In 2007, Wikileaks released news that US consul cables from Saudi Arabia indicated that Saudi proven reserves were being overstated by nearly 50% and that they were not certain that Saudi’s would be able to maintain promised crude deliveries much beyond 2011. They indicated that deliveries would flatten by 2012 and probably stay level for 15 years, then begin an irreversible decline. Saudi oil peaking has been in the public background certainly since 2007. James D. Hamilton, writing in the October 2007 Atlantic Monthly, brought this issue to full visibility. Hamilton’s article is worth reading: good discussion of issues and good maps of the oil fields.
It is interesting that Yahoo’s report on the Guardian information release generated a fire storm of typical right-wing comments. Unsigned or anonymous flame comments typically misfired on what is going wrong. Aside: Why do operators of serious websites still allow unsigned comments? Human history is littered with poison pen letters spewing untruths and half truths that uncritical readers accept as reality. Many dead bodies have been generated by this process.
Here is the issue in a nut shell. The Aramco appears to have systematically overstated Saudi proven reserves by at least 50% in a possible effort to stave-off loss of foreign investment. Big money involved here. Major sources (such as the Saudi Ghawar oil field) are apparently near the limits of what can be removed using current techniques. Saudis are experiencing major issues as they try to open new fields and deploy new techniques. This increasing difficulty in extraction comes with played-out fields. The shocking statement was that the Saudi official could not foresee production increases ever rising much above the stated 2010 target of 12 M b/d (million barrels per day). Note-1: The US IEA reports that world petroleum usage is about 85.5 Mb/d and U.S. usage is 19.5 M b/d, of which US production supplies 11 M b/d. Note-2: Although for economic stability, we require much more than we produce, our oil companies still export petroleum products.
The Saudis have provided the stabilizing volume needed to keep the oil flowing throughout the world. The news that Saudi Arabia will soon not be capable of such stabilizing supply brings visions of chaos.
So where do we go from here? We have not yet experienced much Saudi inability to supply oil to stabilize the world market, and probably will not for several years, yet. This is not the time to panic, but it is time to sit down and face the fact that oil is going rise in price and become ever more scarce. What does this imply for our future?
Personally, I feel discouraged. We in the US are in the grip of the same forces that have kept us from doing energy reassessment for the 40 years of my career. Time moves onwards, and options narrow. Although we need to do significant planning on how to survive as a world power in the face of declining resources, I do not think this will actually happen until our toes are hanging over the edge of the cliff.
Charles J Armentrout, Ann Arbor
2011 Feb 11, Minor Modification 2011 Jun 03
Listed under Natural Resources Natural Resources > Oil
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great post and an interesting and informative blog you have built here. glad i stumbled across it.