By OGJ editors
HOUSTON, Aug. 2 -- The world increasingly is going to depend on Canada's oil sands to fill an anticipated gap left from declining production in Ghawar field in Saudi Arabia along with other mature oil regions elsewhere, said St. Peterburg, Fla.-based Raymond James & Associates Ltd.
Canadian oil sands production eventually could grow to 4 million b/d and maintain that rate for more than 100 years, RJA analyst John Mawdsley said in a July 16 research note.
"Canada's stable political environment and Alberta's attractive fiscal regime provide a profitable investment arena. As the world's other giant oil fields decline, we believe that an investment in the oil sands is going to produce impressive long-term returns," Mawdsley said.
Ghawar
Ghawar, the world's the largest oil field, is near the Arabian Gulf and has been on stream since 1951. Many industry observers are asking how long the field will be able to maintain production.
"We estimated that by the end of 2004, 57 billion bbl of oil will have been produced from Ghawar field. . . production peaked in 1981 at 5.7 million b/d (subsequently restrained for market reasons). It again reached over 5 million b/d in the 1990s and has since declined to recent levels of 4.5 million b/d. At these rates, Ghawar generates almost 6% of the world's oil production each and every day," Mawdsley said.
Estimates of Ghawar's remaining reserves vary. The US Energy Information Administration estimates 50-70 billion bbl while state oil company Saudi Aramco estimates 125 billion bbl. Mawdsley said Ghawar's production will continue to gradually decline.
"Another important point to make here is the current water cut, which is believed to be anywhere from 20% to 55%. It is estimated that the field's oil production is declining by about 8%/year, and, assuming this rate, oil production next year will drop by 360,000 b/d. Additional work will have to be done at Ghawar just to maintain the current production level," he said.
Advanced extraction techniques, including "bottle-brush drilling" and sea water injection have been used in the field.
"Both of these methods boost the current production rate, but can cause damage to the reservoir and lead to declines in future years. . . we believe it is likely that Ghawar's reservoir may have suffered damage that will lead to a shorter lifespan than had been previously anticipated," Mawdsley said.
In terms of reserves, "the oil sands are the world's only identified petroleum resource that is comparable to Ghawar," he said.
