Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

Saudi Aramco IPO

Discussions about the economic and financial ramifications of PEAK OIL

Re: Saudi Aramco IPO

Unread postby Plantagenet » Thu 04 Apr 2019, 01:24:14

The Financial Post has gone through the newly released Aramco oil production and reserve data and they think the most important new information is that the report shows that Ghawar has peaked. Ghawar used to produce ca. 5 million bbls/day just a few years ago, but now can only produce ca. 3.8 million/bbls/day today.

That means a ca. 20% decline in production has already occurred at Ghawar, apparently just in the last few years.

No doubt oil production at Ghawar will continue to decline further.

saudi-arabias-biggest-oil-field-is-fading-faster-than-anyone-guessed

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Thu 04 Apr 2019, 10:51:33

The Financial Post has gone through the newly released Aramco oil production and reserve data and they think the most important new information is that the report shows that Ghawar has peaked. Ghawar used to produce ca. 5 million bbls/day just a few years ago, but now can only produce ca. 3.8 million/bbls/day today. 

That means a ca. 20% decline in production has already occurred at Ghawar, apparently just in the last few years. 


There is no way of telling from the Prospectus if the decline in average production rate at Ghawar is due to problems encountered or rather is a part of their overall management scheme. I’m thinking the latter based on some of the notes in the prospectus:

The Government determines the Kingdom’s maximum level of crude oil production in the exercise of its sovereign prerogative. Accordingly, the Government may in its sole discretion increase or decrease the Kingdom’s maximum crude oil production at any time based on its sovereign energy security goals or for any other reason, which may be influenced by, among others, global economic and political conditions and their corresponding impact on the Kingdom’s policy and strategic decisions with respect to exploration, development and production of crude oil reserves.


This is a simple way of stating that the government attempts to balance it’s internal needs for capital with the requirements it has as a lead OPEC member coupled with a healthy understanding of global supply/demand dynamics. It understands the need for some spare capacity in the system given the near train wreck they faced back in 2006 when spare capacity was zero and global demand was accelerating. They also understand that spending CAPEX today on spare capacity you might not utilize for sometime is money badly spent. As a consequence it is a bit of a juggling game and they have decided 2 MMB/d is the appropriate number.

The Government’s decisions regarding crude oil production and spare capacity, and the Company’s costs of complying with such decisions, may not maximise returns for the Company. For example, the Company may be precluded from producing more crude oil in response to either a decrease or increase in prices, which may limit its ability to generate additional revenue or to increase its production of downstream products.


And

The Company actively manages its prolific reserves base in accordance with the Kingdom’s laws and regulations to maximise long-term value while optimising ultimate recovery from its fields. Because of the size and number of its fields and spare capacity, the Company is able to maintain its desired level of overall production by tapping into new reservoirs when required to improve long term value through portfolio capacity optimisation. This approach, which differs from the typical industry practice of maximising production rates per field, is more capital efficient given the nature of the resources available and leads to stable production and higher ultimate oil recoveries.


When those two statements are taken in context what it means is ARAMCO can’t just bring new wells on in fields without understanding how it impacts their overall MSC. If they are already producing at MSC then bringing on a new well strategically in one field would require shutting in equal amounts of production elsewhere. As ARAMCO states they would do this based on their understanding of what the best management strategy is to optimize recovery. In the case of Ghawar we know that they have been busy bringing on new production in Khurais and Shaybah and that Ghawar has now produced somewhere around 60% of its currently recoverable Proven reserves. It is entirely possible that ARAMCO has brought on oil elsewhere at the expense of drilling new MRC sidetracks in Ghawar simply since they see this as helping them achieve their goal of optimizing overall recovery across the entire fields. As well the oil produced in SA is somewhat variable and ARAMCO may have decided to increase their capacity associated with the super light fractions to take advantage of demand from certain refiners. The numbers don’t tell you the reasoning unfortunately.

When it is all said and done whether Ghawar production has peaked or not is of much less consequence than was espoused in Twilight in the Desert. The comment was always made back then “where goes Ghawar so goes the whole of Saudi Arabia and the oil industry” and that has been shown in the prospectus assessment to be untrue. Ghawar production back when Simmons was ranting about this all the time was around 5 MMbbl/d according to ARAMCO and overall SA production was around 8 to 8.5 MMbbl/d meaning Ghawar indeed made up the majority of production. Rather than suddenly fall off a cliff as Simmons predicted Ghawar kept trucking along at a relatively stable water cut and depletion rate for another decade. And today Ghawar only makes up one third of the total ARAMCO production whereas total ARAMCO production is about 20% higher meaning Ghawar was not as important as suggested. Indeed ARAMCO has increased their spare capacity to 12 MMbbl/d while decreasing production at Ghawar. If Ghawar did peak Saudi Arabia as a whole certainly did not. All fields reach maximum production at some point and they all have a reserve life associated with them. For Ghawar the reserve life associated with Proven reserves is still pretty significant …48 Gbbls. To keep that reserve number in perspective that is larger still than the bulk of Super Giant fields original recoverable reserves (eg. Canteral, Aghajari, Tengiz, Majnoon etc) and there are only a few fields whose original recoverable reserves are bigger than the remaining reserves at Ghawar (eg. Burgan, Gachsaran) and it is pretty close to what was the total oil reserves of the US at the end of 2017. Not insubstantial by any stretch of imagination.

And the total reserve life for Saudi Arabia just based on Proven Reserves is around 60 years. What is significant in the prospectus is the statement:

The organic crude oil and condensate reserves replacement ratio based on the Kingdom’s reserves on a three year rolling average from 2016 to 2018 was 104%. The organic oil-equivalent reserves replacement ratio based on the Kingdom’s reserves on a three year rolling average from 2016 to 2018 was 127%. Reserves replacement ratios are calculated on reserves changes relative to net reservoir withdrawal from operated fields, rather than production volumes.


What that means is beyond the stated Proven Reserves which have been audited by D&M there is obviously a significant amount of Probable and Possible reserves that are continually being upgraded to replace produced Proven reserves. So the actual reserve life associated with 3P is probably very significant.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Thu 04 Apr 2019, 11:15:32

There is no way of telling from the Prospectus if the decline in average production rate at Ghawar is due to problems encountered or rather is a part of their overall management scheme.


Either the prospectus is a true, transparent report on Saudi Aramco's oil fields or it isn't. IF the current maximum production rate at Ghawar reflects just a management decision, and the actual production capacity is higher, then the Bond prospectus is a fraud, as it clearly states the current production capacity of Ghawar is 3.8 million bbls/day.

The prospectus clearly lists the production of capacity of all of KSA's oilfields----in fact this is one of the central disclosures of the report. Before investors buy bonds from Aramco they will demand to know some basic facts, i.e. what the production capacities and reserves of their oilfields are. Thats why the bond prospectus was prepared---to meet transparency requirements of international financial markets. The chances that the Saudis are trying to commit some kind of fraud by reporting false numbers in the bond prospectus seems remote, IMHO.

SO, lets accept facts. The production capacity of Ghawar has just been reported to be 3.8 million bbls/day. This represents a 20+% drop from previous estimates of the field's capacity. For instance, the US government estimated Ghawar to have a production capacity of 5.8 million/bbls day as recently as 2017.

This indicates Ghawar has peaked and gone into production decline.

“As Saudi’s largest field, a surprisingly low production capacity figure from Ghawar is the stand-out of the report,” said Virendra Chauhan, head of upstream at consultant Energy Aspects Ltd. in Singapore.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Thu 04 Apr 2019, 12:24:16

Either the prospectus is a true, transparent report on Saudi Aramco's oil fields or it isn't. IF the current maximum production rate at Ghawar reflects just a management decision, and the actual production capacity is higher, then the Bond prospectus is a fraud, as it clearly states the current production capacity of Ghawar is 3.8 million bbls/day.


Not the case. The government decides what the MSC is for the company which includes the spare capacity requirement. It is up to the company to decide how it applies that MSC across the various field as is stated in the prospectus. Each year Ghawar has had additional wells drilled as well as re-entries in the MRC wells (they use expandable liners and SMART completions in order to shut off certain laterals and drill new ones which are brought on stream). That was all done in order to maintain the target production rate ARAMCO had for Ghawar as each year wells reach their economic limit (such is the case for all oil wells everywhere, Ghawar being no exception) and need to be replaced. IF they decided that their interests of optimizing ultimate recovery was better served by increasing production at other fields at the expense of Ghawar they simply stop drilling new laterals in Ghawar for the time being or at least limit drilling substantially. As a consequence, the MSC (which represents what they can bring on stream quickly at minimal additional CAPEX) drops. It doesn't necessarily mean the field isn't capable of higher production rates if capital investment was directed that way and it doesn't mean the field MSC can't increase at some point in the future.

The chances that the Saudis are trying to commit some kind of fraud by reporting false numbers in the bond prospectus seems remote, IMHO.


which they are not. I think you have a misunderstanding of what MSC is and how ARAMCO manages it.

This indicates Ghawar has peaked and gone into production decline


at this point the production is less than it was which if it never recovered it would meet the definition of peak production. What I am saying is based on the reporting in the prospectus you can not tell if Ghawar is capable of being produced at a higher rate if ARAMCO decided to drop production at another field and increase it at Ghawar.

and the main point I was making is it doesn't seem to matter if it has peaked for ever or not. Everyone here was wringing their hands and having kittens over worries that Saudi Arabia would implode if production declined at Ghawar. Such is not the case, they have more than replaced it and the life left in Ghawar is still very, very significant.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Thu 04 Apr 2019, 15:55:29

at this point the production is less than it was which if it never recovered it would meet the definition of peak production.


Yup. Thats my point exactly.

Back here in the real world Ghawar production has now fallen over 20% from its peak.

And that a very interesting development indeed.

Looking back, I would guess that concerns over a decline in Ghawar production contributed to the decision at Saudi Aramco in 2015 to test CO2 injection in one part of the field. Based on the information in the 2019 Bond prospectus, its apparent the CO2 test project hasn't yet succeeded in boosting Ghawar daily oil production back to its prior levels.

saudi-aramco-testing-c02-to-get-more-oil-from-giant-ghawar-field

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Thu 04 Apr 2019, 17:01:50

Yup. Thats my point exactly.

Back here in the real world Ghawar production has now fallen over 20% from its peak.

And that a very interesting development indeed.

Looking back, I would guess that concerns over a decline in Ghawar production contributed to the decision at Saudi Aramco in 2015 to test CO2 injection in one part of the field. Based on the information in the 2019 Bond prospectus, its apparent the CO2 test project hasn't yet succeeded in boosting Ghawar daily oil production back to its prior levels.


you apparently didn't bother to read anything I wrote. The Ghawar production limit is something that ARAMCO can manage. If they have moved CAPEX spending elsewhere in order to maximize overall reserve recovery (which they say in the prospectus is their main goal) Ghawar production and MSC will be down for reasons other than something happening in the reservoir.

They are managing production in the fields meaning the current production level may have no bearing on what the field is actually capable of. You immediately assume that Ghawar production is down because that is the best the field can now produce, that does not have to be the case and the fact that ARAMCO states they manage production in their fields to optimize both recovery and sales of various grades suggests there is more going on here and the granularity is not presented.

Bottom line is that you cannot tell if the decrease in production is self-imposed so that they could increase production elsewhere given they have a limit as to what the total MSC is. There might now be limits to producing Ghawar but then again there very well may not be. The prospectus does not allow you to determine which is the case, my point all along.

and if this is all based on your former comment:

If Ghawar peaks and goes into rapid decline in the coming years, Saudi will be hard pressed to maintain their current rate of oil production, no matter what their oil reserves are


the prospectus proved that to be an incorrect assumption given Ghawar production is down and it has been more than replaced.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Thu 04 Apr 2019, 17:47:19

you apparently didn't bother to read anything I wrote.


Thats a silly thing to say considering that I directly quoted from what you wrote in your post, wrote that I agreed with it, and then made further comments on the same subject.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby evilgenius » Sat 06 Apr 2019, 13:02:05

What happens if there is a revolution in Saudi Arabia, and the overall philosophy behind managing production changes? How far can you go, like if the revolution were only confined to the caste of characters within the Royal Family, before things got too far out of whack and the reserve picture had to be redrawn? I'm thinking about the kinds of pressure they would be under if American production actually did drop off dramatically, and they were called upon to take up the slack. They might feel they had to keep up appearances, as a threat to be a swing producer that can keep the rest of the oil producing countries in check. Is it possible to run Ghawar hard, and put it away wet, or wouldn't that make the picture look bleak, perhaps bleaker than it really was? I ask this because I'm trying to get a handle on the implications regarding war, if the US stumbles in the coming decade either with its shale position or its adoption of electric vehicles.
User avatar
evilgenius
Intermediate Crude
Intermediate Crude
 
Posts: 2631
Joined: Tue 06 Dec 2005, 03:00:00
Location: Stopped at the border.

Re: Saudi Aramco IPO

Unread postby Plantagenet » Sat 06 Apr 2019, 23:53:13

evilgenius wrote:What happens if there is a revolution in Saudi Arabia, and the overall philosophy behind managing production changes? .... Is it possible to run Ghawar hard, and put it away wet


Thats the million dollar question. Aramco has been extraordinarily secretive about their oil production capacity in the past, so the information they've released for their Bond issue is very very important in understanding the situation with regard to Aramco's oil reserves and production potential. According to the independent review, Ghawar at this time can produce a maximum of ca. 3.8 million barrels per day. Thats down over 20% from prior estimates of Ghawar production.

evilgenius wrote:....wouldn't that make the picture look bleak, perhaps bleaker than it really was? I ask this because I'm trying to get a handle on the implications regarding war, if the US stumbles in the coming decade either with its shale position or its adoption of electric vehicles.


If the production from Ghawar continues to decline, KSA would have to make it up with production from other fields. So far they've been able to do it.....but at some point they won't be able to keep it up.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Sun 07 Apr 2019, 10:33:13

Here is an article written by Michael Lynch for Forbes that states exactly what I had suggested with regards to Ghawar and the MSC.

https://www.forbes.com/sites/michaellynch/2019/04/05/declining-production-at-saudi-arabias-largest-oil-field-is-not-cause-for-concern/#19276aa2001b

Why did Ghawar’s production decline? Since the field still has 48 billion barrels of proved reserves (according to Aramco’s numbers), maintaining 5 mb/d should be technically easy. However, the field is not a stand-alone operation; Aramco has a choice of investments among numerous fields, and explicitly chose to add capacity elsewhere, as proven by the fact that the national capacity is 12 mb/d, showing no signs of decline.
Why invest in other fields instead of Ghawar? The economically rational explanations would be that the company wanted to exploit more favorable pricing for different crude qualities or that additional capacity in other fields had become cheaper because of geological, engineering, or geographical reasons.
 
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Sun 07 Apr 2019, 21:20:12

Here is an article written by Michael Lynch for Forbes that states exactly what I had suggested with regards to Ghawar and the MSC.

https://www.forbes.com/sites/michaellynch/2019/04/05/declining-production-at-saudi-arabias-largest-oil-field-is-not-cause-for-concern/#19276aa2001b

Why did Ghawar’s production decline? Aramco ....chose to add capacity elsewhere


Both you and Michael Lynch seem unaware of the fact that Saudi Aramco actually did invest new money into Ghawar---they started a new CO2 injection program there in 2015 in an attempt to maintain oil production at Ghawar.

However, in spite of this new program and the increased spending on Ghawar, the recent independent review of Aramco's oil fields shows that oil production has fallen at Ghawar to the point that its now down over 20% from its peak a few years ago.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 08 Apr 2019, 11:15:37

Both you and Michael Lynch seem unaware of the fact that Saudi Aramco actually did invest new money into Ghawar---they started a new CO2 injection program there in 2015 in an attempt to maintain oil production at Ghawar.


actually I'm fully aware of that program as I reported on it in one of the threads here a year ago. It was a test program involving a very small area near Haradh. Aramco was quite clear that the whole idea of the test program was to look at means of carbon storage through CO2 injection and that they were also interested in seeing what improvements might be made with respect to recovery but that was not the main goal. It was a test program not a full on tertiary recovery program as you seem to want to infer and it's main goal was carbon capture not tertiary recovery.

However, in spite of this new program and the increased spending on Ghawar, the recent independent review of Aramco's oil fields shows that oil production has fallen at Ghawar to the point that its now down over 20% from its peak a few years ago.


and as both Mike and I point out this drop in production is very likely planned as a means of dealing with MSC balanced over many fields with differing liquid properties.

Lynch pointed out something that is very true. Having 48 Gbbls of reserves left means there should be no problem whatsoever producing at 5 MMB/d especially if there is sufficient water and gas handling capacity. A general industry rule of thumb is to be careful not to strain a reservoir no more than 10% of reserves should be produced per year. 5 MMbbl/d is about 3% of total remaining reserves.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Mon 08 Apr 2019, 17:24:17

....carbon storage through CO2 injection....


I know math isn't your strong suit, but think about this for a second. If Aramco finds a natural CO2 reservoir and they drill it and produce it and inject that CO2 into an oil reservoir as part of an EOR project, the net amount of carbon sequestration is zero, because the CO2 used in the EOR project would never have been produced if not for the EOR project.

Furthermore, many studies have already shown that CO2 EOR projects, even those where the CO2 is recovered from factories etc. (which isn't what KSA is doing), accomplish no carbon sequestion, and usually result in MORE CO2 emissions.

Why is that you might wonder? Well, let me explain it to you.

Lets see how you are on chemistry......do you know that oil is a hydrocarbon? What do you think happens when oil is brought into contact with CO2?

Oil is immiscible in water....thats means it can't dissolve in water so during a water flood the oil is pushed ahead of the rising water line. However, CO2 will DISSOLVE in oil. That means the oil produced as a consequence of a CO2 EOR project contains a lot of dissolved CO2, which is then released during storage, refining, etc. Even more CO2 comes up with the produced oil. The net CO2 sequestion is about zero.

So CO2 EOR projects don't effectively sequester CO2---something everyone in the industry has known for decades... except you apparently.

no-CO2-sequestion-in-enhanced-oil-recovery

Furthermore.....in spite of your dissembling the CO2 EOR project carried out in part of Ghawar clearly did have enhanced oil recovery as a goal. I quote from a report on the project: Saudi Aramco’s first test of using carbon dioxide (CO2) injection to extend the life of a field....

Fast Start for First Saudi CO2 EOR Project

Read the sentence I quote above in bold font. It clearly says the CO2 EOR project was a test of using CO2 in an EOR program to extend the life of Ghawar. And at first it seemed to work well....except that the part of Ghawar field where they were testing had a 98% water cut.....so boosting oil production by four times just means they got it down to a 90% water cut---apparently not enough to make it worthwhile to expand the expensive CO2 EOR program.

You and Michael Lynch are not allowed your own set of facts. Your claim that Ghawar's falling rate of oil production would be reversed if only they spent some money on more drilling and modern EOR recovery methods ignores the fact that Aramco already is doing more drilling and spending more money on a modern CO2 EOR project---and it didn't work well enough to warrant expanding the program.

there should be no problem whatsoever producing at 5 MMB/d ....


Except there is.

Lets look at the facts.

The field has been producing for over half a century now. Parts of Ghawar now have a 98% water cut. Thats extremely high. That means the Saudis can drill and do CO2 EOR all they want, and they still aren't going to get much oil out of those parts of Ghawar.

It isn't too hard to figure that as parts of Ghawar are depleted of oil, the overall production capacity will fall. And thats just what has been reported.

An independent review of Saudi Aramco's oil production facilities just released as part of their current bond proposal reports that the actual current maximum production rate possible at Ghawar today is only 3.8 MMB/d.....and thats far below the number you put forward just above and down more than 20% from estimates of Ghawars production capacity made by the EIA and other analysts just a few years ago.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 08 Apr 2019, 18:31:41

You and Michael Lynch are not allowed your own set of facts. Your claim that Ghawar's falling rate of oil production would be reversed if only they spent some money on more drilling and modern EOR recovery methods ignores the fact that Aramco already is doing more drilling and spending more money on a modern CO2 EOR project---and it didn't work well enough to warrant expanding the program.


God save us from your proselytization about a subject you do not seem to understand. The project was conducted at Uthamaniyah. They purposefully went to an area of Ghawar that was almost completely depleted in order to properly test both CO2 sequestration rates as well to evaluate EOR potential. The rest of the field is not 98% water cut, pretty hard to have 48 billion bbls of oil remaining if it was. Here is what Aramco said about the CCS - EOR evaluation program back in 2013 when it was in the planning stages. It speaks to why they conducted it in the first place.

Saudi Aramco has been actively engaged in carbon management initiatives within the oil industry. A comprehensive research framework has been developed for CCS, including CO2 capture (mobile capture, oxy-fuel combustion, and chemical-looping combustion), storage, and EOR technologies (Al-Meshari, 2011). EOR is of particular interest to Saudi Aramco as it can be a win-win solution to the challenges of rising world energy demand and climate change, by increasing oil production while reducing CO2 emissions. Saudi Aramco is working on the first CO2-EOR demonstration project in Saudi Arabia. This project will be implemented in a small part of the 'Uthmaniyah area of the giant Ghawar field, which was discovered in 1948 and started to produce oil in 1951


There were only four producing wells so doubling the oil production in an area that was nearly depleted is pretty significant. Aramco has not made any statements as to their future plans for tertiary recovery in any of their fields. IN fact they said back when the project was in it's planning stages:

While Saudi Arabia has abundant conventional oil reserves and EOR is not required at production scale for decades to come, the main objective of the CO2-EOR project is to assess the applicability to sequester CO2 in a mature zone within an oil reservoir. [/quote]

You and Michael Lynch are not allowed your own set of facts. Your claim that Ghawar's falling rate of oil production would be reversed if only they spent some money on more drilling and modern EOR recovery methods ignores the fact that Aramco already is doing more drilling and spending more money on a modern CO2 EOR project---and it didn't work well enough to warrant expanding the program.


Neither of us said anything whatsoever about spending money on EOR in Ghawar. The four wells in the test program were not done to manage production at Ghawar, the increase is so small as to not be noticeable. The type of spending that is needed to have any impact is additional laterals in MRC wells. As various laterals decrease in oil production they need to be shutoff and a new lateral drilled with an expandible liner. Choosing not to do that results in lower production. You suggest the CO2 project was done with the intention of increasing Ghawar production and nowhere has ARAMCO stated that, in fact just trying to imagine that 4 wells in a depleted part of the field could make any difference whatsoever is ridiculous.

The field has been producing for over half a century now. Parts of Ghawar now have a 98% water cut. Thats extremely high. That means the Saudis can drill and do CO2 EOR all they want, and they still aren't going to get much oil out of those parts of Ghawar.

It isn't too hard to figure that as parts of Ghawar are depleted of oil, the overall production capacity will fall. And thats just what has been reported.


Except the 48 billion bbls of oil remaining are not in the depleted parts of Ghawar. What part of 48 billion bbls reserves do you not understand?

An independent review of Saudi Aramco's oil production facilities just released as part of their current bond proposal reports that the actual current maximum production rate possible at Ghawar today is only 3.8 MMB/d.....and thats far below the number you put forward just above and down more than 20% from estimates of Ghawars production capacity made by the EIA and other analysts just a few years ago.


Wrong. What they pointed to was the MSC (maximum spare capacity) which is the level the field can be produced at without additional investment for the next few months. It is not the same thing as the maximum possible production rate. IF you don't understand that concept then there is really no point continuing your argument as you are just wrong. Find us someplace in the prospectus where it says that is the maximum rate that Ghawar can ever be produced at....good luck with that as it doesn't exist. I suspect you haven't bothered to read the prospectus or any of the comments I posted above from that document. Aramco makes it very clear that they have to manage to the MSC number they have been given by the government, hence every one of their fields has managed production to some extent.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Mon 08 Apr 2019, 21:00:10

The type of spending that is needed .... is additional laterals in MRC wells.


Hahahaahahah! :-D :) :lol: :lol: Do you really think the armies of engineers and consultants who work for Saudi Aramco haven’t thought of that?

Back here in the real world Aramco has been drilling and completing new MRC wells at Ghawar more or less continuously since at least 2004. AND Satellite surveys show the drilling activity in the Ghawar field has recently increased, suggesting Aramco may be trying to slow the production decline.

However, in spite of all the new drilling, production has now fallen more than 20% at Ghawar.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Mon 08 Apr 2019, 22:47:05

Hahahaahahah! :-D :) :lol: :lol: Do you really think the armies of engineers and consultants who work for Saudi Aramco haven’t thought of that?

Back here in the real world Aramco has been drilling and completing new MRC wells at Ghawar more or less continuously since at least 2004. AND Satellite surveys show the drilling activity in the Ghawar field has recently increased, suggesting Aramco may be trying to slow the production decline.

However, in spite of all the new drilling, production has now fallen more than 20% at Ghawar.


Are you actually that dense that you don't understand how this works? They were continually drilling new laterals from the MRC wells in order to maintain production since wells meet their limits through time. That is why I said that in order to increase production they would have to spend more capital and drill more laterals. What is not known is what pace that drilling has occurred at given the last report was on Haradh III which was completed back in 2010. It is entirely possible that they have decided to slow down drilling of additional laterals or have left some drilled and uncompleted.

Please show us this new satellite survey showing drilling has increased. The last time someone brought up that nonsense of trying to count rigs was a decade ago. IN 2015 Bernstein research reported their results based on images taken in 2004 to 2007. Nothing to do with recent activity. Plus from a satellite picture, it would be impossible to tell the difference between a rig out there drilling a new lateral from an existing well pad versus a rig out there doing a normal workover. Without detailed specifics on what the rigs were doing, how many laterals had been completed etc. you would have no idea whatsoever what level of production they were maintaining.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Mon 08 Apr 2019, 23:33:28

They were continually drilling new laterals from the MRC wells in order to maintain production .....


Yes, thats what I've just explained to you twice now. I'm glad to see you got it this time.

Your claim that all they need to do to boost production at Ghawar is start drilling MRC wells is silly, since they have been drilling for decades, and yet it hasn't stopped a significant fall in production revealed in the recent bond report.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Tue 09 Apr 2019, 09:42:30

Yes, thats what I've just explained to you twice now. I'm glad to see you got it this time.


don't be a moron...the first time it was mentioned in this "discussion" was by me up thread and the first time it was brought up on this site was by me back over a decade ago when the first wells were being drilled. Give your head a shake. :roll:

The four wells in the test program were not done to manage production at Ghawar, the increase is so small as to not be noticeable. The type of spending that is needed to have any impact is additional laterals in MRC wells. As various laterals decrease in oil production they need to be shutoff and a new lateral drilled with an expandible liner.


then you repeated what I had said. Either you have a very low attention span or a low level of literacy or perhaps both.

Your claim that all they need to do to boost production at Ghawar is start drilling MRC wells is silly, since they have been drilling for decades, and yet it hasn't stopped a significant fall in production revealed in the recent bond report.


Let me explain this once again as you are having a hard time understanding it would appear. If there are 200 separate laterals that are shut-in downhole with SMART completions each year then 200 separate new laterals with expandable liners have to be drilled in order to replace production. If they only drilled 100 new laterals production would drop, if they drilled no new laterals production would drop further. Can you demonstrate how many laterals they drilled and completed in the last couple of years? Can you even demonstrate that they completed any new laterals in that time period? Can you demonstrate they did anything whatsoever to bring on new production in Ghawar in the past year? Of course not. But apparently, that doesn't stop you from making unsubstantiated claims.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6718
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Plantagenet » Tue 09 Apr 2019, 10:44:14

......


Well, you made it maybe five posts that time before starting in with the childish ad homs.

Have a great day, little one.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby Plantagenet » Tue 09 Apr 2019, 19:51:09

The ARAMCO Bond sale is a tremendous success. The bidding process is way oversubscribed. There are 10x as many bids as bonds to sell

the-monster-saudi-aramco-bond-offering-may-have-just-doomed-its-ipo

Ironically, the tremendous success of the Aramco bond offering may lead to the cancellation of the much-delayed IPO. Now that Saudi Aramco has demonstrated that it can raise huge amounts of money by offering bonds, why go to all the hassle of doing the IPO?

If Aramco (or Prince Muhammad and the Saudi Royal Family) decide they want more cash for infrastructure or other purposes, it would be easier for them to just issue another bond.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 22177
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

PreviousNext

Return to Economics & Finance

Who is online

Users browsing this forum: No registered users and 18 guests