You have hit the nail (conundrum) on the head. The bananoil republics (and shiekhdoms)have given cheap subsidized oil to keep the masses happy. To not cut the subsidies means less (and more expensive) oil to supply the rich capitalist west (and China etc)as more is wasted locally. But if the masses don't get their daily fix of cheap bananoil then they will be up in arms (and the revolutions will bring out the radical elements- usually anti western) with a jump in oil prices on the turmoil.

Not quite correct. Subsidized or not, if you use your bananas in-country you boost your local economy.

The definition of a banana republic is a government that stiffs its citizens of their bananas to sell more to outsiders and keeps the money. The ELM model would be the antithesis of that.

Great work Wes. For me log normal plots tell the truth as best can be learned from the limitations. I know you understand the significance of a straight l/n plot but many don't understand the physical natural laws driving the reservoir dynamics. I'll bet more than a few are suspicious of such a straight and predictable projection. Once, on another thread, I tried to explain the accuracy of production forecasting when the decline curve reaches this point but I doubt I did much good.

westexas, what was the historical decline rate of Texas and the Lower 48 & how closely do you think Saudi Arabia may follow this? Sorry if this has already been mentioned on prevuous threads.

It is self evident that the logistic method for swing producers has problems, but does that make it useless?

Depends on how big the problems are. You and Laherrère are clearly pretty far apart here.

The 2006, 2007 and 2008 Saudi data are going to show a logistic plot that is consistent with an URR of less than 200 Gb, (C+C).

But, the URR is going to show that it is creeping higher as you add those numbers in. You will also find % of Qt moving backward, not forward as you would expect if the HL was correct. That's what I discovered both when I backcast Texas from about 1960 forward, and when I did the HL for Saudi and added in the years following 2005. In other words, incorporation of new data indicates that the URR is not static per the HL.

It might be useful to update the paper, incorporate the data through 2007, (you could even estimate 2008 at this point) and indicate what is changing - and by how much. But what, I mean URR, % of Qt, etc.

Jeff,
You should use this result instead:

It leads to the following forecast which has a wide uncertainty interval in terms of flow rates but the upper limit is close to what Jean is saying:

The HSM is also pointing to a constant production scenario until 2020:

I tend to concur with your view as the graphics below. In the first graphic, the data is annual data AND for comparison I show where the linear flow would have to be to achieve a URR of 260 GB. The last "tail" data is what would be projected if the total year average for the KSA was 9.3 MMBPD, a number that has not yet been achieved in 2008 as an average for the YTD. As Robert points out elsewhere, it has the effect of shifting the curve to the right but only slightly. Flat production eventually shows up as a declining curve as the P/Q ratio gets smaller with each additional data point. And to continue to shift the curve "to the right" one has to have continual growth in production for quite sometime. Mathematically, what compounds the issue is that larger the production the faster the increase in sum value (Q) and the more difficult it becomes to sustain or increase the P/Q ratio.

Notice that this graphic projects to a value of ~213 GB. the arrow to the 2005 peak also moved in the translation from Excel to a JPEG. Thats the point just above the arrowhead.

The second graphic is the same data except using monthly as opposed to annual data. The curve has much more noise to it, but the linearization covers the same time frame (January 1990 to present). Note that the monthly data suggests a somewhat lower URR (~205) AND because of the larger number of datapoints is less influenced by a single or a small collection of production increases or decreases on a monthly basis. To shift this curve substantially, as noted above, would require production increases that are not characterisitic of any production curve that we have seen.

For fun, I increased the KSA output by an average of 100,000 BPD/month from now until the end of 2009 (so that production is over 11 million barrels per day and beating their November 1980 output record. It does shift the curve to a URR of ~240GB or roughly the amount used globally in a little more than one year. But as soon as this increase "stops" the curve begins it's decline once again. So, it is reasonable to ask, in the face of what we do and do not know, does any of this increase seem reasonable or even plausible?

And for real fun if you increase at a rate of 200,000 BPD/month so that production at the end of 2009, production is more than 12.5 million BPD, it shifts the curve a little further to the right to the value of 260 GB URR, but only 20 GB greater than the hypothetical immediately above even though the rate of increase is twice as high over the same period. And this production curve does not look like anything we've seen recently from the KSA.

"Ultimately," the big numbers get you!

I not know much about this subject but I like to share some simple thoughts, please forgive me for my ignorance:

First, a swing producer exist when there is an abundance (supply > demand at a reasonable price) so in order to stop price from falling the swing producer cut production, vice versa for the opposite. As soon as abundance is gone and tightness comes, when demand is greater than price there is no longer a swing producer because all the producers are producing at their maximum level to take advantage of the price.

Since the hubbert's linearization is I think based on the assumption that a producer will produce at its maximum level geologically possible therefore it not work for swing producers. There is no use of linearizing a swing producer. In order to get some useful information about flow rates and reserves must only linearize non-swing producers only. The swing producers must only linearize when they are no longer swing producers.

Second, all oil exporters which also have vast natural gas reserves (I think they all have that) would ultimately liquify their natural gas to be sold as liquids. So, in order to get useful information about prices, flow rates etc we must take in account natural gas reserves of an oil exporter as well as its oil reserves. Luckily there is no opec like thing for natural gas liquids so we can assume that govt declared reserves are correct. This thing help reducing chaos in our data and predictions that come due to uncorrect reporting of oil reserves by some govts.

looks like the consumption of Norway is actually very small (look at the consumption incremental bump, not the total consumption of the left hand side), however, the data in that graph looks very non-conclusive, because the US and China make up the lion's share and its hard to tell whether its price or economies driving the consumption at different prices.

My understanding is that KSA has huge heavy oil deposits they never have bothered with. Maybe now they will. And KSA is but one supplier. The obsessive hysteria about KSA does not strike me as a balanced world view, even within the oil sector.
Anyway, crude demand seems to be falling faster than supply. On the near horizon are automobiles, slated by nearly every major manufacturer, that will draw most of their power from electrical grids. And powering up grids can take zero oil.
Grid demand from non-auto sources looks like it will head south too. New LED lightbulbs, improved HVAC systems, better insulation, better building desings -- architects have learned to cut energy consumption radically.
In 20 years, the real question will be: Who will be left buying oil? Is there anyone reading this board that would prefer to spend $7 a gallon over plugging your car in? Is there anyone who would choose an old-fashioned incan light bulb over an LED, and LED that will last 20 years and uses 15 percent or less of the power of an incan?
The biggest risk right now to a cleaner and more prosperous world is an oil price collapse. The EV is the OPEC-killer, the death-ray for speculators.
Once the commodity funds start unloading positions, ouch, look out below. Oil below $120 today. Is $20 out there somewhere?
Not possible? Who would have thought $10 was possible in 1998, from the vantage point of 1980?

"It seems advancements in technology are not being addressed here."

not here, in this specific article, but in many previous posts, this has been discussed. unfortunately, i am too lazy and not nimble enough computer-wise to cite you some examples.

"A horizontal well at the top of the reservoir will produce almost a normal flow till the water (or other injection medium) gets to the horizontal pipe and then the fall off is precipitous and not like the lower 48 ...."

this would be true in a completely homogeneous reservoir, one thing that ghawar is not is homogeneous.

many are forecasting a precipitous decline for ghawar and that may well be the case. ghawar is made up of thousands of wells, they wont all water out at one time. at least that is not the case in any fields i have knowledge of.

One of the major points Simmons made in latter portion of 'Twilight in the Desert', was; World demand for oil would continue to increase to 120 mbd by the year 2020, and the only oil producing country with potential spare capacity to meet that demand was Saudi Aramco. However he did not think they had that kind of spare capacity, and thus Peak Oil would occur sooner rather than later.

I think it's hard to predict what will happen regarding oil a month from now, much less 12 years from now. I think that he's basically on track, but we have to be careful about predicting too much. As has been shown many times, specific predictions he makes are often quite off.

If we pass this bumpy plateau and begin a downward slope worldwide, then prices will go up to $500/barrel and beyond. By the time that happens, it seems more and more doubtful that we'll be prepared for it with alternatives. Solutions do exist, but a critical mass of desire to implement them doesn't exist yet. Therein lies the problem.

I doubt we will ever reach the point where the demand is 120 mbd. My suspicions are based on the idea of equilibrium. Price will have to increase to the point that demand is lower (as in far lower than the demand that exists right now)... we are more likely to be looking at civil wars or NEW international resource wars before demand goes above the range of 85-95 mbpd. That means... very soon. Probably no later than 2010-2012. As for my own prediction here... this is really the sort of thing I'd be grateful to be wrong about. :)

They see (as do I) the track to the present day is full of dips and rises; how can complete disaster be extrapolated from that?

With a lot of circular logic, an unsupported premise, and much repetition. And by covering your eyes and holding your nose.

Perry 1961, It is obvious that EV's are right around the corner. But we aren't going to have additional power plants online any faster then we will have refineries for heavy crude. What are these Politicians smoking! I have a daughetr in California that has been through the Black outs and she says "keep your F-ing EV's away from here". We barely have enough power now in the west. They say "charge at night" LOL

http://oilenergystockvideos.blogspot.com

Iraq says they'll double production to 5mbpd in the next few years. Whether or not that comes to pass, Iraq could conceivably pump more oil than the Saudi's someday.

It wouldn't surprise me if Iraq has more oil left than Saudi Arabia, but I seriously doubt that Iraq will have a higher oil production rate than Saudi Arabia.

On June 30, 2008, Iraq Oil Minister Shahristani hoped that Iraq's production will reach "4.5 mbd by 2013 from its current level of 2.5 mbd".
http://www.upstreamonline.com/live/article158317.ece

Only a few days later on July 3, 2008, Shahristani "told lawmakers that short-term technical support contracts worth around $3 billion may not get signed" which will limit Iraq's ability to increase oil production.
http://www.upstreamonline.com/live/article158500.ece

Iraq may have significant remaining oil reserves but extracting that oil is not easy.

Iraq has produced about 32 Gb of crude & condensate to Dec 2007.
OPEC Annual Statistical Bulletin http://www.opec.org/library/

The creaming curve for Iraq below indicates a total URR of 130 Gb.

source: page 32 http://www.oilcrisis.com/LaHerrere/zurich.pdf

The black line in the chart below shows that Iraq could produce up to 8 mbd peak plateau, assuming no constraints. This is highly unlikely.

Colin Campbell has dropped his forecast peak production rate for Iraq from 4.5 mbd in December 2002 to only 2.65 mbd in June 2008. Campbell's peaks are assumed to peak plateaus in the chart below.
http://www.aspo-ireland.org/index.cfm/page/newsletter

The Iraq Oil Minister hopes that 4.5 mbd can be reached by 2013. The forecast below delays this production rate of 4.5 mbd by one year to 2014.

Given the instability in Iraq and the need to drill not only production wells but also the requirement to build necessary infrastructure, an upper bound peak plateau of 4.5 mbd for Iraq seems reasonable.

ace,

i have the greatest respect for your work.

"The average recovery factor for Saudi Arabia is likely to be between 30% to 37% as discussed in my story called "Saudi Arabia’s Crude Oil Reserves: Particulars or Propaganda?" June 15, 2008"

but, i think you might be a little pessimistic on recovery factors.

abqaiq is discussed above. i believe that 50% recovery is a minimum extrapolation of the linear rate vs cumulative graph. i also believe that abqaiq is as good an analog as we will find for ghawar. so imo, ghawar will recover > 50% ooip. i dont know about the balance of the fields, but if these 2 giants are at 50%(or greater), i dont think their overall recovery will be as low as 30%. the 37% may be too low also.