Re: Saudi oil field declines.

From: Al Koop <>
Date: Thu Apr 29 2004 - 10:19:33 EDT

Glenn quoted the Oil and Gas Journal below:

"Under no scenario (even the most exotic ones) could the Wocap
model be simulated to peak after 2008-a date that really seems to be the
ultimate terminus ad quem." A. M. Samsam Bakhtiari, "World Oil
Production Capacity Model Suggests Output Peak by 2006-2007," Oil and
Gas Journal, April 26, 2004, p. 18

Below is an internet list exchange about an article written by Michael Lynch, a former MIT economist. He is one of the most well-known and frequently quoted optimists about the world oil supply. There is a reply at the end from Jean Laherrere, one of the best known petroleum geologists working onthis question, who, with Colin Campbell, called attention to peak oil in a 1997 Scientific American article.

An introduction to Michael Lynch:

Mr. Lynch has over twenty years of experience analyzing international energy, particularly oil and gas markets. He has numerous publications in four languages and speaks regularly at international conferences. He is the primary author of Global Petroleum SEER and Global Petroleum Outlook, which provide short- and long-term oil market analyses.
Mr. Lynch's previous work has included computer modeling of the world oil market and estimation of the economics of supply for both world oil and natural gas, including LNG supply, and market behavior under normal and disrupted conditions. He has also given testimony and advice to committees of the U.S. Congress and the United Nations, the World Bank and the International Energy Agency.
Before coming to Strategic Energy & Economic Consulting , Inc., Mr. Lynch was Vice President of Oil Services at WEFA, Inc. Prior to coming to WEFA he was Director, Asian Energy and Security, at the Center for International Studies, M.I.T., as well as a Lecturer in the Diplomatic Training Program at the Fletcher School of Law and Diplomacy, Tufts University. Prior to that, he held a number of research positions at M.I.T., as well as serving as a senior associate for the Washington International Energy Group. His work consisted primarily of advising corporations, governments and industry associations on world oil and gas markets and energy security policy.

So how do we try to decide who is correct about the world oil supply-people like Michael Lynch or like Glenn Morton and Jean Laherrere?

I tend to first believe the experienced people in a field, then secondly I tend to believe the people who invest in that area, and then I often believe the opposite of what the the manipulators like politicians tell us. Virtually all experienced petroleum geologists suggest we are close to the oil peak. Lots of money is headed towards that end. Most of the politicians and manipulators are suggesting that there is no problem.

It's a trifecta--we are near the oil peak. This is not about optimism or pessimism. We only have so much oil and soon the demand will exceed the supply. What you can be optimistic or pessimistic about is what happens when the peak occurs. Will we find reasonable alternative energy supplies or won't we? Will the nations and their citizens behave in an orderly fashion or will they try to take more than their share? Those remain open questions about which something can be done.

Here is a recent exchange on the energy resources list:

Ron Patterson wrote the following:

   An article by Mike Lynch:

 In this article Mike quotes Matt Simmons:
 "Saudi Arabia is now intensively explored;"
 To which Lynch counters:
 "Also, Saudi Arabia is not intensively explored and has large
 areas with petroleum potential that are virtually undrilled."
 Undrilled, yes, unexplored, definitely not! And the parts that
 are undrilled are undrilled because intensive exploration has
 shown that no oil exist in those parts. The exploration of Saudi
 Arabia began in the 1930s and has been intensively
 explored*.over and over again since that time. Not one square
 inch of Saudi Arabia is unexplored. In fact, other than the
 lower 48 States it is probably the most intensively explored
 patch of land on the planet.
 I will never believe Mike Lynch again because he just makes up
 his own facts.

Steven Zoraster responded:

A non-exhaustive search in the standard sequence of SPE papers
returns many discussing good drilling and production strategies for Saudi Aramco fields. But none hinting in title or abstract anything about how completely the country has been explored, or drilled. Given that the Saudis have only 9 seismic crews and less than 50 rigs working, one can guess..... What?

To which Ron Patterson responded:

Eh...Steven, you seem to be talking about what is happening
 RIGHT NOW in Saudi Arabia. Funny, I thought you were somewhat of
 a historian. If so, then surely you know that oil exploration in
 Saudi Arabia has a 70 YEAR HISTORY!

 You should also be aware that up until the 1980's, you being a
 historian and all, that this exploration was run entirely by
 five American companies.

 I was in Saudia Arabia from 1980 until 1985. Back then, even the
 Rub Al-Khali (Empty Quarter) had been completely explored. The
 dunes there are as large as any anywhere in the world. That must
 be the hardest place to explore.

 Recently the oil found there has been tapped, but not all of it.
 Yes, there is some oil under the Rub Al-Khali that has not been
 tapped, but not much.

 The Saudis may have only 9 seismic crews simply because there is
 nowhere left in the kingdom to explore. What the hell is the
 point of exploring territory that has already been explored a
 dozen times?

 Okay, I will not discuss this subject again. That is because it
 is down in the dirt dumb to suggest that after 70 years of
 continious exploration that there are still large areas of Saudi
 Arabia that are unexplored. And that is EXACTLY what Mike Lynch
 was saying.

This written by Jean Laherrere, a retired petroleum geologist, who has probably done the most work estimating how much oil is left.

 It is better to believe people who were on the ground than published
 papers from a country which keeps confidential all the bad things
 Have you read from USGS or USDOE that US is overexplored? , despite the
 fact that Schlumberger has closed their US seismic offices.
 Ron (and his son) was in Saudi Arabia and knows better than those who
 were never in the country
 The best is to look at the creaming curve (cumulative discovery versus
 cumulative number of new field wildcats (NFW)
 Saudi Arabia has drilled about 160 NFW from 1938 to 2003 and found in
 2P (proven+probable) 313 Gb from IHS,
 but Saudi Aramco reports 391 Gb but Wood Mackenzie reports only 236 Gb.
 Out of these 313 Gb
 the first 20 NFW (1938-1965) has found 250 Gb
 the next 20 NFW (1966-1968) has found 25 Gb
 the last 20 NFW (1994-2003) has found 5 Gb
 It is obvious that they found less and less, meaning that exploration
 is having problems in finding and not in drilling
Received on Thu Apr 29 10:20:20 2004

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