Article Archive for February 2008
Everybody talks about the Saudi Arabian Oil Miracle, but most seem to be saying the same things. And those things usually consist of quotes or statistics provided by Saudi Aramco. This presents us with the following dilemma: if we believe what they say, why don’t we just quit worrying about whether or not their oil will continue to flow? Or, if we don’t believe what they say, why do we bother making future oil supply projections based on “production capacity” figures by them — figures which can never be verified because their production levels always remain below capacity? What we need is some independent verification of the things they tell us. Hence the birth of Saudi Satellite Sleuthing using Google Earth. Following a brief introduction, I will show how Google Earth can be used to shed some light on the Haradh III Megaproject brought onstream in 2006.
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This project began early last year with a crude effort to map out Saudi oil fields using Google Maps. I soon discovered that recent releases of Google Earth facilitated this at a much higher level. After being inspired by the work of Stuart Staniford, Euan Mearns, and other TOD contributers on Ghawar, I persisted and was soon sucked in beyond the point of no return. This finally resulted in the creation of Satellite o’er the Desert where I will try to relieve the backlog of what I have learned (and am continuing to learn). It is planned that many articles will be posted here as well for discussion.
Getting Started
The first few entries at SOTD present an introduction to using Google Earth to study oil fields. Rather than repeat all of that here, I will just suggest reading the following:
Some people (such as my niece) like to work on 500+ piece jigsaw puzzles where you know what the end result will look like and the pieces almost all look the same. I can only take so much of that, but the Saudi oil is very much a puzzle with hints scattered across the internet. I don’t think that many (even at Saudi Aramco) know what the picture really looks like. So, on with the fun!
Finding Haradh III
Haradh is the southernmost operational area of the Ghawar oil field, and Increment III represents the development of the bottom third of the area. This project was completed and production brought online in early 2006, although the field wasn’t producing at the planned output capacity of 300,000 barrels of oil per day until mid year. The infrastructure put in place includes 32 maximum reservoir contact (MRC) wells (each with multiple horizontal laterals), 28 horizontal water injector wells, 12 observation wells, and a new gas-oil separation plant (GOSP).
What does Haradh III look like? There were some rather crude renditions being used in Saudi Aramco presentations for awhile, but they eventually decided to come clean with the article Haradh III: A Milestone for Smart Fields which included the following image:
This seems to be a fairly definitive representation. To see if this reflects how the field was actually laid out, we will use Google Earth to overlay this image over the satellite imagery for the tip of Haradh. Unfortunately, the imagery for most of that area was taken between May through November of 2004 as the project was just getting started. Fortunately, the water injectors on the east side lie in an area photographed in May 2006 and so we have an initial point of reference. Also, the Haradh III GOSP construction was far enough along in November 2004 that its location is clear as well. There are also low resolution DigitalGlobe preview images available dating to 2006-2007 which cover parts of Haradh. While it is not possible to make apriori identifications using these, they can be used for spotting changes indicative of new development by comparison with older high resolution images covering the same area.
Finding Putative Haradh III Wells
Another complication is that the area encompassed by this project is already full of wells, as shown in the left figure below. The field boundary is drawn based on its location relative to the wells in the paper by Stenger et. al. Assessing the Oil Water Contact in Haradh Arab-D (SPE 71339). Upon closer inspection, it is determined that over 80 of these are gas wells drilled down into the Khuff formation deep beneath the Arab-D oil reservoir. These can be clearly distinguished from oil wells as discussed here. Shown below right are identified gas wells along with the network of manifolds and pipelines which feed the gas into the Haradh Gas Plant.
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All visible lower Haradh wells (left) and identified gas wells, pipelines, and manifolds (right).
One other curious observation regarding the gas wells is that they are almost invariably oriented as shown below (north is towards the top), even when it results in a rather contorted path for the pipeline.
It Seems To Fit
With the gas wells identified, it becomes easier to ignore these while adjusting the dimensions and position of the overlay to match putative Haradh III wells. The the result of this process is shown below at left. The published image was found to be stretched horizontally by about 22% from the true aspect. Existing wells or well sites are identified with large circles (blue for injectors, yellow for observation wells). Two drilling rigs are observed (May 2006) at injector sites on the eastern flank. It is clear that several wells present in 2004 were either targeted for or reused as observation wells for Haradh III. Also, six water injection wells were seemingly present by mid 2004. This conflicts with this report which indicates that development didn’t start until Feb. 2005. However, an earlier well layout map shown in a Feb. 2004 CSIS presentation by Nansen Saleri (former reservoir czar for Saudi Aramco) suggests that several wells around the periphery were put in place by then and that these were distinct from the 28 planned for 2005-2006.
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Using low-resolution DigitalGlobe preview images as overlays as described earlier, we can try to confirm locations for the Haradh III producers. Tentative confirmations (how’s that for a hedge) are indicated with green circles in the figure above at right. 26 of the 32 producers were accounted for. Recent imagery covering those at the southern tip was not available. Also shown (with red lines) are some new pipelines that were found, including a connection line from the new GOSP III to GOSP II (located just up into the low resolution coverage area). This is most likely used to transport water for injection in Haradh III. An additional well was identified at the right top, although a pipeline also visible in the low resolution 2006 photo shows that this connects with a manifold for the Haradh II increment. This highlights the point that, while boundaries can be drawn on a map separating development increments, there is really no geological boundary between them.
It is curious that the May 2006 drilling date for the two water injectors comes several months after production completion was announced. Also, there is this report which describes MRC well Haradh-1425 being drilled in April 2006. 
Its orientation and relative lateral positions suggests a good match with one of the southernmost Haradh III producers, as shown at right. Additional evidence comes from the well id (HRDH-1425). A complete synopsis of the well numbering scheme in Haradh will be forthcoming in a separate article, but for now I will just assert, based on evidence from the Saleri presentation mentioned above, that the 32 Haradh MRC producers have ID values from 1400-1431. I have also found a report of the drilling dates for to other Haradh producers: HRDH-1417 , from October 1 to November 17 of 2005, and HRDH-1406 from December 1, 2005 to January 3, 2006.
Actually, Just Getting Started
In summary, Google Earth is a useful tool for correlating the various fragments of information out there on Ghawar and other Saudi oil fields with what is actually found there by looking from above. In the midst of a lot of misinformation and sloppy reporting, it is hoped that this type of analysis can inject some independent and objective data into the discussion.
Deutsche Bank’s $150 Call: Peak Oil Light
DB made some good points that might be news to the mainstream but probably not to my readers:
1. The U.S. economy wrung a lot of oil-intensiveness out during the ’70s oil shock when it took oil out of electricity generation and U.S. industry became much more oil-efficient. Those savings cannot be replicated no matter how high the oil price goes.
2. On the other hand, U.S. transportation is vastly inefficient and thus can and will reduce oil use as prices rise. This is the most significant available source of oil savings in the OECD world. Of course, DB probably meant to say “cars†rather than “transportâ€, since trucks which use 1/3rd of transport fuel do not have the same savings potential that cars do.
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Phil Flynn: Remember The Gold old days!
Demand for oil is weak and it is obvious that we are seeing at least some form of demand destruction but as we have seen, rising supply and lower demand does not necessarily translate into lower price.
We have gotten beaten up lately by correctly predicting rising supply and weakening demand. What we failed to realize is that rising supply and lower demand does not always translate in to lower price. Larger market forces have rewritten the laws of gravity as commodity price inflationary pressures have over ruled the basic laws of supply in demand. Even with clear signs of demand destruction in the US and some worrying signs of slowing in Japan and even Europe, oil prices have surged along with inventories.
Oil at $300/barrel? - Matt Simmons on WSJ Report
Alaska to sue BP over 2006 Prudhoe spill
NEW YORK (Reuters) - The state of Alaska is planning to sue BP Plc for “several hundred million dollars” to recover oil revenues lost when corrosion in pipelines at the oil major’s Prudhoe Bay oil field forced a partial shutdown of the field in August 2006, the Anchorage Daily News reported on Friday.
The suit may be filed as soon as September if settlement talks are unsuccessful, the Daily News reported.
Spain sets power, gas network price structure
MADRID, Feb 29 (Reuters) - The Spanish government on Friday set a new pricing structure for the electricity and gas distribution sectors, sending shares in Red Electrica and Enagas higher.
The new structure will only affect installations that are started after Jan. 1 2008, the government said after a weekly cabinet meeting.
UN likely to vote new Iran resolution Saturday
UNITED NATIONS (Itar-Tass) — The UN Security Council is likely to vote a new resolution on Iran on Saturday, however Tehran already made it clear it will not comply, as its nuclear program is the business of the International Atomic Energy Agency (IAEA) rather than of the United Nations.
Morgan Stanley: A Petrodollar Tsunami Is Coming
High energy prices lead to transfers from oil importers to oil exporters, note Stephen Jen and Charles St-Arnaud in Morgan Stanley’s latest Global Economic Forum, and as oil breaches the psychological US$100 a barrel, so investment decisions by the owners of these petrodollars clearly become more important the higher oil prices go.
Earlier this month, The Chronicle ran an interesting interview with General Motors CEO Rick Wagoner, in which he said major car manufacturers need to develop a variety of alternative energy technologies in preparation for the day that world gets off the oil.
The theory goes: Betting on just one — electric cars or fuel cells — would be too risky.
That’s not the party line over at BMW. The German car manufacturer told TED attendees in Monterey Thursday that they are betting the whole hog on hydrogen.
Residents, community leaders and consultants alike, on the other hand, have questioned the viability of a large RV resort in Gunnison. Not only would it add to the many already in the area, but the long-term prospect of the RVing industry has been called into question in light of rising energy costs, peak oil and the general fight against climate change.
Oil price strikes record high above 103 dollars
LONDON (AFP) - The price of New York crude oil hit an all-time high point of 103.05 dollars per barrel on Friday owing to record weakness of the dollar but then fell back, traders said.
And the price of gold reached an historic peak of 976.32 dollars per ounce.
“This was part of a broad-based commodities run based on the continued weakness of the dollar,” said Petromatrix analyst Olivier Jakob.
A weak US currency boosts demand for dollar-denominated raw materials such as crude oil because it makes them cheaper for buyers using stronger currencies. However the increased demand eventually leads to higher prices.
The Peak Oil Crisis: Catenaries and Pantographs
As the availability of liquid fuels dwindles, those supplies that remain will be increasingly allocated to uses for which there are no readily available substitutes — such as powering aircraft and ships. Electric power for land vehicles appears to be the most realistic option for the present. Cellulosic biofuels may come to power some share of land transport, but this is still many years away. Electric power is a proven technology and, more importantly, a widespread distribution system for electricity is already here.
With domestic production falling, it must buy costly oil abroad to sell at subsidized prices at home.
OPEC unlikely to change output at current price: Libya
PARIS (AFP) - OPEC is unlikely to change its production level at a meeting next week if the oil price stays at about 100 dollars per barrel, acting Libyan Oil Minister Chukri Ghanem told AFP on Friday.
Fire at Kuwait’s Shuaiba Oil Refinery Is Contained, KUNA Says
(Bloomberg) — A fire at Kuwait Petroleum Corp’s Shuaiba refinery was extinguished today without any casualties or disruption to output, according to KUNA, the state-run news agency.
The fire broke out at 12:21 a.m. local time in a distillation tower in one of the heavy oil refining units as it was being idled for maintenance, KUNA said, citing Mohammad Al- Mutairi, the refinery’s acting managing director.
North Sea Sullom Voe Oil Terminal Halts Berthing on High Winds
(Bloomberg) — The North Sea Sullom Voe terminal in Scotland’s Shetland Islands, which handles shipments of benchmark Brent crude oil, suspended berthing because of high winds.
Partnership will bid for U.S. oil refineries
Petroplus Holdings, Europe’s largest refiner, said Wednesday that it had entered into a $2-billion deal with private equity firms Blackstone Group and First Reserve to buy crude oil refineries in the United States.
Each partner has committed $667 million to form an investment company to be led by Petroplus Chairman Thomas D. O’Malley.
Ecuador shuts off oil exports after pipeline break
QUITO (AFP) - OPEC member Ecuador on Thursday suspended its oil exports because a landslide cut off its main pipeline, state-run Petroecuador oil company said.
“Exports were suspended and a force majeure was declared to avoid sanctions from our buyers, who already have been notified of the emergency,” an unnamed Petroecuador official told AFP.
Russian paper predicts trouble for South Stream pipeline
MOSCOW (AFP) - A Russian newspaper on Friday predicted trouble ahead for Moscow’s strategic South Stream gas pipeline, saying the project could be held up by difficult relations with neighbouring Ukraine.
Nepal strike over after accord reached
KATMANDU, Nepal - Trucks began transporting gasoline to the fuel-starved Nepalese capital Friday along with much-needed food and other supplies after ethnic-rights groups in southern Nepal ended a paralyzing strike, authorities said.
Japan arranging climate change summit: official
TOKYO (AFP) - Japan said Thursday it was arranging a meeting of national leaders to address climate change as it prepares to hold the Group of Eight summit of major industrial economies this summer.
A newspaper report said Japan has invited heads of state and government from 16 nations, which together account for 80 percent of greenhouse gas emissions, for parallel talks to the G8 summit.
EU nations sound objections to climate change plan
BRUSSELS (AFP) - EU nations raised on Thursday a host of objections to new proposals for fighting climate change, setting the stage for tough negotiations over the package.
In the first debate of the plans since they were proposed in January, EU members lined up to call for more flexibility and greater attention for industrial competitiveness while also pushing their national wish-lists.
Vestas has received two orders for a total of 33 wind turbines for two projects in Poland. The order for the Dobrzyn project consist of 17 units of the V90-2.0 megawatt (MW) wind turbine, and the order for the Wronki project consists of 16 units of the V90-3.0 MW turbine. Both contracts include supply, installation, commissioning and a five-year service contract.
Raser Technologies, Inc. has announced that it has completed drilling on a geothermal production well in southern Utah for use in a binary-cycle geothermal power plant for generating renewable electric power. Preliminary readings of well 21-34 indicate the existence of geothermal resources with promising water temperatures well in excess of 260 degrees F (127 degrees C). Detailed testing for the reservoir’s properties has now commenced with final results pending.
Xcel Energy has announced that it will begin testing a technology to store wind energy in batteries. It will be one of the first projects to use the technology in the United States for direct wind energy storage.
Electricite de France (EdF) and its 50% subsidiary EDF Energies Nouvelles have formally agreed to a development partnership focusing on the decentralized and renewable energies market. The companies plan to creation of a new 50-50 joint venture called EDF Energies Nouvelles Reparties (EDF ENR) which will be fully consolidated by EDF Energies Nouvelles.
The U.S. Department of Energy (DOE) has selected Novozymes’ Project DECREASE (Development of a Commercial-Ready Enzyme Application System for Ethanol) to receive DOE funding. The project aims to improve performance of the company’s advanced cellulase system which could help to bring down the cost of cellulosic ethanol production.
Bioenergy is emerging as one of the most reliable, diverse and cost-effective forms of renewable energy. The seemingly ubiquitous industry encompasses a whole range of technologies and feedstocks, from advanced pyrolysis and anaerobic digestion to wood pellets and firewood.
