Trump Tweet To Tweak Oil Trend

A showdown appears to be looming:

OPEC vs. Trump tweets.

That's said only half in jest.

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(edited)

On 7/1/2018 at 1:43 PM, Tom Kirkman said:

A showdown appears to be looming:

OPEC vs. Trump tweets.

That's said only half in jest.

The Iran sanctions were after consulting GCC, especially KSA. So, these GCC countries will increase the oil production to contain Iran. I see the GCC countries taking out 2 billion barrels of oil as spare to contain Iran. The 2 billion barrels will be used to substitute about 1.5 million barrels lost from Iranian 2.5 million barrels of export for 4 years. Iran is still likely to sell oil to China, Turkey and Russia to the tune of 1Mbd.

Edited by Bhimsen Pachawry
Spelling correction
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Trump really is a master troll.  Iran reacts...

Iran Furious After Trump Calls Saudi King, Demands 2MM Barrel Production Boost

Update: as expected, it did not take long for Iran - which has the most to lose from any Saudi output hike which would not only send the price of oil lower but also allow Riyadh to capture Iran's sanctioned market  share - to respond, and moments ago Bloomberg reported that in an interview with Hossein Kazempour Ardebili, Iran’s OPEC governor, he said that "if Saudi Arabia accepts U.S. President Donald Trump’s request to boost output, that means he is calling on them to walk out from OPEC."

"We are 15 countries in an agreement. Set aside that they do not have the capacity, there is no way one country could go 2 million b/d above their production allocation unless they are walking out of OPEC."

Well, if they don't have the capacity (which they do), there is no reason to be concerned. And yet Iran is precisely that, and considering that Trump said Saudi Arabia has "agreed" to his demand, we may have just witnessed the end of OPEC.

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They should install in the oval office an Amazon dash button you just have to press to order 2 millions barrels a day to the Saudis.

It would be more convenient than ordering it on Twitter.

 

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would be interesting to hear conversation between King Salman and Khalid Al-Falih after that call... any insight?;)

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39 minutes ago, DanilKa said:

would be interesting to hear conversation between King Salman and Khalid Al-Falih after that call... any insight?;)

Khalid Al-Falih tells King Salman: **

"I love it when a plan comes together.

Hey Boss, is now a good time to discuss an increase in my salary?"

Saudis Boost June Oil Production Close To All-Time High

 

 

 

** If you believe this is an actual quote, have you considered getting a job at CNN?

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as someone who worked on integrated project to boost production, I can tell 2M bopd is beyond reach unless its is already build and in this case - it is inexplicable waste of resources... I really doubt KSA may fork out that much for an extended period. At some point Ghawar (~5M bopd field, larges in the world) will resemble Cantrell (largest oil field offshore Mexico where nitrogen injected to keep water level from rising into perforations - works fine until there is little oil left and then decline is rather rapid) - you don't want to increase drawdown on naturally fractured Arab D formation with edge water drive as it may cause some damage which will be expensive to fix.

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3 hours ago, DanilKa said:

as someone who worked on integrated project to boost production, I can tell 2M bopd is beyond reach unless its is already build and in this case - it is inexplicable waste of resources... I really doubt KSA may fork out that much for an extended period.

In the meantime then, there should be an increase in production of bombastic rhetoric between Iran and KSA.

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(edited)

fingers xssed for rhetoric not converting to ballistic...

Edited by DanilKa
typo

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15 hours ago, DanilKa said:

as someone who worked on integrated project to boost production, I can tell 2M bopd is beyond reach unless its is already build and in this case - it is inexplicable waste of resources... I really doubt KSA may fork out that much for an extended period. At some point Ghawar (~5M bopd field, larges in the world) will resemble Cantrell (largest oil field offshore Mexico where nitrogen injected to keep water level from rising into perforations - works fine until there is little oil left and then decline is rather rapid) - you don't want to increase drawdown on naturally fractured Arab D formation with edge water drive as it may cause some damage which will be expensive to fix.

Ghawar doesn't produce 2GBL per day anymore. It used to do so in 2010 but has declined greatly. They were doing EOR in 2014-15 for Ghawar due to heavy decline. Nevertheless, Ghawar is only 30% of KSA oil resources and 40% of reserves. OOIP of Ghawar is 170GBL while reserves are at 55% -60% which is around 100GBL. Total OOIP & reserves of KSA was 530GBL and 275GBL. Ghawar has higher reserve to resource ratio due to large formation but it is not the only oil for KSA.

So,even without Ghawar, the KSA has still 360GBL resource and 175 GBL oil reserves. As of now, Ghawar has been seriously declining and 90% is exhausted. Other smaller oil fields are being tapped.

Just like USA is able to produce 10MBPD with 35GBL oil, KSA can produce even upto 25MBPD from 110-115GBL oil (10GBL is Ghawar and rest from other fields). KSA wastes so much money on various activities like building ghost cities, making man made islands etc that investment for spare capacity should not be considered as wasteful It is always wiseto keep spare capacity to be the swing producer

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Update:  Saudi Arabia Won’t Bring 2 Million Bpd Online

"... Oddly, oil prices did not spike at the start of trading on Monday, which suggests oil traders clearly didn’t entirely dismiss President Trump’s bold claim that OPEC would add 2 mb/d. The market is probably betting that Saudi Arabia could add more supply than previously indicated.

But as the supply outages mount, Saudi Arabia is in danger of losing control of the market. Riyadh does not want to burn through all of its spare capacity, which means it won’t add something like 2 mb/d. However, that means that the market is starting to look undersupplied for the second half of 2018. It’s a tricky balance for Riyadh, wanting to keep the market balanced but also wanting to keep dry powder for future disruptions.

Most likely, the Saudis will opt for allowing prices to go higher rather than using up most of their spare capacity."

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7 hours ago, Bhimsen Pachawry said:

Ghawar doesn't produce 2GBL per day anymore. It used to do so in 2010 but has declined greatly. They were doing EOR in 2014-15 for Ghawar due to heavy decline. Nevertheless, Ghawar is only 30% of KSA oil resources and 40% of reserves. OOIP of Ghawar is 170GBL while reserves are at 55% -60% which is around 100GBL. Total OOIP & reserves of KSA was 530GBL and 275GBL. Ghawar has higher reserve to resource ratio due to large formation but it is not the only oil for KSA.

So,even without Ghawar, the KSA has still 360GBL resource and 175 GBL oil reserves. As of now, Ghawar has been seriously declining and 90% is exhausted. Other smaller oil fields are being tapped.

Just like USA is able to produce 10MBPD with 35GBL oil, KSA can produce even upto 25MBPD from 110-115GBL oil (10GBL is Ghawar and rest from other fields). KSA wastes so much money on various activities like building ghost cities, making man made islands etc that investment for spare capacity should not be considered as wasteful It is always wiseto keep spare capacity to be the swing producer 

although you are highlighting my point, I'd like to ask you for source of your info. Ghawar was (and likely still is) the largest field in the world; it produced ~5MMBOPD and was pushing insanely high recovery factors. One of a theories I've heard from Aramco geologist - porosity of Arab D is underestimated (can't core good rock).

I'm out of the Kingdom (wouldn't share confidential info anyway) and wasn't following operating area production; google not cooperating but this link suggest field is still close to 5MM http://energy-cg.com/OPEC/SaudiArabia/OPEC_SaudiArabia_Ghawar.html 

I find Aramcons very professional bunch and Saudis as well-educated pragmatic people. Yes, there was waste (cheap gas, water, and electricity for one) and corruption but over-investment into spare capacity wouldn't be done unless they really hoped to "swing it" at a time of high oil price. Yes, I know Amin Nasser reassured Aramco have 2MM to spare but there are some doubts about that claim.

My bet - US will walk back anti-Iran rhetoric to avoid oil shock. And we still see it - one cannot neglect maintenance and investment into infrastructure w/o paying the price for it.

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good article by Wael Mahdi for your reading pleasure: Why 2 million Saudi barrels will not solve world’s oil problems

President Donald Trump’s move to pressure OPEC to increase production is not the optimal solution to cool down higher oil prices. That is because there is no single country or group that can carry the burden of balancing the oil market alone these days. In response to pressures from oil consumers, OPEC and its allies decided last month to increase production starting from July 1 by a nominal 1 million barrels a day to calm the market fears over possible shortages and to lower oil prices.  However, that hike seems not enough as oil prices closed on Friday at a little short of $80, the same level that triggered complaints by the US and other oil consumers two months ago. So why is this happening? And will exerting more pressure on OPEC resolve the situation? Probably not.

...

Politicians do not understand that asking Saudi Arabia to pump more will leave the market with a thin buffer of spare capacity. Geopolitical uncertainty means that in itself could lead to higher oil prices as fear over more shortages mount. But the Saudis know that. Moreover, politicians need to address long-term issues such as lack of investments in oil and gas, something they are not willing to do as more governments are supporting the shift from fossil fuel and adapting unfriendly policies to hydrocarbons. Reasonably high oil prices are needed for investments to continue. And surely, the world needs political stability. That is not happening with international trade wars or unstable governments in oil production. Two million barrels a day of spare Saudi capacity will not be enough to solve all the world’s problems. That is why there is an enormous need for constructive political thinking and dialogue and less OPEC finger-pointing. 

 

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On 7/3/2018 at 7:27 AM, DanilKa said:

although you are highlighting my point, I'd like to ask you for source of your info. Ghawar was (and likely still is) the largest field in the world; it produced ~5MMBOPD and was pushing insanely high recovery factors. One of a theories I've heard from Aramco geologist - porosity of Arab D is underestimated (can't core good rock).

I'm out of the Kingdom (wouldn't share confidential info anyway) and wasn't following operating area production; google not cooperating but this link suggest field is still close to 5MM http://energy-cg.com/OPEC/SaudiArabia/OPEC_SaudiArabia_Ghawar.html 

I find Aramcons very professional bunch and Saudis as well-educated pragmatic people. Yes, there was waste (cheap gas, water, and electricity for one) and corruption but over-investment into spare capacity wouldn't be done unless they really hoped to "swing it" at a time of high oil price. Yes, I know Amin Nasser reassured Aramco have 2MM to spare but there are some doubts about that claim.

My bet - US will walk back anti-Iran rhetoric to avoid oil shock. And we still see it - one cannot neglect maintenance and investment into infrastructure w/o paying the price for it.

Ghawar peoduction till 2009 was over 65GBL. It was producing 5 million barrels a day in 2009 - 

http://www.gregcroft.com/ghawar.ivnu

Total Ghawar reserves which are extractable with EROEI of over 1 is 95-100 GBL. The production was roughly 1.8GBL per year in 2009-2010. So, by 2015, the production would have been over 75GBL.

Ghawar had been undergoing EOR sice 2014. Here is the link - http://peakoilbarrel.com/closer-look-saudi-arabia/

It is only natural that EOR of 3rd stage like CO2 injection or methane injection has to begin once the oil depletion reached about 45-50%. Assuming the EOR gave back the oil production ability upto 5MBPD, the production as of 2018 would be about 82GBL.

I won't say that Ghawar is not absolutely producing 5MBOD oil but that Ghawar is producing in its last stage of EOR extraction. The production may be 5MBPD, but is artificially sustained for the time.being and will fall by 2020. I was just saying that Ghawar already is like Cantrell field of Mexico and will be soon under rapid decline

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On 7/3/2018 at 9:57 AM, DanilKa said:

one cannot neglect maintenance and investment into infrastructure w/o paying the price for it.

The time is approaching to pay the piper for the overdue bill for lack of maintenance.

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40 minutes ago, Bhimsen Pachawry said:

I won't say that Ghawar is not absolutely producing 5MBOD oil but that Ghawar is producing in its last stage of EOR extraction. The production may be 5MBPD, but is artificially sustained for the time.being and will fall by 2020. I was just saying that Ghawar already is like Cantrell field of Mexico and will be soon under rapid decline

In a long run - we are all dead. Meanwhile, single field is #3 producer, behind US and Russia. 

CO2 EOR was a pet project, not needed for recovery (already fantastic), cannot say more than it.

Field is on water injection; ~11MM bwpd few years back; largest seawater treatment plant (don’t ask about Ca and Mg sulphates).  If any factual published data - I’d be interested. Twilight in the desert is not the one. 

Thanks for responding, though. 

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1 hour ago, DanilKa said:

In a long run - we are all dead. Meanwhile, single field is #3 producer, behind US and Russia. 

CO2 EOR was a pet project, not needed for recovery (already fantastic), cannot say more than it.

I am not speaking of long term. EOR already started in 2015. Ghawar may have large extraction but you are forgetting that it is a 170GBL field. So, extraction of even 3-4 MBPD will be considered as decline. Also, may be to conserve the field for maximum extraction, KSA have already begun 3rd stage EOR in 2014-15.

The pilot project of CO2 injection to Ghawar began in 2012. I believe reuters is a good source-

 https://www.reuters.com/article/saudi-co2-ghawar/aramco-to-inject-co2-into-biggest-oilfield-by-2012-idUSLDE61E0TW20100215

Here is the confirmation in 2015 -

https://www.epmag.com/saudi-aramco-starts-co2-tests-ghawar-field-812516

https://www.globalccsinstitute.com/projects/uthmaniyah-co2-eor-demonstration-project

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8 hours ago, Bhimsen Pachawry said:

I am not speaking of long term. EOR already started in 2015. Ghawar may have large extraction but you are forgetting that it is a 170GBL field. So, extraction of even 3-4 MBPD will be considered as decline. Also, may be to conserve the field for maximum extraction, KSA have already begun 3rd stage EOR in 2014-15.

The pilot project of CO2 injection to Ghawar began in 2012. I believe reuters is a good source-

 https://www.reuters.com/article/saudi-co2-ghawar/aramco-to-inject-co2-into-biggest-oilfield-by-2012-idUSLDE61E0TW20100215

Here is the confirmation in 2015 -

https://www.epmag.com/saudi-aramco-starts-co2-tests-ghawar-field-812516

https://www.globalccsinstitute.com/projects/uthmaniyah-co2-eor-demonstration-project

Thanks for the links. Sorry, I mean links to the published production numbers. 

You are mistaken on scale of the CO2 injection pilot - 40mcsf/d is immaterial for the field where 11mbwpd is injected. If my math is right, 0.8MT of CO2 represent 0.0000125% of injected wtr volume. 

To close this discussion - fact of EOR pilot is no indication of present day production. Ghawar is not getting younger but shouldn’t be written off. At a same time, Aramco may find it hard to boost production by 2mmbopd in no time unless crude is in storage and production capacity already build. In which case it’s a bit of a waste and I think it is much cheaper to tell the world “no worry, we have capacity” than actually building it. 

My point - I will believe when I see 12.7mbopd coming out. Hasn’t happened yet. 

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The Trump Tweets vs. OPEC game continues...

image_5ee4f5a7-0088-4376-af67-d36e926aff5120180705_084140.jpg

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Trump tweets like that to make it look like he the master mover of world events. Luckiest con man to ever live (perfect storm getting him elected) is what he is. It will be hilarious if, in the end, he goes crying like a baby to prison, like the evangelist, Jim Baker, did. How sweet that would be!

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On 7/1/2018 at 8:11 PM, DanilKa said:

 

KSA has MASSIVE excess capacity. They don't need to go drill a bunch of new wells, just open the chokes.

They claim to have 2MM barrels in excess capacity, although it's worth noting that a lot of people think that's an exaggeration. That's clearly where Trump got that number from, though.

https://www.reuters.com/article/us-saudi-privatisation-aramco/saudi-spare-oil-capacity-complicates-any-aramco-listing-sources-idUSKCN0UX1Z2

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But it's all because Trump is under pressure over high gas prices at the pump, right?

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(edited)

13 hours ago, Eric Staib said:

KSA has MASSIVE excess capacity. They don't need to go drill a bunch of new wells, just open the chokes.

Insha'Allah...

as you may have noticed, I'm one of that lot:)

P.S. Have you worked on remediation of water breakthrough in fractured carbonates?

Edited by DanilKa

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On 7/9/2018 at 9:43 AM, TraderTate said:

But it's all because Trump is under pressure over high gas prices at the pump, right?

I would guess it has more to do with needing to gain buy in from the rest of the world on Iran sanctions. The United States needs all the other countries to stop importing Iranian oil. The rest of the world is not going to sever ties with Iran unless it is sure it can get oil from other places. I think this is Trump's way of sending the message that the shortfall needs to be/will be covered. 

 

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