by Michael Klare
At the hastily convened global oil summit in Jeddah, Saudi Arabia on June 28, top officials of producing and consuming nations from around the world attempted to find a combination of solutions that would somehow extricate us from the current crisis over sky-high energy prices. These proposals ranged from increased output by major producers like Saudi Arabia and Kuwait to restrictions on the activities of international oil speculators.
But all were based on the premise that the crisis can be resolved through the right mix of actions, thus restoring an environment of cheap and abundant oil - a premise that is fundamentally flawed. More and more, the evidence suggests that this is not just a temporary crisis. It is the beginning of the end of the Petroleum Age.
How do we know that the Petroleum Age is drawing to a close? Two key indicators tell us that this is so. First, many of the giant fields that have satisfied our massive thirst over so many years are experiencing diminished output. Second, although the major oil producers are spending more money each year to discover new reserves, they are finding less and less oil. Either of these factors by itself is cause for significant worry; the combination is deadly.
Dangerous Reliance
Few people understand how reliant we have become on a relatively small number of mammoth fields for the lion’s share of our daily petroleum intake. Though the world possesses tens of thousands of operating fields, a mere 116 of them - each producing more than 100,000 barrels per day - together account for nearly one-half of total global output. Of these, all but a handful were discovered more than a quarter of a century ago, and most are showing signs of diminished capacity. Indeed, some of the world’s largest fields - including Ghawar in Saudi Arabia, Burgan in Kuwait, Cantarell in Mexico, and Samotlor in Russia - appear to be now in decline or about to become so. The decline of these giant fields matters greatly. Compensating for their lost output will take increased yield at thousands of smaller fields, and there is no evidence that this is even remotely possible.
Signs of decline at the major fields began accumulating this spring when Mexico announced that Cantarell’s output had fallen by 416,000 barrels per day, a 25% reduction over its 2007 output. Though state-owned Pemex was able to boost output at a number of other fields, the decline at Cantarell was so significant that Mexico reported a 9% drop in net oil output for the first quarter of 2008 as against 2007. This is an ominous sign from a country that a year ago was America’s second leading supplier of crude petroleum. A similar sign of alarm came this spring from Russia, until recently the rising star of the oil world. Since last October, output there has fallen about 2%, with no hint of a recovery in sight.
The biggest mystery is the status of Ghawar. This Saudi Arabian field, the world’s biggest by far, accounts for about 7% of global supply. Saudi Arabian officials insist that the field is in good shape and fully capable of sustaining daily output of nearly 5 million barrels for years to come. But many skeptical analysts, including noted Houston investor Matthew Simmons, believe that Ghawar is on its last legs and will soon go into decline. In his 2005 book Twilight in the Desert, Simmons cited technical papers to show that field pressure at Ghawar was being artificially maintained through the heavy use of water injection - a technique that cannot be sustained indefinitely and is usually followed by a rapid plunge in output.
http://www.commondreams.org/archive/2008/06/28/9943/
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