Saudi Arabia is Freezing Oil Production By Default

20 Comments on "Saudi Arabia is Freezing Oil Production By Default"

Plantagenet on Fri, 1st Apr 2016 2:19 pm 



Actually oil production from KSA has dropped slightly over the last few months. But that is more than offset by new oil exports coming from Iran.

The oil glut continues.

Cheers!

rockman on Fri, 1st Apr 2016 2:20 pm 



Just some clarification on what “pumping full out” means. Essentially it means whatever the speaking wants it to mean. Which means it doesn’t really mean anything in that case.

I’ll explain. The Rockman is currently producing a number of oil wells. He’s not necessarily pumping everyone at its MER…Maximum Efficient Rate. There are a number of reasons this might happen such as low oil prices and increased LOE (Lease Operating Expense). For instance the well cuts a lot of water. Pumping it harder might increase the oil rate but might increase the water by even more. Besides costing more to dispose of that water it could exceed the oil/water separation system on that well. While the increased oil revenue might offset the water disposal cost it might cost $100k to increase the oil/water separation equipment.

But there’s an even more important reason to not produce a well as fast as possible: you might destroy the completion and lose all the oil production until expensive repairs are made. And worse case: it can’t be repaired and the production is lost forever because he economics don’t allow a new well to be drilled. I won’t give any more details of the potential damage….too much engineering.

Bottom line: just the physical dynamics surrounding the decision on how fast to produce an oil well is complex and well beyond what the MSM would ever attempt to understand. And then layer in the marketing and geopolitical angles and it becomes all the more complex.

HARM on Fri, 1st Apr 2016 4:03 pm 



@rockman,

So you seem to be saying that FF production is somehow related to physics and bound by certain hydrodymanic and thermodynamic principles. Interesting theory. Odd how BAU somehow keep on magically circumventing those limits and pushing production and consumption (and population) to ever higher limits.

KSA: still very much in power and still evil.

U.S. oil production: past its previous 1971 peak and still going.

Oil: still under $40/BBL, lowest price in 45 years, even factoring in inflation.

Me: still waiting for the mythical Age of Consequences to start.

Truth Has A Libral Bias on Fri, 1st Apr 2016 4:07 pm 



I suspect KSA is pumping full out as much as they can. Just a hunch. I could be wrong. If they are indeed pumping flat out all they can and are not holding anything back then it stands to reason that calling for a production freeze is kinda like calling a cease fire when you’re out of ammo. Now even if they are pumping all out and are holding nothing back at the moment it doesn’t mean that they can’t bring more on line in the future. However that is not certain. What is certain is that some of their fields must be experiencing decline. The rig count in KSA is up quite a bit, like 30% from 2014 to now, but it’s not adding much in the way of production, and once air conditioning season kicks in their domestic consumption will surely rise and their exports will as a result decline. This years air conditioning season will be telling about their capabilities.

rockman on Fri, 1st Apr 2016 8:44 pm 



Truth…goods points. And about the more rigs and not more oil. Perhaps not: drill more wells into old reservoirs to replace declining production from the original wells. Not an uncommon practice especially when oil prices increaese enough to justify the investment. Consider that a while back the Rockman drilled two horizontal wells in a 70 year old field that was producing a TOTAL OF 12 BOPD from 5 wells. Those two new wells can produce a total of 300 BOPD. The idea was developed 10 years earlier but couldn’t get it drilled with $30/bbl oil. But then $100/bbl got the idea sold.

Besides drilling higher oil prices can also justify increasing production equipment to allow a higher rate.

Now consider what the KSA might have done to increase production during the recent record high oil prices and what it mighty not be able to do to maintain current rates now the price has fallen so far.

So there’s how much production can be increased (or just maintained) from a technical angle and how much can be justificated economically. IOW there’s is what can be done go increase production and what can be done that makesd a good invesdtment. IOOW it isn’t as much the question of how much the KSA can increase (or maintain) production but what it can justify financially.

Boat on Fri, 1st Apr 2016 8:48 pm 



rock,

Exellent input.

Boat on Sat, 2nd Apr 2016 11:05 am 



Every year, Saudi Arabia executes between 25,000 and 35,000 animals because they are suspected of homosexuality, this includes many animals like dogs, cats, horses and camels, which are either stoned to death or decapitated, almost always in front of crowds.

http://www.inquisitr.com/2952707/social-media-is-making-too-many-homosexuals-saudi-arab-push-for-gays-to-be-executed/

Them is some weird ass folks.

GregT on Sat, 2nd Apr 2016 12:29 pm 



And now for other meaningful news from the inquisitr:

MARCH 24, 2016

VOLCANO KNOCKED MOON OFF ITS AXIS — ICE FROM ANCIENT POLES MAY HOLD CLUES FOR EARTH
LOS ANGELES DAD ALLEGEDLY MURDERED HIS SON FOR BEING GAY
EVIDENCE PROVES JACK MCCULLOUGH WAS WRONGLY CONVICTED OF CHILD MURDER, BUT JUDGE SAYS HE WILL NOT BE RUSHED IN RELEASING HIM
GEORGE CLOONEY GETS APOLOGY FROM MAGAZINE FOR FABRICATED INTERVIEW
KENDRA WILKINSON TALKS PLAYBOY MANSION SECRET DATES, CHEATING ON HUGH HEFNER & MARRIAGE DRAMA [VIDEO]
POLICE OFFICER PLAYS HOPSCOTCH WITH HOMELESS GIRL – CLEVERLY USES THE GAME TO LEARN ABOUT THE CHILD’S WELFARE
JOHNNY MANZIEL RUMORS: IN DANGER OF FALLING OUT OF THE NFL ENTIRELY, MANZIEL STILL CAN’T STOP PARTYING
VLADIMIR PUTIN SENT RUSSIAN MERCENARIES TO ‘FIGHT IN SYRIA AND UKRAINE’
DONALD TRUMP ABORTION BACKLASH: #WONTBEPUNISHED GOES VIRAL
‘BACHELOR’ STARS BEN HIGGINS AND LAUREN BUSHNELL SPEND TIME IN INDIANA, CELEBRATE HIS BIRTHDAY AS RELATIONSHIP STRENGTHENS
SCIENTISTS MAKE MONUMENTAL STRIDES AGAINST WORLD’S DEADLIEST ‘INFECTIOUS’ DISEASE

Them is some weird ass folks…….

Anonymous on Sat, 2nd Apr 2016 3:02 pm 



http://www.alternet.org/story/90161/ignorant_america%3A_just_how_stupid_are_we

Tatonka82 on Sat, 2nd Apr 2016 4:22 pm 



The Saudis are pumping flat out. US production is decline rapidly in the shale. This won’t take long.

DAVID G MOSBY on Sat, 2nd Apr 2016 4:26 pm 



Saudi is in bad shape financially. They will not cut back production to stabilize the price higher. I have not heard the one about increased water production with oil, except it should come up in the same ratio. The science of reservoir engineering is not so difficult to understand. The owner should want to produce at a rate to balance maximum output with ensuring proper field drainage. Saudi is keeping field production figures secret. I am not certain Iran is producing more now. During the embargo years, they were producing, but selling on the black market. In that area of the world, it is easy to do.

Gary on Sat, 2nd Apr 2016 4:36 pm 



Saudi Arabia has been increasing rigs during the price decline. If they are not increasing production or capacity, one can assume they need more wells to produce the same amount of oil. If that is the case, they no longer have production cost of $20 per barrel or whatever they claim.

Boat on Sat, 2nd Apr 2016 4:53 pm 



PS

OPEC’s ‘effective’ spare capacity stood at 2.69 mb/ d in February, with Saudi Arabia accounting for 75% of the surplus.

https://www.iea.org/oilmarketreport/omrpublic/currentreport/

Stabilizer on Sat, 2nd Apr 2016 4:55 pm 



KSA has been the world leader in EOR for more than 40 years. EOR is “Enhanced Oil Recovery”. You don’t bother with EOR if you can extract oil cheaper.

Stabilizer on Sat, 2nd Apr 2016 4:57 pm 



Boat – don’t necessarily believe what you read on iea.org. KSA has no outside oversight or review and pretty much says whatever they want. The actual numbers may be quite different, higher or lower.

Stabilizer on Sat, 2nd Apr 2016 5:01 pm 



Tatonka82 – when you try and link oil price to supply and demand – you are 100% on target. Price is PURELY set by supply and demand, well 90 day average, there can be some short term volatility from speculators. Nigeria is struggling to maintain output. Brazil is also struggling, and will get worse as the government realizes the olympics start soon and NOTHING IS READY. India and China are losing output while increasing consumption. Mexico is acting like Mexico. Etc. I would not bet against you on this, I think by summer we will see oil ramping back up. Not to $80, but I expect $60

Boat on Sat, 2nd Apr 2016 5:46 pm 



Stabilizer,

So who has more reliable information.

Iran, Iraq and Lybia may factors in the next year or two when it comes to added supply. The US when it comes to dropping supply.

makati1 on Sat, 2nd Apr 2016 7:31 pm 



I think I see the fat lady in the wings spraying her throat and preparing for the final song in the Oily Opera.

Pass the popcorn.

fida USA on Sat, 2nd Apr 2016 10:20 pm 



It does not matter what the above comments say, the Wahhabi dynasty is doomed and is on its way out. The country is ripe for common man revolution and the day is not far of when the turmoil in Saudi Arabia will result in the oil at $200 per barrel.

makati1 on Sat, 2nd Apr 2016 10:53 pm 



fida, $200? LMAO!

Just $100 oil will kill the world economy. Especially the West. That means if the KSA goes, the US goes with it. And the rest of the West and some of the rest. But, let it fall. I’m prepared. R U?