Saudi Arabia has peaked, view of US drilling supervisor that drilled in SA

[Seahorse]

I will post a series of posts made by "energydigger."  He was a drilling engineer who drilled all over the world, including Saudi Arabia (twice kidnapped).  At one time, he posted his resume online.  I can still find it on the net, but will not post it here, bc he eventually took removed it and it has all his personal information.  Bottom line, he's one of the few "experts" I've ever seen post online that also backed his statement with a link to his resume.

Here's where he starts addressing Peak Oil.

We can produce around 86 million barrels a day now and we are pretty much flat out. With respect to the "quality" of oil production - - your question is not easily answered in a flat statement - - Saudi Arabian oil is very high quality and always has been - I have seen it coming out of the ground looking like honey - you can easily imagine going straight into your engine lubrication system direct from the well - what is happening is basically this - the fields that produce the high quality oil are deminishing in volume and output. The newer fields are less friendly to drill and often times lower quality. Some new fields are being brought on with very high quality oil - higher than the North Sea Brent if not as high API Gravity as Saudi and Iraq. But as I have said before here , the "low-hanging fruit" has all been picked so we are dealing with a supply volume problem more than a quality of product issue. Although your assumption is not totally unfounded, it is not the primary concern or driver - it is a finite driver but in terms of priorities, it is down the list a notch or 2. Supply/Demand relationships are going to be the drivers of this industry and the eco-socio re-alignment coming - there will be pardiem shifts in the way we live, work and play. Matt Simmons is pretty much spot-on with this subject and as someone very very close to this issue - I can tell you that he hasn't missed anything - we are in for some hard times ahead. Get used to it.

http://peakoil.com/post322908.html#p322908

[Seahorse]

Thanks for the kind words. The oil field is a particularly dis-franchised industry - we have always taken a backseat in many formats. When we were starving at $12 oil and had 85% of the people in our industry losing their homes to the bank in a single year - there were no cries of foul and let's give some money back the the oil companies to help their people. This is not whining, people in the oil business don't do that - we get up and go find work - there is a point here... During the down-turns in the oil industry, the talented people have esentially been forced out of this business - I cannot even begin to convey the magnitude of the losses - they are staggering. These people NEVER come back to the oil industry as they are smart and have found other career paths and moved on in other industries - understandable. These down-cycles have come in regular waves - usually less than 10 years apart - this is a major problem as I will further discuss below.

The essential point here is this - there is nobody who can perform the work needed to replenish the resources we are talking about - sure, we are drilling and doing work but it is so inefficient that is is a pethetic thing my friend - it's really terrible. As someone with 30 years of high-end experience, I am contacted almost daily with job offers - not a bad thing for me, but a terrible statement of the industry as a whole. I am published in 170 countries and have worked in more than 40 countries in the last 30 years - I dare say that there are no more than a few thousand people in the world that can say that - there should be 50,000 people with that kind of experience but there is not.

Peak oil is here - I agree with Simmons - he has an educated viewpoint that few really understand - even in our own business, few understand it because they have such little experience in this business (reference previous sentences)... The education of an advanced oil engineer that is worth his salt and actually contributes to new ideas and is highly productive is about 10 years (minimum - remember the time-frame I established above for industry down-turn cycles?) - there are few people in this industry now with 2-3 years and many people with weeks and months only - our rigs are staffed with drug-ridden flunkies - I would say about 80% of rig personell are extremely incompetant - these figures are rough of course but I believe I am being very conservative... the big picture is this - we would not be at or so near to peak oil if we had a robust and vibrant industry - to be perfectly honest, the petroleum industry is in a shambles and I think it will be 10 years before we start to make a decent recovery - and also, this is really too late, we are about 10-20 years too late in fact... we could be 3 decades behind the curve in the whole scenario - - to add fuel to fire, the other countries we are competing with have smarter and more motivated people than Americans... I know thta isn't what you want to hear - I don't like it either but it is a raw hard fact - other countries have a much more educated work-force than the United States. We are competing in a large sence with other countries for resources now and they not only have a better educated industry than the US - they are also closer to the resources in most cases and have better relationships, lower cost-structures, etc... yes, we are in Peak oil and it is getting worse, not better - we may catch up a little someday but I probably will not see it in my career.

http://peakoil.com/post322908.html#p322908

[Seahorse]

Energydigger,

Do you also agree with Simmons that Opec production has peaked and is in decline? Simmons projects up to a 1/3 reduction in Opec oil output by 2012 (which would be a drop of roughly 10mbpd).

Also, I want to make sure I'm understanding your post. If I understand, the resources may be there (which if developed, would push back the peak) but the people and expertise aren't there to develop the resources, therefore, we are at peak by virtue of the fact that we can't find and produce fast enough what is out there. Is that correct?

I was a drilling supervisor in Saudi Arabia for 2 years 1998 & 1999 - - yes, the field is in severe decline - this is basically from neglect and ignorance on the Saudi part - they have the reserves and can boost them significanyly if they go to work - which they are - BUT, it will take a long time to turn it around if it can be done - and by that I mean if they can chaneg their culture and work ethic which is highly unlikely - this segways perfectly into your other part of your post - the answer is a definative yes - the people and resources are severly lacking and that will make the problem worse rather than abating the situation... this is real - there is no mistaking it - I personally am a very conservative investor and have always been so - however, for the first time in my life I have 100% of my equity investments in energy and have done so for the better pat of 5 years - my ROI is as good or better than any professional stock picker in the industry over the last 5 years - I do not plan on adjusting my holdings for at least 5 years at this point - so my money is where my mouth is on this issue.

http://peakoil.com/post322908.html#p322908

[Seahorse]

no offense taken RockDoc, this is one of the reasons why I created the EnergyDigger.com website, to keep up with all this news... I had presumed from your screen name that you were a reservior engineer or a geologist.... your dealing with SPE papers and statistical data, much like the US government and some hedge funds out there - what I offer you is not hard data i nthe form you ask for and obviously prefer - but rather on the ground experience - I have drilled the new replacement wells as well as the workovers and I have seen first hand the declines and they are absolutely positivly real - even if I cannot support you with some SPE paper to that effect - the real issue here is graft - let me explain a particular situation and it will make more sense for you - try to put SPE papers and raw statistical data out of the picture for a moment and imagine that government and SPE figures are as about as accurate as the inflation figures and housing starts - - this is one of many variations of the same scenario in all phases of operations in Saudi - exploration/drilling, production, refining, etc..etc... - - - the royal family is now near 6,000 strong if not more... the king owns everything in that country - and i mean everything. By extension, the royal family has it's hands in everything that has anything to do with money - some flunky way down the list happens to control a mud (barite) supplier. The barite company sellign the barite to Aramco (via this low-level Saudi family member) decides to give the flunky a big cash award for accepting a lesser volume of barite but mark it as the full weight/volume as per the sale. The flunky makes off with a lot of cash and the barite supplier delivers the 60% of barite needed to drill the hole with. The drilling supervisor in charge of the operation is no idiot (my spelling is not great but I do know how to drill a well in my sleep) and confronts the Aramco manager with the issue decidely laying out the consequences of this action. The manager tells the supervisor to drill the well the best he can (because there is more than one cash award floating around, obviously) - - your hard working engineer drills the well with underbalanced drilling fluids which for the uninitiated causes blowouts among other greta things - I have seen three 30 million dollar Santa Fe rigs burned to the ground in as little as 4 months. BUT, let's say there is no fire, we get through this thing with our skin on and complete the well - Whew! OK.... well, theres another really big problem that will nag us for the remainder of the entire life of the well. When we drilled the well underbalanced (meaning the formation pressures are higher than the wellbore artificially induced drilling mud weight - the rheology of the drilling fluid systems did not build up what is termed a "skin" on the wall of the hole to seal the formation in from the chemicals and other formation fluids up and down the wellbore - as a reservior engineer, I can imagine you will greatly appreciate this particular example - if you take a core, it will be contaminated to unusable - and thus extreme formation damage has occurred - ultimately reducing the output and longevity of the well. SIGNIFICANTLY ! I have drilled wells over there in a field where I had everything i needed and brought in 600 bbl a day but most of the time, the wells can be ruined (in terms of Saudi rates) to less than 50 bbl/day... and that is day one, they can decline after that for the first year or two... the fields over there are all very homogenios - the wells can be batch drilled in a straight line across the desert and the results can be nearly identical with exceptions - the data I have is not printed but it is so firmly established that is is undisputible - at least for me.

That was only one example of graft hurting the Saudi oil production system - there are many many of these examples and that is just Saudi - Nigeria is even worse. Try North Africa or Eqypt, they are bad too - the European oilfields are much better run but less prolific. I drilled Japaneese Geothermals in Kyushu Island areas last year and they are extremely efficient but no real reserves except for the Northern Sapporro areas... Phillippines are the same - spent a month there last year. I spent January - June last year in Australia and they are declining at about 4% per year - falling behind very fast - a national emergency actually in their eyes. I lived in Venezuela and Columbia for 2 years in the mid 90's and graft is bad there as well but in a different way - the government runs the oilfields and need I say more about that??


Listen, I know you are trying to get the straight skinny here and I like hard fast numbers as much as the next guy, seriously, I am an engineer and that is a well know fact about the breed but I am telling you from first hand accounts at the most upstream end there is - I have been kidnapped 3 times in my career, twice in West Africa and once in South America - I have had morters land within 50 yards of me in Cabinda, Angola - - I flew into Kikwit, Zaire when ebola virus broke out and my company evacuated the country, I have worked hazard duty in the worst environments on earth and these experiences give one a keen eye for many things in life - including life itself - I have spent my entire adult career chasing oil - it has been my passion and my life for 30 years. I wish I had a better picture to paint but it is not as you say - the problem is real and I suggest only look at the real price of energy fuels today to justify my conclusions even if you cannot accept them at face value in this forum. It is actually a pretty simple equation but so many, including educated people find it hard to believe we are running so close to the edge on supply/demand.

That is my story and I am sticking to it...

http://peakoil.com/peak-oil-discussion/michael-lynch-disputing-peak-oil-t4138-1065.html

[gnosis]

Amazing.

If this guy is real, which I trust he is (if seahorse vouches for it, I'm 100% sold), then this just adds to the chorus of those singing Peak Oil.
I have met oil engineers in south america, and they tell me that the people running the state oil firms and wells are just worthless (mind you, those who
told me that are also south americans, not americans). I believe him when he says what he says about the bad state of affairs in the oil business.

I wonder which country in South America he was kidnapped in....?

[Seahorse]

He is the real deal.  I was so fascinated with his observations, I corresponded with him privately several times.  For what its worth, he now drills exclusively for NG.  All the oil to be found is in the deep water.  If you want to work on land and find something, you'll be looking for NG these days. 

[boiler_92]

WoW!   

Thanks, Seahorse!

[everyman44]

The gravy stains about P.O. I've seen of late on MSNBC and heard as recently as this morning on N.P.R. may actually lead to some real journalism (finally) on the oft dismissed "theory" of P.O.

Time to hoard all that is worthy my doom brethren.

[Bill from Pennsylvania]

WoW!   

Thanks, Seahorse!

ditto... pretty amazing source!

[Chickengirl]

will there be some more coming? this is great reading, thanks seahorse!

[alaskat]

Good post SH, as an old oilman I would concur with the comment re. state or gov oil engineers, they seem to live in another world!!!

[Seahorse]

Unfortunately, this poster doesn't post anymore and I haven't touched base with him in a long while.
So, what I posted is all there is about Saudi Arabia.  He was last there in 1999 I believe.

[metaforge]

Found this Hubbert analysis of Ghawar & the rest of Saudi Arabia over at the drum:

http://www.theoildrum.com/pdf/theoildrum_3050.pdf

According to the analysis, entire SA & Ghawar already peaked in the middle of this decade.

Ken Deffeyes says here:

http://www.princeton.edu/hubbert/current-events-06-02.html

Ghawar has been producing 4 million barrels per day; when the Ghawar field waters out, you can kiss your lifestyle goodbye.

[Satori]

just more confirmation

http://www.hedgeco.net/news/10/2009/logi-energy-determines-saudi-oil-production-has-peaked.html

[Brennus]

just more confirmation

http://www.hedgeco.net/news/10/2009/logi-energy-determines-saudi-oil-production-has-peaked.html

It doesn't look too good in the next few years.