RE: Saudi fields

From: Glenn Morton <>
Date: Wed Apr 14 2004 - 22:49:26 EDT

> -----Original Message-----
> From: Rich Blinne []
> Sent: Wednesday, April 14, 2004 2:35 PM

> Guy Caruso, who heads the Energy Department's analytical arm,
> said Saudi Arabia's current oil production capacity of 10.5
> million barrels per day
> (bpd) will likely increase to 22 million bpd by the year 2025.

I love this. This is more than the Saudi's claim and their methodology
seems to be
1. extrapolate demand rise
2. extrapolate production decline
3. add in production from new fields found
4. subtract 1 from 3 and voila you have the future Saudi output!

I haven't personally worked Ghawar, the largest field in the world, the
Saudi field which produces 6% of the world's oil. But I have spoken to
lots of people who have worked that field. They say different things
than the EIA says. I will believe them. Might they (and I) be wrong?
Of course. But most of the Washington Bureaucrats never make it outside
of the Beltway. And some of them were the people who couldn't get jobs
in the early 1980s. I have met a few of them in government work. In the
early 80s we were hiring anyone with a heart beat and half a brain.

> Speaking to reporters on the release of the EIA's long-term
> international energy forecast, Caruso said Saudi Arabia will
> be able to reach the 22 million bpd production level based on
> its current proven oil reserves of 264 billion barrels --
> one-fourth of the world's total.

They will have produced 130 billion barrels by 2010. That is half of
their stated reserves. When a country produces about half its oil, the
production rate begins to decline shortly after. This is due to

1. an increasing water cut in the wells
2. pressure decline in the wells
3. fields simply watering out.

 How on earth the EIA thinks that Saudi Arabia will do what no other
country has done is beyond me.

> "The existing (Saudi) resource base, crude reserves...are
> sufficient to get to this production capacity," Caruso said.
> Saudi officials have said their country's oil production will
> not decline any time soon, and that they expect the kingdom's
> recoverable oil reserves to actually increase over the next
> two decades.

Clearly, if the Saudis can do this, then they can produce more. But
just because they say they can do it does not make it a certainty. When
I got over to the UK the DTI, the governmental body which regulates oil
and gas was saying that they were going to be producing 3 million
barrels per day for the next 10 years! I looked at the production
figures and realized that we were about 6 months to a year past peak
oil. I told a colleague, who later became my boss. He didn't believe me.
We bet a dinner. I won and got a wonderful Malaysian dinner cooked by
his lovely Malay wife. We also had a wonderful Turkish couple at the
dinner as well. That is one of the things I really miss about being
back in Houston--the opportunities to meet people from all over the
world is limited. Anyway, the UK has continued to plummet with the DTI
not giving up its 3 million bbl/day claim until early 2002.

Here is the UK daily production in barrels since 1999. I got to Scotland
in 2000.

1999 2,753,248
2000 2,530,939
2001 2,343,130
2002 2,328,410
2003 2,130,459

It is early, but this year very well may go below 2 million per day and
the UK has now become a net importer of oil. They no longer add to the
world oil supply outside their country.

> Caruso would not speculate on whether the Saudis would need
> to open their oil sector to foreign oil companies in order to
> produce 22 million bpd.
> However, he pointed out the kingdom is already able to
> produce 10.5 million bpd "without outside investment."

Precisely what Takin said they couldn't maintain without future fields
coming on line.

> Separately, Caruso said the EIA's long-term forecast has
> Iraq's oil production rising from 2.5 million bpd this year
> to 6.6 million bpd in 2025.

I don't know if Iraq can do this. If we don't win in Iraq, they won't.
They will go back to caves and keep their oil.

> Many analysts believe Iraq's oil output could go even higher,
> because so many parts of the country have not been explored for oil.
> The additional barrels from Iraq and Saudi Arabia will help
> boost OPEC's total oil production to 56 million bpd in 2025,
> more than double the cartel's expected average output of 27
> million bpd this year, according to the EIA's forecast.

This is almost laughable. OPEC today produces only around 30 million
per day. Venezuela, Indonesia are well past prime. This claim would
mean a doubling of oil output. So far I haven't seen any sign of that
much investment. Besides, only the US government and a few other
wild-eyed optimists think the peak of world oil production (which must
include most of OPEC) can be delayed until 2025

> World oil demand is expected to rise from 81 million bpd in
> 2004 to 121 million bpd over the next two decades, EIA said.

On this we agree. Current fields on line will only be producing 40
million bbl/d in 2020. It took 100 years to put 80 million bbl/d on
line. We must put the next 80 million bbl/d on line in 16 years. That
means we have to do a whole lot more exploration than we are currently
Received on Wed Apr 14 22:49:43 2004

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