Stating for the record that the global oil supply is rapidly being depleted seems to be something that leading politicians and industry executives simply won't do.
However, an increasing number of industry analysts feel that this indeed might be the case. Those who believe this to be true point to the reported news in Saudi Arabia, the biggest oil producer for the past 30 years, or so. It has been rumored for years that its largest oil field, Ghawar, is in permanent decline.
If you don't know anything about Ghawar, it is by far the largest conventional oil field in the world, measuring an estimated 175 miles by 20 miles. Currently, conjecture has it producing between 4.5 and 5 million barrels of oil per day by outside observers, in excess of six percent of global production. The officially stated maximum sustained crude production capacity is 8.5 million barrels per day, though actual daily output is a closely-guarded state secret. Thus far, approximately 60 billion barrels have been pumped out of Ghawar since production began back in 1951.
Ghawar's total proven reserves, also known as 'recoverable' oil, still left in the ground, have been estimated at just over 70 billion barrels by Saudi Aramco, the nationalized oil company which is the largest of its type in the world. The word 'recoverable' is particularly important, as the total amount of oil in the ground is of lesser importance than the amount that can easily be removed at a given level of extractive technology. While modern techniques can certainly boost the amount of oil that can be extracted per oil field, the question of how expensive the operation turns out to be remains extremely pertinent. Once oil extraction becomes too difficult, and therefore expensive, it becomes economically infeasible to attempt to remove the remaining supply.
Saudi Arabia comes under particular scrutiny because of its importance in the global oil markets. It has long been acknowledged as the world's largest producer of oil, and has acted as a 'swing producer,' increasing and reducing oil extraction rates to balance to the worldwide market in concert with the other nations in the Organization of Petroleum Exporting Countries (OPEC).
A number of worrying signs clearly indicate that the largest oil field in the world might be in permanent decline. In April of 2006, a Saudi Aramco spokesman shocked listeners by making the observation that its older fields are now declining at a rate of 8 percent per year. In other words, Ghawar's production is now most likely past its 'peak.' The spokesman went on to say that measures were being taken to offset the decline, but that the only viable solution to declining crude supplies is to locate new fields, and it has been frequently noted by industry insiders that discoveries have not kept pace with growing global demand.
If it becomes clear that Ghawar is indeed in decline, it likely means that the overall production around the world is as well. Of the 'super-giant' oil fields, four are officially past their peak production: China's Daquing, Mexico's Cantarell; Russia's Samotlor; and Kuwait's Burgan. Though Ghawar has not officially been so declared, the implications of the facts noted above are clear.
Article Source: http://www.orbitaloc.com/
Matthew Paolini is a consultant with Citybook.com for the Detroit, MI online Yellow Pages division.
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