A New York Times article questioned Saudi Arabia's ability to produce as much oil as they had claimed they would. The main points were:
Given:
The Saudi's pump about 9.5 million barrels, leaving a cushion of about 1.5 million barrels, mostly of heavier grades not very usable in the West. There is virtually no other global spare capacity.
Our official policy:
The administration has endorsed the Saudis plans to increase its oil production capacity. They rely on a few producers, especially Saudi Arabia, to adjust their production to keep prices within reason. In April, Prince Abdullah reaffirmed President Bush that they could meet previously announced expansion plans.
Concerns raised:
There are now doubts raised as to whether they can still fulfill their function of stabilizing prices and meeting production requirements or meet their expansion plans.
Nansen G. Saleri, a senior Saudi oil executive who manages Saudi reservoirs, said going to 12 million or 15 million barrels a day was possible because the country had an estimated 150 billion barrels above the 260 billion in proven reserves. This was corroborated by Ali al-Naimi, the oil minister, saying they could add 200 billion barrels to their reserves, from existing fields and yet to be discovered resources, enabling production of 15 million barrels a day for 50 years or perhaps longer.
Edward O. Price Jr, consultant to several U.S. government agencies on middle east affairs and former vice president for exploration and production at Saudi Aramco, questioned where their estimate of more than 150 billion barrels of extra oil came from. Mr. Price said that Mr. Saleri told him that the basis for the higher oil figures was a 2000 study by the United States Geological Survey which estimated that Saudi Arabia's undiscovered resources were 87 billion barrels. Mr. Price was reported as saying that the U.S.G.S reserves had no credibility.
This story brings to the main press the urgency of responding to peak oil. The doubts about Saudi Arabia being able to meet its plans for future production and to be able to meet its role as the swing country in being able to adjust production to maintain pricing are not new concerns in the peak oil community. In fact as early as 2003 Saleri made a presentation that gave scenarios of increasing production capacity to 12 and 15 mbd for fifty years and indicated that their probable and and possible reserves were over 100 billion barrels. The bigger issue is that even if they could meet plans, would that be sufficient capacity to meet production requirements that are forecast. The shortage of desired oil production has been addressed by Chris Skrebowski and others as discussed in my previous post.
Saudi's claims of higher reserves are met with great skepticism and some (Matt Simmons in particular) have claimed that previous estimates of reserves were too high. The issue regarding the credibility of U.S.G.S estimates of reserves still is an issue to be resolved. It is a view by many geologists in that 'undiscovered reserves' may not be able to be developed with currently used technology. The term 'undiscovered reserves' is somewhat of a contradictory term and at best is a very speculative estimate.
Heading Out at The Oil Drum discusses this story in his post: "When they said that Matt Simmons had connections.....", Oct., 26,2005
Resources:
"Doubts raised on Saudi vow for more oil", New York Times via the Energy Bulletin, Oct. 26, 2005
"Fifty-year Crude Oil Supply Scenarios: Saudi Aramco's Perspective", Mahmoud. M.
Abdul Bsaqi and Nansen G, Saleri, Saudi Aramco, February 24, 2004
Comments