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See these slides on the state of oil and gas production

February 8th, 2010 · 1 Comment

By renowned expert Simmons. A must read…

The only thing that saved us was the crisis and the reduced demand that produced.
Read them all here, but here are just some interesting examples:

Slide 12:

  • If so many new wells were drilled and so much money spent, was it wasted?
  • No. These projects were critical to offset accelerating decline rates from mature fields.
  • The big problem:
  • –All new discoveries were either small or in deepwater
  • –All peak fast and decline fast

Slide 13:

  • >800 super-giant, giant and large oil fields comprise 58% of world’s crude supply.
  • Other 42% comes from ˜70,000 small to tiny fields (average field production 440 bbls/day).
  • Foundations of world’s oil supply comes from 356 super-giant oil fields. Almost all are “mature” and past peak.
  • IEA’s WEO 2008 Supply Outlook laid bare some ugly facts.

Slide 15:

  • Data that shows crude oil production peaked in 2005

Slide 18:

  • Between 2005 And 2008, A Lot Happened
  • All world’s drilling rigs were finally at work.
  • Prices went up at furious pace.
  • Technology advanced ways to bring out more oil flows.
  • E&P spending soared.
  • But, this did not impact rising decline rates for almost all important key oil fields.
  • And, it did not find any easily producible high quality crude oil.

Slide 19:

  • The Supply Picture Is Not Pretty (And Explains $147 Oil)
  • There are no bright spots on supply horizon.
  • There are many flashing red lights indicating “all is not well”:
  • –Civil unrest in key oil producing regions
  • –Fragile aging infrastructure
  • –Accelerating decline rates due to oil field technology
  • Visible oil stocks keep getting “too tight.”
  • This explains why oil prices rose 15 fold.

Slide 28

  • Natural Gas Production Decline Rates Are Amazing
  • Since natural gas is a vapor, it can be produced at extremely high rates, but once it declines, rates can range from 30% -65% per annum.
  • Tight rock gas can be fractured or acidized to create high flow rates for short periods.
  • Shale gas resource base is abundant, but:
  • –It is very energy intensive to get out of ground
  • –Its decline rates vary by type of shale
  • –Individual well flows are small

Slide 30:

  • Russian Gas Crisis Almost Froze Europe
  • On January 1, 2009 a bitter Arctic blast froze Russia.
  • Putin had a tough decision as high amount of their gas was committed to Europe (at high prices).
  • Russia did not have enough gas for peak winter in Russia and Europe, let alone Ukraine.
  • So, they closed their taps and Europe almost froze.
  • This problem was not political. It was mature Siberian giant gas fields in steep decline.

Slide 31

  • Russia’s “Big Three” ProblemsWill Never Get Better
  • Russia’s three top gas fields produce 65% –70% of its gas.
  • All have peaked.
  • Urengoyis the “Ghawar” of global gas:
  • –It peaked in the mid-1990s at 305 bcm/year
  • –By 2000, Urengoy’sproduction was 145 bcm/year
  • –By 2015, production is estimated to fall to 70 bcm/year
  • Yamburg’s decline is close behind.
  • Zapolyarnoyecame on stream one year ago and is just starting to decline.

Tags: Natural Gas · Oil

1 response so far ↓

  • 1 kencooksam // Feb 8, 2010 at 4:13 pm

    Matt has been right so far..