IEA (International Energy Agency) releases its annual perspective survey, World Energy Outlook 2008
18/11/2008 One of the conclusions is that falling oil production from the world's large oil fields is accelerating because of a lack of adequate measures.
According to the IEA, the aggregated future production decline from producing fields represents the most important uncertainty in the world's oil supply situation. That is why the Agency has chosen to pay particular attention to this topic in its perspective survey, World Energy Outlook 2008.
The IEA has analyzed data from around 750 of the world's largest oil fields: about 50 super-giants (> 5 billion barrels), about 250 giants (> 500 million barrels), and about 350 large fields (> 100 million barrels). It is estimated that the 400 largest fields in the world contain a total of approximately 1 300 billion barrels of oil reserves. About one-half of this volume has been produced. While there is considerable uncertainty associated with these figures, one factor that clearly emerges is that a few large fields have a dramatic impact. Of a total of about 4 000 producing oil fields, the ten largest of these produced nearly one-fifth of the world's oil in 2007. All of these fields were proven more than 40 years ago.
What determines production trends for a field or a province?
It seems that commercial and political factors may mean more than the physical realities for the world's largest oil fields. In other words, this means that field size and geographic location are more important than geological factors and reservoir conditions as explanatory variables for actual production schedules, according to the IEA analysis.
Smaller oil fields achieve peak production faster; they produce a larger percentage of their reserves before the decline phase, and then fall faster than larger fields. Offshore fields have a more aggressive production trend than fields on land; a trend which is reinforced with increasing water depths. This can be explained in part by the fact that offshore fields often have fewer but more highly productive wells, often horizontal wells, and that the distance between the wells is greater than in fields located on land. The result is that while large fields (> 1.5 billion barrels) on land can produce for an average of more than 110 years, the lifetime for a similar offshore field would be less than one-third of this. However, this data is based on limited industry experience, and thus entails substantial uncertainty.
With the exception of the largest fields in the world, production properties seem to be more important than geographic location. Large fields (> 1 billion barrels) with good production properties have produced 70 per cent of their reserves after 30 years, while similar fields with poorer production properties have produced 67 per cent of their reserves after 40 years. Another observation indicates that the later a field is developed, the greater the chance of it having a faster decline phase. This is due to improved production technology, altered commercial practices in the industry and a larger percentage of offshore fields. The decline rate is consistently twice as high outside of OPEC as within OPEC.
The situation on the Norwegian shelf
Oil production on the Norwegian shelf has been declining for the past eight years, after peaking in 2000. In 2007, oil production was 30 per cent lower than in 2000, and the average production decline was less than 5 per cent per year during that period. For fields where more than 70 per cent of the reserves have been produced, this was done within an average production period of 12 years.
Based on the figures from World Energy Outlook 2008, the NPD has examined 27 selected fields that represent 55 per cent of the oil and gas production on the Norwegian shelf. The well situation was analysed for the three-year period from January 2005 – January 2008. This analysis revealed that oil production from wells that produced during the three-year period fell by an average of 19 per cent per year. This is somewhat higher than what the IEA analysis describes as a normal decline rate of approximately 14 per cent. The explanation for this is that offshore fields that are run efficiently (e.g. with many wells early on and injection from day one), have a higher decline rate than fields on land that are often developed more gradually.
At the present time, there are about a thousand producing oil and gas wells on the shelf. If we assume an average production decline from existing wells of about 20 per cent, and assuming that the drilling targets are equally good, about 200 new producing wells would have to be drilled each year in order to maintain a relatively stable production level in the years to come. After the production decline started, about 80-90 new wells have come on stream each year on the Norwegian shelf. This may seem to be a rather low figure, and more wells could perhaps have limited or delayed the decline in production to some extent. However, the idea that 200 new producing wells can be drilled each year to drilling targets as good as existing production wells is not very realistic. There is a continuous trade-off to determine whether there are good enough drilling targets in existing fields to contribute to optimal recovery.