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Oil supplies - May 9

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Saudi Arabia's Ghawar Isn't Sinking (but has apparently moved)

JoulesBurn, The Oil Drum
Analysts Neil McMahon and Ben Dell from Bernstein Research are back with more analysis. When we last heard from them, they were looking for Haradh in all the wrong places and reporting on the widespread dismantling and bulldozing of oil wells in Ghawar, the super giant oil field in Saudi Arabia.

As promised, they have returned with a study purporting to show that Ghawar is not rapidly depleting because it is not sinking. Using the the technique of Synthetic Aperature Radar (SAR) Interferometry, which is capable of measuring millimeter vertical movements via satellite, they found not subsidence but actually a slight rise in one area.

Despite the rather dubious premise behind this, given that Ghawar is being pressurized by injecting water, it warranted another look.

However, before getting to that question, my analysis of their analysis rapidly became one of forensic pathology. Alas, they have misplaced Ghawar by a few miles, rendering their interpretations misplaced as well. Also, their technique for quantifying changes in oil field infrastructure was found to be rather inaccurate. This can't end well.

Ghawar is the largest oil field in the world. It is divided into six operational areas, as shown in the figure at right. ...

Conclusion

I (hesitantly) suggest that the Bernstein authors revise their conclusions in light of, at least, a correct placement of the Ghawar field. Consider counting wells instead of "objects". Ghawar may be crashing, or it might be doing just fine, but their current interpretation and data set don't really push the needle one way or the other.It is likely true that Shedgum is being drilled for the remaining oil, and visual evidence suggests that Uthmaniyah and Hawiyah are attracting serious attention as well. The question is not really how well Saudi Aramco is managing their fields -- they are probably doing a fine job. The question, at least for the near term, is how they are managing their existing production rates.
(8 May 2008)
The Wall Street Journal recently ran a story on Tracking Saudi Oil From Space (May 6) in which author JoulesBurn was mentioned. -BA


Russian oil: Trouble in the pipeline

The Economist
Despite booming demand and record prices, Russia's oil industry faces problems
---
... Over the past seven years, according to Citibank, Russia accounted for 80% of the growth in oil production outside the Organisation of the Petroleum Exporting Countries. The increase in its output in the early part of the decade matched the growth in demand from China and India almost barrel for barrel. Yet in April, production fell for the fourth month in a row. It is now over 2% below the peak of 9.9m barrels a day (b/d) reached in October last year. Before that, the growth in Russia's output had been slowing steadily, suggesting that the drop is not a blip. Leonid Fedun, a vice-president of Lukoil, a local oil firm, says Russia's production will never top 10m b/d. The discovery that Russia can no longer be relied upon to cater to the world's ever-increasing appetite for oil is naturally helping to propel prices to record levels.
(8 May 2008)


OPEC sees no oil shortage, would pump more if needed

Reuters
World oil markets have enough supply now, but OPEC is willing to pump more if needed to keep pace with demand, the group's secretary-general said on Thursday.

Adbullah al-Badri also said in a statement that the 13-member Organization of the Petroleum Exporting Countries holds more than 3 million barrels per day of spare production capacity for use if needed.

"There is clearly no shortage of oil in the market," the statement quoted him as saying.
(8 May 2008)

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