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Matt Simmons: Saudi Arabia May Already Have Peaked

20 February 2005

Matthew Simmons, the energy investment banker whose analysis we have cited here numerous times on GCC, suggests in an interview with Aljazeera that the world may already have passed peak production of oil.

“If Saudi Arabia have damaged their fields, accidentally or not, by overproducing them, then we may have already passed peak oil. Iran has certainly peaked, there is no way on Earth they can ever get back to their production of six million barrels per day (mbpd).”

The technical term for damaging an oilfield by overproduction is rate sensitivity. In other words, if the oil is pulled out of the ground too fast, it damages the fragile geological structure of the field. This can make as much as 80% of the oil within the field unextractable. Of course, at the moment, virtually every producer is at full tilt. The most important among them is Saudi Arabia; their Gharwar field is the world’s biggest.

The idea that Saudi Arabia could force its production up to 12 mbpd or higher is met with scorn by Simmons.

“This is dangerous stuff,” warns Simmons. “If we say they have not peaked and then they choose to further increase production, they will only hasten their field decline, and waste huge amounts of valuable oil into the bargain.“

The Saudis—not surprisingly—scoff at such forecasts. Unsettlingly, however, Simmons bases his analysis, which he pursued in great detail beginning last year, on a thorough review of a large number of engineering and government documents, from both the US and Saudi Arabia.

The Saudis have proven adept at the geopolitical management of their position as lead global supplier. It remains to be seen whether they will prove as adept at the long-term geotechnical management of their reserves. Releasing a more detailed accounting of reserves and production on a well-by-well basis would be an excellent place to start, and a way to put to rest concerns such as Simmons’.

Unless, of course, Simmons is correct.

February 20, 2005 in Oil | Permalink | Comments (5) | TrackBack (0)

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Comments

Damaging the oil fields would be fine. Every barrel made un-extractable means (roughly) one more tonne of fossil-derived CO2 that will never get into the air, and makes the need for developing clean alternatives that much more pressing.

True, Richard.

In the best of world we'd have enough discipline to drop oil use without running out, and we'd keep it as a backup source. But I guess this is not that world.

After having learned about the impending crisis of peak oil last year, it is interesting to sit back and watch it unfold like a slow-motion car wreck. Given the complete apathy of most of the world can one consider any but the worst scenario leading us to complete social upheaval by 2007-2010?

Without the benefits that cheap oil has given us, we'd still live in a 19th century world. Sure, there are problems, but the average mother of eight in 1850 would give her right hand to have such problems.

It's sad to see it go, odds are we can handle it. Let's get to work.

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