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.