[Reader-list] Peak_oil approaching fast?

[Nagraj Adve]

This is one of the key data issues in the peak oil debate, how much does
Saudi have? I believe that many of the key OPEC countries doubled their
reported reserves in the late 1980s, and some folks are sceptical of those
claims.
Naga




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WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on
prices US diplomat convinced by Saudi expert that reserves of world's
biggest oil exporter have been overstated by nearly 40%

• Jeremy Leggett: We are asleep at the wheel on peak oil
• Datablog: Are we running out of oil?

John Vidal, environment editor guardian.co.uk,
Tuesday 8 February 2011 22.00 GMT

The US fears that Saudi Arabia, the world's largest crude oil exporter, may
not have enough reserves to prevent oil prices escalating, confidential
cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a
warning from a senior Saudi government oil executive that the kingdom's
crude oil reserves may have been overstated by as much as 300bn barrels –
nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more
than $100 a barrel on global demand and tensions in the Middle East. Many
analysts expect that the Saudis and their Opec cartel partners would pump
more oil if rising prices threatened to choke off demand.

However, Sadad al-Husseini, a geologist and former head of exploration at
the Saudi oil monopoly Aramco, met the US consul general in Riyadh in
November 2007 and told the US diplomat that Aramco's 12.5m barrel-a-day
capacity needed to keep a lid on prices could not be reached.

According to the cables, which date between 2007-09, Husseini said Saudi
Arabia might reach an output of 12m barrels a day in 10 years but before
then – possibly as early as 2012 – global oil production would have hit its
highest point. This crunch point is known as "peak oil".

Husseini said that at that point Aramco would not be able to stop the rise
of global oil prices because the Saudi energy industry had overstated its
recoverable reserves to spur foreign investment. He argued that Aramco had
badly underestimated the time needed to bring new oil on tap.

One cable said: "According to al-Husseini, the crux of the issue is twofold.
First, it is possible that Saudi reserves are not as bountiful as sometimes
described, and the timeline for their production not as unrestrained as
Aramco and energy optimists would like to portray."

It went on: "In a presentation, Abdallah al-Saif, current Aramco senior
vice-president for exploration, reported that Aramco has 716bn barrels of
total reserves, of which 51% are recoverable, and that in 20 years Aramco
will have 900bn barrels of reserves.

"Al-Husseini disagrees with this analysis, believing Aramco's reserves are
overstated by as much as 300bn barrels. In his view once 50% of original
proven reserves has been reached … a steady output in decline will ensue and
no amount of effort will be able to stop it. He believes that what will
result is a plateau in total output that will last approximately 15 years
followed by decreasing output."

The US consul then told Washington: "While al-Husseini fundamentally
contradicts the Aramco company line, he is no doomsday theorist. His
pedigree, experience and outlook demand that his predictions be thoughtfully
considered."

Seven months later, the US embassy in Riyadh went further in two more
cables. "Our mission now questions how much the Saudis can now substantively
influence the crude markets over the long term. Clearly they can drive
prices up, but we question whether they any longer have the power to drive
prices down for a prolonged period."

A fourth cable, in October 2009, claimed that escalating electricity demand
by Saudi Arabia may further constrain Saudi oil exports. "Demand [for
electricity] is expected to grow 10% a year over the next decade as a result
of population and economic growth. As a result it will need to double its
generation capacity to 68,000MW in 2018," it said.

It also reported major project delays and accidents as "evidence that the
Saudi Aramco is having to run harder to stay in place – to replace the
decline in existing production." While fears of premature "peak oil" and
Saudi production problems had been expressed before, no US official has come
close to saying this in public.

In the last two years, other senior energy analysts have backed Husseini.
Fatih Birol, chief economist to the International Energy Agency, told the
Guardian last year that conventional crude output could plateau in 2020, a
development that was "not good news" for a world still heavily dependent on
petroleum.

Jeremy Leggett, convenor of the UK Industry Taskforce on Peak Oil and Energy
Security, said: "We are asleep at the wheel here: choosing to ignore a
threat to the global economy that is quite as bad as the credit crunch,
quite possibly worse."
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