Latest Graphs

fig_1d_2010_12 fig_1c_2010_12 fig7_2010_12 fig8_opec_2010_12

Oil Price

Saudi King ordered oil exploration to cease. But will it matter?

Saudi Arabia seems to jump on the bandwagon of a rethink on oil exploration following the oil spill in the Gulf of Mexico, packaging it in an apparently wise policy of resource conservation. But this article shows that the Saudi exploration ban will have no impact as discoveries in the last years were negligible anyway. If anything, the exploration stop will serve as a future explanation for production drops.

—————————

While the Obama administration is fighting and apparently losing court battles over a drilling ban in deep water

Court rejects Obama administration’s bid to restore oil drilling moratorium

http://www.news.com.au/breaking-news/court-rejects-obama-administrations-bid-to-restore-oil-drilling-moratorium/story-e6frfku0-1225889697057#ixzz0tKceD8HT

and the European Energy Commissioner coming up with similar ideas

Europe should freeze deep water drilling: top official
http://news.yahoo.com/s/afp/20100707/sc_afp/usoilenvironmentpollutioneu

the Saudi King has ordered oil exploration in his kingdom to cease completely, not just temporarily

Saudi King Seeks Wise Oil Use, Not Output Ban, Banque Saudi Analyst Says

The monarch told Saudi scholars studying in Washington that he had ordered all oil exploration to cease “in order to keep the earth’s wealth for our sons and grandsons,” state-owned Saudi News Agency reported yesterday.

http://www.bloomberg.com/news/2010-07-04/saudi-king-seeks-wise-oil-use-not-output-ban-banque-saudi-analyst-says.html

While it is certainly a wise decision to preserve oil resources for future generations this instruction will hardly have any impact on finding new oil fields. This is because the 2009 drilling program was not very successful anyway, in particular with oil:

From Aramco’s 2009 exploration report:

Non-associated gas field Sanaman, 444 barrels per day of condensate
Arabian super light oil field Sirayyan, 3.7 kb/d ; Siryyan 2 well flowed at 3.4 Kb/d
Gas field Unayzah, 1.74 Kb/d  of condensate

http://www.saudiaramco.com/irj/go/km/docs/SaudiAramcoPublic/AnnualReview/2009/AR09_Exploration.pdf

For comparison: Australia consumes around 900 Kb/d

Let’s have a look at Saudi oil reserves as presented by Mamdouh Salameh

http://www.eoearth.org/contributor/mamdouh.salameh

to the 10th IAEE  European Conference “Energy, Policies & Technologies for Sustainable Economies” in Vienna in September 2009

http://www.aaee.at/2009-IAEE/uploads/presentations_iaee09/Pr_6_Salameh_Mamdouh.pdf

saudi_arabia_oil_in_place

The above graph shows the discoveries (red columns) and the cumulative oil in place (=oil in the rock, whether it can technically or economically be produced or not). The last significant find were 6 oil fields in the Hawtah trend with 6 Gb OIIP  in 1990.  ASPO estimated a total of 15 Gb for the period 1982-2004, bringing the total to 580 Gb

Saudi Aramco, however, claims an additional 110 Gb  OIIP for this period, with a total OIIP of 700 Gb in 2003 . This total figure is taken from slide 8 in this presentation by Baqi/Saleri at the CSIS in Washington in 2004:

50 year crude oil supply scenarios: Saudi Aramco’s Perspective

http://csis.org/files/media/csis/events/040224_baqiandsaleri.pdf

In this slide show Saudi Aramco adds another 200 Gb to be discovered until 2025, or 10 Gb every year. These sort of discoveries were not made in the last 5 years.

Salameh writes: “Applying the previously assumed lower and upper global recovery factor limits of 30% to 35% to the more realistic estimate of 580 Gb OIIP gives a range of 174 to 203 Gb of recoverable [original] reserves. Given that Aramco has cumulative production of 120 Gb by end 2008, this gives a range of remaining recoverable crude oil reserves from 54 to 83 Gb, not Aramco’s propaganda claim of 264 Gb. Even if we accept the Saudi OIIP figure of 700 Gb we come to estimated reserves of  90 to 125 Gb.”

The corresponding depletion levels would be as follows:

(a) 120 Gb / 174 Gb = 69%

(b) 120 Gb / 203 Gb = 59%

(c) 120 Gb / 210 Gb = 57%

(d) 120 Gb / 245 Gb = 49%

So even using the most optimistic parameters half of  Saudi Arabia’s original crude oil reserves are gone. But it could be much more. Take your pick.

saudi_arabia_reserve_estimates_salameh_2009

The best outlook comes from Aramco’s oil operation report:

“With the completion of the oil production increments portion of our capital program, we are turning our attention to increasing gas production and to integrated refining and petrochemical projects. However, we are moving forward with one mega-project in oil: The offshore Manifa increment is scheduled to begin production of 500,000 bpd of Arabian Heavy crude oil by June 2013 and will ultimately produce 900,000 bpd by January 2024. This increment will offset natural declines in other producing fields.”

http://www.saudiaramco.com/irj/go/km/docs/SaudiAramcoPublic/AnnualReview/2009/AR09_OilOperations.pdf

This oil reserve problem is  not limited to Saudi Arabia:

12/11/2009   “Key oil figures were distorted by US pressure, says whistle blower”
http://www.crudeoilpeak.com/?p=564

18/10/2009   OPEC reserves revisited
http://www.crudeoilpeak.com/?p=355

Coming back to the introductory theme of oil exploration, what is the response of the Australian government? Surely not conservation and saving oil:

Green light to oil drilling

PETER GARRETT, MINISTER FOR ENVIRONMENT PROTECTION: The release of areas for exploration acreage for petroleum is just something which happens every year. They identify certain areas which have got potential, depending on prospectivity and the like, and it’s a process which happens, more or less, automatically. I don’t see it as being inimical to what we’re doing in terms of the marine planning process.
http://www.abc.net.au/7.30/content/2010/s2948671.htm

Automatic? Let’s have a look at how automatic the process is after peak oil:

wa_crude_oil_2000_2009

The pre 2004 fields are trending towards zero some time in this coming decade and there is an offshore struggle to compensate this decline,  just like in the Gulf of Mexico. Nothing automatic here.

What will be automatic, however, is the fastest return to Jurassic Park:

The incredible journey of oil

http://www.abc.net.au/science/crude/

And this following CTL (coal to liquids) project – designed to solve the problem of declining oil production will even dwarf – in terms of emissions – the environmental impact of offshore drilling:

$3.5 billion liquid fuels project planned for Felton

http://www.ambreenergy.com/investors/media/liquid-fuel-project

4 million tons of coal (=12 mt of CO2) turned into 950 ML of petrol and 150 ML of LPG,  just 5% of demand. Reminder:

8/3/2010
NASA climatologist James Hansen at Sydney Uni: “Australia doesn’t agree now that they got to stop their coal, but they are going to agree. I can guarantee you that within a decade or so because the climate change will become so strongly apparent that’s going to become imperative”
http://www.usyd.edu.au/sydney_ideas/lectures/2010/professor_james_hansen.shtml

Our government certainly hasn’t understood the double challenge of peak oil and global warming and doesn’t follow the solutions proposed in many of my previous posts, e,g. here:

26/5/2010  Submission Sydney’s Metropolitan Transport Plan
http://www.crudeoilpeak.com/?p=1519

Comments are closed.