An Enerty Tsunami Ahead?

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An Energy Tsunami Ahead

Admittedly this guy has a vested interest in increased oil production but he gives some statistics that are worth considering whether or not they have merit. A synopsys of the statistics in the presentation.

Statistics below are from Simmons' speeches.

50% of the world's oil production comes from only 120 fields that were discovered 40+ yrs ago. Half are more than 40 yrs old, 95% are more than 25 yrs old.

Saudi Arabia has 5 key fields producing 90% of their output, and have so for 40 yrs.

Pressurized oil fields all have a "rate sensitivity" to how they are drained, so that the higher the production, the faster high reservoir pressures end. Once pressures fall to a "bubble point", gas rises to the surface of the pool and pressures begin to drop much faster. Thus, many experts believe that if the Saudi's pump faster by adding a lot more holes in these few high producing fields, the peak production point will be reached faster and the degradation rate after peak production will become faster.

A geologist I read said the world has been entirely "mapped" seismically, and the liklihood of any significant numbers of "elephant" finds is highly unlikely: thus these types of finds may soon be called dinasaurs rather than elephants.

The date of peak discovery in the world was 1965. The typical time from date of peak discovery of a single field to peak production is tyically 40 yrs.

The Saudi's have some severe challenges to maintain production, let alone increase production: the age of their fields, the rising "water cuts" [The ratio of water produced compared to the volume of total liquids produced], and the tight and complex geologic formations. The north Ghawar water cuts have risen from 0.1% to ~3.0% over the life of the reservoir, so far, and the slope is increasing.

Technology was supposed to make oil easy to find and cheap to produce: instead, technology exaggerated proven reserves and used up most of the high quality light crude oil. The track record of technology being able to bail us out from the present course towards peak oil production is not good.

There are significant "choke points" of capacity to produce oil: Well head, Processing, Pipeline, Tanker, Refining, Drill rig capacities as well as finding new projects to boost the supply inventory of viable large drilling opporunities, and also the people to execute those projects. Spare high quality offshore and deep depth (high horsepower) land rigs can be counted on 5-7 hands. The global drilling fleet is old, the capacity to add drilling components is sparse, and the capacity to build offshore platforms is spare with the cost to build an offshore rig being twice that of the 1996-2001 period. The rig shortage squeeze in the near future will be acute. Also, the oil and gas industry has a graying work force with a "lost generation" gap of new hires since the late 70's, and pre-1982 hires will be retiring in the next 10 yrs.

There are frontiers out there (Russia, Artic, Antartic, offshore US/Canada and Mexico, and Alaska North Slope), but they all take time and will merely offset post Peak-production declines.

"Once Saudi oil productino passes peak, so has the world."

We are not running out of oil but we are running out of *cheap* oil just as oil demand appears to be surmounting supply in the 4th quarter of this yr as we will produce 83-84 M bpd and are likely to need 86-87 M bpd. We will not run short of oil then, but prices will cause the elasticity of demand to meet supply.