The three major oil producers (i.e. those producing more than 5 mbd each) are currently seeing surges in production as the world moves to an overall production of 90 mbd. The OPEC June Monthly Oil Market Report (MOMR) notes that this has brought Russia to 10.33 mbd in May, some 100 kbd over the same period in 2011; and Saudi Arabia is reported to have averaged 9.917 mbd in May, up 40 kbd over April. The United States is running at 6.236 Mbd of crude (from the EIA TWIP), while importing 9.117 mbd. The MOMR reports US oil supply at 9.66 mbd on average, but counts more than just crude in this value. The gain over the past year is around 600 kbd. It is interesting to note, in regard to OPEC production the continued difference between the volumes that OPEC reports from direct contact with the suppliers, and that when the numbers are obtained from “secondary sources.”
Figure 1. OPEC production from its members, with values provided by them (OPEC June MOMR)
Figure 2. OPEC production from information provided by secondary sources (OPEC June MOMR).
This surge from the majors has, in part, led the EIA to project that oil prices will, for the remainder of the year, remain relatively stable.
Figure 3. EIA estimate of crude oil prices going forward over the next eighteen months (EIA TWIP)
In the short term, and leading into a national election, there is no significant event (short of a hurricane or two) that obviously threatens this projection – though the Iranian situation and the questionable stability of nations in the Middle East and North Africa (MENA) has to remain a concern. But sadly the continued ill health of the global economy, with no evident savior or realistic plan for growth now visible, means that demand – which OPEC projects will still grow 1.17 mbd y-o-y on average this year, may continue to be met.
I have, however, in previous posts, given my reasons for anticipating that the surge in both Russian production and that in the United States are at near peak, and will soon decline. Saudi Arabia’s fall will be less dramatic and a little later, but the combination does not bode well for the international supply in the next presidential term. The big question with Saudi Arabian production has been, to date, more focused on the production from Ghawar, which at 5 mbd has been the rock on which the overall production builds. But that rock is continuously eroding under the long production periods that its different regions have seen. The final major new effort to bring new production on line in the overall field was the effort at Haradh, down in the South tip of the field.
JoulesBurn has written comprehensively on this region, beginning with the first well that came into production. In 1979, as the late Matt Simmons pointed out in “Twilight in the Desert”, the three northern segments of Ghawar, Ain Dar, Shedgum and North Uthmaniyah were producing 4.2 mbd of the 5.3 mbd total Ghawar output, with South Uthmaniyah producing another 400 kbd. By 2006 North Uthmaniyah was running at a 46% water cut. Joules has taken the historic record for that region of the field and made a short movie presentation included in a post that shows how Uthmaniyah was developed over the years.
Figure 4. Single frame from the movie on drill site development in Uthmaniyah, over time (JoulesBurn)
The sequence of wells, moving inexorably to the crest of the field, shows how the wells had to move as the underlying reservoir became more depleted in oil. Uthmaniyah is the region where the test program to inject carbon dioxide to enhance EOR is under construction, as mentioned earlier, and scheduled for completion in the fourth quarter of 2013. It is worth noting that Aramco are also planning on using more steam injection for enhanced oil recovery (EOR) and that plans have just been signed to increase steam production at the Ju’aymah, Shedgum and Uthmaniyah plants, with completion dates in 2014 and 2015.
As one moves south the quality of the reservoir changes, and becomes more difficult to produce. However as Greg Croft has noted the two lower segments of the field Hawiyah and Haradh were developed with horizontal wells, rather than the vertical wells further north in Ghawar. This has overcome some of the geological constraints and the fact that the productivity index drops from around 140 barrels of oil per day/psi to 45 BOPD/psi at Hawiyah, and 31 at Haradh. In 2008 the Hawiyah NGL recovery plant was commissioned, to yield 310 kbd of ethane and NGL.