Posted by Sam Foucher on April 10, 2007 - 11:30am

This a guest post by ace.

Summary

My post is related to Stuart's and Euan's stories as my post discusses the declining Saudi Arabia's future production rates. The discussion about Euan's and Stuart's stories further validates Saudi Arabia's forecast decline.

My forecast decline for Saudi Arabia is in disagreement with Euan's previous statement: "According to my view, Saudi Arabia, together with other OPEC countries will raise production to meet this demand challenge". This demand challenge is stated by Euan to be that "The IEA are forecasting demand to rise strongly by around 3 million bpd between the second and fourth quarters." My assumption in my forecast in that Saudi Arabia does not have any long term ability to raise their production. This assumption is confirmed by Riyadh Bank's recent forecast of 8.44 mb/d average production for Saudi Arabia in 2007.

Stuart stated in his story "Saudi Arabian oil declines 8% in 2006". that "I'll bet $1000 with the first person who cares to take me up on it that the international oil agencies will never report sustained Saudi production of crude+condensate of 10.7 million barrels or more." My analysis gives further support to Stuart's prognosis that Saudi oil production is in decline, while showing a temporary increase back to 9 mb/d in 2011. However, the 900 kb/d total increase in capacity from Manifais the last of Saudi's known megaprojects. Consequently, Saudi oil production will begin steady irreversible decline, starting at the end of 2011.

Further evidence is presented from Hans Jud's article which uses field by field HL to forecast a decline in Saudi Arabia production. A hypothesis of URR=205 Gb is tested and proven to be false using a two cycle HL chart. Consequently, Saudi Arabia URR is showing a strong trend towards 165 Gb, of which about 110 Gb has already been produced. It's also worth noting that in BP's statistical review, Saudi Arabia reported reserves of 169.6 Gb in 1987, which is close to the URR of 165 Gb, and 255 Gb in 1988. How could this be when the last giant Saudi field of Lawnah (1.17 Gb) was discovered in 1975.

Finally, the future decline of Saudi production implies that peak total liquids is forecast to occur in mid 2009. This means that coordinated conservation plans need to start now.

Further evidence supporting Saudi Arabia's production decline continues to emerge. The evidence is not only technical and economic, but also behavioural. The analysis of the further evidence, described below, shows that Saudi Arabia is highly unlikely to produce over 8.5 million barrels/day of crude oil and lease condensate, on an annualised basis.

Saudi Arabia is in decline now. This means that the world's production is in decline now. Future supply will be unable to meet forecast demands. Governments, corporations and individuals need to start making coordinated plans to prepare for the decline in world production.