by Jerome a Paris
Tue Jun 28th, 2005 at 08:34:07 AM EST
A Cartel and Its Snakeoil - The Saudis claim to have huge oil reserves. Do they really?
Update [2005-6-28 12:12:11 by Jerome a Paris]:
Across the oil industry, the uneasy feeling is growing that world production may be approaching its own "Hubbert's Peak." The last major field yielding more than a million barrels a day was found in Mexico in 1976. New discoveries peaked in 1960, and production outside the Middle East reached its high point in 1997. Meanwhile world demand continues to accelerate by 3% a year. Indonesia, once a major exporter, now imports its oil.
Before an uneasy feeling grows into full-blown pessimism, however, one must consider the supposedly vast oil resources lying beneath Saudi Arabia. The Saudis possess 25% of the world's proven reserves. They routinely proclaim that, for at least the next 50 years, they could easily double their current output of 10 million barrels a day.
But is this true?
Story below the fold corrected. I copied the same part twice, sorry about that!
This is not just the WSJ - this is the wingnut territory Op-Ed pages, the same that just a few days ago published an editorial claiming that global warming was just political scaremongering (for a thorough debunking, see this rebuttal by Real Climate and my own take on it here).
Almost 90% of Saudi production comes from six giant fields, all of them discovered before 1967. The "king" of this grouping--the 2000-square-mile Ghawar field near the Persian Gulf--is the largest oil field in the world. But if Saudi geology follows the pattern found elsewhere, it is unlikely that any new fields lie nearby. Indeed, Aramco has prospected extensively outside the Ghawar region but found nothing of significance
. In particular, the Arab D stratum--the source rock of the Ghawar field--has long since eroded in other parts of the Arabian Peninsula. The six major fields, having all produced at or near capacity for almost 40 years, are showing signs of age. All require extensive water injection to maintain their current flow.
Based on these observations, Mr. Simmons doubts that Aramco can increase its output to anywhere near the level it claims. In fact, he believes that Saudi production may have already peaked. Is he right?
Mr. Simmons's critics say that, by relying on technical papers, he has biased his survey, since geologists like to concentrate on problem wells the way that doctors focus on sick patients. Still, the experience in America and the rest of the world shows that oil fields don't last forever. Prudhoe Bay, which was producing 1.2 million barrels a day five years after being brought on line in 1976, is now down to less than 400,000.
The mystery of Saudi oil capacity bears an eerie resemblance to Saddam Hussein's apparent belief that his scientists had developed weapons of mass destruction. Who are the deceivers and who is the deceived? No one yet knows the answers. But at least Matthew Simmons is asking the questions.
And this is published by a "legitimate" writer, a Mr Tucker, associate at the well-known American Enterprise Institute. Furthermore, the WSJ is actively promoting Matthew Simmons' book about Saudi oil, "Twilight in the Desert", on their website.
There has been a strain of the conservative movement that has wanted to pounce on Saudi Arabia ever since 9/11, but the argument is usually about the fact that the US depends on such an unstable and unreliable country for the supply of a strategic resources and should interefere more aggresively in its domestic politics to have a friendlier regime. This is quite different. This is highly critical of the Saudis (lumping them with Saddam Hussein is a pretty strong signal!), but it criticises the physical ability to provide the oil, not their political reliability which is, as far as I know, a first.
So, despite the efforts of the official establishment mouthpieces like the Economist and CERA (Cambridge Energy Research Associates) to deny the looming reality of peak oil, it is seeping through into the MSM with an increasingly high frequency.
Well, once in a while, the WSJ Op Ed pages publish interesting things (;-), and it's good to see them write on this topic, whatever their ulterior motives - but do note that this article does not call for ANWR or any other similar stuff, just for better information from Saudi Arabia and other oil producers.
Is it time for desperation if even the WSJ op-ed pages don't use peak oil for partisan posturing?!