As more giant fields mature, the average decline rates for all giants accelerate, according to an independent study from Sweden’s Uppsalla University. David Manuel examines the report.
THE majority of petroleum assets in the world today consist of “old” fields from which some 950 billion barrels of oil equivalent were extracted during the 20th century. This large slice of exploited reserves comes from giant oil fields, holding about half of the planet’s estimated total reserves.
An oilfield is called “giant” if it contains at least 500 million barrels of extractable reserves. Only about 500 such fields exist in the world. The giant fields are only 1% of all oilfields but, in 2005, they accounted for 60% of world oil production and 65% of the world’s total reserves.
Future development of giant oil fields will have a significant impact on the world oil supply. These massive oil reservoirs, which typically contain more than 0.5 Gb (gigabarrels) of recoverable reserves, have been the biggest contributors to the world’s total oil production over the years.
These fields have the capacity to produce more than 100,000bpd for more than a year.
Today, it is estimated that about 70 per cent of the hydrocarbon liquids produced in the world actually come from fields that have been in operation for more than twenty years. In 2005, the 20 largest fields alone accounting for nearly 25 per cent of global energy supply.
But sometime around 2004, total world oil production ceased to expand, according to several studies. Instead, new production has only succeeded in keeping world oil production relatively flat. Yet more fields transition into decline each year.
Increasing through time
Given dwindling worldwide production, giant oil field decline rates are useful for estimating the likely average world decline. These so-called giants are behaving according to ‘average decline rates’ and ‘production-weighted decline rate’ – two gauges to determine the field’s age.
A majority of the largest giant fields are over 50 years old. Overall production from these fields is declining, and is set to age faster as time progresses.
“The average decline rate of the giant oil fields have been increasing with time, reflecting the fact that more and more fields enter the decline phase and fewer and fewer new giant fields are being found,” said Mikael Höök, an expert from Global Energy Systems of Uppsala University in Sweden, and secretary of the Association for the Study of Peak Oil & Gas.
Over the years, the chance of discovering new giant fields is decreasing sharply. New giants have been rarely discovered since a peak in the late 60s and early 70s, and been in constant decline in the last two decades.
“Since the 1970s, the share of giant oilfields in decline has increased, showing the overall maturity and lack of new fields brought into production,” the Global Energy Systems team said in an independent analysis of mature fields and their impact on global production.
In the case of Saudi Arabia, its supergiant Ghawar oilfield – ‘the giant of giants’ with an estimated production capacity of 5.2mbpd – evidently showed signs of ageing. Discovered in 1948 and producing since the 1950s, Ghawar is one of Saudi’s most prolific oilfields, accounting for about half of its production.
Many experts believe that when Ghawar’s production decline curve accelerates, global oil production will tip into decline as well. In the extreme, a potential 10 per cent annual decline in Ghawar would be very challenging to offset and would create severe problems for Saudi Arabia and the world.
“Every year production from the world’s existing, conventional oil fields decreases by 3.5%. Therefore, to maintain production at the current level, every year one must find new oil fields that can produce 2.5 million barrels of oil per day, said Kjell Aleklett, lead researcher on Global Energy Systems at Uppsala University.
“Despite the fact that the price of oil has more than quadrupled during the last three years, and despite that every available oil rig is being used to look for more oil, we have not found new oil fields at the rate required,” he added.
The evolution of decline rates over past decades includes the impact of new technologies and production techniques. The average decline rate for individual giant fields is increasing with time.
Saudi Aramco, like any major producer, has resorted to enhanced oil recovery (EOR) techniques such as injecting water and other substances into the field to force the oil towards well openings. Aramco also employs other EOR techniques such as horizontal and directional drilling, both of which can be used to angle the well so as to maximise the length of oil well pipe in contact with the “pay zone”; the layer of oil bearing rock.
In 2009, Aramco expressed concern by getting extra help from Halliburton to re-develop Ghawar. The contract calls for the US services giant to drill about 200 oil and water injection wells, using directional and horizontal drilling, to help maximize Ghawar’s oil flow.
“Halliburton’s mandate will be to deal with higher and higher water cuts, utilise all known new technology to hold rates as high as possible and stimulate wells as required,” said Michael Lynch, analyst at Gerson Lehrman Group, at the time.
“Now Halliburton will drill even more trying to improve rates, and lessen decline. It is a good, long-term contract and a tall order for the company.”
Using these depletion-delaying well technologies will improve and optimise production. Now, the total number of wells drilled in Ghawar exceeds one thousand including hundreds of vertical wells that have either been abandoned or converted to horizontals.
“Many giants have been in production for many decades without reaching the onset of decline, but sooner or later they will eventually do so,” the Global Energy Systems report states.
Inevitable decline
Using its own comprehe
nsive database of giant oil field production data, the Global Energy Systems team estimated ‘average decline rates’ of the world’s giant oil fields that are beyond their plateau phase. It also estimated the ‘production-weighted decline rate’ in comparison to previous studies of CERA and the IEA.
Global Energy Systems’ independent analysis showed an average total decline rate of 6.5 per cent, while the production-weighted giant field decline rate is 5.5 per cent. Both trends show that technology transfer, primarily in the Middle East, was able to ‘dampen the decline’ in many highly productive fields.
“This cannot continue, and ultimately, production-weighted decline must approach the average decline rate,” said Aleklett. “How the production-weighted decline will behave in the future is difficult to estimate, but an increase appears inevitable.”
Earlier, the International Energy Association concluded that the average production-weighted decline rate worldwide was 6.7 per cent for post-peak fields, which means that the overall decline rate would be less, since many fields are not yet in decline.
“Currently, the world may have a false sense of security, temporarily created by decline-delaying technology introduction in underdeveloped fields. When fewer giants can be momentarily revived, the production-weighted decline must eventually begin to increase,” said Hook, in the report.
The future behaviour of the remaining giants, especially those under OPEC member state control, will be a key factor in future oil supply. In non-OPEC countries, the group projected a 2030 decline rate of roughly 11 per cent, while the OPEC member state decline rate is estimated at 8 per cent by 2030.
This means that OPEC fields decline slower than non-OPEC fields due to the cartel’s quota system – effectively regulating each member state’s output targets. In comparison, the non-OPEC states, which include the North Sea, Russia and the US, are seeing rapidly falling production rates.
Many of the low decline rates can be found in the US with fields that peaked before the 1970s. In fact, most of the non-OPEC land group is dominated by the US giant fields such as land-based Prudhoe Bay.
It also found that offshore fields decline faster than land fields. The non-OPEC offshore group is dominated by giant fields in the North Sea, particularly the UK’s Thistle offshore field. Many fields, both giant fields and smaller ones, in the North Sea show a high decline rate.
“Sooner or later the production-weighted decline rate must catch up with the average decline rate, but exactly how soon and how fast this development will happen is hard to forecast,” the report states.
“These findings have large implications for the future, since the most important world oil production base – giant oilfields – will decline more rapidly.
“Our conclusion is that the world faces an increasing oil supply challenge, as the decline in existing production is not only high now, but will be increasing in the future,” the authors said.
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