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Knowing the true reasons for oil production declines

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Knowing the true reasons for oil production declines

Unread postby Zentric » Tue 22 May 2007, 17:58:38

Much of the reporting relating to the production declines at most of the world's major oil fields is probably bogus.

Sure, oil's more scarce these days, and the oil that reaches the refineries will tend only to get heavier and more sour. But what are the odds that so many major fields and regions, for geological reasons, have begun to face falling production rates - all roughly at the same time?

Some reports of such production declines- and their reasons for them - might be fully accurate, while others are likely written to deceive, for lots of reasons. How can one reliably separate the fact from the fiction?

And, to introduce a side issue: Is it possible that "peak refinery capacity" is being introduced to forestall the public's awareness of peak oil?

And to introduce a side issue to the side issue: Is it possible that, after that, the idea of "temporary peak sweet oil" gets introduced to the public to take their mind off of "peak refinery capacity." You know, on down the line, like wackamole?
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Re: Knowing the true reasons for oil production declines

Unread postby keehah » Tue 22 May 2007, 18:24:53

$this->bbcode_second_pass_quote('', 'B')ut what are the odds that so many major fields and regions, for geological reasons, have begun to face falling production rates - all roughly at the same time?


This is not so much the case, for example the US as a region begain falling in 1971. What is really happening is new fields and regions (on the whole) are no longer ramping up new production over and above the declines in existing fields and regions.


$this->bbcode_second_pass_quote('', 'A')nd, to introduce a side issue: Is it possible that "peak refinery capacity" is being introduced to forestall the public's awareness of peak oil?

And to introduce a side issue to the side issue: Is it possible that, after that, the idea of "temporary peak sweet oil" gets introduced to the public to take their mind off of "peak refinery capacity." You know, on down the line, like wackamole?


Yes and yes. And don't forget the elites immediate readiness to address the climate change problem we have known about for over 30 years but 'coincidentally' are making real noise about addressing just as we reach peak oil production.

Making refining a bottle neck to a bottle neck could be justified as 'good business sense' not expanding for a non-growth industry, but it is also brilliant way for big oil to keep more profits for itself instead of letting crude be the true bottle-neck and having to share more profits with the owners of the crude (other country's governments).

Oh and by the way, all that CO2 sequestion we are to be taxed for is one of the best methods to push a little more oil out of existing fields.
Last edited by keehah on Wed 23 May 2007, 18:10:18, edited 2 times in total.
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Re: Knowing the true reasons for oil production declines

Unread postby MonteQuest » Tue 22 May 2007, 19:24:56

$this->bbcode_second_pass_quote('Zentric', ' ') But what are the odds that so many major fields and regions, for geological reasons, have begun to face falling production rates - all roughly at the same time?


Pretty good.

Production follows discovery.

US peaked in discoveries in 1930.

US peaked in oil production in 1970. 40 years later.

World discovery peaked about 1965.

World peaked in oil production in 2005, maybe... 40 years later.

Oil declines once a peak is reached.
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Re: Knowing the true reasons for oil production declines

Unread postby aflurry » Wed 23 May 2007, 12:48:55

$this->bbcode_second_pass_quote('Zentric', 'B')ut what are the odds that so many major fields and regions, for geological reasons, have begun to face falling production rates - all roughly at the same time?


Seems to me like part of the answer is that they have NOT all been facing falling rates all at the same time. As noted, individual fields have fallen and petered out all throughout the oil age.

However, another explanation could be the market acting on geology. As an individual field enters a production decline, it becomes more expensive to produce, and so the companies focus their efforts on younger, more profitable fields. Inevitably those fields age as well and the oil in them becomes more expensive. before you know it, that old field they abandoned has become competitive again, so they renew efforts on the old field with added market incentives and perhaps improved technology. and then the whole cycle repeats itself.

At some point they find that no younger fields are available and all existing fields are producing at full and diminishing capacity.

And as i understand it, that's Peak Oil.

So, if all these fields are reaching peak at the same time, it is no accident of Geology. It is the result of a coordinated extraction process. AKA "market efficiency."
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Re: Knowing the true reasons for oil production declines

Unread postby Zentric » Wed 23 May 2007, 16:02:34

$this->bbcode_second_pass_quote('aflurry', 'A')t some point they find that no younger fields are available and all existing fields are producing at full and diminishing capacity.

And as i understand it, that's Peak Oil.

So, if all these fields are reaching peak at the same time, it is no accident of Geology. It is the result of a coordinated extraction process. AKA "market efficiency."


All around 2005 these three majors -- Saudi Arabia's Ghawar, Kuwait's Burgan and Mexico's Cantarell -- have apparently gone into terminal decline.

Upon reflection I think you're right. Your term, "coordinated extraction process," could also be referred to as a worldwide race for the "low hanging fruit." And this effect predictably causes nearly uniform depletion everywhere except, of course, unstable regions like Iraq or places presently too remote for people, drilling equipment, ships or pipelines. My idea of how some governments might be choosing to responsibly manage their production rates to the downside - by using false news or other methods - likely only merits the smallest consideration when stacked up against this larger effect.

If you think about it, the "market-efficiency" of nearly-uniform depletion everywhere appears to dictate a dramatic drop-off on the right side of the world's oil production peak, especially when you also take into account today's quick extraction methods, . It's scary stuff...

Monte and Keehah - thank you for your posts.
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Re: Knowing the true reasons for oil production declines

Unread postby mididoctors » Thu 24 May 2007, 06:54:35

$this->bbcode_second_pass_quote('Zentric', '')$this->bbcode_second_pass_quote('aflurry', 'A')t some point they find that no younger fields are available and all existing fields are producing at full and diminishing capacity.

And as i understand it, that's Peak Oil.

So, if all these fields are reaching peak at the same time, it is no accident of Geology. It is the result of a coordinated extraction process. AKA "market efficiency."


All around 2005 these three majors -- Saudi Arabia's Ghawar, Kuwait's Burgan and Mexico's Cantarell -- have apparently gone into terminal decline.

Upon reflection I think you're right. Your term, "coordinated extraction process," could also be referred to as a worldwide race for the "low hanging fruit." And this effect predictably causes nearly uniform depletion everywhere except, of course, unstable regions like Iraq or places presently too remote for people, drilling equipment, ships or pipelines. My idea of how some governments might be choosing to responsibly manage their production rates to the downside - by using false news or other methods - likely only merits the smallest consideration when stacked up against this larger effect.

If you think about it, the "market-efficiency" of nearly-uniform depletion everywhere appears to dictate a dramatic drop-off on the right side of the world's oil production peak, especially when you also take into account today's quick extraction methods, . It's scary stuff...

Monte and Keehah - thank you for your posts.


there playing a double bluff then?

ie ghawar isn't peaking out and the saudis say so.... but give the impression they are lying so people think it is?

that is a subtle game indeed

I find it unlikley

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Re: Knowing the true reasons for oil production declines

Unread postby kokoda » Fri 25 May 2007, 13:41:05

I think market forces will have more to do with production declines than something as arbitrary as an oil field having had half its oil extracted or declining discoveries of new fields.

America peaked in the early seventies.

But was that because it was impossible to extract oil at higher rates ... or simply because the cost of extracting that oil had become prohibitively expensive?

After all there was far cheaper oil available in other parts of the world.

But if you accept that argument what happens when there is no cheap oil left?

Simple ... you go back to the old fields where oil was once prohibitively expensive and start drilling again. This oil will be expensive to produce and refine ... but I believe that it will continue to be extracted and production will increase right up to the point when it simply becomes too expensive to be economically viable ... at which point production will go into decline.

The era of cheap oil is over. I wouldn't be surprised if we had already chewed through half the world's oil reserves. But I don't think we will see a decline occur as a result of our inability too extract more oil.

I think it will decline simply because we won't be able to afford it.
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Re: Knowing the true reasons for oil production declines

Unread postby Zentric » Fri 25 May 2007, 18:03:04

$this->bbcode_second_pass_quote('kokoda', 'I') think market forces will have more to do with production declines than something as arbitrary as an oil field having had half its oil extracted or declining discoveries of new fields.

America peaked in the early seventies.

But was that because it was impossible to extract oil at higher rates ... or simply because the cost of extracting that oil had become prohibitively expensive?

After all there was far cheaper oil available in other parts of the world.

But if you accept that argument what happens when there is no cheap oil left?

Simple ... you go back to the old fields where oil was once prohibitively expensive and start drilling again. This oil will be expensive to produce and refine ... but I believe that it will continue to be extracted and production will increase right up to the point when it simply becomes too expensive to be economically viable ... at which point production will go into decline.

The era of cheap oil is over. I wouldn't be surprised if we had already chewed through half the world's oil reserves. But I don't think we will see a decline occur as a result of our inability too extract more oil.

I think it will decline simply because we won't be able to afford it.


Good points. As to "affordability," also consider that, even in industrialized countries, the cost of labor relative to the cost of a barrel of oil is only set to decrease in the future labor-rich/resource-poor economy, such that labor-intensive extraction efforts at old oil fields may be much more viable than first thought.
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Re: Knowing the true reasons for oil production declines

Unread postby MonteQuest » Sat 26 May 2007, 00:44:25

$this->bbcode_second_pass_quote('kokoda', ' ')The era of cheap oil is over. I wouldn't be surprised if we had already chewed through half the world's oil reserves. But I don't think we will see a decline occur as a result of our inability too extract more oil.


Then I suggest you do a little reading on Peak Oil 101.

You don't have a grasp of the concept.

Peak oil means, no matter how much money or how much technology you throw at it, production declines.
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Re: Knowing the true reasons for oil production declines

Unread postby kokoda » Sat 26 May 2007, 04:19:36

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kokoda', ' ')The era of cheap oil is over. I wouldn't be surprised if we had already chewed through half the world's oil reserves. But I don't think we will see a decline occur as a result of our inability too extract more oil.


Then I suggest you do a little reading on Peak Oil 101.

You don't have a grasp of the concept.

Peak oil means, no matter how much money or how much technology you throw at it, production declines.


Saying that "no matter how much money or how much technology you throw at it, production declines" is simplistic. There has to be a reason that production declines ... and that can be expressed in financial terms.

If you had infinite resources to throw at the problem you could continue increasing production almost up to the end.

But of course we don't have infinite resources which means that eventually market forces will determine when peak oil production is reached.

If people could afford to pay a $100 a barrel then production would grow for as long as that demand remained. Of course extraction, transportation, and other associated costs would continue to rise until at some point that $100 mark would be passed. As oil reserves continue to shrink and the cost of extraction starts to increase exponentially then oil prices could simply go out of control. At some point oil prices will reach a tipping point when people will simply be unable to afford to buy increasing amounts of the stuff ... at which point we enter decline.
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Re: Knowing the true reasons for oil production declines

Unread postby Zentric » Sat 26 May 2007, 05:15:45

$this->bbcode_second_pass_quote('kokoda', '')$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kokoda', ' ')The era of cheap oil is over. I wouldn't be surprised if we had already chewed through half the world's oil reserves. But I don't think we will see a decline occur as a result of our inability too extract more oil.


Then I suggest you do a little reading on Peak Oil 101.

You don't have a grasp of the concept.

Peak oil means, no matter how much money or how much technology you throw at it, production declines.


Saying that "no matter how much money or how much technology you throw at it, production declines" is simplistic. There has to be a reason that production declines ... and that can be expressed in financial terms.

If you had infinite resources to throw at the problem you could continue increasing production almost up to the end.

But of course we don't have infinite resources which means that eventually market forces will determine when peak oil production is reached.

If people could afford to pay a $100 a barrel then production would grow for as long as that demand remained. Of course extraction, transportation, and other associated costs would continue to rise until at some point that $100 mark would be passed. As oil reserves continue to shrink and the cost of extraction starts to increase exponentially then oil prices could simply go out of control. At some point oil prices will reach a tipping point when people will simply be unable to afford to buy increasing amounts of the stuff ... at which point we enter decline.


I think Monte's correct on this point. What's fundamental is that the world is powered on oil, not money. Money is just what humans use to allocate the oil between themselves. Human labor can possibly be made cheap in the future to more-economically extract the last bit of oil from a depleting field. But at some point that field - like a spent tube of toothpaste - won't want to give you much if anything more at all - no matter how much money you try to use to convince it otherwise.
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Re: Knowing the true reasons for oil production declines

Unread postby Twilight » Sat 26 May 2007, 05:25:53

$this->bbcode_second_pass_quote('kokoda', 'S')aying that "no matter how much money or how much technology you throw at it, production declines" is simplistic. There has to be a reason that production declines ... and that can be expressed in financial terms.

It's more of a thermodynamics and fluid mechanics thing.

$this->bbcode_second_pass_quote('kokoda', 'I')f you had infinite resources to throw at the problem you could continue increasing production almost up to the end.

Physics trumps money.

A black box which gives less out than you put in, does not give a damn how much you put in. It will keep giving less.
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Re: Knowing the true reasons for oil production declines

Unread postby EnergyUnlimited » Sat 26 May 2007, 06:09:42

$this->bbcode_second_pass_quote('kokoda', 'S')imple ... you go back to the old fields where oil was once prohibitively expensive and start drilling again. This oil will be expensive to produce and refine ... but I believe that it will continue to be extracted and production will increase right up to the point when it simply becomes too expensive to be economically viable ... at which point production will go into decline.

The era of cheap oil is over. I wouldn't be surprised if we had already chewed through half the world's oil reserves. But I don't think we will see a decline occur as a result of our inability too extract more oil.

I think it will decline simply because we won't be able to afford it.

It is a good idea for one to read about EROEI in this context...
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Re: Knowing the true reasons for oil production declines

Unread postby SevenTen » Sat 26 May 2007, 08:49:43

$this->bbcode_second_pass_quote('kokoda', '')$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('kokoda', ' ')The era of cheap oil is over. I wouldn't be surprised if we had already chewed through half the world's oil reserves. But I don't think we will see a decline occur as a result of our inability too extract more oil.


Then I suggest you do a little reading on Peak Oil 101.

You don't have a grasp of the concept.

Peak oil means, no matter how much money or how much technology you throw at it, production declines.


Saying that "no matter how much money or how much technology you throw at it, production declines" is simplistic. There has to be a reason that production declines ... and that can be expressed in financial terms.

If you had infinite resources to throw at the problem you could continue increasing production almost up to the end.

If you had infinite resources, you wouldn't need the oil.

Monte's explanation is perhaps a little simplistic, so here's maybe a better one. In order to maintain production after the peak, you would need to expend exponentially more and more resources. After the US peaked in the lower 48 in the early 1970s, drilling and exploration increased four-fold, and production still declined.

Expressed in financial terms, you would need to throw exponentially more and more money at the problem.
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Unread postby Pops » Sat 26 May 2007, 09:07:02

I am no economist but let me give one tiny example.

In the Teens my grandparents got oil on their place in Oklahoma, the financial equation went like this:

For a while they pumped money into their little field and oil came out.
Then no matter how much money they pumped in nothing came out.
Then they went broke.

That little field hasn’t produced another drop in 60 years, no matter what the price or how big the shortfall in supply -
because there isn't any oil left there.

Pretty simple.
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Re: Knowing the true reasons for oil production declines

Unread postby MonteQuest » Sat 26 May 2007, 10:35:49

$this->bbcode_second_pass_quote('kokoda', ' ')
Saying that "no matter how much money or how much technology you throw at it, production declines" is simplistic. There has to be a reason that production declines ... and that can be expressed in financial terms.


Again...
$this->bbcode_second_pass_quote('Montequest', 'T')hen I suggest you do a little reading on Peak Oil 101.

You don't have a grasp of the concept.


kokoda,

I'm am afraid you haven't got a clue about peakoil and what it means.

Peak oil is a geolological event of declining production.
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Re: Knowing the true reasons for oil production declines

Unread postby mel1962 » Sat 26 May 2007, 11:20:48

I believe that we are already past peak on light sweet and maybe approaching peak on the sour stuff. IMHO

The fact that oil sands in Alberta and Venezuela are economically viable should be the canary in the mine.

High gas prices in US are driven by the fact that most US refineries are set up to refine light sweet.

People keep blaming the oil companies and Saudis, I just shake my head and have to clearly explain that there is only so much oil in the world! :roll:
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Re: Knowing the true reasons for oil production declines

Unread postby threadbear » Sat 26 May 2007, 11:30:12

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('Zentric', ' ') But what are the odds that so many major fields and regions, for geological reasons, have begun to face falling production rates - all roughly at the same time?


Pretty good.

Production follows discovery.

US peaked in discoveries in 1930.

US peaked in oil production in 1970. 40 years later.

World discovery peaked about 1965.

World peaked in oil production in 2005, maybe... 40 years later.

Oil declines once a peak is reached.


Are you implying, Monte, that the oil oligarchs aren't going to take a bad situation and make it worse, to ramp up profits. Come on, Man. It's not either, or, it's both.
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Re: Knowing the true reasons for oil production declines

Unread postby MonteQuest » Sat 26 May 2007, 11:39:01

$this->bbcode_second_pass_quote('threadbear', ' ')Are you implying, Monte, that the oil oligarchs aren't going to take a bad situation and make it worse, to ramp up profits. Come on, Man. It's not either, or, it's both.


Oh, so the countries that have peaked could increase production if they wanted to?

Your hatred of BIG Oil is clouding your thinking.
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Re: Knowing the true reasons for oil production declines

Unread postby threadbear » Sat 26 May 2007, 11:50:38

$this->bbcode_second_pass_quote('MonteQuest', '')$this->bbcode_second_pass_quote('threadbear', ' ')Are you implying, Monte, that the oil oligarchs aren't going to take a bad situation and make it worse, to ramp up profits. Come on, Man. It's not either, or, it's both.


Oh, so the countries that have peaked could increase production if they wanted to?

Your hatred of BIG Oil is clouding your thinking.


What are you talking about? Of course they couldn't increase production, but take that fact and add colluding refiners who pump up their profit margins, and it makes the situation much worse. Are you aware of the Enron situation with electrical production, Monte? Do you see no parallels here? Are you a complete moron?
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