Giant Oil Field Decline Rates

Summary of article 1, Cobb’s “Aging Giant Oil Fields” 2013

  • The world’s 507 giant oil fields comprise a little over 1% of all oil fields, but produce 60% of current world supply
  • Of the 331 largest fields, 261, or 79%, are declining at 6.5% per year.
  • Techno-fixes have made matters worse because they’ll increase the decline rate to 10% or more, because we’re getting oil now, faster, with new technology that we would have gotten later.
  • And that will make it harder for unconventional oil (tar sands, deep ocean, tight “fracked” oil, etc.) to replace it

Summary of article 2, Koppelaar’s “… future oil supply”:

Based on 3 studies, average global oil decline rate of 4.5 to 6% assumed. No problems until 2013, and only then if there’s a rapid recovery of the economic system. Otherwise:
2014: in a weak recovery oil starts to tighten
2017: weak recovery, growing demand can’t be met
2020: if there’s another economic downturn, there is ample supply for a decade]

Aging giant oil fields, not new discoveries are the key to future oil supply

April 7, 2013  by Kurt Kobb

With all the talk about new oil discoveries around the world and new techniques for extracting oil in such places as North Dakota and Texas, it would be easy to miss the main action in the oil supply story: Aging giant fields produce more than half of global oil supply and are already declining as a group. Research suggests that their annual production decline rates are likely to accelerate.

Here’s what the authors of “Giant oil field decline rates and their influence on world oil production” concluded:

  1. The world’s 507 giant oil fields comprise a little over 1% of all oil fields, but produce 60% of current world supply (2005). (A giant field is defined as having more than 500 million barrels of ultimately recoverable resources of conventional crude. Heavy oil deposits are not included in the study.)
  2. “[A] majority of the largest giant fields are over 50 years old, and fewer and fewer new giants have been discovered since the decade of the 1960s.” The top 10 fields with their location and the year production began are: Ghawar (Saudi Arabia) 1951, Burgan (Kuwait) 1945, Safaniya (Saudi Arabia) 1957, Rumaila (Iraq) 1955, Bolivar Coastal (Venezuela) 1917, Samotlor (Russia) 1964, Kirkuk (Iraq) 1934, Berri (Saudi Arabia) 1964, Manifa (Saudi Arabia) 1964, and Shaybah (Saudi Arabia) 1998 (discovered 1968). (This list was taken from Fredrik Robelius’s “Giant Oil Fields -The Highway to Oil.”)
  3. The 2009 study focused on 331 giant oil fields from a database previously created for the groundbreaking work of Robelius mentioned above. Of those, 261 or 79 percent are considered past their peak and in decline.
  4. The average annual production decline for those 261 fields has been 6.5 percent. That means, of course, that the number of barrels coming from these fields on average is 6.5 percent less EACH YEAR.
  5. Now, here’s the key insight from the study. An evaluation of giant fields by date of peak shows that new technologies applied to those fields have kept their production higher for longer only to lead to more rapid declines later. As the world’s giant fields continue to age and more start to decline, we can therefore expect the annual decline in their rate of production to worsen. Land-based and offshore giants that went into decline in the last decade showed annual production declines on average above 10 percent.
  6. What this means is that it will become progressively more difficult for new discoveries to replace declining production from existing giants. And, though I may sound like a broken record, it is important to remind readers that the world remains on a bumpy production plateau for crude oil including lease condensate (which is the definition of oil), a plateau which began in 2005.

[rest of article snipped from here on]

1 Mar 2010  Drawing the lower and upper boundaries of future oil supply

By Rembrandt Koppelaar, ASPO Netherlands

The oil supply challenge is often summarized in terms of the production volume equivalent of Saudi-Arabia’s that needs to be replaced.

This popular metric is based on in-depth studies of global decline rates that show a decline range between 4.5 and 6 percent over the current 73 million barrels of crude oil produced per day. By using such literature values for all types of production, it can be shown that:

  • In the next 3 years there’s a sufficient oil supply for world demand under any economic scenario.
  • Supply constraints will arise if OPEC proves to be too slow in turning available capacity into production.
  • Oil supply can no longer meet growing demand beyond 2013 only in the unlikely case of a rapid economic recovery.
  • In case of a fairly weak economic recovery the oil market will begin to tighten in 2014 when production capacity begins to decline and growing demand can no longer be met around 2017.
  • If we suffer another economic downturn, ample oil supply will be available for a period of at least a decade.

Decline rates over current conventional production.
Recent studies have been conducted to date on the global decline rate of total conventional oil production, including fields with rising, declining and plateau production.

1) Cambridge Energy Research Associates in 2007, showed that 2007 average decline of oil fields under production was 4.5% per year (CERA 2007). This study used data from 811 oil fields representing two thirds of global oil production, obtained from the IHS Energy database. The selection was comprised of 400 fields, each with reserves of more than 300 million barrels, that produced half of global production in 2006, and 411 fields with less than 300 million barrels that produced only 8.5% of production in 2006.

2) Höök et al. (2009) estimated that the overall decline rate is 6% globally based on the finding that decline rates in smaller fields are equal or greater than those of giant fields.

Based on these studies, a starting point for current decline lies between 4.5% and 6%. Within this range a decline rate around 5% can be taken as a reasonable number. The value given by CERA (2007) of 4.5% probably over represents giant and super giant fields and hence is likely too low as small fields have bigger decline rates. The value given by Höök et al. (2009a) of 6% is probably too high as the total decline rate is inferred directly from post-peak decline of giant and supergiant fields on the assumption that smaller fields will tend to have an equal and higher decline, ignoring the effect of fields still on a plateau and in build-up.

Although 5% is a good starting point, the catch lies in knowing what will happen in the future. More supergiant and giant fields will go into decline due to depletion as time passes by, causing an increase in the average decline rate that needs to be compensated. This was shown by Höök et al. (2009) who found that the world average decline rate of the 331 giant fields was near zero until 1960, after which the average decline rate increased by around 0.15% per year.  Höök, M., Hirsch, R., Aleklett, K., 2009. Giant oil field decline rates and their influence on world oil production, Energy Policy Vol. 37, pp. 2262-2272

For scenario analysis we can take optimistic and pessimistic boundaries based on the studies describe above. The most optimistic stance is to extrapolate the starting point decline rate, estimated here at 5%, onto the entire forecast horizon up to 2030. The most pessimistic view based on current information would be a rapid increase in decline in the next five to ten years up to 6.7% as the production-weighed decline rate rapidly catches up with the average decline rate. After this a more smooth decline increase of 0.15% per year as historically was the case, up to a value of 8.6% in 2030, is an informed estimate. The real decline will lie somewhere in between these two bounds.



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