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Ron Patterson: OPEC August Production Data

Ron Patterson: OPEC August Production Data thumbnail

Data for the OPEC charts below are from the OPEC Monthly Oil Market Report. All OPEC data are through August 2018 and in thousand barrels per day.

OPEC 15 crude only production was up 278,000 barrels per day in August to 32,565,000 bpd. Most of that increase was Libya, up 256,000 bpd.

July OPEC production was revised down 38,000 barrels per day.

Sanctions are beginning to have an affect on Iranian production.

Iraq reached a new high in August, but just barely. They had 4,649,000 bpd. Their previous high was 4,642,000 bpd in December 2016.

Libya was the big gainer in August, up 256,000 bpd to 926,000 bpd. They are still fighting rebels however. They will likely be down slightly in September.

I think Saudi Arabia will hold pretty close to this level for awhile now.

Venezuela’s decline continues. They are now over 1,100,000 barrels per day from their average in 2015.

No change in OPEC big 5 output this week. The decline in Iran was offset by slight gains from the other 4. But I look for declines in the big five in the next few months because of Iranian sanctions.

The OPEC Other 10 was up in August because of Libya. But the decline will continue.

There was no increase in Russian production in August but OPEC did have an Increase. It is my opinion that both OPEC and Russia will level out for a few months then start a slight decline.

The three charts below are from Baker Hughes and the data are through August 2018. The Baker Hughes Iran and Iraq rig counts are incomplete and therefore not included.

Saudi began its massive infill drilling program in 2006. They tapered off in 2009 and 2010. It is likely that the big increase that began in 2011 was mostly for the Khurais and Manifa projects. The oil rig count was 66 in August.

Kuwait’s oil rig count went from an average of 11 in 2009 to over 40 in 2017. The August count was 35.

The UAE rig count, (Abu Dhabi+Dubai), went from an average of around 13 in 2010 to over 50 today. The count was 54 in August.

From Oil and Gas Journal 05/08/2000

Horizontal wells find varied applications in Saudi fields

King Saud University, Riyadh Horizontal-well applications in Saudi Arabia have many objectives, such as controlling oil and gas coning in relatively thin remaining columns, improving waterflood sweep efficiency, improving productivity rates from thin and tight reservoirs, and saving development costs. At yearend 1999, about 200 horizontal wells had been drilled in Saudi oil fields. Horizontal wells are recognized as one of the most important technical advances in the oil and gas industry in the last 20 years. At first, the industry considered this technology to be an exotic way of drill…

And that’s all I could read of the article without a subscription to Oil and Gas Journal. But that’s enough. We know that in 1999, Saudi oil columns were getting thin and that they had a serious coning problem.

Above: Verticle oil well water coning.

They began combatting the problem by drilling Horizontal wells with laterals right along the top of the reservoir. They had, at that time, about 200 such wells. But 200 wells is not very many wells. They would need a lot more.

The below was posted by Stuart Staniford on April 7, 2007 on The Oil Drum.

The Status of North Ghawar

Western flank cross section of North ‘Ain Dar. Source: Figure 9 of Alhuthali et al, Society of Petroleum Engineers Paper #93439, March 2005.

The legend on the right is percent water. It is very hard to read, especially if, like me, one has defective color vision. But the 2004 image is not nearly as bad as it looks. If you go halfway down the column, from the top, you still have less than 50 percent water. So in 2004, there was still a lot of oil left in the Ain Dar section of Ghawar. But you can understand that the vertical wells were starting to pull up a lot of water. In fact, the water intrusion was so bad that all Saudi fields, at that time, had an average decline rate of about 8 percent. But not to worry Saudi had a solution.

Other Ghawar fields, Shedgum and Uthmaniyah, show similar profiles as Ain Dar.

I published most of the following in March 2014. The Ravensworth link had already been removed when I published this piece. However, the Saudi Arabia’s Center for Strategic and International Studies link was valid at the time but since been removed. The “International Business Publications” link still works but this publication is updated annually and the version with the quote below is no longer available. However, it is a Saudi publication and is still interesting.

Ravensworth.org published the following in 2006:

One challenge for the Saudis in achieving this objective is that their existing fields sustain 5 percent-12 percent annual “decline rates,” (according to Aramco Senior Vice President Abdullah Saif, as reported in Petroleum Intelligence Weekly and the International Oil Daily) meaning that the country needs around 500,000-1 million bbl/d in new capacity each year just to compensate.

That quote by Abdullah Saif was widely circulated. and in 2007 International Business Publications published this on page 144:

One challenge for Saudi in achieving their strategic vision to add production capacity is that their existing fields sustain, on average, 6 to 8 percent annual “decline rates” (as reported by Platts Oilgram) in their existing fields, meaning that the country needs around 700,000 bbl/d in additional capacity each year just to compensate for natural decline.

However, in 2006 Saudi Arabia’s Center for Strategic and International Studies claims they have gotten this decline rate down to almost 2%.

Without “maintain potential” drilling to make up for production, Saudi oil fields would have a natural decline rate of a hypothetical 8%. As Saudi Aramco has an extensive drilling program with a budget running in the billions of dollars, this decline is mitigated to a number close to 2%.

The drilling program they are talking about is those horizontal wells placed at the very top of the reservoir.  Now imagine, that with all those brand new horizontal wells sucking the oil right off the top of the reservoir, they still had a decline rate of over 2%! Of course, that was in 2006, 12 years ago. And just what might that decline rate be today?

We have the following quote from the Aramco CEO in the Annual Review 2017, published August 17, 2018, bold mine.

Notwithstanding an improved market picture, the oil industry’s preparedness for the future remains in question as the sector has lost an estimated $1 trillion in planned investment since the market downturn began. The situation becomes more disconcerting when seen in the light of global demand growing at the rate of 1 to 1.5 million barrels per day annually, and maturing oil fields around the world exhibiting steepening natural declines that must also be offset by continuing Investment in the industry.

Khalid A. Al-Falih, Aramco Chairman of the Board of Directors.

Then we have this, bold mine:

Saudi Aramco Signs Deal With Baker Hughes To Boost Offshore Oil Production

Marjan is the first of three major offshore field expansions that Saudi Arabia plans. The other two will be for the Zuluf and Berri offshore fields, which currently have capacity of 800,000 bpd and 200,000 bpd, respectively, S&P Global Platts data shows.

The three major offshore expansion plans are expected to add 1 million bpd of production capacity by 2023. This could offset declining production from aging fields in Saudi Arabia, which continues to be viewed as the swing oil producer in the global market.

These three fields are themselves very old and mature oil fields. Berri was discovered in 1964, Zuluf in 1965, and Marjan in 1967. And all three have been online since. Saudi has discovered several new fields but they are all tiny little things that will add little to Saudi’s production capacity. So they must turn to more infill drilling in their old offshore fields to try to keep production flat.

Saudi’s last major discovery, Sahybah, was discovered in 1968 but did not go online until 1998 due to its very remote location.  Khurais and Manifa were both discovered in 1957 and produced for many years before being mothballed because of low production and other problems. But both were brought out of mothballs due to declining production in their other fields. Massive water injection was used to increase reservoir pressure. There are no more supergiants to be discovered in Saudi Arabia and no more old giants to be brought out of mothballs and put back online.

Conclusion: I believe Saudi Arabia can keep producing at, or close to, current levels for a few more years. That is if more infill drilling in their old offshore fields can compensate for declining production in their old onshore fields. But don’t look for increased production from them if demand and prices increase in the future. They will, very likely, only try to keep production level, as long as they possibly can.

Peak Oil Barrel by Ron Patterson



18 Comments on "Ron Patterson: OPEC August Production Data"

  1. Anonymous on Wed, 12th Sep 2018 4:34 pm 

    1. The imminent decline of Saudi oil was a prominent conspiracy theory of Simmons, Staniford and Hamilton and TOD, ten years ago. But it came to naught.

    2. The US likely became the #1 producer of crude and lease condensate in AUG18: https://www.sacbee.com/news/business/article218277335.html

  2. Peter on Thu, 13th Sep 2018 1:32 am 

    Ron Patterson told everyone in 2015 that 2015 was the peak oil year and gave a whole list of reasons why.
    He was also quite sure 2016 was the peak year also.

    Keep going Ron. One day you will be right.

    Peter

  3. James on Thu, 13th Sep 2018 1:43 am 

    Ron Patterson has been making a fool of himself for years.

    https://oilprice.com/Energy/Crude-Oil/Why-Peak-Oil-Is-Finally-Here.html

    http://www.theoildrum.com/node/5521

  4. John on Thu, 13th Sep 2018 2:03 am 

    Ron P

    Has been crying WOLF since 2008

    http://www.theoildrum.com/node/5576

    The longer peak oil eludes him the more he hates being contradicted.

    Get a proper hobby Ron, how about bowles

  5. Paul on Thu, 13th Sep 2018 3:27 am 

    Ron P thought non OPEC oil peaked in 2008 as posted on the oil drum.

    In 2008 non OPEC production was 50.5mmbld

    https://www.opec.org/opec_web/static_files_project/media/downloads/publications/MR012009.pdf

    This year it will average 59.5mmbld

    Ron you are not very good at this are you. You should leave predicting oil peak to people who know what they are talking about.

    9 million barrels and 10 years wrong and counting

  6. Jaz on Thu, 13th Sep 2018 5:41 am 

    I have had discussions with Ron P for many years. Although it is really impossible to have a discussion with a foul mouthed person who resorts to swearing whenever someone points out a fact he does not like.

    http://europe.theoildrum.com/node/5544

    This is a quote from him in 2009

    “I believe that in less than one year it will be obvious to everyone except the most deranged cornucopians that non-OPEC oil production has peaked. That will leave only OPEC to cast doubt on whether or not the world has peaked.”

    http://europe.theoildrum.com/node/5544

  7. Cloggie on Thu, 13th Sep 2018 2:38 pm 

    The US can become top oil producer on the basis of a new technology. It is only a matter of time before other territories could become very productive as well, making the world awash in oil.

    Peak oil, so 2010.

  8. Boat on Thu, 13th Sep 2018 3:01 pm 

    The oil supply has more to do with Nigeria, Libya, Venz and Iran than some meaningless hyper spam over which country produces the most. The US will up production slowly for around a year till the pipelines are completed but in no way keep up with 1.5 mbpd in world demand.
    There is plenty of oil out there but can the world temper its politics to get at it.

  9. Antius on Thu, 13th Sep 2018 3:58 pm 

    The global economy has accumulated unprecedented levels of debt since 2008. Aside from Germany, none of the western economies has recovered the prosperity that it had in 2007. Chinese debt exploded at about the same time. How could this be?

    Tim Morgan’s Surplus Energy Economics site provides an explanation. Since 2003, the global average ‘energy cost of energy’ has increased from roughly 4% to 8% GDP. Since wages, taxes and investment are paid for by the energy profits of an economy, a decline in ECoE puts downward pressure on wages, government revenues and money available to support capital investments needed for more economic growth. Many governments around the world have tried to compensate by allowing increased government borrowing and quantitative easing, which tends to provide investment income by flooding into the stock and bond markets. The problem is that the debt must be repaid eventually and most of it was not invested in projects that were capable of generating good returns. Hence, interest rates cannot rise much without bringing down large parts of the economy.

    This is why shale oil in places like the Russian steppes is not going to save the global economy. If the world economy cannot cope with an ECoE of 8% without spiralling into debt induced collapse, how will it deal with an ECoE of 20%?

  10. makati1 on Thu, 13th Sep 2018 7:18 pm 

    Once upon a time there was a fiction writer called “OPEC”. LMAO

  11. Anonymous on Thu, 13th Sep 2018 7:36 pm 

    Is there a single peak oil amateur analyst or commenter who has changed his tune AND stayed interested in the discussion (lot of interesting stuff going on)?

    Laherre: stuck in stupid. Can’t even write clear English. (I would try to be kind because of my own language issues…but if I had been writing articles in French for the last 20 years, I would be UP TO SPEED). Plus they are just disorganized messes. Plus he keeps being dramatically wrong on his HL fascination. He projected in FEB14 that Bakken would peak at about 1000 in 2014 and be down to 500 now. It is at 1.2! And that is even with a price crash, he did not predict. Emiritus disease. Or maybe just was always a dumbfuck.

    Berman: Wrong like crazy. Seems to be trying to moderate a little or just to admit the facts. Still wiggly…but closer to honest than the worst peakers.

    Hughes: Wrong like crazy. Just go look back at the 2006 Peak Gas Youtube video. And has not learned his lesson. Just a blatant biased type. wrong, again and again.

    TOD: Ran away because they were so wrong. Instead of just pivoting to overall resource analysis and following the fracking revolution (very interesting topic). Then again, they always were losers.

    ASPO: See TOD.

    Inman: Really one of the better peakers. But still has not totally fessed up to all the things that didn’t go his way. Now pivoting to straight left wing politics and environmentalism.

    Staniford: I think he learned his lesson but still never full on fessed up. Trying to get out of peak oil and get a job, I guess. In computers. No interest in applying his brain to the cool analysis that could be done on the growth of fracking (bias probably the reason).

    Hamilton: see Staniford.

    Rapier: Seems the most interested in being an analyst versus an advocate. Still doesn’t meet my standard of full on honest. and seems a little to fascinated with being a third rate talking head. But one of the better peakers.

    Decline of the empire dude: very left wing, but super super honest. One of the few willing to say peak oil was full of shit.

    Ace: ran off and hid. Was always a loser. Even Staniford called him out.

    Ron: Very nice charts and I appreciate his style of presentation. Trend of bias over the years. Still he does try to be more data oriented. And even if he gets all old man angry, he is capable of eventually learning something (like Texas revisions).

    Dennis: Annoying to both peakers and cornies in his “I have a scenario for everything”. At a certain point, what the heck are you saying?

    Campbell: old fuck, hiding.

    Deffeyes: old fuck, hid. Dead.

    Ruppert: blew his brains out because of being wrong.

    Gail: moron. thinks she is smart from knowing the limpest math.

    Enno: One of my favorite peakers. He says he really isn’t one…and probably really wants to be an honest analyst. Still a little biased. But very smart and very hard worker and great with computers. Happy for him with his business venture. He has also moderated view when shown wrong (doesn’t like getting it ground in his face, but he’s not a saint.)

    Dean: not that good really. Should have progressed more.

    Alex: miss him. smart dude.

    Pesek (spelling?): very cool dude as a dude. But wrong over the years. But still like that he knows the technical topic very well.

    Upsalla uni dude: Emeritus disease. And I can see being stupid for a while. But he had enough time to learn better. At the end of the day…a dumb fuck. don’t trust him on other topics.

    Roger B. oldish juco instructor. Half smart I guess. But not smart enough to learn from being wrong.

    Cassandra guy: see pezek. good vibe as a person. But hasn’t learned from being wrong. A biased blogger. Not a shrewd analyst.

  12. ERRY on Fri, 14th Sep 2018 7:39 am 

    Foolish comments here. Research on Peakoil should be improved so that we will not be surprised.

  13. MASTERMIND on Fri, 14th Sep 2018 8:03 am 

    Nikki Haley spent over $52K in State Department money on curtains

    https://nypost.com/2018/09/14/nikki-haley-spent-over-52k-in-state-department-money-on-curtains/?utm_campaign=SocialFlow&utm_medium=SocialFlow&utm_source=NYPTwitter

  14. Davy on Fri, 14th Sep 2018 8:36 am 

    “Nikki Haley spent over $52K in State Department money on curtains”
    https://tinyurl.com/yceavs84

    “A spokesperson for Haley said plans to buy the curtains were made during the Obama administration.”

    BTW, I do not care for the little b**ch but this is just another example of sloppiness from boymind.

  15. MASTERMIND on Fri, 14th Sep 2018 8:51 am 

    Davy

    Blame it on Obama..Sure..Just like everything else..You are as dumb as they come..

    Go back to the farm you nut job!

  16. Jaz on Fri, 14th Sep 2018 1:05 pm 

    ERRY

    The foolish comments have been made by Ron P.

    http://europe.theoildrum.com/node/5544

    Idiots like him have made Peak Oil open to ridicule.

    10 years of being rude to people who knew more than him. Him should only be published on a toilet door.

  17. ERRY on Tue, 18th Sep 2018 7:43 am 

    Jaz

    Only North America has such a great, fairy tale-like happiness for oil.
    In Europe, on land, great oil has never been found, there is no “new spring” in the North Sea. China has already achieved its Peak Oil.

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