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Western Australia’s Battle for Offshore Oil – Crude Oil dropped by 27% in 2009

The West Australian Department of Mining and Petroleum published its latest statistics for 2009 on 27/4/2010 http://www.dmp.wa.gov.au/7105_10347.aspx

Crude oil production dropped from 13.1 GL in 2008 to 9.5 GL in 2009. The following graph shows the stacked production profiles of all oil producing fields in WA:

wa_crude_oil_2000_2009

We can clearly see the production battle out there in those offshore oil fields. The pre-2004 fields have been declining at around 10% pa since their peak in 2002 and would peter out in the 2nd half of this coming decade.

New fields have come on-stream since 2004 which stabilized production at a 15% lower level in the years 2004-2008, but these new fields themselves decline fast, after impressive ramp-ups.

griffin_production_profile_1994_2007

Maturing fields

A good example for the decline in maturing fields is the shut-in of the Griffin field >>>

in October 2009 which was no longer economic to produce despite its remaining P90 reserves of 1.262 GL (equivalent to 7 years of 2008 production at 183,506 Kl, see page 46-47 in PWA April 2009).

Cyclonic activity was also given as a reason for the timing of the closure.

www.dmp.wa.gov.au/documents/oilandgas05.pdf

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New fields

north_west_shelf_north_rankin An example for the rapid decline in new fields is the Stybarrow field (850 m water depth, discovered 2003) which started in late 2007 with contracts to supply oil to a Japanese power station (one wonders why they can’t manage with nuclear power), to Singapore for fuel blending and to refineries in Korea and Japan.

<<< Map of fields 135 km NW of Dampier

Green dots = oil, red dots = gas

http://www.theaustralian.com.au/business/mining-energy/stybarrow-field-to-start-early-for-bhp/story-e6frg9df-1111114914655

Original reserves estimates ranged between 60 and 90 million barrels or 9.5 to 14.3 GL but by end 2008 already 4.093 GL had been produced with published P90 reserves down to 5.605 GL (P50 at 7.805 GL). Production dropped 55% from 3.794 GL in 2008 to 1.729 GL in 2009. The field was shut down in the 1st quarter 2010 and gross output was just 22.25 Kb/d instead of the maximum of 80 kb/d

Technical challenges and accidents

The Vincent oil field started to produce in August 2008 with an expected initial production of 50 kb/d (= 2.9 GL pa) and a natural decline to 40 Kb/d by the end of the year.

http://www.woodside.com.au/NR/rdonlyres/F543F3E8-5E45-443B-8CF7-A44FBD74C006/0/VincentProjectProducesFirstOil.pdf

Vincent’s floating production storage and offloading vessel (FPSO) is an impressive facility with state of the art technology best described in this slide show:

http://www.neptunems.com/sites/neptunemscomau/assets/public/File/pdf/Maesrk%20Vincent%20Ngujima%20Yin%20Case%20Study.pdf

Recoverable reserves are 73 million barrels – at Australia’s daily consumption of 950 kb/d

http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=AS

this is the equivalent of about 80 days supplies!)

But these FPSOs are vulnerable. In April 2009, there was an explosion and subsequent fire in the gas compression module, an event which is assessed in this accident report:

“Denmarks’s Division for Investigation of Maritime Accidents says that the crew of the Float­ing Pro­duc­tion Stor­age and Offload­ing ves­sel, FPSO,  Maersk Ngujima-Yin han­dled  emer­gency response and fire fight­ing effec­tively and com­pe­tently with what they had dur­ing a fire onboard but iden­ti­fied a lack of safety cul­ture and crit­i­cised man­age­ment for not pro­vid­ing the means nec­es­sary to accom­mo­date and coor­di­nate the inter­ests of the project team and the oper­a­tions team, acted inad­e­quately on the feed­back from the FPSO crew dur­ing the project and has not been able to re-establish a healthy safety cli­mate on board and says that the sup­port for main­te­nance on board pro­vided by man­age­ment has been inadequate.”

http://maritimeaccident.org/2009/11/28/poor-safety-culture-fired-up-fpso-maersk-has-failed-to-meet-their-duty-of-care-maersk-ngujima-yin-fire/

r463016_2284492 Just 4 months later the West Atlas rig caught fire in the Montara field. >>>

“A federal inquiry into an oil spill off the northern coast of Western Australia last year will begin in Canberra today.

Oil and gas from the Montara well began leaking into the Timor Sea last August, causing thousands of barrels of oil and gas to spill into the ocean off the Kimberley coast.

The leak, which continued for more than 10 weeks, was eventually stopped when heavy mud was pumped down a relief well.”

http://www.abc.net.au/news/stories/2010/03/15/2845752.htm

And the deep water Horizon fire and oil spill in the Gulf of Mexico

http://en.wikipedia.org/wiki/File:Deepwater_Horizon_offshore_drilling_unit_on_fire_2010.jpg

show that we may have reached the environmental and technical limits to offshore production.

Read about the blowout here: http://www.theoildrum.com/node/6421?nocomments

Outlook 2010: These 2 oil fields started production in early 2010

  • Pyrenees (170-250 m, 80-120 million barrels reserves, max production 90 Kb/d)
  • Van Gogh (340-400 m water depth, 1,300 m true vertical well depth plus long-reach horizontal wells, 59 million barrels reserves, max production 40 Kb/d, the FPSO’s delivery was also delayed by a fire while at Singapore’s Keppel shipyard)

Condensate

Condensate comes from gas fields and their development depends on LNG projects. Most of it is exported (into the bottomless pit of the global oil markets) as Australian refineries don’t have condensate splitters.

wa_condensate_2000_2009

What is condensate? This is the composition from the Bayu-Undan field:

LPG 1.8 % Light Naphta 21.4 % Heavy Naphta 34.1 %
Jet Kerosene 27.4 % Diesel 9.7 % Other carbonhydrates 5.6 %

http://www.santos.com/activities-browser/liquids-marketing/bayu-undan-condensate.aspx

Given the offshore challenges, how will these oil and gas fields perform? As an example, the following graph shows a superimposition of actual production (from PWA April 2010) on an estimate published in the Western Australia Oil and Gas Review 2005,  page 7.

wa_crude_condensate_vs_2005_estimate

Underlay for this graph from: www.dmp.wa.gov.au/documents/oilandgas05.pdf

We can see that the predicted 2nd peak didn’t happen.

Not only has production become a challenge but we have to ask for which purpose is the rest of this precious oil produced? Will the proposed resource rent tax

Henry review recommends resource rent tax

http://www.theage.com.au/business/henry-review-recommends-resource-rent-tax-20100121-moc5.html

be properly used? If it is spent on new freeways, the oil is gone, the tax wasted and nothing is built up to get away from oil and to replace the existing energy and transport system.

28/3/2010
Report Card 2009 (part 3) Nation Building Program spends only 23% on rail, long list of motorways
http://www.crudeoilpeak.com/?p=1282

Governments and the public still have to wake up to what oil decline really means.

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