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The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

bloomberg.com

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Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#101

Post by JamesBarney »

aliswe wrote: post #10

I don't get it. The article states that the Ghawar is "the world’s largest conventional oil field", and "can produce a lot less than almost anyone believed", and is in fact "able to pump a maximum of 3.8 million barrels a day -- well below the more than 5 million that had become conventional wisdom in the market" The saudi "12 million b/d capacity" was known from before, I assume, so isn't the surprise that other fie…

Look up oil and gas decline curves and you'll see that a faster declining oil production means you'll get a lot less oil out of the ground over the next 10 and 20 years.

And given a reasonable discount rate of 6% mean oil in 10 years is worth half of oil today and oil in 20 years is worth a quarter.

You also run into efficiency issues. Running a high volume rig much more expensive than running a low volume rig.

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#103

Post by AnthonyMouse »

max_wen wrote: post #33
AnthonyMouse wrote: post #26

Earlier quoted context omitted.

> based on what? Rising popularity of electric cars, increasing vehicle efficiency in general, potential legislation targeting climate change, etc.

- Electric cars are still less than 5% of new car market. Hardly impactful - The increase in efficiency is more than offset by the growth in overall car market - Potential legislation in China? India? Emerging markets? Sorry but nothing suggests that is happening

> Electric cars are still less than 5% of new car market. Hardly impactful

That is up from I doubt we're going to be at 100% electric cars in ten years but I would not be surprised if it was somewhere in the mid double digits by then. And by that point it becomes a lot easier to target ICE cars with legislation because there is a proven viable alternative.

> The increase in efficiency is more than offset by the growth in overall car market

Any given factor is more than offset by the growth in the overall car market. But you add them all together.

> Potential legislation in China? India? Emerging markets? Sorry but nothing suggests that is happening

China has a slate of domestic electric car companies and it's exactly their style to pass legislation that favors domestic companies over foreign competitors. Climate change provides them a really good justification to do that here.

And carbon taxes generate revenue, which makes it easy to make them revenue neutral. Use the money to lower other taxes or fund a UBI. This knocks out the "harms the poor/developing countries" argument because the cost becomes only the cost difference between fossil fuels and alternatives, which is rapidly approaching zero.

Moreover, most of the current oil demand comes from the US and Europe. If either of them, much less both, passed relevant legislation then not only would their own demand fall off, the increased economies of scale and network effects that would spur in alternatives would also make them more cost effective in countries without any such legislation.

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#104

Post by Someone »

benj111 wrote: post #66
Someone wrote: post #47

Earlier quoted context omitted.

No, they want to maximize the amount of money they get out of their oil, with money they get now being worth more than money they will get next year, with that being worth more than money they get a decade from now, etc. Also, the house of Saud isn’t playing only that game. They also want to stay in power. They’re not universally popular in the region, so that means listening to their faraway supporters, who want to…

I don't get what you're disagreeing with me about?

”higher prices, which is something they'd want to maximise.”

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#105

Post by benj111 »

Someone wrote: post #104
benj111 wrote: post #66

Earlier quoted context omitted.

I don't get what you're disagreeing with me about?

”higher prices, which is something they'd want to maximise.”

Yes... You maximise money, by maximising prices (for some value of maximise).

I'm not saying they should be aiming for $1 million / barrel. But clearly $60 is better than $50, assuming that doesn't lower volume.

We seem to agree on that?

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#106

Post by adrianN »

max_wen wrote: post #28
max_wen wrote: post #19

Earlier quoted context omitted.

"what will likely become a declining demand for oil over next 20-30 years" based on what?

20+% increase by 2015-2030 https://www.statista.com/statistics/547100/projected-base-oi... A more realistic assessment from Shell Oil is that oil demand continues to grow over the next 20 years, a view shared by rival BP and energy consultants like Wood Mackenzie. https://www.forbes.com/sites/daneberhart/2018/09/18/forecast... Long-term oil demand is expected to increase by 15.8 mb/d, rising from 95.4 mb/d in 2016 to…

It wouldn't be good for Shell's or BP's stock value if they predicted falling demand for their product...

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#107

Post by saagarjha »

Tepix wrote: post #50
saagarjha wrote: post #41

Earlier quoted context omitted.

> the US supports another vile regime and its disgusting human rights practices and culture It’s possible to come up with examples of this for every country, including the United States. That being said, this is whataboutism.

Few countries have meddled in the affairs of other states like the US.

That's true, but I'm not sure how to interpret your response into the context of mine.

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#108

Post by tinus_hn »

fredgrott wrote: post #94
govg wrote: post #44

Earlier quoted context omitted.

Oil isn't somehow magical in any manner - everything that oil does today can be boiled down to supplying kinetic energy. We don't use its chemical properties in any special way, it just happens to be among the most efficient in terms of calories per kg. With advances in battery tech, and large-scale shift to renewables, I think running out of oil is largely a non-issue in the long run (of course we'll have pains in s…

are sure? how many plastics including textiles would have to be replaced if we did not have the chemical properties of oil to create them? Any idea? I bet you are wearing at least one item of clothing with a textiel created with oil chemicals..such as nylon or others

There are processes that create crude oil given energy and some basic resources.

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#109

Post by woodandsteel »

carlos22 wrote: post #37
AnthonyMouse wrote: post #26

Earlier quoted context omitted.

> based on what? Rising popularity of electric cars, increasing vehicle efficiency in general, potential legislation targeting climate change, etc.

> Rising popularity of electric cars Currently very slow - needs to accelerate a lot to be significant in 2030 (thats only 11 years). > increasing vehicle efficiency in general There is not much to gain, the vehicles are gaining weight in the last 2 decades (SUVs etc.). Thats eating up the small improvements in efficiency. A real big improvement is not in sight. > potential legislation targeting climate change We can…

> Rising popularity of electric cars Currently very slow - needs to accelerate a lot to be significant in 2030 (thats only 11 years).

S-curve, man, S-curve. The experts say that around 2023-25 sales prices of EV's will be down to equal ICE's, and EV sales will take off like a rocket.

Re: The Biggest Saudi Oil Field Is Fading Faster Than Anyone Guessed

#110

Post by wcarron »

max_wen wrote: post #33
AnthonyMouse wrote: post #26

Earlier quoted context omitted.

> based on what? Rising popularity of electric cars, increasing vehicle efficiency in general, potential legislation targeting climate change, etc.

- Electric cars are still less than 5% of new car market. Hardly impactful - The increase in efficiency is more than offset by the growth in overall car market - Potential legislation in China? India? Emerging markets? Sorry but nothing suggests that is happening

60% of new cars sold in Norway recently were EVs. That's a start, and a good one at that. I'd be highly doubtful that EVs won't continue to gain steam over the next decade, as VW, Porsche, Audi, Volvo, Ford, GM, and Toyota continue to expand EV production lines and models.
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