Tom Kirkman

Aramco Crude Production Restored To Pre-Attack Levels, Official Says

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9 hours ago, Tom Kirkman said:

Many thanks for weighing in, William.  As always, your insight is both useful and appreciated.  Great to see you are keeping a level head, as usual.

The dearth of actual, hard facts in the media is aggravating as hell.   So. Much. Spin.

Is it at all possible that the "spin" is not intentional, but is a result of the ignorance of the commentators? Most superficial analysts still confuse production and production capacity. Rather fundamental shortcoming, I would say.

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1 hour ago, William Edwards said:

Is it at all possible that the "spin" is not intentional, but is a result of the ignorance of the commentators? Most superficial analysts still confuse production and production capacity. Rather fundamental shortcoming, I would say.

 

1 hour ago, William Edwards said:

Is it at all possible that the "spin" is not intentional, but is a result of the ignorance of the commentators? Most superficial analysts still confuse production and production capacity. Rather fundamental shortcoming, I would say.

Unless an analyst has inside confidence of the House of Saud, especially the oil minister’s innermost thoughts, ideas and knowledge regarding the Saudi fields, amount of water being pumped to maintain pressure, new well production and old well decline curves—things not commonly shared with mere mortals outside the upper realm of the Kingdom—how on earth could one be sure of much anything? Not to dismiss your unique analysis, sir, but I presume you are one of those “insiders.”

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2 minutes ago, Gerry Maddoux said:

 

Unless an analyst has inside confidence of the House of Saud, especially the oil minister’s innermost thoughts, ideas and knowledge regarding the Saudi fields, amount of water being pumped to maintain pressure, new well production and old well decline curves—things not commonly shared with mere mortals outside the upper realm of the Kingdom—how on earth could one be sure of much anything? Not to dismiss your unique analysis, sir, but I presume you are one of those “insiders.”

I am not an insider, at all, Gerry, although I may have a much better grasp of the business of oil than the insiders have. My assessment did simple arithmetic with published facts, that anyone could do if they were careful in word and concept definitions. It all starts with the principle that consumption cannot exceed production, nor can production exceed consumption. A simple fact, but mostly ignored by the elite consultants and advisors of the petroleum world, including OPEC. If production capability exceeds consumption, then removing excess production capability has NO impact on production. I simply reflected that fact in my analysis.

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(edited)

In 2014 (if I remember correctly) the Saudi's increased their production by almost 2 million bbl/day to presurise the shale industry or from certain Russian perspectives punish them for their support of Assad. This is not so far from the 20% spare capacity figure you mention. Are we absolutely sure they still have a further 20% spare today? There was a reply to one of the oil price articles I copy posted a few days back where the auther doubted they had the capacity to exceed 10 million bbl/day, it was an interesting perspective...who knows at this point because they are so secretive. Like many people I don't claim to know what they are capable of but I am watching it all as closely as I can for obvious reasons...I don't like feeling poor 😆

I guess we will find out on the next few months if this attack has really damaged their production/exports or not. I've said this earlier but there were some reports that KSA was buying Kuwaiti oil to help them meet customers demand and then another one that claimed a satellite fitted with some kind of radar could analyse the volume of oil in their storage (is that even possible?).

One thing is for sure, their messy involvement in Yemen isn't over yet. I have seen some reports of the UAE attacking the Houthi and that Saudi launched another separate attack both over the last few days, if true and they suceed to put significant pressure on the Houthi rebels then retaliation is all the more likely.

Cheers

Edited by El Nikko
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21 minutes ago, El Nikko said:

In 2014 (if I remember correctly) the Saudi's increased their production by almost 2 million bbl/day to presurise the shale industry or from certain Russian perspectives punish them for their support of Assad. This is not so far from the 20% spare capacity figure you mention. Are we absolutely sure they still have a further 20% spare today? There was a reply to one of the oil price articles I copy posted a few days back where the auther doubted they had the capacity to exceed 10 million bbl/day, it was an interesting perspective...who knows at this point because they are so secretive. Like many people I don't claim to know what they are capable of but I am watching it all as closely as I can for obvious reasons...I don't like feeling poor 😆

I guess we will find out on the next few months if this attack has really damaged their production/exports or not. I've said this earlier but there were some reports that KSA was buying Kuwaiti oil to help them meet customers demand and then another one that claimed a satellite fitted with some kind of radar could analyse the volume of oil in their storage (is that even possible?).

One thing is for sure, their messy involvement in Yemen isn't over yet. I have seen some reports of the UAE attacking the Houthi and that Saudi launched another separate attack both over the last few days, if true and they suceed to put significant pressure on the Houthi rebels then retaliation is all the more likely.

Cheers

The key question is "Does the world need the full output that the Saudis can provide?" A complete global balance is required to answer this question, but a rough approximation of such through incremental analysis suggests that the Saudi (and global producers') problem in the next few years will be TOO MUCH PRODUCING CAPACITY. So the answer to the question remains "No!"

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1. Shale producers other than the super majors cannot make a profit <$55.  

2. New “mega-discoveries” have fallen off dramatically. 

3. If one presumes the Saudi welfare state persists, they can’t survive on <$55 oil. 

4. The transition from fossil fuels to renewable energy is going to take decades, not years. 

5. Barring a pandemic, the world is going to become more overpopulated. 

6. Ergo, something has to give. I suspect that means global chaos. Financial. Hegemony shift.  Oil prices >$100 seem likely at some point. Everyone has an opinion. Mine is there will be a supply crunch for no other reason than the collision of forces I’ve outlined above. 

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1 hour ago, William Edwards said:

I am not an insider, at all, Gerry, although I may have a much better grasp of the business of oil than the insiders have. My assessment did simple arithmetic with published facts, that anyone could do if they were careful in word and concept definitions. It all starts with the principle that consumption cannot exceed production, nor can production exceed consumption. A simple fact, but mostly ignored by the elite consultants and advisors of the petroleum world, including OPEC. If production capability exceeds consumption, then removing excess production capability has NO impact on production. I simply reflected that fact in my analysis.

Well, unlike electricity, which is rather definitive on that score, there's a little bit of slack in the system (elasticity of supply and demand in economics speak). It most certainly effects pricing and I talked about this here It's the demand, Stupid

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2 hours ago, El Nikko said:

and then another one that claimed a satellite fitted with some kind of radar could analyse the volume of oil in their storage (is that even possible?).

Yes it's possible, assuming the tanks have "floating" roofs, which most do, because a roof that doesn't have a big volume of air below it won't go "BOOM" quite so badly as one that does if there's a spark. ;)

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2 hours ago, William Edwards said:

. A simple fact, but mostly ignored by the elite consultants and advisors of the petroleum world, including OPEC. If production capability exceeds consumption, then removing excess production capability has NO impact on production. I simply reflected that fact in my analysis.

Well put. Thank-you.

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(edited)

Well there are differences in production capacity and processing capacity and it was the latter that was impacted.  There are two important levels of processing that were being discussed.  The first level is called a GOSP, gas oil separation plant.  That component is the first stage in processing the oil by removing the water and then separating the oil and gas which flow to different processing facilities or if oil, to storage tanks.  The GOSPs for some fields are distributed around the fields which is the case for Khurais.  So no loss of production occurred at Khurais other than what had to be shut in temporarily.  What was lost at Khurais was 600kbbl/day of stabilization capacity.  That is the part of the processing that removes H2S from the oil and also reduces the vapor pressure so that the oil can be put on ships for export or stored in tanks long term.  There is enough oil used domestically in KSA that not all of it needs to be stabilized because it can be sent directly to a refinery instead of on a ship for export.

So what has been lost at Khurais is 600kbbl/day may not even be needed but very likely it was being used because that stabilization plant has been expanded by 300kbbl/day in the last 5 years.  Why expand if you don't use the capacity?

OK so now to Abqaiq where 7mmbbl/day can be processed directly from the oil fields if I understand correctly.  The facility at Abqaiq can process 7mmbbl/day from the GOSP phase to the export phase.  The oil from the fields first must pass through the spherical oil separators or spheroids as they have been referred to.  There are 11 of those at Abqaiq and 8 were damaged which is 72%.  The oil must first be passed through those in order to reach the stabilizers.  Thus, 5.1mmbbl/day of both production and processing capacity were lost and will not be restored in short order unless some of the 8 were not seriously damaged.  However, we can see that at least 5 of the 11 were seriously damaged and will be out of commission for quite some time, that is 45% or 3.18mmbbl/day of production AND processing that is impacted.

The media reported on the 5.1mmbbl/day plus 600kbbl/day of lost processing capacity which was correct.  Now maybe they don't need all of that processing capacity and weren't using it but they weren't exporting up to their normal levels when this happened.  They were at around 6.7mmbbl/day or so for August I believe.  In any case, they have certainly lost 3.2mmbbl/day of production processing.  So supposing that Abqaiq has 18 stabilizers and five of them were severely damaged.  This amounts to 27% of the export processing capacity or about 2mmbbl/day of lost export processing at Abqaiq.  However, the remaining stabilizer towers may not all be operable due to proximity to towers that have to be repaired.  It may be unsafe to operate the rest of the towers in close proximity that were not damaged.  I believe that is part of the obfuscations that are taking place in the media and by KSA itself.

What we really want to know is exactly how much export capacity they have available, is it 6.8mmbbl/day? We can't know for certain because some oil is exported from the east coast and some from the west.  I believe it was running about 5mmbbl/day on the east and 2mmbbl/day on the west.  I think the Khurais field supplies the west while Ghawar and several others supply the east through Abqaiq.  I believe that ALL of the export capacity of the east is at Abqaiq.  So if Abqaiq was previously processing 5mmbbl/day, the question is how much is it doing now?  The claim is that it's processing 4mmbbl/day.  Hence, a loss of 1mmbbl/day at Abqaiq.  I think the 600kbbl/day lost at Khurais will show up as a loss on the west coast.  So it's my view that the most that the Saudis will be able to export going forward, until more units are repaired, is 5.2mmbbl/day.

That is a far cry from the 8mmbbl/day they were exporting when they flooded the market and even the 7mmbbl/day that they have been exporting the last year or so.  Hence, the market is going to be in deficit 2mmbbl/day for the next two months I think.  I assume that the Saudis have some idea of what they can bring back by the end of November but my guess is that it won't be 2mmbbl/day, half that if they are lucky.

 

Edited by wrs
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2 hours ago, wrs said:

Well there are differences in production capacity and processing capacity and it was the latter that was impacted.  There are two important levels of processing that were being discussed.  The first level is called a GOSP, gas oil separation plant.  That component is the first stage in processing the oil by removing the water and then separating the oil and gas which flow to different processing facilities or if oil, to storage tanks.  The GOSPs for some fields are distributed around the fields which is the case for Khurais.  So no loss of production occurred at Khurais other than what had to be shut in temporarily.  What was lost at Khurais was 600kbbl/day of stabilization capacity.  That is the part of the processing that removes H2S from the oil and also reduces the vapor pressure so that the oil can be put on ships for export or stored in tanks long term.  There is enough oil used domestically in KSA that not all of it needs to be stabilized because it can be sent directly to a refinery instead of on a ship for export.

So what has been lost at Khurais is 600kbbl/day may not even be needed but very likely it was being used because that stabilization plant has been expanded by 300kbbl/day in the last 5 years.  Why expand if you don't use the capacity?

OK so now to Abqaiq where 7mmbbl/day can be processed directly from the oil fields if I understand correctly.  The facility at Abqaiq can process 7mmbbl/day from the GOSP phase to the export phase.  The oil from the fields first must pass through the spherical oil separators or spheroids as they have been referred to.  There are 11 of those at Abqaiq and 8 were damaged which is 72%.  The oil must first be passed through those in order to reach the stabilizers.  Thus, 5.1mmbbl/day of both production and processing capacity were lost and will not be restored in short order unless some of the 8 were not seriously damaged.  However, we can see that at least 5 of the 11 were seriously damaged and will be out of commission for quite some time, that is 45% or 3.18mmbbl/day of production AND processing that is impacted.

The media reported on the 5.1mmbbl/day plus 600kbbl/day of lost processing capacity which was correct.  Now maybe they don't need all of that processing capacity and weren't using it but they weren't exporting up to their normal levels when this happened.  They were at around 6.7mmbbl/day or so for August I believe.  In any case, they have certainly lost 3.2mmbbl/day of production processing.  So supposing that Abqaiq has 18 stabilizers and five of them were severely damaged.  This amounts to 27% of the export processing capacity or about 2mmbbl/day of lost export processing at Abqaiq.  However, the remaining stabilizer towers may not all be operable due to proximity to towers that have to be repaired.  It may be unsafe to operate the rest of the towers in close proximity that were not damaged.  I believe that is part of the obfuscations that are taking place in the media and by KSA itself.

What we really want to know is exactly how much export capacity they have available, is it 6.8mmbbl/day? We can't know for certain because some oil is exported from the east coast and some from the west.  I believe it was running about 5mmbbl/day on the east and 2mmbbl/day on the west.  I think the Khurais field supplies the west while Ghawar and several others supply the east through Abqaiq.  I believe that ALL of the export capacity of the east is at Abqaiq.  So if Abqaiq was previously processing 5mmbbl/day, the question is how much is it doing now?  The claim is that it's processing 4mmbbl/day.  Hence, a loss of 1mmbbl/day at Abqaiq.  I think the 600kbbl/day lost at Khurais will show up as a loss on the west coast.  So it's my view that the most that the Saudis will be able to export going forward, until more units are repaired, is 5.2mmbbl/day.

That is a far cry from the 8mmbbl/day they were exporting when they flooded the market and even the 7mmbbl/day that they have been exporting the last year or so.  Hence, the market is going to be in deficit 2mmbbl/day for the next two months I think.  I assume that the Saudis have some idea of what they can bring back by the end of November but my guess is that it won't be 2mmbbl/day, half that if they are lucky.

 

^ Excellent analysis.  Wish I could give you more than 1 upvote.

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That depends on what they mean by production. I think Aramco certainly has the ability to ramp up production. But I seriously doubt that they are back at the point where they could process that much produced oil.

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The attack were in middle of September (14), so I wonder want a more accurate number be August prod - Sept. p * 30/16 =  (9,8-9,1) * 30/16 = 1,3125 miil. barrels a day.  If you assume same production as Agust until the event? But its of course who knows exactly whats behind the daily production numbetrs. Anyway a daily periodics of the month should be a better indicator for Saudis oil production.

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23 hours ago, Ward Smith said:

Yes it's possible, assuming the tanks have "floating" roofs, which most do, because a roof that doesn't have a big volume of air below it won't go "BOOM" quite so badly as one that does if there's a spark. ;)

Even if it has a fixed roof, there are satellites that can accurately assess the volume. 🤐

So the answer is absolutely yes, we can very accurately assess volumes. The question is if that information is public. (That, I don't know...)

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5 minutes ago, Otis11 said:

Even if it has a fixed roof, there are satellites that can accurately assess the volume. 🤐

So the answer is absolutely yes, we can very accurately assess volumes. The question is if that information is public. (That, I don't know...)

Well that is pretty damn cool to know

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29 minutes ago, Otis11 said:

Even if it has a fixed roof, there are satellites that can accurately assess the volume. 🤐

So the answer is absolutely yes, we can very accurately assess volumes. The question is if that information is public. (That, I don't know...)

True, the volume is relatively easy to determine by looking at the shadows and doing some trigonometry. However that presupposes the volume is completely filled. 

Here's something that Is published, which means it is showing what is out of date compared to state of the art by about 6 years or so. 

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(edited)

47 minutes ago, Otis11 said:

Even if it has a fixed roof, there are satellites that can accurately assess the volume. 🤐

So the answer is absolutely yes, we can very accurately assess volumes. The question is if that information is public. (That, I don't know...)

There is an outfit that is a subscription service that does this.  They observed that in the first few days after the attacks, Saudi storage dropped about 10mmbbl but recovered a little bit by the end of the month.  I haven't seen them publishing anymore free data lately.  Here is what will happen to the "production" from KSA if they can't process it. They are going to be a big Venezuela, no use producing oil you can't export.

https://twitter.com/staunovo/status/1180153592159883264

Edited by wrs
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2 hours ago, Otis11 said:

Even if it has a fixed roof, there are satellites that can accurately assess the volume. 🤐

So the answer is absolutely yes, we can very accurately assess volumes. The question is if that information is public. (That, I don't know...)

 

1 hour ago, Ward Smith said:

True, the volume is relatively easy to determine by looking at the shadows and doing some trigonometry. However that presupposes the volume is completely filled. 

Here's something that Is published, which means it is showing what is out of date compared to state of the art by about 6 years or so. 

 

1 hour ago, wrs said:

There is an outfit that is a subscription service that does this.  They observed that in the first few days after the attacks, Saudi storage dropped about 10mmbbl but recovered a little bit by the end of the month.  I haven't seen them publishing anymore free data lately.  Here is what will happen to the "production" from KSA if they can't process it. They are going to be a big Venezuela, no use producing oil you can't export.

https://twitter.com/staunovo/status/1180153592159883264

A few years ago I recall there were a couple outfits that published bits and pieces of data of global storage of oil using satelite imaging.  To get the full info, you needed to subscribe. 

Using satelites and custom computer algorithms to calculate changes in storage tank levels globally is not cheap, and I would not expect that a global overview updated weekly or monthly would not be available for free.

 

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Well, this is some of the best information I have ever read or heard of, and I’m grateful that you shared it with us. There are no secrets in this brave new world!

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This thread is still going?

Saudi stated something... it means FA.

Sorted. End of. 

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On 10/4/2019 at 12:38 PM, Ward Smith said:

True, the volume is relatively easy to determine by looking at the shadows and doing some trigonometry. However that presupposes the volume is completely filled. 

Here's something that Is published, which means it is showing what is out of date compared to state of the art by about 6 years or so. 

Yes, this can absolutely be done, but there are also satellites that can measure specific parameters about a fixed volume tank and calculate additional information about the contents which would allow you to derive how much oil is in a partially filled fixed volume tank even if you had no access to the tank itself.

Sorry, unfortunately I have to leave what parameters are measured and what you can calculate from that intentionally vague. (These satellites were not developed for this purpose, but never the less, have found such an application.)

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10 hours ago, Otis11 said:

Yes, this can absolutely be done, but there are also satellites that can measure specific parameters about a fixed volume tank and calculate additional information about the contents which would allow you to derive how much oil is in a partially filled fixed volume tank even if you had no access to the tank itself.

Sorry, unfortunately I have to leave what parameters are measured and what you can calculate from that intentionally vague. (These satellites were not developed for this purpose, but never the less, have found such an application.)

If it were my problem to solve, I'd probably do something in the infrared with sidereal views, counting on the part with oil being cooler than the rest. I haven't spent much time thinking about it, but am very confident I could write the software, or better yet define the algorithm and let someone younger write it.   ;)

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On 10/2/2019 at 7:10 AM, wrs said:

Zerohedge are gold cheerleaders and oil haters, always have been.  They hate shale with a passion.  I have been following them since they started back in 2009 or 8.  One of the original commentators posts on a private investing board I have been at for 20 years.  He is rarely anything but sarcastic and hyperbolic in his postings.  I take what they say with a big grain of salt.

BTW, they were a volunteer organization to begin with.  I think the guy that is on the investing board was paid some small amount and left angry because the owner is the one who ended up raking in the dough when it became successful.

Back on topic, they shut the flares down by the 27th I think and so that means they figured out how to get that oil processed and moved elsewhere.  That oil is NOT going to Abqaiq and it's all sour, heavy.  They are basically a big Venezueala until they have that Abqaiq plant fixed. They also lost a good percentage of Khurais and what they are putting out there is not as good as what it was before they lost two stabilizer towers.

They will not be able to meet their future delivery requirements and the market isn't going to want that much heavy sour oil.  Let's see what the story is by December.

I could not agree more. My understanding is that global inventories being drained by 150mbbl/month and shortages will become apparent by Xmas. It is just that Saudi inventories being drained first (which no one cares about), and US imports very little from Mid-East, so I guess the shortages will hit Europe/Asia when they come?

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Crap. 20% of 10mmb/d is 2mmb/d. Still leaves 3.7mmb/d coming out of inventories. Rystad shows Saudi inventories plummeting.

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The question I have where those spearoids still being used?

In another thread somebody said they where old technology dating from the 60s and so longer being used because the loss and speed to process no longer made them economical. If this is the case then the only thing holding back processing is getting the towers back online, which sounds like a much easier process vs repairing the spearoids.

Also assuming they are holding back production they also have the processing capacity to run full bore. How much of this space capacity if any is idle at other locations, and how long to bring it back online?

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