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Page added on August 11, 2014
Tech Talk – Rig Counts in the Middle East
In recent posts about the situation in the Middle East, I have noted the need for Aramco to increase the number of drilling rigs that it must use, since it is now looking for natural gas in their tight sand deposits rather than finding the large reserves that they had hoped in the shale reservoirs. It is interesting in this regard to plot the number of rigs that have been working in the Middle East.
Getting the overall data from Baker Hughes the rig count can be plotted, over time, to give the following:
Figure 1. Rig Counts in the Middle East (Baker Hughes)
If one looks at the trend for the last twelve months, it has remains on a fairly consistent upward trend, following that of the longer time interval plot of Figure 1.
Figure 2. Recent trend in Middle East Rig count (Baker Hughes)
Back in the days of The Oil Drum, Euan Mearns and I had this concern, which occasionally surfaced, about these numbers. From my early post on the subject which noted that back in 2005 the KSA were running around 20 rigs, which would not be enough to get them the production they were claiming to need in the future, to Euan’s in 2011, the topic was revisited regularly over the time that the count steadily mounted as the Kingdom had to drill an increasing number of wells just to keep production at around the same overall level.
I am using the KSA as the example, given the large volume of its production relative to that of the others in the Middle East, but as the numbers show, the trend toward increased drilling rate to create enough productive wells to sustain production as the larger volume wells dry up is starting to become a steadily more frantic race across the region.
Rune Likvern used the phrase “Red Queen” in discussing the overall long-term need of the companies in the Bakken to have to drill an increasing number of wells, with individually reducing production, in order to remain in place with regard to overall production. As the production from the Bakken now exceeds a million barrels a day it may seem foolish to be predicting this “squirrel cage” view of the future, but the rig count up there is still running at around 190 rigs, which is not enough to sustain future growth for long, given that access to the sweet spots is limited, and they are beginning to run out of new sites.
So it is in the Middle East. The rig count numbers are mounting steadily, it is reported that there were 88 rigs drilling in the country in October 2012. Last year this rose to 170, and the number is expected to rise to 210 by the end of this year.
Aramco have done remarkably well, over the past decade, in developing new technologies to harvest the attic oil left around the tops of the major producing formations such as Ghawar, as the main body of the fields begin to be exhausted. But the problem with these secondary rig operations is that they were directed at the smaller pools around the field, rather than tapping into the major volume, and thus they had an expected and finite life. That life is starting to come to a close. Just as, when sucking a thick milk shake through a single immovable straw, when it stops drawing fluid, there is still a fair amount left in the cup. But as you move the straw around and slide it up and down the sides, the amount that you recover gets less, and it takes greater and greater effort to get it, to the point where you quit and discard the carton. And that is where the Middle Eastern oilfields are beginning to find themselves.
The high-quality light oils of the mainland are rapidly running out, and the remaining fields with the promise for sustaining Saudi production at around 10 mbd for the next few years, are the heavier sour crudes from the offshore fields such as Safaniya and Manifa. At the same time there is a need to reduce the increasing amount of oil (now at 3 mbd) being consumed in country, with the hope that this can be replaced by domestic natural gas. But those hopes are being reduced as the shales are found to be less productive than anticipated, and hopes are now switching to the slower production that can, hopefully, be achieved from the tight sands – but at the cost of an increased number of wells, inter alia.
This is the writing on the wall for global oil production, and in the short-term it will be neglected. Increasing the number of rigs will, in that interval, increase the number of wells that will produce, even though the volume from each well will be less, and the overall life of the wells will similarly reduce, as higher production techniques tap into smaller fields.
But we are now on the treadmill in the squirrel cage, or, as Rune would have it, we have wrapped ourselves in the cape and crown of the Red Queen, and must run faster and faster just to stay in place. (There are additional concerns since, as an example, Manifa could not be brought on line until there were refineries built that could process that crude, and so the options for increasing production beyond the capacity of refineries to absorb that increase is a futile exercise).
There will soon come a time when the gain from the overall increase in new wells will not match the decline in production from older wells, particularly if the effort to “run faster” is restricted to only a few players (Russia for example is not yet putting the effort and investment into increased drilling rates in order to sustain their overall levels of production, and given the age of their major fields are likely now in terminal decline).
Ouch!
19 Comments on "Tech Talk – Rig Counts in the Middle East"
shortonoil on Mon, 11th Aug 2014 9:19 am
She ran faster, faster, and faster, and still she didn’t get anywhere! Alice got her first lesson in Physics 101. Nature can be a harsh task master. It is no surprise that one has to drill, faster, faster, and faster to get the same production. The laws of physics don’t apply to just little girls in fairy tales.
About a hundred and fifty years ago the most fundamental laws of physics that humans have ever stumbled upon began being developed. Over the next century and a half they were expanded into vast library of theorems and equations. In our report, “Depletion: A determination for the world’s petroleum reserve” we use that knowledge to determine the status of the world’s reserve. What do those theorems, equations and calculations tell us?
Ouch!
http://www.thehillsgroup.org/
Northwest Resident on Mon, 11th Aug 2014 9:32 am
“It’s fairly clear that the fracking bubble will burst soon—almost certainly within the decade. Our ongoing analysis at Post Carbon Institute documents the high per-well decline rates (a typical well’s production drops 70% during the first year), the high variability of production potential within geological formations being tapped, and the dwindling number of remaining drilling sites in the few “sweet spots” that offer vaguely profitable drilling potential. Meanwhile, as the Energy Information Administration (EIA) has recently documented, the balance sheets of fracking companies are loaded with debt while surprisingly short on profits from sales of product—with real profits coming mostly from sales of assets (drilling leases).”
And who is (or will be) to blame when the fracking “boom” finally goes bust?
Environmentalists, of course!
“Environmentalists will merely be handy scapegoats. Blaming environmentalists for the bursting of the fracking bubble will divert public attention from the industry’s own bad business practices. But even more usefully, telling receptive members of Congress that falling oil and gas production rates are due to anti-fracking, fear-mongering, business-hating enviros will set the stage for new and powerful calls to roll back local, state, and national regulations.”
postcarbon dot org/blog-post/2335069-blame-the-environmentalists
GregT on Mon, 11th Aug 2014 9:46 am
“And who is (or will be) to blame when the fracking “boom” finally goes bust?”
Environmentalists? or Vladimir Putin?
Arthur on Mon, 11th Aug 2014 9:49 am
If fracking goes wrong in the Ukraine, it will be obviously Putin’s fault:
http://deepresource.wordpress.com/2014/08/11/the-mouse-that-roared/
Boat on Mon, 11th Aug 2014 10:04 am
What is interesting is the exact opposite is happening with Nat Gas. The number of drilling rigs has dropped in half since 2011. The market has expanded dramatically and further expansion is exploding. Yet the price remains historically low when factoring in inflation.
The US became a net exporter of finished petroleum products since 2011. In the land of North America there is a bright spot among the talk of gloom and doom. The cheap price of nat gas because of fracking is the difference.
Northwest Resident on Mon, 11th Aug 2014 10:06 am
Thank goodness for Vladimir Putin. If American and European governments didn’t have Putin to blame for everything falling apart in Europe, then who else could they pin all the blame on? God forbid they actually talk about the real reasons — the truth would scare people a LOT more than all the Putin bogeyman look-alikes they keep trotting out for public consumption.
Now, off topic, except for the “blaming Putin” part:
Arthur — You no doubt recall posting an article soon after the Malaysian airlines shoot-down which strongly argued that the passenger jet had been shot out of the sky by Ukrainian jets. That account seemed pretty convincing to me. Now, the Malaysian government is directly blaming the Ukrainian government shooting down their passenger jet, and also making the case that it was machine gun and “cannon” fire from the two Ukrainian jets, not a BUK missle fired from the ground. I’m sure you’ve read all about it — just sayin’…
Northwest Resident on Mon, 11th Aug 2014 10:11 am
Boat — You sound a lot like my good buddy Nony who is always singing the wonders of NG. But you need to keep in mind that NG is just like almost everything else in this high-tech modern world — TOTALLY dependent on conventional oil for its production and delivery to market. I said it to Nony a hundred times, but he never seemed to get the point. But I’ll say it to you and hopefully you will understand the simple underlying truth of this one short statement:
NO OIL = NO NG
Arthur on Mon, 11th Aug 2014 10:19 am
NWR, I am in complete agreement with the Malaysians. I just completed a very compact post, with all the evidence to prove it was Kiev:
http://deepresource.wordpress.com/2014/08/11/reasons-why-it-was-kiev-who-shot-down-mh17/
Davy on Mon, 11th Aug 2014 10:54 am
Ok, NR/Art, I am all ears. When will this become western MSM reported. Please don’t tell me it won’t because that news is too significant and the global news too porous. There is no way to hide that information. All they can do is try to offer a different outcome and destroy the the credibility of those findings. NR in your opinion what will be the results of this either f**kup by the Ukr’s or an out right exposed false flag. Surely some heads will drop. Surely the DC mafia will do damage control.
Arthur on Mon, 11th Aug 2014 11:10 am
Since a few days western politics and media have gone completely silent on the mh17 topic, now that they have understood who really did it. The investigation has stalled, cover up and silence will be next. Now on the six o’clock Dutch news: it is too dangerous and from October on the winter will make investigating impossible. End of story mh17 investigation. The media reluctantly admit that it is imposdible to prove who did it. The vast majority of Dutch internet commenters meanwhile believe Kiev did it.
Arthur on Mon, 11th Aug 2014 11:15 am
De Telegraaf is the largest Dutch newspaper. The paper still tries to push the Russia-did-it story, but if you view the readers comments in google translate you see that the vast majority supports the view that Kiev did it.
http://www.telegraaf.nl/binnenland/mh17/22949162/___MH17_was_een_vergissing___.html
Northwest Resident on Mon, 11th Aug 2014 12:19 pm
Davy — It is no secret that I believe the American mass media in total is completely controlled by the same TPTB that are busy rolling out their plans to rearrange things in Europe and Eurasia. Since the downing of that passenger jet no longer fits into the narrative they are carefully promoting for mass public consumption — in other words, since it no longer has propaganda value because it clearly was their own henchmen that shot the plane down — I expect that the American mass media machine will go totally silent on the subject. Later, maybe weeks from now, on the back page of the NY Times, there might be a small article claiming the final results of the investigation reveals that the evidence is inconclusive, and that’s the end of it for American media.
That’s my guess. Let’s see how it actually plays out.
Northwest Resident on Mon, 11th Aug 2014 12:36 pm
Davy — It is also no secret for those of us “in the know” that the unraveling of our high-energy-consumption and debt-based civilization is increasing at a fast clip, and that rate of speed will only continue to pick up from here on out. For TPTB and their mass media, it is all hands on deck just to keep the illusion of economic growth alive for a little while longer. They know and we know how this is all going to end. Things are becoming increasingly dangerous around the world. It won’t be long, I suspect, before some of that danger starts rolling into home towns and big cities around America. The world is a dry tinder box just begging for a spark — it needs to burn, just like a diseased forest has no chance of rejuvenation until it burns to the ground and new seeds take hold. Don’t expect a lot of “truth” coming from America mass media going forward. Truth is too dangerous to give it official presentation to the nervous, clueless, totally unprepared and ignorant masses. In some cases, saying nothing is much better than trying to tell a big fat lie — this is the course that MSM will take, based on explicit instructions from their masters in TPTB Club.
Arthur on Mon, 11th Aug 2014 2:09 pm
NWR, “I expect that the American mass media machine will go totally silent on the subject. Later, maybe weeks from now, on the back page of the NY Times, there might be a small article claiming the final results of the investigation reveals that the evidence is inconclusive, and that’s the end of it for American media”
Indeed. That is what Der Spiegel already did:
http://deepresource.wordpress.com/2014/08/08/der-spiegel-backs-down-on-mh17/
Davy on Mon, 11th Aug 2014 2:45 pm
NR, what about Al Jeezera and or BBC reporting as a possibility the UKr’s as responsible parties? They have North American feeds. We also have Link TV and Free Speech TV. Then there is the documentary “Frontline”. I imagine it will take time but the MH17 conspiracies theories will be in the American GP awareness soon enough.
Art, on the St Louis, MO shooting nothing different than what happens in Paris or London. North St Louis has a few areas that are no go areas for whites. They are gang areas. The City of ST Louis and the Metro area is actually a very nice area with very nice urban, suburban, and rural farming towns. If we could wipe a few areas off the map there would be far fewer problems and the crime statistics would greatly change. The urban area has gone through an urban renewal with migration into the city of people renovating old houses and the creation of lofts in the old warehouse district.
Northwest Resident on Mon, 11th Aug 2014 3:07 pm
Davy — I’m sure information will leak out through various sources. But “the American GP (general population) awareness”??? That cracks me up. Maybe if they squeeze the leaked info into 10-second time slots between Honey Boo-Boo episodes, or maybe create Justin Bieber t-shirts with fine print saying “We know who shot down MH17”. I’m ridiculing American GP awareness — not your post. For those in the general population who actually are aware, yeah, the information will most likely filter to them through one or another non-MSM channels. But the number of those who are “aware” is miniscule compared to the population at large, and no threat to any plans or illusions that TPTB are working on.
Arthur on Mon, 11th Aug 2014 3:46 pm
“Art, on the St Louis, MO shooting nothing different than what happens in Paris or London. North St Louis has a few areas that are no go areas for whites. ”
Yep, true. Here is *Britain*, the entire country, just because one dimwitt got whacked by the police, which is used as an excuse to go on a nationwide rampage. Just go to google/images and enter “britain 2011 riots”. The resulting thousands of pictures are dominantly warm yellow/orange. It took David Camoron days to calm things down. Obviously it was pure ethnic: black looting white. With every new round of disturbances the clashes will be more violent until the inevitable race war level is reached. In Europe it will be a race between France and Britain, who is first. I gamble France, since Britain has absolutely no sense of identity or pride whatsoever. Ideal Big Brother material. They will only fight with the back against the wall. France in contrast has the most sophisticated nationalist party in Europe. But in continental Europe things are different, a few hundred km from the Atlantic coast things become ‘normal’, until the Ural mountains and beyond.
Energy Investor on Mon, 11th Aug 2014 5:07 pm
The Dutch crash investigators are getting ready to release their preliminary report as to what caused the crash…rather than who. They are now operating from the Netherlands and if it was caused by machine gun fire, then the Ukrainians have some explaining. Otherwise the media will keep up the rhetoric against Tsar Vladimir the Great 🙂
On the subject of France, we see that Italy has gone back into recession and France may well join them within a few months…then the blame game may well find a new target…probably Germany.
Jealousy within the EU is bound to be its undoing, sooner or later.
Arthur on Mon, 11th Aug 2014 6:33 pm
On the Dutch 20:00 news: the Australian PM came to the Hague today to see our PM Mark Rutte to talk about mh17 and it’s aftermath. His visit ended with a press conference. The only subject they talked about was… getting all the bodies back, or what is left of it after four weeks.
What was absolutely not a topic was the whodunnit investigation. Nobody cares anymore. They all know what happened and Washington does not want this to become public knowledge. It probably takes somebody with terminal cancer to spill the beans, like Italian ex-president Cossiga did with 9/11. Israel and CIA did it).