EntouchOne of the most momentous announcements was made on Nov. 12, 2005, but no one noticed. The field is Burgan, which is the 2nd largest in reserves and, now, the 2rd largest in production. Here is what was said recently by the oil optimists about Burgan:
"'Kuwait has produced an average of 2.1 million b/d in recent years, he said, However, the Burgan field, Kuwait's biggest, is mature and making water, so the Kuwait Oil Co. (KOC) would prefer not to increase production from it, he added. With proper investment, however, increased drilling should raise production capacity to an average of 3 million b/d by 2015." Hart's E&P Staff, "Middle East and Caspian nations can Help Meet Burgeoning Petroleum Demand by 2015, but Still won't Fill the Bill," The Future of the Energy Industry, Supplement to Hart's E&P October 2005, ed. by William Pike,, p. 15
Those who have access to the wildly optimistic IEA World Energy Outlook, quote it as saying:
Greater Burgan is expected to remain the single most important contributor to production throughout the projection period, but the share of smaller producing fields - such as Raudhatain and Umm Gudair- will rise. Excluding additional output through advanced technologies , Greater Burgan's output is expected to increase steadily to 1.6 mbd in 2015, and then decline sllightly to around 1.5 mbd by 2030. http://www.theoildrum.com/story/2005/11/14/03928/018
Yeah, right, 3 million in 2015, sure, and pigs fly!
Here is the Middle East Finance report noting the inability of Kuwait to maintain even 1.9 million bbl/day out of Burgan. So much for the wild-eyed optimists and their rosy views of the world.
It was an incredible revelation last week that the second largest oil field in the world is exhausted and past its peak output. Yet that is what the Kuwait Oil Company revealed about its Burgan field.
Kuwait: Saturday, November 12 - 2005 at 08:46
The peak output of the Burgan oil field will now be around 1.7 million barrels per day, and not the two million barrels per day forecast for the rest of the field's 30 to 40 years of life, Chairman Farouk Al Zanki told Bloomberg.
He said that engineers had tried to maintain 1.9 million barrels per day but that 1.7 million is the optimum rate. Kuwait will now spend some $3 million a year for the next year to boost output and exports from other fields.
However, it is surely a landmark moment when the world's second largest oil field begins to run dry. For Burgan has been pumping oil for almost 60 years and ac counts for more than half of Kuwait's proven oil reserves. This is also not what forecasters are currently assuming.
Last week the International Energy Agency's report said output from the Greater Burgan area will be 1.64 million barrels a day in 2020 and 1.53 million barrels per day in 2030. Is this now a realistic scenario?
The news about the Burgan oil field also lends credence to the controversial opinions of investment banker and geologist Matthew Simmons. His book 'Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy' claims that the ageing Saudi oil filed also face serious production falls.
The implications for the global economy are indeed serious. If the world oil supply begins to run dry then the upward pressure on oil prices will be inexorable. For the oil producers this will come as a compensation for declining output, and cushion them against an economic collapse.
However, the oil consumers then face a major energy crisis. Industrialized economies are still far too dependent on oil. And the pricing mechanism of declining oil reserves will press them into further diversification of energy supplies, particularly nuclear, wind and solar power.
All this was foreshadowed in the energy crisis of the late 1970s when a serious inflection in oil supply by the year 2000 was clearly forecast. How ironic that those earlier forecasts now look correct, while more modern and recent forecasts begin to look over optimistic and out-of-date with geological reality.
Nobody can change the geology, and forces of nature that laid down reserves of oil and gas over millions and millions of years. Could it be that we have been blinded by technological advances into thinking that there is some way to beat nature?
The natural world has an uncanny ability to hit back at the arrogance of man, and perhaps a reassessment of reality at this point is called for, rather than a reliance on oil statistics that may owe more to political maneuvering than geological facts.
We can ignore such things to our peril, but the reality is that the end of the oil age is within sight. We are almost at Hubbert's peak. After all, when we realize that we took 150 years to burn the first trillion barrels of oil, and that at current rates of consumption it will take only 33 years to burn the second trillion, it doesn't take a genius to know that we can't continue this for very long. Will be try to burn the 3rd trillion barrels of oil in 5 years? No, there won't be any commercial quantities of oil remaining.
I might add, that $3 million a year cited in the report above is a pittance. One well can cost more than this. This will get you no more than a 6 mile pipeline.