Does S Arabia Have 2 Mln Barrels in Spare Capacity?

[millenniumice 0]

Very interesting > 

What if I said all arab nation will run out of oil at the same time.
Crazy right ? 

why are 20 saudi princes still being held in jail ? 

Why did Crown price want to start FUND ? 
and why did that die also ? 

why do only 3 or 4 Saudis know how much reserves actually exist? 

and why did the 287bbl estimate in 1997 magically stay at 287bbl til 2007 ? 

The saudi fund is in limbo for only one reason . noone will let anyone test 

reserve status . 
truth is there is no more oil in saudi arabia. 

the end of days is very near., 
God pulls plug on arabs and turns back to israel.
a great transfer of wealth will be the sign of Joseph . 
there will be 7 years of famine for everyone outside of israel 

and 7 years of pletty for Israel >

armageddon will be for OIL
christ will finish battle and all will know that he is King of Kings 
and Lord of Lords. 

    

[Bhimsen Pachawry + 72]

15 hours ago, NickW said:

The USA is not a Petrostate - it is the 2nd the biggest importer on the Planet and oil production only makes up a few 5 of its economy. As I said if the USA went to being zero producer it would have major repercussions for sure but a determined policy to adjust to it is feasible. I can't see this being the case for Saudi which is a centrally planned one trick pony economy build around a kleptocracy. 

Adapt to European size vehicles

Rapid transition to Hybrid, PHEV and EV's

Mass shift towards a nuclear - renewable energy economy 

Major shift towards end use efficiency.

Plenty of coal reserves to fill in the gaps

 

The only valid point you had was coal reserves to fill the gap. The other points are invalid.

European or other sized vehicles are not enough. USA does not have proper connectivity like rail across the land. Only connectivity is flight and road. So, the efficiency gained by EU vehicles is only minimal. The transportation of goods via trucks, military oil expense, petrochemicals etc are a big problem.

Electric vehicles is a big joke. Hybrid may be reasonable but electric one is absurd. The lithium ion battery itself needs petrochemicals for the solution! Also, Lithium is in short supply an not enough for replacing the propulsion in hundreds of millions of cars.

The USA is heavily urban society with 70% population in Urban areas and 15% in semi-urban areas. Only 5% of the population are in farming. So, how do you expect people to cope up with loss of production? Where will the urban population go? What jobs will urban population have if production goes down? 

Petroleum is needed to make items like PVC wires without which there is no electric cables and hence no electricity. Mobiles, computers etc also need petroleum. Food production needs petroleum fertilisers, pesticides etc. Plastics, paints, clothing, electronics etc depend on petroleum based raw materials.

USA will not die out of starvation like the Arabs who don't have water and hence food growing ability, but USA will be cut off from the rest of the world and will not be able to have extensive contact with the old world. USA will also have to make a major shift in its economy and will have to lead a rural life. The transition will be drastic and not something to be taken lightly. So, oil production can't be done recklessly in the fields. The sudden spurt in oil production from 5MBD to 11MBD in 5 years is a big rise and I don't think that it was a reckless decision.

[NickW + 2,714]

3 hours ago, Bhimsen Pachawry said:

The only valid point you had was coal reserves to fill the gap. The other points are invalid.

European or other sized vehicles are not enough. USA does not have proper connectivity like rail across the land (1). Only connectivity is flight and road. So, the efficiency gained by EU vehicles is only minimal (2). The transportation of goods via trucks, military oil expense, petrochemicals etc are a big problem (see point 6)

Electric vehicles is a big joke . Hybrid may be reasonable but electric one is absurd. The lithium ion battery itself needs petrochemicals (4) for the solution! Also, Lithium is in short supply an not enough for replacing the propulsion in hundreds of millions of cars(3)

The USA is heavily urban society with 70% population in Urban areas (5) and 15% in semi-urban areas. Only 5% of the population are in farming. So, how do you expect people to cope up with loss of production? Where will the urban population go? What jobs will urban population have if production goes down? 

Petroleum is needed to make items like PVC wires without which there is no electric cables and hence no electricity. Mobiles, computers etc also need petroleum (as per 4). Food production needs petroleum fertilisers (6), pesticides etc. Plastics, paints, clothing, electronics etc depend on petroleum based raw materials (7)

USA will not die out of starvation like the Arabs who don't have water and hence food growing ability (8), but USA will be cut off from the rest of the world and will not be able to have extensive contact with the old world. USA will also have to make a major shift in its economy and will have to lead a rural life (9). The transition will be drastic and not something to be taken lightly. So, oil production can't be done recklessly in the fields. The sudden spurt in oil production from 5MBD to 11MBD in 5 years is a big rise and I don't think that it was a reckless decision.

The point I was making was that of a hypothetical scenario to effectively compare the USA to KSA's future were they faced with the same issue - no oil. In the USa's case it could adapt, certainly not in a BAU perspective but it could. KSA in contrast is completely fooked unless they all emigrate to Sweden. 

In response....

1. How about build some more rail then - Jan was telling us how cheap this is in the USA.

2. A Hybrid or Plug in Hybrid offering 3-4 L /100km is a massive improvement over 9-10 L /100Km even if only applied to private vehicles and light trucks. Hybrid tech is now being applied to Buses and their is no reason why it couldn't be applied to heavy trucks

3. There are alternatives to Lithium such as Sodium which is not quite as good but a lot cheaper than Lithium. There are about 11kg of elemental sodium in a cubic metre of seawater. No shortage there. 

Already being commercialised - https://www.faradion.co.uk/

4. The scenario is where the USA is no longer a producer of petrochemicals - not a petrochemical free world

5. An observation which supports the electrification of transport networks - either personal or public. 

6. Ammonia can be produced from water and air using electricity. In fact Ammonia production has been mooted as an answer to utilising stranded wind where the economics of connecting to a grid are uneconomic. You can also run a diesel engine on Ammonia - the Russians did it in WW2. Its not as compact a fuel as diesel but its easy to do. 

7. Volumes could be met from imports / vegetable oils. You can also make ethylene from water and carbon dioxide which is the basis for many plastics. 

8. Yes - that was the point I was making

9. Sure in a petroleum limited world travel will be less frequent, particularly flight but fast ships can do the Atlantic in about 5-6 days. 

 

 

[Bhimsen Pachawry + 72]

4 hours ago, NickW said:

The point I was making was that of a hypothetical scenario to effectively compare the USA to KSA's future were they faced with the same issue - no oil. In the USa's case it could adapt, certainly not in a BAU perspective but it could. KSA in contrast is completely fooked unless they all emigrate to Sweden. 

In response....

1. How about build some more rail then - Jan was telling us how cheap this is in the USA.

2. A Hybrid or Plug in Hybrid offering 3-4 L /100km is a massive improvement over 9-10 L /100Km even if only applied to private vehicles and light trucks. Hybrid tech is now being applied to Buses and their is no reason why it couldn't be applied to heavy trucks

3. There are alternatives to Lithium such as Sodium which is not quite as good but a lot cheaper than Lithium. There are about 11kg of elemental sodium in a cubic metre of seawater. No shortage there. 

Already being commercialised - https://www.faradion.co.uk/

4. The scenario is where the USA is no longer a producer of petrochemicals - not a petrochemical free world

5. An observation which supports the electrification of transport networks - either personal or public. 

6. Ammonia can be produced from water and air using electricity. In fact Ammonia production has been mooted as an answer to utilising stranded wind where the economics of connecting to a grid are uneconomic. You can also run a diesel engine on Ammonia - the Russians did it in WW2. Its not as compact a fuel as diesel but its easy to do. 

7. Volumes could be met from imports / vegetable oils. You can also make ethylene from water and carbon dioxide which is the basis for many plastics. 

8. Yes - that was the point I was making

9. Sure in a petroleum limited world travel will be less frequent, particularly flight but fast ships can do the Atlantic in about 5-6 days. 

 

 

I am only saying that oil production of USA with reserves to production ratio of 10 is not reckless. So, KSA producing 12mbd is not excessive

[John Foote + 1,135]

USA only marginally has a national oil policy, and it's centered on the economics to the stock holder, not national interests. Starting in the 70s, it made a heck of a lot more financial sense to import crude. 

Aramco cannot react at the speed on an international oil company, let alone smaller independents you find in the USA. Time to well completion is at least 3X the US. Decision making is at a glacier pace. A lot of slack time has to be built in to avoid the potential of failure. Time to initiate drilling that well. Probably measure that in years. Heck, I know it's in years, although of course it's updated regularly and the amount of drilling is forecasted to go up, a lot, just to maintain. Expense per well, wow, it's very high for land based and shallow water, although against the revenue stream it's kind of a who cares. One of my favorite things to do was drive by the pipe yard and see billions of dollars of just-in-case laying around. I seriously doubt they are really the low cost producer any more. They could be, but the inefficiencies are gradually overcoming the inherent natural resources and efficiencies of scales put in back in the 70s and early 80s. 

With enough "runway" I have no doubt Saudi Arabia could exceed 12MBD. Go look at their production 1979 through 1982. They've been at these levels long ago, though then with far fewer producing wells. It took the first Iraq war, and international policies against Iran, to bring them to back to consistently over 8 billion.

[NickW + 2,714]

18 hours ago, John Foote said:

USA only marginally has a national oil policy, and it's centered on the economics to the stock holder, not national interests. Starting in the 70s, it made a heck of a lot more financial sense to import crude. 

Aramco cannot react at the speed on an international oil company, let alone smaller independents you find in the USA. Time to well completion is at least 3X the US. Decision making is at a glacier pace. A lot of slack time has to be built in to avoid the potential of failure. Time to initiate drilling that well. Probably measure that in years. Heck, I know it's in years, although of course it's updated regularly and the amount of drilling is forecasted to go up, a lot, just to maintain. Expense per well, wow, it's very high for land based and shallow water, although against the revenue stream it's kind of a who cares. One of my favorite things to do was drive by the pipe yard and see billions of dollars of just-in-case laying around. I seriously doubt they are really the low cost producer any more. They could be, but the inefficiencies are gradually overcoming the inherent natural resources and efficiencies of scales put in back in the 70s and early 80s. 

With enough "runway" I have no doubt Saudi Arabia could exceed 12MBD. Go look at their production 1979 through 1982. They've been at these levels long ago, though then with far fewer producing wells. It took the first Iraq war, and international policies against Iran, to bring them to back to consistently over 8 billion.

Motto of Joe Public in KSA is Never Make a Decision Never Make a Mistake. To be fair - in an authoritarian police state that's not a bad position to take from a self preservation perspective. 

Spending a few days around Al Midra will give you a good perspective on the cost base there. 

Edited July 21, 2018 by NickW

[John Foote + 1,135]

4 hours ago, NickW said:

Motto of Joe Public in KSA is Never Make a Decision Never Make a Mistake. To be fair - in an authoritarian police state that's a bad position to take from a self preservation perspective. 

Spending a few days around Al Midra will give you a good perspective on the cost base there. 

Been there, done that, got the payout. You have to wonder all the corners of the Kingdom to understand the vast unnecessary infrastructures. Al Midra is just a monument to managing projects others kicked into gear, and doing a bumbling job at it. I really like the country, but I am somewhat pessimistic. The changes required are very hard, especially for a successful company and Aramco is successful. To appreciate real waste, the King Abdulaziz World Cultural Center is right out the window. Is there a more expensive building in the world? It is amazing, but really?

[NickW + 2,714]

11 hours ago, John Foote said:

Been there, done that, got the payout. You have to wonder all the corners of the Kingdom to understand the vast unnecessary infrastructures. Al Midra is just a monument to managing projects others kicked into gear, and doing a bumbling job at it. I really like the country, but I am somewhat pessimistic. The changes required are very hard, especially for a successful company and Aramco is successful. To appreciate real waste, the King Abdulaziz World Cultural Center is right out the window. Is there a more expensive building in the world? It is amazing, but really?

Did you work in that building? I got transferred there in 2011 when it opened and immediately started suffering sick building syndrome symptoms. The reason was it was full of Formaldehyde being vented off from new furnishings. We recommended they heat up and then air purge the building to resolve   of course no one listened. 

The cultural centre came after I left. 

 

 

[John Foote + 1,135]

Had many meetings in Midra, never assigned there. Didn’t know about the furniture outgassing, but the glass siding/windows were falling off the building. Lucky no one was killed. Up high on a clear day you could watch vehicles burning on the highway. Traffic was the one thing I could never adjust to. 

[NickW + 2,714]

8 hours ago, John Foote said:

Had many meetings in Midra, never assigned there. Didn’t know about the furniture outgassing, but the glass siding/windows were falling off the building. Lucky no one was killed. Up high on a clear day you could watch vehicles burning on the highway. Traffic was the one thing I could never adjust to. 

I used to get the Hibijibis driving from RT to DH. Also drove up to Tanajib / Manifa several times - should have flown really but driving was one way of getting through another day in the magical kingdom. 

Someone told me the safety violations in the construction phase for Midra exceeded 2000. All waved through. 

[Ian Austin + 131]

On 7/11/2018 at 7:45 PM, Marina Schwarz said:

Well, does it? From a recent Oilprice story:

"More recent history shows Saudi has never produced more than 10.6mn b/d on average over a single month. And even in the recent period, we have observed a steep decline in domestic Saudi oil inventories," Bank of America Merrill Lynch wrote in a note, arguing that there is plenty of reason to question the notion that Saudi Arabia has around 2 mb/d of idled capacity. "Thus, it appears the oil market has little confidence that Iran volumes can be easily replaced."

I don’t think anybody, outside of the KSA, knows the real answer to this question. I’m sure they have spare capacity - however I wonder if they even know that number

[Jeffrey Brown + 207]

It’s instructive to compare Saudi Arabia’s net export response to two oil price doublings—from 2002 to 2005 and from 2005 to the 2011 to 2013 time period.  

As annual Brent crude oil prices approximately doubled from $25 in 2002 to $55 in 2005, Saudi net exports (total petroleum liquids, BP data base) rose from 7.1 million bpd to 8.7 million bpd, a 6.8%/year rate of increase.

As annual Brent crude oil prices doubled again, from $55 in 2005 to an average of $110 for 2011 to 2013 inclusive, Saudi net exports averaged 8.0 million bpd from 2011 to 2013 (11% below the 2005 level), and so far Saudi annual net exports have been below their 2005 level for 12 straight years, through 2017. 

Furthermore, if we extrapolate the 2005 to 2017 rate of decline in the Saudi ratio of production to consumption (what I call the Export Capacity Index, or ECI), it suggests that the Saudis have already shipped more than half of their total post-2005 supply of Cumulative Net Exports of oil (CNE).  

At an ECI Ratio of 1.0, production = consumption and net exports = zero.  Saudi Arabia’s ECI Ratio fell from 5.0 in 2005 to 3.1 in 2017.   Note that when Saudi Arabia’s inevitable production decline kicks in, the rate of decline in their ECI Ratio will really accelerate. 
 

Edited July 22, 2018 by Jeffrey Brown

[Jeffrey Brown + 207]

The Six Country Case History (major net oil exporters, excluding China, that hit or approached zero net oil exports from 1980 to 2010), in the time period from 1995 to 1999, and Saudi Arabia, from 2005 to 2016, were both characterized by rising production and rising consumption, with a declining ECI Ratio (ratio of production to consumption) and declining net exports of oil, relative to 1995 and 2005 respectively. 

The following chart shows normalized post-1995 values for the Six Countries, through 2002 (BP data base, total petroleum liquids):

http://i1095.photobucket.com/albums/i475/westexas/Slide1_zpsklujn2kn.jpg

Based on the observed initial rates of declines in the respective ECI Ratios (1995 to 1999 for the Six Countries and 2005 to 2017 for Saudi Arabia), Six Country estimated post-1995 CNE (Cumulative Net Exports) were 18 Gb (billon barrels, total petroleum liquids) and Saudi estimated post-2005 CNE were 60 Gb.   In both cases, these extrapolations basically assume a perpetual rate of increase in production. 

Of course, Six Country production subsequently fell, after 1999, and post-1995 CNE were only 7.3 Gb, about 40% of what the initial (1995 to 1999) projection showed.  This has obvious implications for remaining Saudi CNE, when the inevitable Saudi production decline kicks in. 

There is another interesting similarity between the Six Countries and Saudi Arabia, in regard to the referenced time periods.  

Six Country net exports in 1996 were the same as 1999 (2.7 million bpd or about one GB/year).  Saudi net exports in 2006 were the same as 2016 (8.4 million bpd or 3.1 Gb/year).   The crucial difference between 1995 and 2005 and 1999 and 2016 is the rate of depletion in regard to remaining CNE, even though the respective annual volumes were the same. 

For example, the Six Countries shipped 14% of actual post-1995 CNE in 1996, and they shipped 24% of remaining actual post-1995 CNE in 1999, even though the respective annual volumes were the same. This is of course an accelerating rate of depletion. In this four year time period (1996 to 1999 inclusive), the Six Counties shipped 54% of actual post-1995 CNE.

Saudi Arabia shipped 5% of estimated post-2005 CNE in 2006, and they shipped 10% of remaining estimated post-2005 CNE in 2016, even though the respective annual volumes were the same, which of course is also an accelerating rate of depletion. In this 11 year time period (2006 to 2016 inclusive), Saudi Arabia shipped about half of estimated post-2005 CNE. 

Note that given a finite remaining volume of Saudi CNE, it’s not whether, but to what degree, that we are seeing an accelerating rate of depletion in remaining Saudi CNE. 

In any event, it’s important to remember that the actual post-1995 CNE for the Six Countries were only 40% of what the initial estimate showed, using the same methodology that I’m using for Saudi Arabia. 

Note that their population increased from 25 million in 2005 to 32 million in 2016, as their total liquids consumption increased from 2.2 million bpd in 2005 to 3.9 million bpd in 2016.  Their net exports fell relative to 2005, even as production increased, because the increase in their consumption outpaced the increase in production.  And note that the ECI Ratio extrapolation for Saudi Arabia in effect assumes a perpetual rate of increase in production.  Given an inevitable production decline, their net export decline rate will really kick into high gear once they see a sustained production decline.  

In any case, if we divide estimated post-2005 CNE at the end of 2005 by 2005 population and estimated remaining post-2005 CNE at the end of 2016 by 2016 population, estimated post-2005 Saudi CNE at the end of 2005 were 2,400 BO per capita and remaining estimated post-2005 CNE at the end of 2016 were 900 BO per capita.   

For the sake of argument, if we assume that the Saudis sell their remaining CNE for about $75 per barrel, they would generate about $70,000 per capita from selling their remaining estimated total volume of CNE.  

Following are links to Six Country and Saudi graphs showing their respective ECI Ratios and annual net exports for 1995 to 2007 and 2005 to 2016 respectively. 

Six Country:
http://i1095.photobucket.com/albums/i475/westexas/Six Country ECINet Exports_zpsnac6scbb.jpg

Saudi Arabia:
http://i1095.photobucket.com/albums/i475/westexas/Saudi ECINet Exports_zpsvljb7s8n.jpg