The structure of the Oil supply industry
The structure of the oil supply industry.
The supply of the oil industry can be divided into the conventional, unconventional oil supply
Conventional being the typical land oil rig
Unconventional being the offshore oil sector as well as the shale oil and other sources of oil.
The first layer, or conventional oil, consists of the largest supply of oil in the world.
There are many different types of oil fields. I cannot recall the distinction, however the large elephant oil fields, with over 30 billion barrels of oil reserves, were all discovered in the early 60's
The elephant oil fields, or
Oil requires constant investment in order to maintain stable production,
larger production leads to higher depletion.
Oil Capex has dropped off significantly since 2014
I read several years back that oil maintenance capex, or the cost to keep stable production due to the natural decline in oil production in 2015, was insufficient to produce the required oil to maintain constant production, much less increased demand. although costs have come down, demand has also moved up an additional 6million barrels since late 2014
The structure of the oil fields
Conventional oil fields only require a pipe to be stuck into the ground and oil starts pouring out.
These are the Ghawar fields and the majority of the discoveries that were discovered in the past.
2 unique factors to oil fields
Declining production
Oil fields production look like a bell curve, the oil initially ramps up and after it reaches a peak, it starts to decline.
1) There are several factors that contribute to this decline,
The first is the size of the oil field, the larger the oil field, the slower the decline.
The larger oil fields like the Ghawar fields with 60billion barrels of oil reserves, will have a hypothetical decline rate of 4~6%, whilst a smaller 500million barrel oil field might have a decline rate of 8~10%, post the peak of the oil field. Almost all new discoveries are in the range of 500million barrels, with larger oil fields coming in at maybe 3billion barrels of reserves. The large elephants seen in the past have been discovered and been producing for 50 years. many of them have reached past their peak field age and are in decline.
The second is the type of oil field, in the conventional straw in the ground oil fields, the declining rate is the slowest, at around 6~8%. The unconventional oil (IE: The offshore/shallow oil fields) the decline might be slightly higher at 10~14%, while the ultra deep water oil fields might have decline rates of 20% once it reaches its peak production. Shale oil has the highest oil decline rates.
The largest oil fields were discovered in the 60's and many have reached past their peak oil and are in decline, the newer discoveries are nowhere near the size of the oil fields of the past. In addition, almost all the new oil discoveries are in the shale oil and offshore oil space. Whereby 70% of commercial oil discoveries are in the deepwater space. These new discoveries and the increasing demand in oil of the world means that over time, the declining rate of oil production increase in terms of percentage. As the older oil fields consist of a smaller part of global oil production and the newer oil, IE: Shale oil and ultra deepwater and offshore and deepwater oil become a larger portion of the global oil mix.
The ability of global oil capacity to meet these demand will have to increase over time as declining rates increase, while global oil demand continues to accelerate at a higher absolute amount every year as the larger economies of china and india enter into developed status.
The 'treadmill' of oil production will continue to speed up and accelerate whilst more and more oil production moves from the declining rate of the giant oil fields in the past to the newer discoveries of smaller oil fields and from conventional oil fields with lower declining rates post field peak to unconventional oil fields with higher declining rates post field peak.
Depleting reserves
Leonardo Maugeri
Pierre Andurand
Andy Hall
The supply of the oil industry can be divided into the conventional, unconventional oil supply
Conventional being the typical land oil rig
Unconventional being the offshore oil sector as well as the shale oil and other sources of oil.
The first layer, or conventional oil, consists of the largest supply of oil in the world.
There are many different types of oil fields. I cannot recall the distinction, however the large elephant oil fields, with over 30 billion barrels of oil reserves, were all discovered in the early 60's
The elephant oil fields, or
Oil requires constant investment in order to maintain stable production,
larger production leads to higher depletion.
Oil Capex has dropped off significantly since 2014
I read several years back that oil maintenance capex, or the cost to keep stable production due to the natural decline in oil production in 2015, was insufficient to produce the required oil to maintain constant production, much less increased demand. although costs have come down, demand has also moved up an additional 6million barrels since late 2014
The structure of the oil fields
Conventional oil fields only require a pipe to be stuck into the ground and oil starts pouring out.
These are the Ghawar fields and the majority of the discoveries that were discovered in the past.
2 unique factors to oil fields
Declining production
Oil fields production look like a bell curve, the oil initially ramps up and after it reaches a peak, it starts to decline.
1) There are several factors that contribute to this decline,
The first is the size of the oil field, the larger the oil field, the slower the decline.
The larger oil fields like the Ghawar fields with 60billion barrels of oil reserves, will have a hypothetical decline rate of 4~6%, whilst a smaller 500million barrel oil field might have a decline rate of 8~10%, post the peak of the oil field. Almost all new discoveries are in the range of 500million barrels, with larger oil fields coming in at maybe 3billion barrels of reserves. The large elephants seen in the past have been discovered and been producing for 50 years. many of them have reached past their peak field age and are in decline.
The second is the type of oil field, in the conventional straw in the ground oil fields, the declining rate is the slowest, at around 6~8%. The unconventional oil (IE: The offshore/shallow oil fields) the decline might be slightly higher at 10~14%, while the ultra deep water oil fields might have decline rates of 20% once it reaches its peak production. Shale oil has the highest oil decline rates.
The largest oil fields were discovered in the 60's and many have reached past their peak oil and are in decline, the newer discoveries are nowhere near the size of the oil fields of the past. In addition, almost all the new oil discoveries are in the shale oil and offshore oil space. Whereby 70% of commercial oil discoveries are in the deepwater space. These new discoveries and the increasing demand in oil of the world means that over time, the declining rate of oil production increase in terms of percentage. As the older oil fields consist of a smaller part of global oil production and the newer oil, IE: Shale oil and ultra deepwater and offshore and deepwater oil become a larger portion of the global oil mix.
The ability of global oil capacity to meet these demand will have to increase over time as declining rates increase, while global oil demand continues to accelerate at a higher absolute amount every year as the larger economies of china and india enter into developed status.
The 'treadmill' of oil production will continue to speed up and accelerate whilst more and more oil production moves from the declining rate of the giant oil fields in the past to the newer discoveries of smaller oil fields and from conventional oil fields with lower declining rates post field peak to unconventional oil fields with higher declining rates post field peak.
Depleting reserves
Leonardo Maugeri
Pierre Andurand
Andy Hall
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