Scary New Article on Peak Oil

[hang a left]

A Tale of Two Planets

A Report on the Conference
“Future of Global Oil Supply: Saudi Arabia"
Held at CSIS, Washington DC, February 24th 2004

by Julian Darley

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http://fromthewilderness.com/free/ww3/031704_two_planets.html



© Copyright 2004, From The Wilderness Publications, www.copvcia.com. All Rights Reserved. May be reprinted, distributed or posted on an Internet web site for non-profit purposes only.

March 17, 2004 1800 PST ( FTW ) -- The new millennium has not exactly been one of ‘irrational exuberance' for many industries, and particularly not for the oil industry, despite high oil prices. Major oil discoveries have declined every year so that 2003 saw no new field over 500 million barrels, and in 2001 and 2002 the top ten non-state oil companies spent more on exploration than they discovered in value, a new and alarming record. It is well over twenty years since more oil was found than consumed in a year. From the outset of 2004, large reserve write-downs, starting with Shell, and including El Paso and BP, have shaken the confidence of the financial community, set in motion an official SEC enquiry, and may yet be just the tip of the iceberg.

Comforting then to know that the Middle East, producer of last resort and future saviour of the world oil system, still has nearly 700 billion barrels of reserves, and is publicly confident that it can deliver the required doubling of output to 40 million barrels a day by 2025. Even more reassuring, Saudi Arabia says it can happily deliver 10 million barrels a day for at least the next fifty years, possibly even rising to 15 million barrels a day – and still for fifty years. This output can be guaranteed because Saudi ‘oil in place' will rise to 900 billion barrels by 2025, while new technology will help existing recovery and lead to many new discoveries. This was the message from Saudi Aramco, delivered on February 24 th, at CSIS (Center for Strategic and International Studies), a well-known think-tank in Washington DC, to an audience of diplomats, CIA, EIA (Energy Administration Agency, part of the US Department of Energy), media of record, and many energy companies and analysts of every stripe.

The trouble is that the Saudi Aramco presentations of Mahmoud Abdul-Baqi, Vice President of Exploration, and Nansen Saleri, Manager of Reservoir Management, seemed to be describing not just another country, but another planet when compared with what Matt Simmons, President of Simmons and Co (the world's largest private energy investment banker) had to say. Industry observers noted that Aramco had never before said so much about their reserves and how they hold production steady in their ageing oil fields, but much of the Aramco presentation concentrated on the benefits of new technology, especially in their medium-sized fields, and the possibilities of future discoveries, without noting that well productivity had fallen by more than half since the early 1970s. More than half of Saudi Arabia's oil comes from one giant field, Ghawar, the largest ever discovered, and the health of this field is now in serious doubt, after decades of water injection to maintain pressure.

Simmons' case rests on the painstaking analysis of two hundred SPE (Society of Petroleum Engineers) reports written over four decades by Saudi petroleum reservoir engineers, as well as a fact-finding mission in 2003, and ten years of other detailed studies of oil and gas depletion. He has been publicly hinting for more than a year that assumptions about Saudi Arabia's seemingly limitless capacity may be misplaced, but now, ahead of the publication of his forthcoming book on Saudi oil, the hints have been replaced by copious data and a dire warning.

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Edited for my scary scarey

[pscot]

1. That tremor in the force

suggests that the "Oil Peak" is upon us. Things will never be the same again. Now is the time to unload that motor home. Next year you'll be putting it up on blocks for good.

Seriously. The signs are all around us. I believe we've seen the end of cheap oil.