Crude Awakening
The only hope for meeting growing world demand for oil, say experts, is to tap Saudi Arabia's reserves. A Bush advisor on energy says those reserves don't exist.
By Kevin Drum
snip
For that, we have to look toward the Middle East. But if you dig around in the details, it turns out that prospects there are surprisingly thin as well—except in one place: Saudi Arabia. In fact, widely respected oil projections share a common feature: They assume that Saudi Arabia, which today produces about 10 million bpd of oil, will be able to double its oil production over the next decade or two.
This is the elephant in the room, and it's something that nearly everyone agrees on. If Saudi Arabia can't double its output, there's not much hope that worldwide oil production can increase very much either. In the end, it turns out that everything hinges on Saudi Arabia.
The problem is that projecting the capacity of Saudi oil production is a tough nut. Ever since the Saudis took control of their national oil company, Aramco, from Western oil companies in 1980, a shroud has dropped over every facet of the kingdom's oil industry. The Saudis release no official data on how their aging fields are holding up, or how well their exploration efforts are going, and their published production totals may not be credible, let alone how much they will be producing a decade from now. As with most OPEC members, Saudi claims of proven reserves have increased steadily since 1980, but most analysts agree that these numbers have been manipulated upward for political reasons related to OPEC production quotas and bear little relation to reality. For oil industry experts, Saudi Arabia is a gigantic black hole, a target of guesswork, not analysis.
snip
In other words, there remains nothing to try. The best technology known to man has already been put to use all over Saudi Arabia in an increasingly desperate attempt merely to keep production steady at 10 million bpd. In the vernacular of the oil industry, Saudi oil fields have been in “secondary recovery” mode for years, and long experience elsewhere in the world has already taught us the limits of the advanced extraction technologies now being used in Saudi Arabia. They can mitigate production declines after a field peaks, but they can't stave off the peak itself. More money and more technology won't bail us out here. We're up against geological limits, not financial ones.
more...
http://www.washingtonmonthly.com/features/2005/0506.drum.htmlSo is Saudi Arabia peaking? Consider this recent development in light of the Saudis claiming they can increase production whenever it is demanded:
Saudi's Crude Calculations Don't Add Up
LONDON, May 24, 2005 (Dow Jones Commodities News Select via Comtex) By Shai Oster of DOW JONES
Call it the 4% difference.
That's the gap between what Saudi Arabia says it pumped since March and outside estimates of what the world's biggest and most important oil producer actually did.
Total up what Saudi Oil Minister Ali Naimi and his aides say the kingdom has produced from February to April and you get 848 million barrels.
But OPEC estimates based on secondary sources put the total at 839 million barrels. And the International Energy Agency pegs it at 814 million barrels - a 34 million barrel difference.
more...
http://www.rigzone.com/news/article.asp?a_id=22733Seems like what the Saudis say they can do and what they actually produce are two different things.
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