King Abdullah of Saudi Arabia has commanded that some recent finds of crude oil be left untapped to preserve the nation's oil-wealth for future generations. Saudi is the world's greatest producer of oil at 11.3 million barrels per day which is predicted to be increased to 12.5 million bpd next year. The king is quoted as saying: "When there were new finds, I told them, 'no, leave it in the ground, with grace from God, our children need it'." World eyes are turned to Saudi to increase production to meet an inexorable thirst for oil, but when asked about the maximum likely production, the king said: "We'll get to 12.5 million barrels a day and then we'll see."
There is no longer any talk of output rising to 15 million bpd, and more likely, if the 12.5 million bpd is achieved, holding back 1 - 2 million bpd worth of spare-capacity, for the foreseeable future Saudi output is likely to be at around 9 - 11 million bpd. The vice president of Merrill Lynch, Tom Petrie commented: "The Saudis and other exporters are placing a new emphasis on elongating the petroleum exploitation and depletion cycle [i.e. the Hubbert Peak]. This stems from a growing awareness of the challenges of conventional resource maturity, as well as rising resource nationalism. This is likely to result in an earlier occurrence of global peak oil output than many customers yet recognize." With various existing estimates of the peak in world oil production at around 2012, this implies that a gap between supply and demand for world oil might occur within just a couple of years.
It is also possible that the Saudi fields are in reality approaching their maximum production, and there are varying estimates of how much oil they do have, with some commentators holding the opinion that Saudi has less recoverable oil than has been claimed, and that production of e.g. the giant Ghawar field has already peaked. Only time will tell, as it will over output from Russia, which according to Yuri Trutnev, the Russian Minister for Natural Resources, will fall this year, for the first time in 10 years. He believes that exports from OPEC, Russia and Mexico will in fact fall by 2.5 million barrels a day between now and 2012, which sounds to me that peak oil has arrived, to all intents and purposes.
All the countries in the Gulf have increased their own domestic use of oil and by 2015 Iran is predicted to use as much oil as they sell. It seems clear that the West simply has to find other ways to keep going that do not depend on oil, although as noted in many previous articles here, this is not an easy task. The major problem is transportation and the adaptation of modern civilization to use less of it. This is not a welcoming thought, including to this writer, but what other choice is there? Hydrogen is acknowledged to be years away if it will ever become a wholesale reality given its many challenges that need to be hence overcome and the world simply can't grow enough biofuels to replace the amount of oil-based fuels it gets through, even by severely compromising food production. Other possible technologies e.g. making diesel from algae and biomass-to-liquids (BTL) conversion are not available on the grand scale, as yet, and might also take years to implement.
Meanwhile oil, food and food prices rocket. Energy costs in general are on the up, notably in the United Arab Emirates (UEA) which apparently plans to double its energy use by 2015, and treble it by 2020. However, it appears very dubious what the actual state of play will be in the world by then, for any of us.
Related Reading.
[1] "Cheap energy in UAE is over." By Gundi Royle, Special to Gulf News. http://gulfnews.com/business/money/10206645.html
[2] "Saudi King Abdullah drops quiet bombshell; U.S. media sleep through it." By Steve Andrews and Randy Udall. http://www.energybulletin.net/print.php?id=43048.
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