Tuesday, June 12, 2007

Saudi Peak Oil Revisited

Three more scary pieces of data have added their weight to my belief that we'll hit Peak Oil within the next decade.

OPEC Reserves Overstated

The first is a very well written document by Phil Hart and Chris Skrebowski, titled "Peak Oil: A Detailed and Transparent Analysis". A summary of this article appeared in the June 2007 issue of the Journal of Petroleum Technology. They wrote this article in response to an anti-peak oil article by Peter Jackson of Cambridge Energy Research Associates in February's J.PT.

In a very ominous portion of the article, they show how Kuwait's oil reserves were severely over-stated. They go on to say:
...it is reasonable to question the size of the remaining reserves of the other OPEC members who also increased their assessments in the so-called 'quota wars' of the 1980's. It is our view that OPEC member reserves are overstated by approximately 250 billion barrels in total.

Saudis Becoming Nervous

My second scary piece of news comes from a friend of mine working at the King Fahd University of Petroleum & Minerals in Dhahran (yes, there is such a thing as a Petroleum University). He says that he's been asking knowledgeable people about the questions discussed in my blog post, "Is Saudi Arabia Running Out of Oil?"

The responses he's been getting have not been encouraging. The Saudi nationals will either not discuss the issues at all, or they simply say, "everything's fine!" The ex-pats (the Western experts working in Saudi) have a different story. They point to recent frenzied activity on the part of the Saudis to re-open old wells and drill new ones as evidence that not all is well in the Kingdom. My friend found general agreement that the Saudis have been lying about their reserves, but of course, no one knows by how much. And finally, he found general agreement that the Ghawar field is starting to "run down."

As my friend put it, "When Saudi peaks, the world has peaked."

Has Saudi Already Peaked?

Saudi isn't the biggest oil producer anymore. Not since 2005.

Saudi Arabia was the largest producer of oil up until 2005, but its production recently has been declining. Russia is now the largest producer of oil. In 2006, Saudi Arabia produced 9,152,000 barrels per day while Russia produced 9,246,000 barrels per day, based on March 2007 US Energy Information Agency data.

Saudi Arabia is the still the largest oil exporter. While Russia produces more, its population is greater, so it has less to export.

OPEC announced a reduction in production as of November 1[, 2006]... [However,] even before the announced cutbacks, the three large OPEC producers (Saudi Arabia, Iran, and Venezuela) were all showing declining production.

-- Oil Quiz, Test Your Knowledge

I hope, for the sake of my child, that the world won't peak for a few more years. We're just not ready for a post-peak world.

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At Sat Jul 14, 04:09:00 pm GMT-7, Blogger Asphalt Bellyflop said...

Just a question though.... is it possible that some of the declining production is due to the fact that the lower production would lift prices? I do agree that the world needs to cut back, but the business side of my mind is still a little bit skeptical on the decline. :)

At Mon Oct 29, 10:05:00 am GMT-7, Blogger Qole Pejorian said...

I hope you're right, Mr. Bellyflop.


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