Report: UK Oil Production Down 12% on the Year

<div class='quotetop'>QUOTE(joe1347 @ Jul 2 2007, 11:00 PM) [snapback]472047[/snapback]</div>

Sorry, but this is old news. The North Sea has been in decline for years and production in the UK peaked in 1999. The big news that only Al-Jeezera has had the guts to publish so far is that Saudi Arabia's production peaked in 2005 and is now declining.

http://english.aljazeera.net/English/archi...ArchiveId=11252
http://english.aljazeera.net/English/archi...?ArchiveId=9622

There is also this:
http://www.theoildrum.com/node/2325

 

Thank you all for the posts. This was a lot of new information in a small package, particularly regarding Saudi Arabia. Not that I would leap to conclusions based on a single year of monthly data, in isolation. But given the context -- that many informed observers are expecting this to happen -- this seems both plausible and disturbing. The Saudi data certainly haven't gotten much popular press coverage.

 

<div class='quotetop'>QUOTE(chogan @ Jul 3 2007, 08:18 AM) [snapback]472192[/snapback]</div>

I don't leap to conclusions based on a single year either but there is a lot more to it.

First: About 80% of Saudi oil comes from several giant fields that have been in continuous production for 50 years or more. Nothing last forever.

Second: The Saudis have promised to increase oil production several times over the last 2 to 3 years when some country has had a production issue and prices spike. Katrina is an example of this. Every time they have made this promise they have failed to follow through.

Third: Saudi field were US run until the early to mid 80's. Shortly after the Saudi's took over they doubled the size of their reserves overnight. Based on the earlier US date, the Saudi fields should have peaked already. However, Saudi Arabia has been spending MASSIVE amounts of money on water injection to prop up production. The end has to come soon.

The really bad thing is that when a well that has had massive water injection stops producing, it just stops producing. You go from pumping ten thousand barrels per day to none because the pressure in the field is not enough to lift the oil anymore. You then have to go to manual lift like we do in the Texas oilfields. A lot of those manual lift wells yield 10 to 100 barrels per day. You see the problem for a world that needs an every increasing amount of oil. :huh:

 

<div class='quotetop'>QUOTE(jhinton @ Jul 3 2007, 03:12 PM) [snapback]472501[/snapback]</div>

The problem with the whole situation is that everybody's had an incentive to lie about the reserves. When foreign companies were running the show, they intentionally downplayed the reserves for tax reasons. When the fields were nationalized, it was in the new operators' best interest to inflate the reserves for taking out loans for upgrades and expanding production infrastructure.

 

<div class='quotetop'>QUOTE(jhinton @ Jul 3 2007, 05:12 PM) [snapback]472501[/snapback]</div>

Yes, I'm in total agreement with you on the context, I'm just having a hard time absorbing what this means, and, given the importance of it, why it's not hitting the popular press at all. I just googled several variations on Saudi oil production down and got no mainstream media, but a lot of informed internet commentary. Even if there is significant uncertainty about this trend -- whether or not this is voluntary or involuntary -- I don't see why this hasn't gotten more attention. I mean, 1) there will always be uncertainty given the secrecy around the production data, 2) official projections for the oil market assume the Saudis will increase exports by a couple of percent per year over the near term, 3) if they don't that's a big problem, and 4) as you point out there is lots of context to suggest this is involuntary.

The only seemingly plausible alternative theory I read is that the Saudis are stockpiling in advance of a coming US attack on Iran (parallel to their perceived effort to stabilize the market at the outset of the Iraq war), hence the reduction in exports (the data) relative to production. But other sources suggest the Saudis don't have anywhere near enough unused storage capacity to account for the decline in exports. Another alternative scenario is that this is simple profit-maximization, with the increased world price more than offsetting the reduction in units sold. I have no information by which to judge the reasonableness of that.

What I'm suggesting is that, of the explanations I've found, running out of oil seems to be at least as plausible if not more plausible than any alternatives. Yet there's no mention of this in the mainstream press. Which, given the importance of this, seems odd. Perhaps we'll be seeing it soon.

 

or perhaps they're being told "mum's the word" to keep oil prices stable. It is very difficult to figure. I think that OPEC is very happy to restrict production. It's pretty obvious that $50-60/barrel oil is adversely affecting the global economy.

 

Indeed. It seems that people seem to equate peak oil with no oil. The problem is that prices will move quickly upwards as we move down the back of the curve. There's a pretty good chance that the back side will be pretty steep because of the abuse many of the large fields have endured to keep them productive. Mexico's Cantarell field is a good example. There's a field in CA (I forget the name) that is another good example of this phenomenon.