Wikileaks Shows Peak Oil Is A Reality

[bill65]

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

[stormymonday_2011]

Must be the worse kept secret in history.

[fluffy666]

The US fears that Saudi Arabia, the world's largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom's crude oil reserves may have been overstated by as much as 300bn barrels – nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their Opec cartel partners would pump more oil if rising prices threatened to choke off demand.

http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks

It is a bit scary that they didn't even think of following it up...

From what I can gather, the published figure for SA 'reserves' is basically their estimate for all the oil they will ever produce, including oil already produced. So a total of 270 billion barrels, with about 40% already produced, hence 40% overstatement. That would leave ~160billion barrels, current production rate ~4 billion/year. (2.5%)

As a very approximate rule of thumb, the very maximum you can get out of oil fields with full on development and unconstrained production, without damaging the field, is about 5% - but that would be unlikely for SA, since they have already been producing for a long time and their oil fields are no longer 'fresh'. So based on the above, scope for production increases are limited - but a collapse in SA production is unlikely.

[Nationalist]

The Saudis have little to gain from investing is more pumping capacity. They spend money and the price goes down.

[fluffy666]

The Saudis have little to gain from investing is more pumping capacity. They spend money and the price goes down.

For decades they had that problem - the classic example being in 1985 where thanks to overproduction and cheating by other OPEC members (plus USSR production), Saudi Arabia would have had to shut in something like two thirds of all it's production to keep oil prices high. In the event, they opened the taps, collapsed the price and incidentally bankrupted the Soviet Union.

But since the mid-2000s, this issue has gone away. Some OPEC countries produce below quota, some above, but prices stay high (sky-high compared with the 1990s). Almost as if the world ran out of significant space capacity circa 2006.

[Chest Rockwell]

The US fears that Saudi Arabia, the world's largest crude oil exporter, maynot have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

LOL! The two often overlooked words when some tosser is trying to spook you is "may" and "if"...debt collectors, banks and just about anyone that wants something from you always you one or both of the above mentioned words!

[Peter Hun]

LOL! The two often overlooked words when some tosser is trying to spook you is "may" and "if"...debt collectors, banks and just about anyone that wants something from you always you one or both of the above mentioned words!

Good, its nice to know that cheap oil is here to stay. My brother is complaining about £1,40 per litre, but what does he know, Saudi my have enough oil to keep the price down, just they don't seem to be producing it.

[Kurt Barlow]

Good, its nice to know that cheap oil is here to stay. My brother is complaining about £1,40 per litre, but what does he know, Saudi my have enough oil to keep the price down, just they don't seem to be producing it.

They are producing it. Part of the problem is that more and more production is being sucked into the domestic economy and being used to make up shortfalls in gas production. Fuels are heavily subsidised so there is no incentive to be eficient in its use.

Anyone who thinks Saudi isn't investing in production capacity would be interested to see the offshore pier developments at Manifa.

[Snugglybear]

They are producing it. Part of the problem is that more and more production is being sucked into the domestic economy and being used to make up shortfalls in gas production. Fuels are heavily subsidised so there is no incentive to be eficient in its use.

Anyone who thinks Saudi isn't investing in production capacity would be interested to see the offshore pier developments at Manifa.

Haven't the Manifa field developments been brought forward 10 years? Commentators (alright, the Oil Drum) see it as shifting from decline compensation work to capacity raising developments.

[Kurt Barlow]

Haven't the Manifa field developments been brought forward 10 years? Commentators (alright, the Oil Drum) see it as shifting from decline compensation work to capacity raising developments.

Yes. They are current drilling the well heads. Projection completion is estimated to be 2020. The other bug development is the Shaybah expansion plus NGL pipeline down there

Interestingly Saudi Arabia is starting to pump money into wind energy - the resources on the gulf and red sea are quite good. Remains to be seen if they get a nuclear power programme going. Whilst they have the money the arab propensity to botch jobs / fabricate records worroes me a little.

[Kurt Barlow]

Haven't the Manifa field developments been brought forward 10 years? Commentators (alright, the Oil Drum) see it as shifting from decline compensation work to capacity raising developments.

The big big problem on the horizon is water depletion. The Saudis are using up their one off fossil water endowment like its going out of fashion. A guy I know told me that water levels at Dhahran have dropped 15 metres in the last 12 years and at some point soon they will get salt water intrusion (its already brackish).

I suppose they can stop growing wheat / other cereals but then they have to start importing it big time which will have an effect on world food prices. Agricultural use accounts for 85-90% of usage.

Otherwise its desalination. Flash distallation uses about 90MJ / m3. R/O is about 25% more. This is where nuclear would be useful. 24Gw of nucs could displace about 1 million bpd of oil used to produce electricity. The waste heat at a rough guess could generate about 10bn m3 of fresh water a year. To put this in perspective that is 4x the amount of rainfall the Country gets each year.

Edited August 25, 2011 by Kurt Barlow

[Snugglybear]

The big big problem on the horizon is water depletion. The Saudis are using up their one off fossil water endowment like its going out of fashion. A guy I know told me that water levels at Dhahran have dropped 15 metres in the last 12 years and at some point soon they will get salt water intrusion (its already brackish).

I suppose they can stop growing wheat / other cereals but then they have to start importing it big time which will have an effect on world food prices. Agricultural use accounts for 85-90% of usage.

Otherwise its desalination. Flash distallation uses about 90MJ / m3. R/O is about 25% more. This is where nuclear would be useful. 24Gw of nucs could displace about 1 million bpd of oil used to produce electricity. The waste heat at a rough guess could generate about 10bn m3 of fresh water a year. To put this in perspective that is 4x the amount of rainfall the Country gets each year.

So 4x naff all, then.

But seriously, 10bn m3 is what proportion of the water currently used per year?

[anonguest]

The big big problem on the horizon is water depletion. The Saudis are using up their one off fossil water endowment like its going out of fashion. A guy I know told me that water levels at Dhahran have dropped 15 metres in the last 12 years and at some point soon they will get salt water intrusion (its already brackish).

I suppose they can stop growing wheat / other cereals ...........

Saudi Arabia has agriculture!? They grow wheat? I thought the place was 99% desert?

Edited August 25, 2011 by anonguest

[Kurt Barlow]

So 4x naff all, then.

But seriously, 10bn m3 is what proportion of the water currently used per year?

Accordinging to CIA world fact book 17bn is total usage so just short of 60% of current needs

[Kurt Barlow]

Saudi Arabia has agriculture!? They grow wheat? I thought the place was 99% desert?

Yes all highly subsidised and based on fossil water irrigation. It is amazing when you fly over the desert and see perfect circles of green - mostly alfalfa for dairy cattle

I think until recently KSA was self sufficient in Wheat. As you go further west the Country gets more fertile

[funinhounslow]

I used to read LATOC regularly until it folded. Although it had its fair share of nutters (!) I learned a lot there.

They were saying on that site a couple of years ago that Saudi sweet light crude had already peaked and what was left is more difficult to refine. Also when Ghawar peaks, we're pretty much at global peak oil.

Does anyone here have any views on this. Was it scaremongering on what was pretty extreme site, or is there a grain of truth there...?

[anonguest]

Yes all highly subsidised and based on fossil water irrigation. It is amazing when you fly over the desert and see perfect circles of green - mostly alfalfa for dairy cattle

I think until recently KSA was self sufficient in Wheat. As you go further west the Country gets more fertile

So...... thats what those big strange circular blobs/patches are scattered over the Saudi countryside are - as seen on Google Earth?! I'll have another closer look. I thought they were specially requested 'blackout' marks to hide sensitve features such as oil/gas/etc installations.

Edited August 25, 2011 by anonguest

[billybong]

Sounds like Wikileaks is now the official leak conduit of "confidential" information.

[billybong]

LOL! The two often overlooked words when some tosser is trying to spook you is "may" and "if"...debt collectors, banks and just about anyone that wants something from you always you one or both of the above mentioned words!

It's difficult to believe any news that comes out of the subject of oil/oil output/oil pricing etc.

That's not to say that specific bit "confidential" news might or might not be true but over the years a lot of the news released has, in time, proved to be plainly untrue and has often just been used as an excuse to bump up fuel and energy prices etc as well as being used as an excuse for inflation.

[Kurt Barlow]

I used to read LATOC regularly until it folded. Although it had its fair share of nutters (!) I learned a lot there.

They were saying on that site a couple of years ago that Saudi sweet light crude had already peaked and what was left is more difficult to refine. Also when Ghawar peaks, we're pretty much at global peak oil.

Does anyone here have any views on this. Was it scaremongering on what was pretty extreme site, or is there a grain of truth there...?

At present they are pumping loads of seawater into Ghawar to keep field pressure up. Come 2014 they start injecting CO2 which improve the yield perhaps as much as 10%. If this is applied to other fields then this will slow the decline.

I don't think production will crash int he next 10-20 years. What is the monster in the room is domestic consumption which shows no sign of being curtailed by market signals (removal of subsidies). This is why all the measures in the programme are supply side. Replacement of OCGT with COGEN (water / electric) GGCT, renewables (solar & wind), and possibly nuclear.

In terms of quality of oil that is falling - the stuff that they will produce at Manifa is nasty - high sulphur and Vanadium content. Hyuandai are building a huge processing plant for aramco to process the stuff and it will trade at a market discount as only a limited number of refineries can handle it. Much of Saudi production is sour which is why it couldn't replace Libyan supply which is sweet.

[Kurt Barlow]

So...... thats what those big strange circular blobs/patches are scattered over the Saudi countryside are - as seen on Google Earth?! I'll have another closer look. I thought they were specially requested 'blackout' marks to hide sensitve features such as oil/gas/etc installations.

Not sure about that. The two biggest single targets in KSA - Abqaiq and Ras Tanura are both quite visible on Google.

[billybong]

The Saudis have little to gain from investing is more pumping capacity. They spend money and the price goes down.

Thinking back a few years I remember the logic for cheaper oil in the past was market penetration (getting the oil addict more hooked was how some expressed it) but I imagine now that China et al are well and truly hooked they can now try to exploit that situation with higher prices.

Even so the oil price has gone down since the recent peak but of course authorities like those in the UK helped them out with more and more road humps etc using more barrels of oil and now I see they're removing the mini roundabouts (recently introduced as all pervasive) with traffic lights. Likely in time they'll reintroduce the mini roundabouts and still keep the traffic lights

There's always scope to spend more and more taxpayers money on such schemes which ultimately links to oil consumption and every little bit helps towards higher oil prices - and their excuse for high inflation.

Edited August 25, 2011 by billybong

[Kurt Barlow]

Thinking back a few years I remember the logic for cheaper oil in the past was market penetration (getting the oil addict more hooked was how some expressed it) but I imagine now that China et al are well and truly hooked they can now try to exploit that situation with higher prices.

Even so the oil price has gone down since the recent peak but of course authorities like those in the UK helped them out with more and more road humps etc using more barrels of oil and now I see they're removing the mini roundabouts (recently introduced as all pervasive) with traffic lights. Likely in time they'll reintroduce the mini roundabouts and still keep the traffic lights

There's always scope to spend more and more taxpayers money on such schemes which ultimately links to oil consumption and every little bit helps towards higher oil prices - and their excuse for high inflation.

Cheap gas achieved the same thing in the UK. It made nuclear and renewables look uncompetitive in the short term. As a result the UK will be highly dependant on imported gas for decades which we may well not be able to afford.

Alternatively after Sizewell B was commissioned we could have commissioned Sizewell C in 1999, Bradwell B in 2003, Oldbury B in 2006, Hinkley C in 2010 and thus retained a continous viable nuclear programme and not facing the energy gap looming over the horizon.

[Odysseus]

Please feel free to shoot me down but after a recent pun conversation, 4-6 pints of real ale consumed I hasten to add. One of my friends came up with the idea of turning Iceland into a global enregy centre.

With the amount of geothermal activity there would it not be possible to invest billions, nay, trillions of dollars into a massive geothermal energy plant. The resulting energy could them by used to create hydrogen or some other transportable energy source for use globally.

Like I said this was a semi-drunken pub conversation, but barring geo-political issues, could this work?

[Kurt Barlow]

Please feel free to shoot me down but after a recent pun conversation, 4-6 pints of real ale consumed I hasten to add. One of my friends came up with the idea of turning Iceland into a global enregy centre.

With the amount of geothermal activity there would it not be possible to invest billions, nay, trillions of dollars into a massive geothermal energy plant. The resulting energy could them by used to create hydrogen or some other transportable energy source for use globally.

Like I said this was a semi-drunken pub conversation, but barring geo-political issues, could this work?

Icelands geothermal resources are not unlimited and as you exploit heat from a borehole it gradually cools reducing the energy outpout,

Rather than turn the electricity into hydrogen which is costly and inefficient and difficult to transport better to simply link icelands grid to the UK via Scotland. That said HVDC is not cheap either but the relaibility of Geothermal energy would help underpin a european grid predominated by intermittant renewables.

As well as geothermal iceland is also very windy and would be a good location for wave energy if the technology develops.