If true, good for oil sands:
I had an interesting conversation this morning with a Haliburton employee just back from Saudi Arabia. His conversation confirmed what we have been hearing. He said: "people think Saudi Arabia has a lot of oil, but they have been injecting water to increase production for years, and now the production from their giant fields is depleting very rapidly. The Saudis are in panic, pulling in rigs from everywhere, punching more holes in the ground to get quick production to stave off rapid old field production decline, and to keep up appearances. Workers are there from many nations to drill the sites, but the new wells are not very prolific."
Reading between the lines, if Ghawar is still producing at gargantuan rates, why the race to get so many rigs to drill so many wells? And the new well production combined with flowing old well production should be showing huge increases in Saudi production supply. But the monthly reports of Saudi production has not been impressive. For example, last month, the Saudis reported an increase of 50,000bd, mostly sour crude. If Ghawar is depleting rapidly, then the Saudis have a major problem, for not only must they drill more to keep their production stable, but also to make up for the declining production of other OPEC producers. Like a juggler with too many plates in the air, at some point it can all crash down. Simmons stated that once Ghawar starts to go, it will drop very fast.
The old saying about the Saudis is you don’t listen to what they say, but you watch what they do. The account of frantic drilling activity and rig acquisition suggests they are in trouble. My friend’s perception is not just his personal one, he said, but one widely shared by those working the oil fields. FWIW
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