Is Saudi Arabia Running Out of Oil?
This month, I have been following a series of articles over at The Oil Drum. Two knowledgable and articulate members have been having a debate about whether Saudi Arabia has hit Peak Oil or not. Stuart Staniford has been producing graphs, charts and tables that back up his theory that the steady 8% decline in Saudi production over 2006 was not voluntary and they have started down the post-peak slide. Euan Mearns has been arguing that the KSA is just doing what it usually does, acting as a swing producer, and that the declines over the year were not as severe as Staniford showed, nor were they involuntary.
There are a few scary things about this debate. First of all, Staniford is frighteningly well informed, and his numbers are difficult to dispute; most people seem to be disputing his conclusions but not his numbers. Secondly, Mearns doesn't pooh-pooh Staniford's claims outright; the best he can do is, "[I] feel there are several cautionary observations that need to be made before jumping to any conclusion about the end of the oil age. If Stuart is right, and he may be, then the consequences may be dire." Thirdly, the comments at the bottom of each article seem to include many expert sources quibbling over small details, but nobody seriously disputing the observation that started it all, that Saudi's production dropped steadily last year.
Lastly, the most scary thing is that Staniford bets anyone willing to take him up on it that the claim made in a Saudi Aramco press release that they will "increase maximum sustained capacity to 10.7 million barrels per day (bpd)" is total BS. He bets that "the international oil agencies will never report sustained Saudi production of crude+condensate of 10.7 million barrels or more." He starts his bet at $1000, and later raises it to $2000.
Nobody takes him up on the bet. The best that Mearns can say is, "High stakes and long odds! If Stuart was so confident that Saudi production was heading south for good then he would not have set the bar so high." ... gulp ... So even the doubter thinks that the press release's numbers are "long odds."
Anyway, here are the articles (so far). Make sure you peruse the comments as well as the articles. Unlike so many comments on other sites, the comments here seem to be mostly from industry experts.
Saudi Arabian oil declines 8% in 2006: March 2, 2007 (Stuart Staniford)
Saudi Arabia and that $1000 bet: March 7, 2007 (Euan Mearns)
A Nosedive Toward the Desert: March 8, 2007 (Stuart Staniford)
Saudi production laid bare: March 19, 2007 (Euan Mearns)
Water in the Gas Tank, Further Forensics on Saudi Oil Supply: March 26, 2007 (Stuart Staniford)
Stuart has called a peak in Saudi production in 2005 and no matter how many wells they now drill, he forecasts that production will continue to slide in a manner similar to that shown. My position is that recent falls in Saudi production reflect voluntary restraint achieved by retiring wells and that production may rise again in the future, dependent upon global demand picking up.
- Euan Mearns
And yet, Mearns refuses to take up Staniford's $2000 bet.
I think I should start getting all of my world travel in now, before it's too late...