Wikinvest Wire

The world has plenty of oil ... because the Saudis say so

Tuesday, March 04, 2008

Today's Wall Street Journal op-ed by Nansen G. Saleri, the former head of reservoir management for Saudi Aramco, makes you wonder just how stupid the Saudis really think the rest of the world is.

The answer?

Pretty stupid.

And they're probably right.

With all the work done by the Peak Oil crowd (see Saudi Arabia's Crude Oil Propaganda) and after all the pleadings by the likes of Matt Simmons to make their reserve data available for public scrutiny, it all comes down to, "Trust us, the oil's there".

Just reading this editorial with it's four central arguments for why the world has plenty of oil - resources in place, recovery efficiency, rate of consumption, and state of depletion at peak - you have to wonder why the first argument merited only about 50 words of explanation while the other three arguments got about three times that amount.

The World Has Plenty of Oil
Many energy analysts view the ongoing waltz of crude prices with the mystical $100 mark -- notwithstanding the dollar's anemia -- as another sign of the beginning of the end for the oil era. "[A]t the furthest out, it will be a crisis in 2008 to 2012," declares Matthew Simmons, the most vocal voice among the "neo-peak-oil" club. Tempering this pessimism only slightly is the viewpoint gaining ground among many industry leaders, who argue that daily production by 2030 of 100 million barrels will be difficult.

In fact, we are nowhere close to reaching a peak in global oil supplies.

Given a set of assumptions, forecasting the peak-oil-point -- defined as the onset of global production decline -- is a relatively trivial problem. Four primary factors will pinpoint its exact timing. The trivial becomes far more complex because the four factors -- resources in place (how many barrels initially underground), recovery efficiency (what percentage is ultimately recoverable), rate of consumption, and state of depletion at peak (how empty is the global tank when decline kicks in) -- are inherently uncertain.

- What are the global resources in place? Estimates vary. But approximately six to eight trillion barrels each for conventional and unconventional oil resources (shale oil, tar sands, extra heavy oil) represent probable figures -- inclusive of future discoveries. As a matter of context, the globe has consumed only one out of a grand total of 12 to 16 trillion barrels underground.
That's all you get for resources in place - trillions and trillions of barrels - it's there - the guy used to work there, he should know.

By Mr. Saleri's math, don't look for peak oil until sometime between 2045 and 2067.

Could there be a bigger disservice to the rest of the world than the continuing claims of nearly infinite global oil reserves, much of it still under the Saudi Arabian desert?

Maybe these claims would be just a little bit more believable if Saudi oil production hadn't declined over the last two years while they've continued to frantically poke holes in the ground in an attempt to coax more of the stuff to the surface.

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Anonymous said...

The Wall Street Journal Op-Ed page is such a joke. Maybe that motley collection of neocon talking points was passable in 2003. But now? Come on.

dearieme said...

Secretive about their data? They're as bad as the Global Warming brigade.

Mathlete said...

What does Saudia Arabia win by selling their oil at sub-optimal prices?

Nozferatu said...

You keep saying "Saudi's this, Saudi's that...."

Who the hell do you think is giving the Saudi's this information? The Saudis??? It's's the USA, it's the UK, it's the Dutch, etc...

Please...we're the one's lying to ourselves...the Saudi's are just making money because they happen to be there. Do you think, for a second, that OPEC doesn't have people in the backstage involved from our countries???


Nozferatu said...

Furthermore, let's assume that there is more oil..and we need to drill more and more in areas that are nature conserves, precious areas of the planet, pristine and untouched....

So what sort of place do you want to live in just so we can get every single drop of oil? It's going to be an ugly place, a hell-hole. How many more places are we going to complete frak up before we stop crapping in our own back yard?

Maybe it's the grand scheme of things that humans simply would be better for all.

Anonymous said...

Why would the Saudi's lie?
To prevent any sense of urgency that would cause us to develop new energy sources and increase conservation which would decrease our dependence on oil.

little larry sellers said...

You know this article is weak when they cite how much shale oil, tar sands, and extra heavy oil are left. Currently, there is little interest in those kinds of oil since the rate of "energy return on energy invested" is miniscule compared to conventional oil. From what I've read, the EREOI of conventional oil is roughly 30 to 1 while the rate for oil sands is only 1.5 to 1. The EREOI for oil shale is supposed to be even worse.

Looks like the WSJ is hoping for a sudden, miraculous technological advance that would drastically change the current situation.

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