Sapient citizens should be both amazed and worried about how world oil production continues to increase.
Amazed because ceteris paribus, production should have begun its inevitable decline years ago.
The “other thing not equal” and not anticipated by many, including myself, has been near free debt that has permitted citizens to afford more expensive oil, and has permitted oil companies to apply technology (aka energy) to squeeze oil out of source rock, while losing money.
Worried because most of this new debt can not and will not be repaid, unless we find another planet of resources to fuel growth, which guarantees a severe economic reset at some point.
Worried because the technology (aka energy) oil companies have used to increase flows, while losing money, guarantees a severe oil production cliff, rather than a gentle decline.
Where are the adults?
Q: Karen Fremerman says:
World supply just keeps going up. I am a long time lurker on this blog and can’t believe how Saudi Arabia just keeps pumping at these levels. I read Matthew Simmon’s “Twilight in the Desert” 10 years ago and it seemed like those high and increasing water cuts would make their peak have happened by now. When will declines ultimately overwhelm increases from other fields in Saudi Arabia and the world? And are we just making a world of hurt for ourselves because we are doing so many extraordinary measures to keep up this rate that fields will just crash and we will have a Seneca Cliff as Ugo Bardi says?
A1: George Kaplan says:
They are continually adding new wells and offshore are replacing all wellheads with artificial lift. Khurais expansion was due about now but I haven’t seen anything in the news. They aren’t adding new water injection or handling capacity which is likely the limit overall, and in terms of production capacity their reserves are irrelevant without new facilities to overcome those limits. Like you I’ve been expecting some sort of decline but they seem to be hanging on. There have been a couple of periods in the recent past where they looked like they’ve been hitting a decline curve before new surface facilities have been brought on. Their active drilling rigs have been steadily falling over the past year or so and so have their stocks. If most of their wells are now horizontal then when decline starts it will go really quickly.
A2: Ron Patterson says:
I worked in Saudi Arabia from 1980 to 1985. All the time I was there I never saw an artificial lift well. Well, at least I saw no nodding donkeys. There may have been downhole electric pumps, I have no idea, but I never heard of them when I was there. But back then everything was pressure driven. Water injection kept the pressure up and they just opened the taps and the oil just came out. No need for artificial lift.