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:
- 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
- >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.
- Data that shows crude oil production peaked in 2005
- 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.
- 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.
- 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
- 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.
- 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.