Saudi Arabia: Sorry To Disappoint The Peak Oil Crowd, But The Era Of Cheap Oil Is Far From Over

Peak oil believers can keep on dreaming, according to Saudi Arabia’s oil minister.

He’s interestingly talking down long-term oil prices, and shocking analysts with his reserve estimates:

Hellenic Shipping News:

Mr Al Naimi said at a conference held in the Saudi capital to celebrate the 50th birthday of OPEC that “I am sorry to disappoint people but the era of easy oil is not over. How can you say the era of easy oil is over when we still have 88 billion barrels in the Ghawar field? That is more than many countries in the world. You can dismiss the notion that easy oil in Saudi Arabia is gone.”

The Ghawar field, measuring 280 kilometers by 30 kilometers is by far the largest conventional oilfield in the world. Although details of the field’s performance are not made public, it is believed to have produced more than 65 billion barrels already since production began in 1951.

Mr Al Naimi’s estimate of its remaining reserves was greater than many analysts had thought, possibly indicating the state oil company, Saudi Aramco has been able to increase its expected recovery of oil. Oil companies generally expect to extract about half of the oil from a typical field but this recovery factor was now rising to 70% in some cases.

The national reported that Saudi Arabia has rejected claims that the era of cheaply produced oil is over, saying the world’s largest field in the kingdom’s eastern province still holds more than many countries. Many of the largest oilfields in Texas and the North Sea have passed their prime forcing companies to target more costly prospects such as bitumen deposits in Venezuela, Canadian tar sands and ethanol.
Mr Ali Al Naimi oil minister of Saudi Arabian pointed to the Ghawar field’s 88 billion barrels of remaining reserves and the kingdom’s large cushion of spare pumping capacity as signs that oil was still abundant.
Mr Al Naimi said at a conference held in the Saudi capital to celebrate the 50th birthday of OPEC that “I am sorry to disappoint people but the era of easy oil is not over. How can you say the era of easy oil is over when we still have 88 billion barrels in the Ghawar field? That is more than many countries in the world. You can dismiss the notion that easy oil in Saudi Arabia is gone.”
The Ghawar field, measuring 280 kilometers by 30 kilometers is by far the largest conventional oilfield in the world. Although details of the field’s performance are not made public, it is believed to have produced more than 65 billion barrels already since production began in 1951.
Mr Al Naimi’s estimate of its remaining reserves was greater than many analysts had thought, possibly indicating the state oil company, Saudi Aramco has been able to increase its expected recovery of oil. Oil companies generally expect to extract about half of the oil from a typical field but this recovery factor was now rising to 70% in some cases.
Mr Matthew Simmons financier who made a name for himself by stoking fears that oil was running out, raised the prospect of a drastic decline in production at Ghawar in the book Twilight in the Desert published in 2005. According to the website of the state oil company Saudi Aramco, Mr Simmons also shed doubt on the size of Saudi Arabia’s proved reserves, which are estimated at 260 billion barrels.
Mr Al Naimi rejected suggestions that Saudi Arabia’s decision to develop the Manifa field, an offshore field containing heavy oil was a sign that easy oil was drying up. We are diversifying our producing fields. We are trying to get experience with heavy oils like with Manifa, but that is the reason it is not because easy oil is over.
He said that Riyadh has a policy of keeping spare capacity of 2 million barrels per day but currently maintains a much larger cushion of 4 million because output has fallen to about 8 million. Saudi Arabia, like the UAE has so many large oilfields that it limits the rate of extraction to ensure they last as long as possible.
He added that Saudi Arabia was exploring alternative energy sources such as solar, wind, nuclear and even biofuels to meet surging domestic power needs which are eating up an increasing amount of its crude oil.

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