Saudi Arabian oil production has peaked

Harris Nesbitt, an commodities investment house and subsidiary of Harris Bank, just released a research report that provides analysis of production details from Saudi's largest oil field---and the largest oil field in the world, Ghawar.

When oil prices hit $50 a barrel, the Saudi's claimed that they would increase production by 500,000 barrels a day, ramping up to an additional 5 million a day by 2012.

However, instead of delivering 500,000 barrels of light sweet crude which is easily processed by oil refineries, the Saudis pumped out dark sulphurous sludge--or sour crude, which has a lower gasoline yield and is currently selling at less than $50 per barrel. There are only a few refineries that can process sour crude and they have no excess capacity--apparently the Saudis won't have the capability to increase light sweet production for another 7 years.

In addition, the 2012 increase was scaled back to 2.5 million barrels because--and this is the kicker--production from existing fields would decrease 2.5 million b/d. Ouch.

And there is more....

As if that weren't bad enough news for consumers, the Saudis claim
they need at least $32 a barrel to justify this new production, because
it requires waterflooding. Desalinating water from the Gulf and
pumping it out to the desert, and then pumping it down into
oilfields, is expensive.

Waterflooding on newborn Saudi wells? Isn't waterflooding
petroleum Viagra for aging wells?

*snip*

Because the combination of the news that there's no new Saudi Light
coming on stream for the next seven years plus the 27% projected
decline from existing fields means Hubbert's Peak has arrived in
Saudi Arabia. The Kingdom's decline rate will be among the world's
fastest as this decade wanes. Most importantly, Hubbert's Peak must
have arrived for Ghawar, the world's biggest oilfield, and Wall Street's
most-cited reason for assuring us month after month that oil prices
would plunge because there were so many billions of barrels of
readily-available crude overhanging the market.

The Street's perception was a tad outdated: OPEC had 15 million b/d
of excess capacity in 1986 when the Saudis decided to rein in OPEC
cheaters and head off further development of major projects abroad,
including the North Sea and the Alberta oil sands. By 2002, OPEC's
unused capacity was down to the one million b/d range, which is,
effectively, too tiny to give the cartel the power to set prices.

corporate.bmo.com...

If Saudi Arabia has reached peak oil, the world has reached peak oil. Saudi Arabia is currently producing a large part of the world's output and has 25% of the world's reserves. They are doing a lot of PR regarding the extent of their reserves and production capability, but as the global oil director of Platt's points out, not all barrels are the same.

www.rigzone.com...
www.energybulletin.net...
www.simmonsco-intl.com...
english.aljazeera.net...

[Saudi Arabia is currently producing a large part of the world's output and has 25% of the world's reserves.



sorry but i just have to say, that is wrong, they hold 55 percent of the worlds crude oil reserves. They produce twenty-eight percent of the worlds oil. thanks.

[edit on 15-1-2008 by iwillfindthetruth]

Great way to raise profits, eh?

No-one in the peak oil business seems to notice Russia completely turned their economy around, paid off all their debts, and is now "paying for procreation" to raise their population.


All from profits generated from very deep oil wells.

Now, just how did dead plants and animal matter get 5 to 10 miles below the surface? No geological process can explain a fossil fuel model for oil that far down.

I constantly wonder at how Jupiter, Saturn, Uranus and Neptune, along with numerous moons, comets, asteroids and such, got all their hydrocarbons------ tens of thousands of earth masses of it.
Must have been a plague of dead dino poop and fallen leaves.

Originally posted by gotrox
I constantly wonder at how Jupiter, Saturn, Uranus and Neptune, along with numerous moons, comets, asteroids and such, got all their hydrocarbons------ tens of thousands of earth masses of it.
Must have been a plague of dead dino poop and fallen leaves.

Even if oil is abiotic, that doesn't mean we can't burn through the supply faster than it replenishes. Given that we don't have a confirmed process yet, it may be that it took millions of years for geological processes to make what we have burned up in the last 150.

reply to post by Quest


I seem to remember watching a documentary on Peak Oil and they went to the Gulf of Mexico and apperantly at the bottom of the Gulf the process of oil is starting again through either the bodies of fish or an abundance of fecal matter. I can't really remember as it was a long time ago.

Saudi Arabia's King Abdullah said he had ordered some new oil discoveries left untapped to preserve oil wealth in the world's top exporter for future generations…
"When there were some new finds, I told them, 'no, leave it in the ground, with grace from god, our children need it'," King Abdullah said…

Saudi production capacity stands at around 11.3 million bpd, and is scheduled to rise to 12.5 million bpd next year.

uk.reuters.com...

So it's now becoming apparent that peak oil is here. Russia has peaked, Mexico has peaked, the U.S. has peaked and now Saudi Arabia. Doubters will say that it's just political but what difference does it make. They've offically capped their production capacity. Actually they haven't hit their capacity for quite some time. Their excess after 9.5 MBD is the high sulphur crude that no one wants. Just look at their production history. No one wants the tar junk that takes special equipment to process.


europe.theoildrum.com...

The peak oil deniers will no doubt be out in force. Meanwhile back in reality the prices keep rising, production stays flat, and demand keeps growing despite both these facts. Pretty soon you'll be saying "Remember when gas was only $4 a gallon?

Russia isn't increasing its oil production with ambiotic oil. This is a myth. Russia does have the worlds deepest drilled hole, drilled since the Seventies, but it is not an oil well, but used for research, and is not producing oil. The U.S. has a similar research effort that was abandoned, but now appears to be back on track. These holes are extremely difficult to drill, and extremely expensive.

If oil is produced from ambiotic sources, those sources are not re-filling the existing oil fields fast enough to keep up with demand. Chance are that we will not find a magic oil well that keeps refilling as fast as we pump the oil out. We can wish with one hand, and develop alternative energy sources with the other.

Sure, there is plenty of oil out there, but will not be nearly as high of quality, and a lot more expensive to tap. Alternative energy sources are the way of the future, and that future is now. These will be technology and labor intensive, which means they will not be easily controlled by huge international corporations, and that is a good thing. Welcome to a brave new world.