franco wrote:Is Saudi Arabia Exaggerating Its Oil Production Potential?
By Simon Watkins
For years, Saudi Arabia has made some pretty hefty claims about its oil potential.
It is becoming increasingly clear, however, that the Kingdom may be stretching the truth a little too far.
Analysts are now beginning to doubt that Saudi Arabia even has the reserves it says it has.
Not sure if correct place but interesting news. Full article:
People are too quick to dismiss peak oil. Since a clear peak did not form in the 2000s most concluded it
was all chicken-little BS. But it wasn't. The world is in an aggregate plateau with most of it in decline
but offset by additional production in the US, Canada and elsewhere from previously unexploited expensive
plays requiring fracking as well as from the use of biodiesel and ethanol. Those are now counted as oil.
The problem is that biodiesel and ethanol are never going to replace crude oil. The fracking and tar sands
activity is not a even a medium term solution. The bottom line is that there are nowhere near enough
conventional crude oil discoveries to offset the decline in existing production fields. This includes the
recent Russian discovery. The world consumes 35 billion barrels of "oil" per year. Divide by 7 to get
5 billion tons of oil per year.
Discoveries have been averaging substantially below consumption for a very long time.
The Saudis have no non-conventional oil like the US and are coasting on their super field called Ghawar. This
field is decades old and not growing in size. It is fast approaching the transition point where the water being
injected to maintain reservoir pressure will start to come out of the wells. This typically happens at just above
50% of the original oil remaining. This is when instead of oil flowing through the sedimentary porous rock you
have the formation of an emulsion and water flow with the oil staying trapped in the rock.
People have tried to predict when Ghawar will become useless but that is not easy partly because the Saudis
keep all the relevant information secret. But once Ghawar dies, the days of large Saudi oil production are over.
People's smug dismissal of peak oil will not prevent it. In fact, it will be catastrophic. The usual peak oil
bell curve graphic is misleading. Extraction pressure is not symmetric in time around the peak. World oil
demand is pushing higher extraction rates. This essentially shifts the post-peak production tail towards
the peak and helps form a plateau instead of a peak. But the price for this is that there is a cliff at the end of the
plateau instead of a bell curve decline.