Those Mysterious Oil Reservoirs
By Randy Udall
In his 36 years with BP, Jeremy Gilbert worked in Kuwait, Abu Dhabi, Iran, Alaska, and the North Sea. In the late 1980s, Gilbert became BP's Chief Petroleum Engineer, with responsibility for all of BP's petroleum engineering worldwide. In this wide-ranging interview with ASPO-USA's Randy Udall, he reflects on the myriad challenges we face in forecasting the future course of global oil production.
Q: A recent series of posts at www.theoildrum.com attempt to divine the current status and future prospects of Saudi Arabia's Ghawar field, the world's largest. Your thoughts?
A: I am amazed at the energy and diligence which the authors exhibit in carrying out their analyses. It is tragic that the Saudis won't release more detailed performance data and their own analyses which would show the situation more clearly. It seems likely to me that the conclusion that Ghawar is in decline is correct. But it's a big step to conclude that its decline will be steep. Oil companies employ reservoir engineers and reservoir geologists to deal with just the situation we have here: "a mature field is showing signs of declining production with its current development, what can we profitably do that might change this situation?"
Q: More than half the oil produced in Mexico is consumed in the U.S. In 2001, PEMEX built the world's largest nitrogen injection plant to increase reservoir pressure at Cantarell. Production doubled to nearly 2 million barrels a day, but last year went into precipitous, apparently terminal decline. Would you, as a petroleum engineer, have anticipated this result?
A: I'm quite sure that the Mexicans were well aware of the uncertainty associated with gas flooding. There are many challenges associated with a successful gas flood. These center on being able to control the advance of the gas front. Because gas viscosity is so much less than that of the other reservoir fluids it will tend to cone and to finger through oil saturated zones, resulting in the premature breakthrough of injected gas into producing perforations. Once gas breakthrough occurs, oil production from the partially swept layer will decline very rapidly, and possibly completely.
Q: When do you expect global production to peak, and thereafter what do you expect the average decline rate to be?
A: I expect to see a peak sometime before 2015, but I don't think we'll see a simple maximum followed by a decline. I foresee a series of maxima, each followed by a brief decline. The simplest analogue would be a sine wave. It may be some time after the true peak before we can recognize it as such. Once one starts talking about average decline rates for regions, countries, the world one gets into a very murky place. Averaging is a dangerous process; averages hide all sorts of anomalies and variations. As we've seen the post-plateau decline rate for individual reservoirs can be as much as 15%/year. If we take the decline rate for a region, where fields are at different stages in their depletion and where some new reservoirs may be coming on stream then the decline rate is more likely to be 4-8%/year. The higher rates will be seen in area where exploration is effectively over, such as the U.K. Continental Shelf. Since the world as a whole is less mature than the North Sea, I expect a lower decline rate.
Q: You worked in Libya, Kuwait, and Abu Dhabi. How much scope is there for future discoveries in the Middle East?
A: There is still much scope for exploration in the Middle East, both in deeper horizons than those currently developed and in stratigraphically more complex areas. By their very nature these deep and complex reservoirs are likely to be smaller and more expensive to develop than the relatively shallow, relatively simple and generally large fields currently under production. For the last few decades there has been little incentive for these countries to 'mature' their exploration programs; they had access to so many discovered barrels that there was no point in going to look for more. In Kuwait and Bahrein, the smaller countries, the scope for additional oil to be discovered is fairly limited and the deeper horizons are likely to be gas-prone but in Saudi, in Iraq and to a lesser extent in Iran there could still be some pleasant surprises. This does not mean that a peak in these countries' production can be deferred the delay from exploration to exploitation is too long but it should mean that the post-plateau decline rate will be low, probably less than 5%/year. And it won't be 5% every year, there will be sharp variations.
Q: The U.S. is striving to keep Iran from enriching uranium. Having spent ten years working there, what is your view of these developments?
A: Nuclear weapons are another question, but I believe that Iran does have a clear need for nuclear electricity. Its population has doubled since the revolution. There are a huge number of young people who aspire to own cars, to improve their housing standards. Domestic demand for gasoline and for electricity is increasing sharply. It makes a lot of sense for Iran to conserve its oil resources for export and to use its own uranium resources in its own nuclear power stations to generate electricity. It's not as though this is a totally new idea - nuclear power stations were close to being completed, by the USSR, near Ahwaz when I left in 1979 and that was at a time when Iran was producing 6 million barrels a day, and exporting close to 5. Since then, their oil production has fallen by one-third, and their exports by one-half.
Q: The European Union is becoming increasingly dependent on Russian oil and gas. Does this concern you?
A: I suspect that the Russians are getting into a real mess. It's not that they lack the reserves to meet their contractual obligations, but they may not have the project management and technical skills to turn those reserves into production quickly, neither as quickly as the West would like nor as quickly as their economy is going to need.
Q: Peak oil forecasting seems to attract many amateurs, most of whom have never been on a drilling rig in their life. Where are the professionals?
A: I find it frustrating how few reservoir geologists or reservoir engineers have come out, post retirement, to speak in favor of the peak oil concept. In both Europe and the U.S. there are many people with suitable experience and it can't be that they have not been exposed to the discussion, but for some reason they apparently don't want to get involved. We don't expect amateur aerodynamicists to second-guess Airbus and Boeing's designs, so why do we assume that amateur industry-watchers can make worthwhile predictions of future oil supply?
Q: In listening to you, I get the sense that oil fields are somewhat more mysterious than we commonly believe. You seem to be saying that even with reams of data, there's a lot hidden underground.
A: Well, what can I say! That's exactly what I keep trying to get across. A large reservoir like Prudhoe might have 50 or more reservoir engineers working on it full time. In addition, there'd be groups of reservoir geologists, of petrophysicists, of all sorts of other specialist engineers. They would use dozens of numerical models (some small and simple, others huge and requiring the most sophisticated software and hardware to use) to help them in their daily analysis of the field's behavior, to improve both short and long term performance forecasts, and to optimize future development plans. This is the reality, this is what I used to do, to manage, to direct. In short, every reservoir is different, they are almost 'alive'; they are mysterious things miles below us which we can never see or touch. Trying to understand them is a huge challenge; pretending that we can do so without access to the sophisticated tools and data which the industry uses, and even then has huge problems, is ridiculous.
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