Posted on 04/25/2008 4:11:18 PM PDT by hamboy
Next year, if all goes well, Saudi Arabia will turn the spigots on the largest oil field to come online anywhere in the world since the late 1970s.
The Khurais complex, sprawling across a swath of red dunes and rocky plains half the size of Connecticut, is expected to add 1.2 million barrels a day to an oil market caught between growing demand and a paucity of significant new discoveries. The twin forces have led to historically high prices for crude oil, which settled at a record $117.48 on Monday.
(Excerpt) Read more at online.wsj.com ...
But the project also illustrates a darker point: Even in Saudi Arabia, home to more than a quarter of the world's known recoverable reserves, the age of cheap and easily pumped oil is over.
To tap Khurais, Saudi Arabian Oil Co., known as Aramco, has embarked on the most complex earth- and water-moving project in its history. It is spending up to $15 billion on a vast network of pipes, oil-treatment facilities, deep horizontal wells and water-injection systems that it calls "one of the largest industrial projects being executed in the world today."
Moreover, with the project, Aramco is dipping into one of its last big basins of oil. After Khurais, Saudi Arabia will have only one known mega-field left to fully develop, the even more challenging Manifa field, offshore in the Persian Gulf. Much of the kingdom's reserves beyond these lie either in aging fields or smaller pockets.
"Khurais and Manifa are the last two giants in Saudi Arabia," says Sadad al-Husseini, a former Aramco vice president for oil exploration. "Sure, we will discover dozens of other smaller fields, but after these, we are chasing after smaller and smaller fish."
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Hey...gee...I wonder if this was written BEFORE the Brazilian oil field discovery???
Peak Cheap Oil. It’s here. This is what Peak Oil is like.
I guess North Dakota and Brazil don't count as significant new discoveries?
The 33 billion barrel Brazilian discovery needs tech to be developed. Send money, it won’t be cheap.
If it were that simple we would have flying cars and bases on Mars already.
I think it is setup to sell the leastest for the mostest.
It might be. The various oil owners do not act in cahoots for long even when they try, not even all the OPEC members. Some of them might be trying to pace themselves, some are already producing much less than they would wish.
I am so tired of this conspiracy theory mindset at this forum.
People, especially those in charge of huge businesses, are not total idiots.
They are producing as fast as they possibly can at these record prices. Why wouldn't they? So their competition can?
It is really time to get a grip around here.
In terms of reservoir quality the Khurais and Ghawar are very different. There was an attempt to develop Khurais [IIRC} in the seventies at the time the results were very disappointing.
The Saudis are trying it again and in doing so employing a lot of infra structure that was not needed at Ghawar for many decades after if was developed.
How successful will they be? It remains to be seen. Manifa has another problem. A lot of vanadium in the oil. My understanding is that the reason it was not developed is that the oil will need to have the vanadium removed before it is can be refined. Not impossible by any stretch, but an indication that the Saudis may not have any better options of any significant size.
Is that why Saudi Arabia declined to increase production this week dispute our begging?
There is no shortage in the supply of oil.
There is the weakness of the US Dollar. Flooding the market with oil with no place to put it does depress the price, but it’s not common sense.
I guess your local supermarket could request 2 million bananas but you couldn’t navigate a shopping cart while they were there.
It’s the same with oil. Refineries can only produce gasoline so fast, and the supply of oil doesn’t change that. Asking Saudi Arabia to increase oil production, which isn’t exactly easy for them, doesn’t do anything for domestic gasoline production. Or at least not much.
The problem is lag time and expense. No one can predict the price of oil in 10 to twenty years, which is about the amount of time that it takes for new sources to hit the market.
The only thing that matters is who can produce the oil the cheapest and the last 10% of demand. The only thing that we know for certain is that we don’t know.
The Saudis [and to a lesser extent the Kuwaitis and maybe others] may be playing a waiting game.
I hope so, as that would tell me there is still something more to come. Since most of the mainstream supply / demand models show the Persian Gulf region production as the plug number to balance supply and demand this is a critical question.
It's no coincidence that all of the so-called "energy crises" of the last 40 years have occurred during periods when the U.S. dollar was in the sh!tter for one reason or another (1973, 1979, 2005-08, etc.).
Who is playing the waiting game? We've restricted drilling offshore the US coast to only 15% of our entire coastline.
We've prevented drilling in countless onshore areas. ANWR is only the most publicized.
There are countless others. The Big Thicket preserve in Texas is seizing the surface under which oil companies have owned the minerals for a hundred years and then denying them access to drill.
Before we criticize others, we had better get our own house in order.
As to US policy, I can't and won't defend it. If we have a near term problem [and I think we do] then there is no excuse for not developing what we have as soon as is feasible.
Big Thicket I did not know about. The Santa Barbara Chanel absolutely. ANWR drill now before the Trans Alaska Pipeline drops under a minimum [not certain how low production can drop before this is an issue.]
It was interesting to see news last week on the plans to develop the nasty heavy crude under the Northern arm of the Great Salt Lake which Amoco drilled up in the seventies before concluding that the time had not yet come, but not before it had identified a several hundred million barrel resource awaiting a market.
I believe we have exchanged comments before on offshore Florida, which other than the Western panhandle is questionable and the East Coast which is pretty much the great unknown. Any other thoughts on where to look in the U.S.?
What kind of money we were on before 1973? Foreign wise, that is. Intertesting that you happened to pick that year.
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