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PRESENTATION ON THE MOTHER OF ALL OIL FIELDS
“THE GHAWAR”-SAUDI ARABIAPETRO ECONOMICS ASSIGNMENT
-BY JYOTI KUMARI,
RAHUL KUMAR,&
NAVNEET BISHT.
OIL AND GAS – BLACK GOLD!
NASA
Oil reserves
Development in world oil consumption
1950 1975 2000
10
20
30
40
50
60
70
80
Mil
lio
n b
arre
ls p
er d
ay
World proved reserves
5 %66 %
7 %
9 %
9 %
4 %
Source: BP Statistical review of world energy
Projecting future discoveries
0
500
1000
1500
2000
2500
1930 1950 1970 1990 2010 2030
Cu
mu
lati
ve D
isco
very
, Gb
Reality
Illusion
Inflexion due tofalling Discovery
OPEC “quota war”
“Back dated” reserves Reserves as reported
Real discovery trend and production
1930 1950 1970 1990 2010 2030 2050
10
20
30
40
50
60
Gb
Past discoveries
Future discoveries
Production
Past discoveries by ExxonMobil
0
100
200
1980 1990 2000
Pro
ved
Re
serv
es,
Gb Saudi
Iran
Iraq
Kuwait
UAE
OPEC Oil “Proven” Reserves!
Accurate reserve estimates for OPEC countries are closely guarded state secrets Values for 1983 are probably accurate (for 1983) 430Gb rise in reserves, no adjustment for 193Gb produced since 1980 These questionable reserves are 45% of world oil reserves used by IPCC! A recent leak of Kuwait Petroleum Company documents showed the actual reserves
are only 48Gb (official reserves are 102Gb) 1980 Kuwait reserves adjusted for production since then are 55Gb
From BP Statistical Review
Not provenby anybody!
Gb = billions of barrels
What Is Peak Oil?
The date an area’s oil production reaches its maximum
Means that about half the oil has been produced
Does not mean “running out of oil” Does mean a continuous decline in production
When oil half gone, the flow of oil begins to fall
Not like a gas tank Oil in the ground is not in a pool but in tiny dropletsDroplets move slowly through the earth due to pressureAt halfway point pressure drops – flow decreases
M. King Hubbert
Geophysicist at the Shell lab in Houston
In 1956, he presented a paper with predictions for the peak year of US oil production
Oil Wells and Fields Peak --- Regions Peak --- The World will peak
Everyone agrees that world oil will peak – controversy on the date
A modellogisticdistribution
Examples: Rapid Depletion is Normal
13
It’s not hopeless!!
Human ingenuity and technology are remarkable.
Appropriate policy choices are available tominimize and adapt to climate change.
Perhaps we (esp. U.S.) will be forced to change by the price and availability of fossil fuels.
Lots of bad news, but
Maybe we’ll be lucky, and unanticipated factors or feedbacks may slow the rate of change.
14
plus invisible GHGsL.A. smog
Chief source: combustion of petroleum products
15
Petroleum: a thick, flammable mixture of solid, liquid, and gaseous hydrocarbons (organic compounds with H and C) that occurs naturally beneath the Earth's surface.
Crude oil* Liquid mixture of naturally occurring hydrocarbons
(aka “oil”)
* After refining: the chief source of transportation fuels
Natural gas
* After processing: used for power generation, residential, fertilizers, manufacturing, transportation (still very limited)
•Gaseous mixture of naturally occurring hydrocarbons
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19 19
20
21
22
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Petrochemicals Chemicals produced from petroleum
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The Graduate 1967
“Plastics.”
ALL PLASTICS are petrochemicals.
25
polystyrene epoxies
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PVC
solvents
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Other synthetic fibers, such as acrylics & dacron: clothing, yarn, rugs, rope, sails, grafts, containers, resins
apparel & home furnishings, plus bottles, fiberglass, LCDs, holograms, filters, insulators, auto body parts
Polyester: the most widely used artificial fiber in the U.S.
29
Apparel, carpets, musical strings, fishing line, racket strings, rope, auto parts, machine parts, sutures
Nylon
30
rubbing alcohol
synthetic rubber MTBE
detergents
vinyl dyes
antiseptics
Modern developed societies depend on petroleum in
innumerable ways. We are petroleum-dependent.
“No civilization can survive the destruction of its resource base.”
31
Make lists of the top 5 countries:
Petroleum productionto date (since ~1860)
Current (1997) rate ofpetroleum production
RemainingpetroleumKSA
USAFSUIranMexico/Venez
KSAFSUIraqIranKuwait/USA
USAFSUKSAIranVenezuela
FSU = former Soviet UnionKSA = Kingdom of Saudi Arabia
SAUDI ARABIAThe Benefits of Doing Business in
Saudi Arabia
Petroleum Intelligence Weekly's Ranking of Top Oil Companies
Rank2006
Rank2005
Company Country StateOwnership %
1 1 Saudi Aramco Saudi Arabia 100
2 3 NIOC Iran 100
3 2 Exxon Mobil US
4 5 BP UK
5 4 PDV Venezuela 100
6 6 Royal Dutch Shell UK/Netherlands
7 7 CNPC China 100
8 11 ConocoPhillips US
9 8 Chevron US
10 8 Total France
Saudi Aramco
Operations in: Exploration, production, refining, marketing,
and international shipping. The company has approximately one
fourth of world oil reserves The company is headquartered in
Dhahran, Saudi Arabia and employs about 52,100 people.
State Owned
Market Analysis
Population Size Description of Labor
Force Consumer Purchasing
Power Distribution
Saudi Arabia - Geography
Saudi Arabia’s Economy
Oil wealth has made possible rapid economic development, which began in the 1960’s and accelerated in the 1970’s.
Saudi oil reserves are the largest in the world, and Saudi Arabia is the world’s leading oil producer and exporter.
A major new gas initiative promises to bring significant investment by the US and European oil companies to develop non-associated gas fields in three separate parts of Saudi Arabia.
In April 2000, the government established the Saudi Arabian General Investment Authority to encourage foreign direct investment in Saudi Arabia.
Population Description and Characteristics
The population of Saudi Arabia is approximately 22,757,092, which includes 5,360,526 non-nationals.
42.52% of the population is aged 0-14. 54.8% of the population is aged 15-64. 2.68% of the population is 65 years old or
older.
Labor Force
Saudi Arabia’s labor force is 7 million people, 35% of this population consists of non-nationals Agriculture 12% Industry 25% Services 63%
Purchasing Power
Saudi Arabia’s Purchasing Power Parity is $232 billion.
GDP Real Growth Rate: 4% GDP per capita: $10,500
Distribution
Railways: 1,389 km Highways (paved): 44,104 km Ports and Harbors: total of 13 Airports with paved runways: 70 Heliports: 5
Saudi Crude Oil Production Peak---------------------------------------------------------------
----------------
Saudi Arabia's crude oil production peaked in 2005 at 9.6 mbd. In 2010 Saudi production averaged 8.2 mbd.
According to official Saudi sources, Saudi oil production will not increase beyond 8.7 mbd until 2015. And as domestic consumption is projected to grow by 5% per annum, Saudi exports are expected to shrink by 10% in the next 4-5 years (see Table 2).
A steady production decline was forecast from 2010 onwards (see Figure 1).
Table 2Saudi Crude Oil Production, Consumption & Exports
(mbd)-------------------------------------------------------------------------------
Year Production Consumption Net Exports------------------------------------------------------------------------------------------------------------------
---1980 9.90 0.61 9.291990 6.41 1.11 5.302000 8.40 1.54 6.862001 8.03 1.61 6.422002 7.63 1.68 5.952003 8.78 1.78 7.002004 9.10 1.88 7.222005* 9.60* 1.96 7.642006 9.15 2.02 7.132007 8.72 2.14 6.582008 9.26 2.30 6.962009 7.95 2.44 5.512010 8.20 2.70 5.502015 8.70 3.45 5.25------------------------------------------------------------------------------------------------------------------
---% change 1980-2015 - 16 + 466 - 43------------------------------------------------------------------------------------------------------------------
---Sources: US Energy Information Administration (EIA) / Official Saudi data.* Peak production year.
Figure 1Saudi Arabia’s Crude Oil Production Rate
-------------------------------------------------------------------
Discoveries and production Saudi Arabia
0
20
40
60
80
100
120
140
1930 1950 1970 1990 2010 2030 2050
Dis
cov
ery
Gb
0
2000
4000
6000
8000
10000
12000
Pro
du
cti
on
kb
/d
2005
46
Yemen
Om
an
UAEQatar
Kuwait
Kingdom ofSaudi Arabia
Iraq Iran
Saudi Arabia Is Middle East’s Prime Oil Producer
Most Middle East producers have passed their prime. Iran peaked at 6 million
barrels/day in 1970s. Iraq, Kuwait, Oman,
Syria and Yemen have all passed peak output.
UAE and Iraq might have growth prospects.
Many giant Middle East oilfields are far past Peak Oil.
Saudi Arabia has 36% of Middle East reserves.
oil = red
largest: Ghawar
Significant traps
are extremel
y localized in space
Persian Gulf Close-
up
51
The Middle Eastcontains 45–60%of the world’spetroleum reserves.
* 6% of global production to date* 6% of modern production
* World’s largest oil field* 60-65% of KSA production to date
Ghawar Ghawar: probably themost important placeyou’ve never heard of
Ghawar, the mother of all oil fields
Discovered in 1948 Huge anticline structure 250km by 30km
wide 3400 wells Reserves when discovered 100 billion
barrels Current production 5 million barrels per
day 7% of the Northern tip of the field
produces 2 million barrels per day 7 million barrels of water pumped in daily
to recover 5 million barrels of oil
Sideways Drilling – e.g., Ghawar
(increases flow by exposing longer length of borehole to oil floating on
injected water)
from Matt
Simmons
top view
side view
Greatly increases flow rate
from single wells
(e.g., 10,000
barrels/day vs. 300
barrels/day)
3-D view of "bottle-brush"
well completion
Ghawar
Largest Oilfield (~5% world
production)
(from reference on next slide)
Oil column thickness (orig: 1300 feet)blue 0-30 feetgreen more than 120 feetred boreholes (most now used for water
injection)
Ghawar 3D Seismic Survey Closeup
Shiv Dasgupta, “Reservoir monitoring with permanent borehole sensors: Ghawar Arab D reservoir”, 74th SEG Conference, 2004http://abstracts.seg.org/ease/techprog/downloadpaper?pape
r_id=817&assigned_num=762
http://www.theoildrum.com/node/2441#comment-177244from garyp
possible location of traverse on
3D reconstructio
n
GhawarBoreholes blue: oil brown: water inj
(approx. overlay)
http://pangea.stanford.edu/~jcaers/theses/thesisJoeVoelker.pdf
The main oil producing Ghawar fields are, from north to south: Ain Dar, Shedgum, Uthmaniyah, Farzan, Ghawar, Al Udayliyah, Hawiyah and Haradh.
Ghawarlargest resevoir in
world (looking south)
surface defined by impermeable cap (anhydrite bed)
http://www.searchanddiscovery.net/documents/2004/afifi01/index.htm
from Euan Mearns
http://europe.theoildrum.com/node/2494
Ghawar Base Case Production Model
5 Mb/d
2007 2014
total prod. ’02 to ’28 = 30 Gb
4 Mb/d3 Mb/d2 Mb/d
Ghawar Depletion by
Region
http://europe.theoildrum.com/node/2507
Rock permeability is spatially
complex (model of 'Ain Dar and
Shedgum, northern Ghawar)
North
Depletion of North ‘Ain Dar
http://www.spe.org/elibinfo/eLibrary_Papers/spe/2005/05MEOS/SPE-93439-MS/SPE-93439-MS.htm
Oil
Oil Oil
Oil
http://www.theoildrum.com/node/2441from Stuart Staniford
‘Ain Dar
[blue is now oil, not water]
Ghawar Field Oil Saturation Plot, 2002
(presumably just under anhydrite cap)
North
Why We Disregard The Peak Oil Issue
“Oil has never run out.” Great new discoveries “must be around
the corner”. Proven oil reserves (1.2 trillion barrels)
equates to 40 years current use. Oil sands and other unconventional oil
wait in the wings. High oil prices will likely create new
energy supplies, economists are our ‘high priests’.
THE DEBATE OVER RESERVES: PESSIMISTS AND OPTIMISTS
During the 1990’s, the debate over oil reserves generated controversy between the "pessimists" and the "optimists".
Oil is so important that publishing reserve data has become a political act. Most of the dispute between the so-called pessimists (mainly retired geologists) and the optimists (mainly economists) is due to their using different sources of information and different definitions. The pessimists use technical (confidential) data, whereas the optimists use the political (published) data. “
•the world is finite and so are its recoverable oil resources
• all of the oil-bearing regions worth exploring have already been explored
• the big fields have already been discovered
• claim that official figures for proven reserves have been overestimated
• world oil production is currently at its optimum (peak) and will decrease steadily
•Geologists and physicists tend to hold this position.
PESSIMISTS
OPTIMISTS
•hold a “dynamic” concept of reserves
• believe that volumes of exploitable oil and gas are closely correlated to technological advances, technical costs and price
• tend to be economists
Remaining in place
17 billion bbls
25%
Produced; 27 billion bbls
40%
Saudi Arabia: Ghawar ‘Ain Dar/Shedgum Area / Arab D resource depletion state 2004
Probable (incremental); 3,5 billion bbls
5%Possible; 7 billion bbls
10%
OIIP: 68.1 billion barrelsProved reserves: 41 billion barrels ( 60% of OIIP)Estimated ultimate recovery: 51 billion barrels (75% of OIIP)
Source: Saudi Aramco, 2004
Remaining proved; 14 billion bbls
20%
from WSJ, Feb 9, 2006
Ghawar and the world
Ghawar has produced about 60% of all Saudi Arabian oil from 1951-2004 and still accounts for some 50% of the Saudi production
When Ghawar output declines, Saudi production will most likely have peaked
After peak in Saudi Arabia it is difficult to envisage a global increase in conventional oil production
The Worry AboutSaudi Arabia’s Energy Miracle
The entire world assumes Saudi Arabia can carry everyone’s energy needs on its back cheaply.
If this turns out to not work, there is no “Plan B”.
Global spare oil capacity is now “all Saudi Arabia”.
No third-party inspector has examined the world’s most
important insurance policy for years.
Conventional wisdom says “Do not worry, Saudi Arabia has always come up with the goods.”
If conventional wisdom is wrong, the world faces a giant energy crisis.
71
Saudi Arabia problemsSince 1970, Saudi Arabia has been the world’s “swing producer” of petroleum: the only country capable of greatly increasing production in a short time (in response to supply interruptions such as hurricanes in GOM, violence in Nigeria, war in Iraq).KSA insists it still can fulfill the role of swing producer, but releases no verifiable data....its attitude is “trust us.” Analysts are (finally) starting to get very concerned (Matt Simmons).
A. Unexplained jump in reserves in 1990 (170 to 258 Gb).B. Ghawar reserves? 70 Gb (SA); 25–40 Gb (analysts).
72
E. Saudi Aramco says production from existing fields declines 8% every year. Thus, KSA needs to increase production by up about 1 million barrels/day every year just to compensate.
C. Almost all KSA production comes from 6 supergiant fields, and >60% comes from Ghawar. All six were discovered 40–60 years ago. Five of the six have produced at very high rates for most of their history.
D. At least some of the wells in these super giant fields are producing very, very high amounts of water with petroleum(70% to 90%; 30% is typical trouble level). In other fields, these levels have led to very rapid production declines.
Summary
The Ghawar field found in 1948 has produced 60% + of Saudi oil, is now producing approx. 5 million bopd and is approaching its tail.
When Ghawar peaks, Saudi will have peaked and so will the world.
Indications are that the OPEC “swing production is about to be exhausted
Summary contn.
Peak means that production can no longer be increased; we have then produced about half of the oil
After peak the price of oil will be market driven
A New Energy System Would Take 20 Years to Create
After peak oil, if our oil supply declines at a low rate of 2% per year….
We would need a new nuclear power station
somewhere in the world every other day for the
next 50 years.
Our economic system demands growth
Impacts of the lead up to Peak Oil
How will our lives change?
More Effects
Multinational companies depend on cheap energy for global trade.
The whole economic model of more and more each year will have to be re thought.
Everything possible will be brought into service to maintain the current economic system.
Unpredictable consequences.
Peak oil leaves us with Four Choices
► Last man standing► Wait for the techno fix► Powerdown► Create lifeboats
Living on the Cusp
Action required on two fronts (Think globally; act locally):
Personal lifestyle changes
Achievement of world wide political consensus and action. - Shift of consciousness?
Political Action ► Adopt the Uppsala protocol
- Distribution of remaining energy, rather than fight over it.
► Reduce population and consumption to long term carrying capacity by each country living within its ecological footprint
►Oppose the scandalous promotion of Nuclear power
►Press for meaningful debate about our energy future.
What Can We do?
► Let as many people as possible know about peak oil www.Livingonthecusp.org www.peakoil.net
► Get informed Web based news The Ecologist, Resurgence, Positive news
What Can We Do?
► Chose a low energy lifestyle.
► Learn to live and really live with less not just make do.
"Faced with a choice between the survival of the planet and a new set of matching tableware, most people would choose the tableware" - George Monbiot
What Can We Do?► Create communities. You can’t go it alone.
► Re-localise economies and energy production.
What Can We Do?
Vision the Future
Exponential growth in a Finite World
Final Word
If we use this opportunity to radically change what we do and how we do it, (adopt a post industrial society), then something positive can emerge.
However, if treat this as just an energy crisis then we are setting ourselves up for a bigger fall further down the line.
THANK YOU!!