« US Bars Prize-Winning Cuban Scientist | Main | Today's Bush Joke »

November 14, 2005

World's 2nd Largest Oil Field Has Peaked Peak Oil

This should be front-page news all over the world. AMEInfo (via EnergyBulletin):

It was an incredible revelation last week that the second largest oil field in the world is exhausted [sic] and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field.

The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al Zanki told Bloomberg.

He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.

However, it is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and accounts for more than half of Kuwait's proven oil reserves. This is also not what forecasters are currently assuming. [...]

The news about the Burgan oil field also lends credence to the controversial opinions of investment banker and geologist Matthew Simmons. His book Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy claims that the ageing Saudi oil fields also face serious production falls. [Emphasis added]

Burgan was supposed to pump 2 mb/d for another 30 or 40 years.

This case is instructive, to put it mildly. Everyone says an oil field is in fine shape, right up until the day when they announce that its output is already falling. Even with a field as important as the world's second largest, the true status of the field is kept under wraps until the situation is so bad that there's no hiding it any longer.

This is what's going to happen with Saudi Arabia, too. One day we'll just wake up and find that all of their projections were BS.

Posted by Jonathan at November 14, 2005 07:14 PM  del.icio.us digg NewsVine Reddit YahooMyWeb

Comments

Oil Prices Dip on IEA Official's Comments

http://biz.yahoo.com/ap/051115/oil_prices.html?.v=4

In a recent post Jonathan included a few graphs that showed historically there is no connection between oil prices and consumer demand, at least in the US. As I get older my memory screws up at times so I will ask Jonathan to correct me if my statement is inaccurate. Recent events have suggested it may be different this time. When I suggested that demand destruction was prompted by higher gas prices, Jonathan pointed out that some of this was due to the September hurricanes.

Now this from Gillian Wong, AP writer.

Crude Oil Futures Slip on Comments That High Prices Are Hurting Fuel Demand

SINGAPORE (AP) -- Crude oil futures drifted lower Tuesday as an International Energy Agency official said high pump prices have hurt fuel demand.
Light, sweet crude for December delivery fell 6 cents to $57.63 a barrel in Asian electronic trading on the New York Mercantile Exchange. The contract Monday rose 16 cents to settle at $57.69.

In London, December Brent crude fell 8 cents to $54.65 a barrel on the ICE Futures exchange.

High oil prices have started dampening global demand and the slowdown in consumption growth could in turn push prices lower, Noe Van Hulst, the International Energy Agency's Director of Long-Term Cooperation and Policy Analysis, said Monday.

The agency last week revised down its 2005 demand world demand growth forecast by 70,000 barrels a day, to 1.2 million barrels, and 2006 demand growth estimate by 90,000 barrels a day, to 1.66 million barrels a day.


Posted by: at November 15, 2005 06:15 AM