Simmons: Saudi Oil Shock Imminent
Posted by Prof. Goose on September 12, 2005 - 8:21am
Simmons also suggests that Saudi production is very near its peak. But the feedback he has received from technical people who have read the book, leads him now to believe that Saudi Arabia has actually exceeded sustainable peak production already.And I think at the current rates they are producing these old fields, each of the fields risks entering into a rapid production collapse, he said.
And when that drops, you could basically see Ghawar go from 5 million down to 2 million bpd in a very short period of time.
Meanwhile, as the world's thirst for oil grows, Saudi Arabia and other oil-producing countries will be unable to keep pace. Some analysts say Saudi Arabia is capable of producing 20 million to 25 million bpd, but Simmons says that level of production is "impossible."
and then if we get through the summer we have a fabulous respite from Labor Day to Thanksgiving, until we hunker to try to figure out how the world gets through the Winter of 2005 and 2006 because oil demand globally could easily go to 86-88 million bpd during the winter, and that could easily exceed supply by 2 million to 5 million bpd.
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Who is Sadad Al Husseini?
Source(pdf)
I get the impression from reading "Twilight in the Desert" by Simmons that Saudi Arabia will be lucky to maintain the 9.5 - 11 mbpd level of output they currently have for much very longer. They will need to discover some significant new fields in order to raise production by 4 to 5 mpbd (to get to 15 mpdb), esp. once depletion becomes evident in Ghawar and their other large-but-aging fields.
Is the world running out of oil? Yes and no
'We're halfway through the hydrocarbon era," my old friend Boone Pickens has been saying for the last couple of years. A folksy line like that, it sticks with you. But I hadn't realized until I began poking around the world of oil forecasting in the wake of Hurricane Katrina that it also meant Pickens had taken sides in a surprisingly heated debate. He subscribes to what is sometimes called the "peak oil hypothesis," which holds that there simply isn't very much new oil left to be found in the world. And, as a result, we are currently in the gradual process of draining the more than 1.2 trillion barrels of proven reserves that are still in the ground. And when it's gone, it's gone.
http://www.iht.com/articles/2005/09/09/yourmoney/mjoe10.php
There is no threat of collapse, danger, recession,
depression or panic from a high economic demand spike.
rich and poor people are trying to buy a small amount
of food and the rich people pay the highest price
and feed their families.
rich and poor countries are tyring to buy a small amount
of oil and the rich countries pay the highest price
and feed their economies.
This is the same old story. Rich countries have the deepest
pockets to last through the 'hard times'. While the 'developing'
countries are never going to 'develop'.
But the only panic, depression, recession, collapse could
come from a physical supply shortage
http://www.amazon.com/exec/obidos/tg/detail/-/0060571284/102-5066517-3529707?v=glance
America the Vulnerable: How Our Government Is Failing to Protect
Us from Terrorism (Hardcover) by Stephen Flynn
The book above describes 3 dirty bombs going off in Miami,
New York and Long Beach. The 3 biggest ports of trade. (I
think the author also blows up some bridge connecting us
to Canada but I can't remember.)
Only this kind of huge human caused supply shortage or some
other political or nature caused physical supply shortage could
make a SHOCK or depression or recession or panic.
A physical supply shortage (1973 embargo, katrina, iraq-iran war)
is totally differnt from an economic demand spike (2004-2005).
Because I care about poor people I want lots of
physical supply shortages to break down world trade. But
I don't want economic demand spikes because I want poor
countries to develop.
use some of the hydrocarbons as overhead for building
a sustainable and renewable economy independant of
oil and natural gas and most world trade.
i should have given more detail about developing a
hydrocarbon economy or a renewable economy
and rich countries should be using hydrocarbons to
transfer from hydrocarbon to renewable
Question:
Anybody find a good list of products that need hydrocarbons
and are acutally essential for a critical sector, like
medical supplies or powerplant parts?
(sarcasm)
That would be my guess. My recollection from his book was that overproducing tended to cause damage on the timescale of a few months or so. No guarantees this time, of course.
The only thing new is the suggestion that the Saudis are overproducing.
Maybe Simmons should start with a more modest, intermediate goal -- such as opening up the ASPO database to a third party audit.
For those who are interested, a contrarian analysis of Matt Simmons is located here.
http://peakoildebunked.blogspot.com/ article #97 refers to Simmons
Personally, the striking things about Matt Simmons are 1) that I couldn't find major logical holes in his book when I read it, and 2) he has a track record of calling the situation right, rather than wrong. Here he is in 2000 pointing out the problems with North American natural gas supply before they were widely accepted, and the problems with electricity supply before the California electricity crisis.
And here is is correctly calling the peak in North Sea oilin 1999, at a time when very few agreed with him.
To me that's a track record that makes me listen very hard to what he has to say.
http://www.financialsense.com/transcriptions/Simmons.html
MATT: Let me give you some really interesting déjà vu numbers that I pulled out earlier this morning while I was thinking about the irony of the 15th anniversary of Kuwait's invasion by Iraq. I had just produced a paper called the Coming Domestic Oil Embargo - and it got enough notoriety that Forbes magazine was in preparation for doing a major article that came out a week after Saddam's invasion, called the Coming Domestic Oil Embargo, and they had a fabulous illustration of Uncle Sam filling up his car at a gas station and accidentally stepping on the hose - and what the story was all about was my concern that unless we started a totally different energy policy of using less energy, or a policy of expanding our oil supply through removing the drilling bans in the inner Continental Shelf, and finding a way to jumpstart creating more drilling rigs, and bringing more people back in, we'd wake up some day - and I never thought it would be that day, or anytime in the 90s, but I knew it would take 10 years to make this happen - we would find we had actually embargoed ourselves.
Let me tell you what the numbers were all about, because I had not thought about this until yesterday and today. In 1990 the United States was still producing 7.3 million bpd of crude oil, today it's 5.1; the 7.3 was after a drop over the previous 5 years of 1.6 million bpd; our refineries only needed to run at 13 ½ million bpd; and we only needed to import 5.8 million bpd of crude oil imports to balance our system. Today we have to run our refineries at 100% or we have major product shocks; today, we have to import 10-11 million bpd, or we lose crude oil stocks; we have to basically create almost 3 million bpd of finished product imports; we have to run the system on a 24-7, all Summer long. And we still liquidate stocks.
So we have actually now created a pending domestic embargo, and we're going to be lucky to get through the Summer without some periodic shortages. We probably will, but the odds are probably as high we will have some shortages, and then if we get through the Summer we have a fabulous respite from Labor Day to Thanksgiving, until we hunker to try to figure out how the world gets through the Winter of 2005 and 2006 because oil demand globally could easily go to 86-88 million bpd during the Winter, and that could easily exceed supply by 2-5 million bpd.[38:53]
JIM: If that was to happen we would almost be looking at $75-80 oil, I suspect.
MATT: No, no, no. Oil prices could easily go up 5-10 times.
"But by 2030 we could easily have a world that can only produce 10 or 15 or 20 million barrels per day, and the shortfall from what we thought we were going to produce is only a modest 100 million barrels per day."
But then there seems to be some kind of disconnect in his mind because a few minutes later he's telling the interviewer that he's optimistic that we'll find solutions and that the economy will be better and we'll all have a better quality of life. Maybe he knows something about his Plan C energy miracle that he's not divulging publicly, but I sure as hell don't see how we could adapt that quickly to a 100 mbd deficit.
"But by 2030 we could easily have a world that can only produce 10 or 15 or 20 million barrels per day, and the shortfall from what we thought we were going to produce is only a modest 100 million barrels per day"
I think a prediction like that melds very nicely into Duncan's timeline:
http://tinyurl.com/8djq4
I think Matt being a member of the CFR and such must end on a happy note so the common folk still have some hope. Sort of like the FX movie "Oil Storm". Show the chaos that will ensue but leave the chumps with some sort of hope in the end. I think he is a peak oil "extremist" but he tries to cover that fact for public consumption. He knows things are going to be catastrophic...
==AC