Well I am now getting into Twilight in the Desert, and, while it would be wrong to describe it as totally dispassionate, it is a well written and relatively easy text to understand and enjoy, so far. This is going to become a fairly controversial subject before long, since the raw numbers are not getting any better and there are going to be some enemies generated. And while not wishing to step on Prof G's toes in this area, historically to motivate the nation, there has had to be an enemy.

This may very well, in the intermediate term, become the Saudi family or the Arabian nation. And, while I tend to agree with Matt Simmons a whole lot more than I don't, there should be some recognition that Aramco and the Saudi family do have some arguments on their side. Which, of course, means that it is time to visit the sandwich shop again. The picture that I have posted tonight is from the presentation that the Saudi Oil Ministry made to counter Matt Simmons presentation to the CSIS in 2004. What it shows is that all the exploratory wells that have been drilled have concentrated in the North East corner of the country where the oil companies have found a significant number of very large fields. So far they have not explored that much in what, for even more reasons, is referred to as "The Empty Quarter."

So here you run a sandwich shop, where, all of a sudden, your Tuna Sandwich has achieved State recognition and busloads of folk have started dropping by to get some. The problem is that you only have so much tuna (think Arabian Light or Extra Light crude oil) and while you think you can order more from the vendor (think going out and finding new fields or drilling more wells in existing fields) that takes time that the bus companies won't wait for. But you do have that shark meat (think heavy sour crude) that the locals are happy to drop off at the back door, and so you start adding a bit of this to the sandwiches. For those who are starving (think the Far East) this is better than nothing, and so business continues to grow.

Realistically you realize that the current shop (think gas oil separation plants and other infrastructure) can only supply so many busloads, and so you start checking out the neighborhood for new franchise locations (think new fields). And by telling all the bus companies about the new prospects, you can continue to convince them to keep bringing all their custom to you.

There are just a three or so minor flies in the ointment, for while the picture shows that you have only visited part of the neighborhood to check out good sites, in reality you had your good friend "Mario" take his limo (airborn exploration) and check them out, and so far he is not finding any really hot new places.

The second worry of course is finding good help to make the sandwiches. Without good makers (think oil drilling rigs) even if you find a good location you are not going to be able to meet the demand. And this is where we have a bit of a debate. Aramco say that they have 48 rigs; the EIA says that they intend to double their rig count to 60, the recent press report says they have 34, and the latest rig count suggests only 31 active . Matt Simmons doesn't think that they can make 100 by the end of next year, though they do have some 36 on order for delivery by the end of this year.

Given the highly technical tools they are now using to get more from the fields, there is a very serious concern that even though they have the hardware, will they have the knowledgeable personnel?

And the third is that the current tuna supplier is having some problems or, to quote the usually optimistic EIA

One challenge for the Saudis in achieving this objective is that their existing fields sustain 5%-12% annual "decline rates," (according to Aramco Senior Vice President Abdullah Saif, as reported in Petroleum Intelligence Weekly and the International Oil Daily) meaning that the country needs to add 600,000-800,000 bbl/d in new capacity each year just to compensate.

Um! I have been remiss in not welcoming Ianqui to our site, having read her site for a time, I was glad to see her come aboard, but as y'all can see (hey we're not all in the North East) she is a great addition to our team and brings an additional depth that makes me even happier that I accepted Prof G's invite to help him start this discussion. So Welcome Gentle Lady, and thanks for contributing your insight. Were the subject not so grim, this would be even more delightful.