Some of my favorite lines:
Every year oil industry around the world has to add at least 5–6 Mbpd of gross production capacity just to break even with the 5–6 Mbpd gross capacity is lost. Any additions to world capacity are on top of the 5–6 Mbpd capacity turnover each year. These figures are much larger than the drops in production capacity contemplated by Simmons, which would be on the order of 500 kbpd YoY. Thus, Lynch concludes that non-Saudi Arabian oil production is capable of making up losses in Saudi Arabia (Lynch 2006, pp. 1–32).
"Lynch concludes that non-Saudi Arabian oil production is capable of making up losses in Saudi Arabia." Because the other OPEC countries all say they can, and we can trust them, right?
On the question of water cuts, Lynch compares Ghawar, whose water cut is around 37%, to the world average, which is 75%, though it is not specified how the 75% average is calculated (volumetric average or average overall wells) (Lynch 2006, pp. 1–32).
"Whose water cut is around 37%", presumably from Aramco. We can trust them, right?
In addition to the foregoing three main points, optimists provide a series of facts that they claim show Saudi oil production to be under no stress at all. Hence they conclude that there is no reason to expect a peak in Saudi production. Chief among these is the famously low cost of oil production for Saudi Aramco. Production cost estimates ranging from $1/bbl to $5/bbl are cited by Lynch 2006, pp. 1–32, which are much lower than those almost anywhere else in the world.
"Production cost estimates", presumably from Aramco. We can trust them, right?
... And looking really hard at the end of the first half of the report, they really don't conclude much beyond 'and if we make some assumptions that there's no particularly good reason to make, the problem goes away for another decade or two.'
It's worth reading, but I hope others at the DOD are reading between the lines of this report a little critically. Also, as noted at Energybulletin, the IEA pulled the rug out from under this report shortly after it was written.