PRESENTATION ON THE MOTHER OF ALL OIL FIELDS

“THE GHAWAR”-SAUDI ARABIAPETRO ECONOMICS ASSIGNMENT

-BY JYOTI KUMARI,

RAHUL KUMAR,&

NAVNEET BISHT.

OIL AND GAS – BLACK GOLD!

NASA

Oil reserves

Development in world oil consumption

1950 1975 2000

10

20

30

40

50

60

70

80

Mil

lio

n b

arre

ls p

er d

ay

World proved reserves

5 %66 %

7 %

9 %

9 %

4 %

Source: BP Statistical review of world energy

Projecting future discoveries

0

500

1000

1500

2000

2500

1930 1950 1970 1990 2010 2030

Cu

mu

lati

ve D

isco

very

, Gb

Reality

Illusion

Inflexion due tofalling Discovery

OPEC “quota war”

“Back dated” reserves Reserves as reported

Real discovery trend and production

1930 1950 1970 1990 2010 2030 2050

10

20

30

40

50

60

Gb

Past discoveries

Future discoveries

Production

Past discoveries by ExxonMobil

0

100

200

1980 1990 2000

Pro

ved

Re

serv

es,

Gb Saudi

Iran

Iraq

Kuwait

UAE

OPEC Oil “Proven” Reserves!

Accurate reserve estimates for OPEC countries are closely guarded state secrets Values for 1983 are probably accurate (for 1983) 430Gb rise in reserves, no adjustment for 193Gb produced since 1980 These questionable reserves are 45% of world oil reserves used by IPCC! A recent leak of Kuwait Petroleum Company documents showed the actual reserves

are only 48Gb (official reserves are 102Gb) 1980 Kuwait reserves adjusted for production since then are 55Gb

From BP Statistical Review

Not provenby anybody!

Gb = billions of barrels

What Is Peak Oil?

The date an area’s oil production reaches its maximum

Means that about half the oil has been produced

Does not mean “running out of oil” Does mean a continuous decline in production

When oil half gone, the flow of oil begins to fall

Not like a gas tank Oil in the ground is not in a pool but in tiny dropletsDroplets move slowly through the earth due to pressureAt halfway point pressure drops – flow decreases

M. King Hubbert

Geophysicist at the Shell lab in Houston

In 1956, he presented a paper with predictions for the peak year of US oil production

Oil Wells and Fields Peak --- Regions Peak --- The World will peak

Everyone agrees that world oil will peak – controversy on the date

A modellogisticdistribution

Examples: Rapid Depletion is Normal

13

It’s not hopeless!!

Human ingenuity and technology are remarkable.

Appropriate policy choices are available tominimize and adapt to climate change.

Perhaps we (esp. U.S.) will be forced to change by the price and availability of fossil fuels.

Lots of bad news, but

Maybe we’ll be lucky, and unanticipated factors or feedbacks may slow the rate of change.

14

plus invisible GHGsL.A. smog

Chief source: combustion of petroleum products

15

Petroleum: a thick, flammable mixture of solid, liquid, and gaseous hydrocarbons (organic compounds with H and C) that occurs naturally beneath the Earth's surface.

Crude oil* Liquid mixture of naturally occurring hydrocarbons

(aka “oil”)

* After refining: the chief source of transportation fuels

Natural gas

* After processing: used for power generation, residential, fertilizers, manufacturing, transportation (still very limited)

•Gaseous mixture of naturally occurring hydrocarbons

16

17

18

19 19

20

21

22

23

Petrochemicals Chemicals produced from petroleum

24

The Graduate 1967

“Plastics.”

ALL PLASTICS are petrochemicals.

25

polystyrene epoxies

26

27

PVC

solvents

28

Other synthetic fibers, such as acrylics & dacron: clothing, yarn, rugs, rope, sails, grafts, containers, resins

apparel & home furnishings, plus bottles, fiberglass, LCDs, holograms, filters, insulators, auto body parts

Polyester: the most widely used artificial fiber in the U.S.

29

Apparel, carpets, musical strings, fishing line, racket strings, rope, auto parts, machine parts, sutures

Nylon

30

rubbing alcohol

synthetic rubber MTBE

detergents

vinyl dyes

antiseptics

Modern developed societies depend on petroleum in

innumerable ways. We are petroleum-dependent.

“No civilization can survive the destruction of its resource base.”

31

Make lists of the top 5 countries:

Petroleum productionto date (since ~1860)

Current (1997) rate ofpetroleum production

RemainingpetroleumKSA

USAFSUIranMexico/Venez

KSAFSUIraqIranKuwait/USA

USAFSUKSAIranVenezuela

FSU = former Soviet UnionKSA = Kingdom of Saudi Arabia

SAUDI ARABIAThe Benefits of Doing Business in

Saudi Arabia

Petroleum Intelligence Weekly's Ranking of Top Oil Companies

Rank2006

Rank2005

 Company Country StateOwnership %

1 1  Saudi Aramco  Saudi Arabia  100

2 3  NIOC  Iran 100

3 2  Exxon Mobil  US  

4 5  BP  UK  

5 4  PDV  Venezuela 100

6 6  Royal Dutch Shell  UK/Netherlands  

7 7  CNPC  China 100

8 11  ConocoPhillips  US  

9 8  Chevron  US  

10 8  Total  France  

Saudi Aramco

Operations in: Exploration, production, refining, marketing,

and international shipping. The company has approximately one

fourth of world oil reserves The company is headquartered in

Dhahran, Saudi Arabia and employs about 52,100 people.

State Owned

Market Analysis

Population Size Description of Labor

Force Consumer Purchasing

Power Distribution

Saudi Arabia - Geography

Saudi Arabia’s Economy

Oil wealth has made possible rapid economic development, which began in the 1960’s and accelerated in the 1970’s.

Saudi oil reserves are the largest in the world, and Saudi Arabia is the world’s leading oil producer and exporter.

A major new gas initiative promises to bring significant investment by the US and European oil companies to develop non-associated gas fields in three separate parts of Saudi Arabia.

In April 2000, the government established the Saudi Arabian General Investment Authority to encourage foreign direct investment in Saudi Arabia.

Population Description and Characteristics

The population of Saudi Arabia is approximately 22,757,092, which includes 5,360,526 non-nationals.

42.52% of the population is aged 0-14. 54.8% of the population is aged 15-64. 2.68% of the population is 65 years old or

older.

Labor Force

Saudi Arabia’s labor force is 7 million people, 35% of this population consists of non-nationals Agriculture 12% Industry 25% Services 63%

Purchasing Power

Saudi Arabia’s Purchasing Power Parity is $232 billion.

GDP Real Growth Rate: 4% GDP per capita: $10,500

Distribution

Railways: 1,389 km Highways (paved): 44,104 km Ports and Harbors: total of 13 Airports with paved runways: 70 Heliports: 5

Saudi Crude Oil Production Peak---------------------------------------------------------------

----------------

Saudi Arabia's crude oil production peaked in 2005 at 9.6 mbd. In 2010 Saudi production averaged 8.2 mbd.

According to official Saudi sources, Saudi oil production will not increase beyond 8.7 mbd until 2015. And as domestic consumption is projected to grow by 5% per annum, Saudi exports are expected to shrink by 10% in the next 4-5 years (see Table 2).

A steady production decline was forecast from 2010 onwards (see Figure 1).

Table 2Saudi Crude Oil Production, Consumption & Exports

(mbd)-------------------------------------------------------------------------------

Year Production Consumption Net Exports------------------------------------------------------------------------------------------------------------------

---1980 9.90 0.61 9.291990 6.41 1.11 5.302000 8.40 1.54 6.862001 8.03 1.61 6.422002 7.63 1.68 5.952003 8.78 1.78 7.002004 9.10 1.88 7.222005* 9.60* 1.96 7.642006 9.15 2.02 7.132007 8.72 2.14 6.582008 9.26 2.30 6.962009 7.95 2.44 5.512010 8.20 2.70 5.502015 8.70 3.45 5.25------------------------------------------------------------------------------------------------------------------

---% change 1980-2015 - 16 + 466 - 43------------------------------------------------------------------------------------------------------------------

---Sources: US Energy Information Administration (EIA) / Official Saudi data.* Peak production year.

Figure 1Saudi Arabia’s Crude Oil Production Rate

-------------------------------------------------------------------

Discoveries and production Saudi Arabia

0

20

40

60

80

100

120

140

1930 1950 1970 1990 2010 2030 2050

Dis

cov

ery

Gb

0

2000

4000

6000

8000

10000

12000

Pro

du

cti

on

kb

/d

2005

46

Yemen

Om

an

UAEQatar

Kuwait

Kingdom ofSaudi Arabia

Iraq Iran

Saudi Arabia Is Middle East’s Prime Oil Producer

Most Middle East producers have passed their prime. Iran peaked at 6 million

barrels/day in 1970s. Iraq, Kuwait, Oman,

Syria and Yemen have all passed peak output.

UAE and Iraq might have growth prospects.

Many giant Middle East oilfields are far past Peak Oil.

Saudi Arabia has 36% of Middle East reserves.

oil = red

largest: Ghawar

Significant traps

are extremel

y localized in space

Persian Gulf Close-

up

51

The Middle Eastcontains 45–60%of the world’spetroleum reserves.

* 6% of global production to date* 6% of modern production

* World’s largest oil field* 60-65% of KSA production to date

Ghawar Ghawar: probably themost important placeyou’ve never heard of

Ghawar, the mother of all oil fields

Discovered in 1948 Huge anticline structure 250km by 30km

wide 3400 wells Reserves when discovered 100 billion

barrels Current production 5 million barrels per

day 7% of the Northern tip of the field

produces 2 million barrels per day 7 million barrels of water pumped in daily

to recover 5 million barrels of oil

Sideways Drilling – e.g., Ghawar

(increases flow by exposing longer length of borehole to oil floating on

injected water)

from Matt

Simmons

top view

side view

Greatly increases flow rate

from single wells

(e.g., 10,000

barrels/day vs. 300

barrels/day)

3-D view of "bottle-brush"

well completion

Ghawar

Largest Oilfield (~5% world

production)

(from reference on next slide)

Oil column thickness (orig: 1300 feet)blue 0-30 feetgreen more than 120 feetred boreholes (most now used for water

injection)

Ghawar 3D Seismic Survey Closeup

Shiv Dasgupta, “Reservoir monitoring with permanent borehole sensors: Ghawar Arab D reservoir”, 74th SEG Conference, 2004http://abstracts.seg.org/ease/techprog/downloadpaper?pape

r_id=817&assigned_num=762

http://www.theoildrum.com/node/2441#comment-177244from garyp

possible location of traverse on

3D reconstructio

n

GhawarBoreholes blue: oil brown: water inj

(approx. overlay)

http://pangea.stanford.edu/~jcaers/theses/thesisJoeVoelker.pdf

The main oil producing Ghawar fields are, from north to south: Ain Dar, Shedgum, Uthmaniyah, Farzan, Ghawar, Al Udayliyah, Hawiyah and Haradh.

Ghawarlargest resevoir in

world (looking south)

surface defined by impermeable cap (anhydrite bed)

http://www.searchanddiscovery.net/documents/2004/afifi01/index.htm

from Euan Mearns

http://europe.theoildrum.com/node/2494

Ghawar Base Case Production Model

5 Mb/d

2007 2014

total prod. ’02 to ’28 = 30 Gb

4 Mb/d3 Mb/d2 Mb/d

Ghawar Depletion by

Region

http://europe.theoildrum.com/node/2507

Rock permeability is spatially

complex (model of 'Ain Dar and

Shedgum, northern Ghawar)

North

Depletion of North ‘Ain Dar

http://www.spe.org/elibinfo/eLibrary_Papers/spe/2005/05MEOS/SPE-93439-MS/SPE-93439-MS.htm

Oil

Oil Oil

Oil

http://www.theoildrum.com/node/2441from Stuart Staniford

‘Ain Dar

[blue is now oil, not water]

Ghawar Field Oil Saturation Plot, 2002

(presumably just under anhydrite cap)

North

Why We Disregard The Peak Oil Issue

“Oil has never run out.” Great new discoveries “must be around

the corner”. Proven oil reserves (1.2 trillion barrels)

equates to 40 years current use. Oil sands and other unconventional oil

wait in the wings. High oil prices will likely create new

energy supplies, economists are our ‘high priests’.

THE DEBATE OVER RESERVES: PESSIMISTS AND OPTIMISTS

During the 1990’s, the debate over oil reserves generated controversy between the "pessimists" and the "optimists".

Oil is so important that publishing reserve data has become a political act. Most of the dispute between the so-called pessimists (mainly retired geologists) and the optimists (mainly economists) is due to their using different sources of information and different definitions. The pessimists use technical (confidential) data, whereas the optimists use the political (published) data. “

•the world is finite and so are its recoverable oil resources

• all of the oil-bearing regions worth exploring have already been explored

• the big fields have already been discovered

• claim that official figures for proven reserves have been overestimated

• world oil production is currently at its optimum (peak) and will decrease steadily

•Geologists and physicists tend to hold this position.

PESSIMISTS

OPTIMISTS

•hold a “dynamic” concept of reserves

• believe that volumes of exploitable oil and gas are closely correlated to technological advances, technical costs and price

• tend to be economists

Remaining in place

17 billion bbls

25%

Produced; 27 billion bbls

40%

Saudi Arabia: Ghawar ‘Ain Dar/Shedgum Area / Arab D resource depletion state 2004

Probable (incremental); 3,5 billion bbls

5%Possible; 7 billion bbls

10%

OIIP: 68.1 billion barrelsProved reserves: 41 billion barrels ( 60% of OIIP)Estimated ultimate recovery: 51 billion barrels (75% of OIIP)

Source: Saudi Aramco, 2004

Remaining proved; 14 billion bbls

20%

from WSJ, Feb 9, 2006

Ghawar and the world

Ghawar has produced about 60% of all Saudi Arabian oil from 1951-2004 and still accounts for some 50% of the Saudi production

When Ghawar output declines, Saudi production will most likely have peaked

After peak in Saudi Arabia it is difficult to envisage a global increase in conventional oil production

The Worry AboutSaudi Arabia’s Energy Miracle

The entire world assumes Saudi Arabia can carry everyone’s energy needs on its back cheaply.

If this turns out to not work, there is no “Plan B”.

Global spare oil capacity is now “all Saudi Arabia”.

No third-party inspector has examined the world’s most

important insurance policy for years.

Conventional wisdom says “Do not worry, Saudi Arabia has always come up with the goods.”

If conventional wisdom is wrong, the world faces a giant energy crisis.

71

Saudi Arabia problemsSince 1970, Saudi Arabia has been the world’s “swing producer” of petroleum: the only country capable of greatly increasing production in a short time (in response to supply interruptions such as hurricanes in GOM, violence in Nigeria, war in Iraq).KSA insists it still can fulfill the role of swing producer, but releases no verifiable data....its attitude is “trust us.” Analysts are (finally) starting to get very concerned (Matt Simmons).

A. Unexplained jump in reserves in 1990 (170 to 258 Gb).B. Ghawar reserves? 70 Gb (SA); 25–40 Gb (analysts).

72

E. Saudi Aramco says production from existing fields declines 8% every year. Thus, KSA needs to increase production by up about 1 million barrels/day every year just to compensate.

C. Almost all KSA production comes from 6 supergiant fields, and >60% comes from Ghawar. All six were discovered 40–60 years ago. Five of the six have produced at very high rates for most of their history.

D. At least some of the wells in these super giant fields are producing very, very high amounts of water with petroleum(70% to 90%; 30% is typical trouble level). In other fields, these levels have led to very rapid production declines.

Summary

The Ghawar field found in 1948 has produced 60% + of Saudi oil, is now producing approx. 5 million bopd and is approaching its tail.

When Ghawar peaks, Saudi will have peaked and so will the world.

Indications are that the OPEC “swing production is about to be exhausted

Summary contn.

Peak means that production can no longer be increased; we have then produced about half of the oil

After peak the price of oil will be market driven

A New Energy System Would Take 20 Years to Create

After peak oil, if our oil supply declines at a low rate of 2% per year….

We would need a new nuclear power station

somewhere in the world every other day for the

next 50 years.

Our economic system demands growth

Impacts of the lead up to Peak Oil

How will our lives change?

More Effects

Multinational companies depend on cheap energy for global trade.

The whole economic model of more and more each year will have to be re thought.

Everything possible will be brought into service to maintain the current economic system.

Unpredictable consequences.

Peak oil leaves us with Four Choices

► Last man standing► Wait for the techno fix► Powerdown► Create lifeboats

Living on the Cusp

Action required on two fronts (Think globally; act locally):

Personal lifestyle changes

Achievement of world wide political consensus and action. - Shift of consciousness?

Political Action ► Adopt the Uppsala protocol

- Distribution of remaining energy, rather than fight over it.

► Reduce population and consumption to long term carrying capacity by each country living within its ecological footprint

►Oppose the scandalous promotion of Nuclear power

►Press for meaningful debate about our energy future.

What Can We do?

► Let as many people as possible know about peak oil www.Livingonthecusp.org www.peakoil.net

► Get informed Web based news The Ecologist, Resurgence, Positive news

What Can We Do?

► Chose a low energy lifestyle.

► Learn to live and really live with less not just make do.

"Faced with a choice between the survival of the planet and a new set of matching tableware, most people would choose the tableware" - George Monbiot

What Can We Do?► Create communities. You can’t go it alone.

► Re-localise economies and energy production.

What Can We Do?

Vision the Future

Exponential growth in a Finite World

Final Word

If we use this opportunity to radically change what we do and how we do it, (adopt a post industrial society), then something positive can emerge.

However, if treat this as just an energy crisis then we are setting ourselves up for a bigger fall further down the line.

THANK YOU!!