[ROCKMAN]

Mettezz

I think the responses you've seen so far give you an idea of the complex nature of a complete and accurate answer. Research the details if you like but I'll warn you that it will take a great and long effort. I've been a petroleum geologist for over 30 years and I meet other PG's with 5 or 6 years of experience who don't really have a good handle on the answer.

A short bit of advice (IMHO) about reading "facts" thown out by unknown sources: there is no such things as an "average" this or that. I've worked reservoirs that recovered only 5% and others that recovered 60%. Same thing for producing rates, decline curves, oil prices (some oil is selling for $130/bbl while others are selling for $70/bbl), etc. The tendency is to take an "average" and extend it out. Very seldom does this result in true and meaningful expectations.

But I'm glad to see you here asking good questions. It isn't all that important for those who work on the technical side of this issue to understand the facts. It's much more important for someone like you (representing the vast majority out there) to be engaged in this discussion.

[Armageddon]

$this->bbcode_second_pass_quote('ROCKMAN', 'M')ettezz

I think the responses you've seen so far give you an idea of the complex nature of a complete and accurate answer. Research the details if you like but I'll warn you that it will take a great and long effort. I've been a petroleum geologist for over 30 years and I meet other PG's with 5 or 6 years of experience who don't really have a good handle on the answer.

A short bit of advice (IMHO) about reading "facts" thown out by unknown sources: there is no such things as an "average" this or that. I've worked reservoirs that recovered only 5% and others that recovered 60%. Same thing for producing rates, decline curves, oil prices (some oil is selling for $130/bbl while others are selling for $70/bbl), etc. The tendency is to take an "average" and extend it out. Very seldom does this result in true and meaningful expectations.

But I'm glad to see you here asking good questions. It isn't all that important for those who work on the technical side of this issue to understand the facts. It's much more important for someone like you (representing the vast majority out there) to be engaged in this discussion.

[KillTheHumans]

$this->bbcode_second_pass_quote('MonteQuest', '
')
Primary production only yields about 15 to 20%, not 35%.

[KillTheHumans]

$this->bbcode_second_pass_quote('ROCKMAN', 'M')ettezz
I've been a petroleum geologist for over 30 years and I meet other PG's with 5 or 6 years of experience who don't really have a good handle on the answer.

[ROCKMAN]

Thanks for the warning KTH. I hope the other rockman is a polite type.

Though I've been a geologist for over 30 years I've done more reservoir engineering the last 15 years than geology. As such I've seen many engineers misinterprete the data. Engineers can't really do a good job without a solid understanding of geology. Same goes for geologists who don't have a good grounding in reservoir engineering. Web sites like this can be a good exposure for the general public only as long as we don't overwhelme them with the technical aspects. Patronizing them won't help the educational process either. I'm very new to this site and hope it doesn't get too technical. I've just joined the Oil Drum also. That's a good spot for all us "geniuses" to show off in front of each other.

I agee 100% with that creepy feeling of yours when folks start throwing "averages" around. And yes...from my experiences statistical misrepresentation (intentional or earnest) is common in all aspects of the oil biz. With dozen's of ways to interprete and present data it's easy to do. I've reviewed 100's of drilling deals and always start out with the asumption that the interpretor has "polished" the data to support his prospect and hide the flaws. I have seldom been wrong. just basic human nature.

[ROCKMAN]

Armageddon

Most geologist and engineers are aware of Peak Oil to some degree. But it may surprise you to hear that most don't focus on the discussion to any great extent. Like professionals in many fields they focus on the immediate project and spend little time thinking about the "big picture". In general we're isolated in our own little worlds.

But I do a lot of well site work in the USA as well as overseas so I hear a bigger story then most.

But then I'm something of a trivia freak. It may sound strange to lump all the aspects of PO into such a category but that's how a great many of the technical folks view PO: PO exists but it doesn't have much bearing on my immediate problem of getting my idea drilled or how to recomplete an existing well or how to get an outside auditor to believe the reserves I want to assign to my well, etc, etc.

Even with my background I tend to look over my shoulder for the current boom to come crashing down. Thirsty years ago I started my careers just before the late 70's boom. Then by the mid 80's I was getting up at 1 AM to deliver produce using my truck and paying for the gas myself. But I'm pretty sure this cycle will last through to retirement....I think....I hope.

[seahorse]

Hi Rockman,

I and many of us always appreciate people within the oil/gas industry posting here. Where do you see the issue of peak oil itself? Do you see PO as an issue? If so, when do you see the peak happening? If you see PO happening anytime soon, do you believe the world will be able to make a transition to other alternatives with little or no economic hardship?

It seems the debate on these boards has been:

(1) Trying to ascertain when PO will occur?

(2) Whether the world can make a fairly easy transition to other alternative energies. The Hirsch Report to the DOE back in 2005 is often cited as detailing how difficult it will be for America to transition off of oil, estimating that it would take 20 years to avoid economic hardship (if I remember correctly) and that even trying to transition five years out would not give enough time to avoid severe economic hardship. It seems part of the problem with the debate rest with the unknowns of (1) what will be the average decline rate; (2) how the situation is handled politically, meaning, will countries work together or simply fight over the remaining oil (resource wars).

Hopefully, you will post to this thread also which asks who all here has oil industry experience.

Industry Experience

[KillTheHumans]

$this->bbcode_second_pass_quote('ROCKMAN', '
')Though I've been a geologist for over 30 years I've done more reservoir engineering the last 15 years than geology. As such I've seen many engineers misinterprete the data. Engineers can't really do a good job without a solid understanding of geology.

[KillTheHumans]

$this->bbcode_second_pass_quote('ROCKMAN', ' ')Thirsty years ago I started my careers just before the late 70's boom. Then by the mid 80's I was getting up at 1 AM to deliver produce using my truck and paying for the gas myself. But I'm pretty sure this cycle will last through to retirement....I think....I hope.

[ROCKMAN]

Seahorse

I have my own perverted view of PO that differs from many out there.

First, my peak oil is defined as that moment when crude buyers (the refineries) cannot buy (at any price) the oil they forecast as needed In others words there is more demand then producers can supply.

Thus it's a function of two factors: demand and supply. As supply tightens and prices go up there is often a drop in demand. Under this view PO may come and go over a period of months. Next January the producers may not be able to supply the refiners and the price jumps. The high prices may cause a drop in gasolene consumption the following summer and then the producers have more deliverability then the refiners need. This cycle will repeat perhaps for several years. When will the supply shortage be permanent? I don't have a clue. I have a pretty good idea about the supply side of the question (I'm pretty sure oil deliverbility has peaked) but the demand side is unpredictable IMHO.

I avoid predicting the future reactions of the world market as far as the demand side goes. The cultural, political and economic systems are just to complex for me to accept anyone's model. But you cannot escape the basic laws of physics: It takes X BTU's of energy to generate one percent of gross national product. And the developing countries (China, India, etc) are growing. Once oil supplies have peaked only those economies with hydrocarbon supplies will expand..the rest will not. One can paint a very bleak or rather hopeful view of the USA down the road. Only time will prove which it will be.

[seahorse]

Rockman,

I do not see your view being a distorted view at all. In fact, it is one shared by many here, namely, that PO means the end of cheap oil (which arguably is different that calling a geological peak in production).

There is an old related thread I started called "Peak Refinery Capacity = Peak Oil" if your interested. It is found here:


Peak Refinery Capacity = Peak Oil

Unfortunately, although I believe all problems are solvable, I don't have a lot of faith in the collective ability to solve collective problems. The example I always fall back on is US Social Security and other entitlement program funding issues like Medicare. Those problems can be solved with a simple stroke of the pen and have been debated for years, yet, we remain as a society incapable of dealing with them and will bankrupt ourselves debating the issue. Thus, if we can't solve relatively simple problems like SS, I don't have a lot of faith that we will collectively come together and solve something more complex like PO.

I also don't believe that "the market" will solve PO problems, for this reason - Americans will fight to sustain their unsustainable lives, probably bc they are ignorant plus, no one ever really wants to do without. Already, instead of Congress coming up with an energy policy, we see them threatening to Nationalize US oil companies, threatening to sue Opec and other stupid stuff like that. So, I fall into the camp that author Michael Klare had it right in his book "Blood and Oil" that most probably the world will solve resource issues through warfare. But, as you say, it really is impossible to predict economics and politics.

[KillTheHumans]

$this->bbcode_second_pass_quote('ROCKMAN', 'S')eahorse

I have my own perverted view of PO that differs from many out there.

First, my peak oil is defined as that moment when crude buyers (the refineries) cannot buy (at any price) the oil they forecast as needed In others words there is more demand then producers can supply.

Thus it's a function of two factors: demand and supply.

[seahorse]

Rockman, I also want to say that I appreciate this statement you made:

$this->bbcode_second_pass_quote('', 'W')eb sites like this can be a good exposure for the general public only as long as we don't overwhelme them with the technical aspects. Patronizing them won't help the educational process either.

[ROCKMAN]

Thanks for the thread link Seahorse.

I could only scan it quickly as lunchtime is almost over and I must get back to work looking for more black gold.

But I'll throw out a couple of quick points:

When folks talk about refining capacity you have to pin them down on what type of refining. Right now the US refineries are running at 85% capacity. But the US refining industries is designed to handle sweet crude...not the high sulfure stuff that accounts for much of Saudi production.

So why not build more refineries here that can handle the nasty stuff? Not so much regulation difficulties but economics. New refineries cost billions of $'s and can take 8 to 10 years to recover the initial cost. But to do so the refinery needs a guarenteed supply of sour crude. Obviously difficyult to find such guarentees these days.

Here fact that will surprise many folks here: we import a large vaolume of gasoline from overseas. Our biggest supplier: ENGLAND.

Why? One reason is they have kept gasoline consumption flat for the last 20 years. The other reason (justa guess since I haven't researched it): their refineries can handle the sour crudes.

Thus the USA lacks refinery capacity (for sour crude) but england has a surplus capacity.) And if the sour crude supplies in the world are starting to decline I don't think I'd put money in a new sour crude refinery as more and more excess capacity shows up in the market place.

[ROCKMAN]

Hey KTP...I may be an industry type but I drive 50 miles roundtrip to work everyday in vehicle that gets 17 mpg. So I have an "economic event" everytime I fill my 33 gal tank.

[KillTheHumans]

$this->bbcode_second_pass_quote('ROCKMAN', 'H')ey KTP...I may be an industry type but I drive 50 miles roundtrip to work everyday in vehicle that gets 17 mpg. So I have an "economic event" everytime I fill my 33 gal tank.

[seahorse]

The question raised in this thread was "how does an oilfield deplete?" The answers here have all covered the physical aspects of depletion, but did not address the "man made" causes of depletion. As we all know, there is a debate between whether geology or politics is behind the high oil prices, but probably they are two sides of the same coin.

In answer to the man-made causes of depletion, I always found this post by energydigger very informative. Its one of my favorite posts ever made on this website. If you haven't read it, its worth the read. Energydigger is an drilling engineer that has drilled all over the world, including Saudi Arabia in the late 90s. His conclusion is SA is at peak, and his post says why. Its an interesting post, bc it says a lot about "the politics" of depletion in addition to the geology. Energydigger hasn't posted here in awhile. He has his own website now called energydigger.com. He is one of the few "experts" I know that has his resume posted, so, no questions about his experience to make the following post:

$this->bbcode_second_pass_quote('', 'n')o offense taken RockDoc, this is one of the reasons why I created the EnergyDigger.com website, to keep up with all this news... I had presumed from your screen name that you were a reservior engineer or a geologist.... your dealing with SPE papers and statistical data, much like the US government and some hedge funds out there - what I offer you is not hard data i nthe form you ask for and obviously prefer - but rather on the ground experience - I have drilled the new replacement wells as well as the workovers and I have seen first hand the declines and they are absolutely positivly real - even if I cannot support you with some SPE paper to that effect - the real issue here is graft - let me explain a particular situation and it will make more sense for you - try to put SPE papers and raw statistical data out of the picture for a moment and imagine that government and SPE figures are as about as accurate as the inflation figures and housing starts - - this is one of many variations of the same scenario in all phases of operations in Saudi - exploration/drilling, production, refining, etc..etc... - - - the royal family is now near 6,000 strong if not more... the king owns everything in that country - and i mean everything. By extension, the royal family has it's hands in everything that has anything to do with money - some flunky way down the list happens to control a mud (barite) supplier. The barite company sellign the barite to Aramco (via this low-level Saudi family member) decides to give the flunky a big cash award for accepting a lesser volume of barite but mark it as the full weight/volume as per the sale. The flunky makes off with a lot of cash and the barite supplier delivers the 60% of barite needed to drill the hole with. The drilling supervisor in charge of the operation is no idiot (my spelling is not great but I do know how to drill a well in my sleep) and confronts the Aramco manager with the issue decidely laying out the consequences of this action. The manager tells the supervisor to drill the well the best he can (because there is more than one cash award floating around, obviously) - - your hard working engineer drills the well with underbalanced drilling fluids which for the uninitiated causes blowouts among other greta things - I have seen three 30 million dollar Santa Fe rigs burned to the ground in as little as 4 months. BUT, let's say there is no fire, we get through this thing with our skin on and complete the well - Whew! OK.... well, theres another really big problem that will nag us for the remainder of the entire life of the well. When we drilled the well underbalanced (meaning the formation pressures are higher than the wellbore artificially induced drilling mud weight - the rheology of the drilling fluid systems did not build up what is termed a "skin" on the wall of the hole to seal the formation in from the chemicals and other formation fluids up and down the wellbore - as a reservior engineer, I can imagine you will greatly appreciate this particular example - if you take a core, it will be contaminated to unusable - and thus extreme formation damage has occurred - ultimately reducing the output and longevity of the well. SIGNIFICANTLY ! I have drilled wells over there in a field where I had everything i needed and brought in 600 bbl a day but most of the time, the wells can be ruined (in terms of Saudi rates) to less than 50 bbl/day... and that is day one, they can decline after that for the first year or two... the fields over there are all very homogenios - the wells can be batch drilled in a straight line across the desert and the results can be nearly identical with exceptions - the data I have is not printed but it is so firmly established that is is undisputible - at least for me.

That was only one example of graft hurting the Saudi oil production system - there are many many of these examples and that is just Saudi - Nigeria is even worse. Try North Africa or Eqypt, they are bad too - the European oilfields are much better run but less prolific. I drilled Japaneese Geothermals in Kyushu Island areas last year and they are extremely efficient but no real reserves except for the Northern Sapporro areas... Phillippines are the same - spent a month there last year. I spent January - June last year in Australia and they are declining at about 4% per year - falling behind very fast - a national emergency actually in their eyes. I lived in Venezuela and Columbia for 2 years in the mid 90's and graft is bad there as well but in a different way - the government runs the oilfields and need I say more about that??


Listen, I know you are trying to get the straight skinny here and I like hard fast numbers as much as the next guy, seriously, I am an engineer and that is a well know fact about the breed but I am telling you from first hand accounts at the most upstream end there is - I have been kidnapped 3 times in my career, twice in West Africa and once in South America - I have had morters land within 50 yards of me in Cabinda, Angola - - I flew into Kikwit, Zaire when ebola virus broke out and my company evacuated the country, I have worked hazard duty in the worst environments on earth and these experiences give one a keen eye for many things in life - including life itself - I have spent my entire adult career chasing oil - it has been my passion and my life for 30 years. I wish I had a better picture to paint but it is not as you say - the problem is real and I suggest only look at the real price of energy fuels today to justify my conclusions even if you cannot accept them at face value in this forum. It is actually a pretty simple equation but so many, including educated people find it hard to believe we are running so close to the edge on supply/demand.

That is my story and I am sticking to it...

[ROCKMAN]

Interesting comments regarding refining capacity being a potentially bigger issue than production capacity. I don't have a data base to back up the following statements but I do think they are fairly accurate from a qualitative basis.

The refining and production capacities are not seperate variables. A greater portion of Saudi crude (and Venez. and the world in general I think) is swinging towards the sour side. You can't really talk about ref cap without distinguishing the crude type. We're only running around 85% capacity in the US at the moment. But if a few very large tankers of sour crude sudden arrived musch of the idle capacity couldn't handle it. So a simple solution: convert to handle sour crude. But that's not cheap nor would you make that investment unless you were guarenteed a constant supply of sour crude to at least ensure the payout of your investment.

Oddly enough the capacity deficet that may really impact Saudi deliverability is a bottle neck in the production stream processing. This has nothing to do with refined products. Much of Saudi crude is produced with ever increasing volumes of water. Additionally, there are other compositional issues that have to be remediated before the crude can be shipped to the refinery. Difficult to measure the growing magnitude of the problem given Saudi secrecy but the expat folks that supply a lot of those logistics have been reporting ever great demands for the equipmen/chemicals used to clean the crude.

This dumps us right back to Mexico. Not only are they the third largest supplier of crude to the US but it's sweet crude. And we all know how fast it's declining. Finding sour crude to replace the Mexican crude isn't going to work unless there's a major redo of US refining capacity. But most US refiners aren't really in a position to put out big bucks right now. Valero is the largest refiner in the US and they are barely able to keep profitable right now. They don't produce any oil themselves. The have to buy every barrel they refine. And we know what that cost these days. It might be hard to believe but I've heard their spread between crude costs and product sales is down to just a few pennies per gallon and that they are actually loosing money selling gasoline on old contracts that didn't have suffcient cost adjustments built in. That's one reason I anticipate gasoline prices to keep rising even if oil stays steady for a while or even drops a little. The refiners will do what ever they can to get their margins back up.

[KillTheHumans]

$this->bbcode_second_pass_quote('seahorse', '
')In answer to the man-made causes of depletion, I always found this post by energydigger very informative. Its one of my favorite posts ever made on this website. If you haven't read it, its worth the read. Energydigger is an drilling engineer that has drilled all over the world, including Saudi Arabia in the late 90s. His conclusion is SA is at peak, and his post says why. Its an interesting post, bc it says a lot about "the politics" of depletion in addition to the geology.

[cube]

KillTheHumans == Troll

To all the other forum members here who have shown extreme patience in dealing with such an annoying person.....I salute your efforts and admit you're a better man then me.

If it was me having this discussion I would of told KillTheHumans to GTFO