When Fatih Birol announced that he and his team, while compiling their much awaited annual analysis of the energy world — The World Energy Outlook — would also undertake field by field analysis of the historical production trends of 800 major oil producing fields of the world — on which the world is dependent for its energy supplies — every one was taken by surprise.

With talks all around and no dearth of pundits — Matt Simmons & Co. — pronouncing with all the strength in their possession that ‘Peak Oil’ was just round the corner and that some of the super giant fields of the world were already past or nearing their peak, this was to be an Herculean assignment — to say the least.

For not only they had set up a challenging task to themselves, the issue was controversial as well. Passions run high as the issue confronts the very lifeline of this crude driven civilization of ours. There were indeed minefields all around!

With crude markets in an extended bull run and prices continuing to breach one peak after the other, the announcement to produce an audit report of the worlds’ major oil producing fields by the second party — and not the third one — the pronouncement was greeted with excitement all around. Every one conceded though the IEA has been a party to the entire issue, representing the consumers rather than being neutral and thus the report had significant weight.

The issue — or the lack — of a proper audit of producing fields, has been at the center of the peak oil debate, with the proponents of the theory generating questions about the very production and reserve data churned out, mostly by the national oil companies — the likes of Saudi Aramco. Matt Simmons and cohorts all these months — and indeed years — continued questioning the data reliability issue to forward their peak oil theory.

Although the Riyadh-based International Energy Forum Secretariat (IEFS) was regularly compiling the Joint Oil Data Initiative (JODI), many argued that it was too dependent upon the data provided by the participating countries themselves. Auditing the data provided was indeed not mandated to the IEFS and was beyond its scope of work.

And thus in the absence of any such audited, credible data by an independent authority, the proponents of peak oil theory kept arguing that the era of crude is over and that the world could no longer believe what the producers continued insisting — there was enough oil beneath the surface and that if conditions remain conducive, they have the will and the desire to keep meeting the global energy needs.

And Ghawar — the Saudi super giant field that has been producing well above 5 million bpd for decades — remained at the center of this debate. Peak oil theory proponents argued that Ghawar was undergoing rapid depletion, turning the entire debate nasty — literally frightening — implying the world was soon to run out of oil.

Indeed any rapid depletion in Ghawar would have made significant impact on the global energy balance, one has to concede. Though Saudi Arabia has over 300 recognized reservoirs yet 90 percent of its oil comes from the five super giant fields discovered between 1940 and 1965. And Ghawar is the most significant of these. Found in 1948, the 300-mile-long sliver near the Gulf is the world’s largest oil field and accounting for 55 to 60 percent of the total Saudi production. Ghawar’s current proven reserves are 12 percent of the world’s total. The field is currently producing 6.25 percent of the world’s total oil production.

Pushing his peak oil theory, Simmons has been arguing that Ghawar’s northern regions are almost depleted and that the two other giant fields, Abqaiq and Berri, also seem to have peaked in the 1970s. He keeps insisting Saudi Arabia wouldn’t be able to sustain production much above the current levels for long — a bleak scenario indeed for the global energy balance.

On the other hand Saudi Arabia has been stressing that Ghawar and its other major field were not undergoing rapid deterioration and depletion. While talking to a galaxy of press men and women, from all over the world, who were taken to visit some of the Saudi Aramco facilities, in the immediate aftermath of the Jeddah energy summit in June, Amin Nasser, Aramco’s senior vice president for exploration and production, had then stressed: “Our strategy is based on a low depletion rate, which is 2 percent a year.” Arguing that Aramco exploration program was geared to replace every barrel that was produced, Nasser underlined, “We have never failed to replace what we have produced so far, and our exploration program is expanding year by year.”

A sense of stewardship and long-term sustainability runs through all the company, he added. “We would not have put any increments into development if we did not have a minimum of a 30-year plateau. That is always our initial plan; we ensure a 30-year plateau and then we extend it as required.” Contrary to claims of peak oil theorists, water cut at the Ghawar field has fallen in recent years, Nasser said. “Water cut in Ghawar is 28 percent, whereas the industry norm for the water cut is 80 percent. This is exceptional. Ghawar is 50 years young.”

The IEA report on Ghawar, when seen in the above perspective, appears reassuring in many, many ways. It is music to ears in real, real sense.

The just released IEA report does not include Ghawar among the post-plateau fields, as production in 2007 was still less than 15 percent below the peak of 5.6 million bpd reached in 1980.

As per the ‘audit report’ compiled by Fatih and his team, Ghawar produced 5.1 million bpd of crude oil in 2007, down from a peak of 5.5 million bpd in 1980 (when the field’s capacity was fully utilized in response to the loss of Iranian production following the revolution.) and a recent peak of 5.3 million bpd in 1997. The observed post-peak decline rate is thus a mere 0.3 percent per year. Ghawar is still at the plateau phase of production, the report underlined — and this must get steam out of the peak oil bogey — one can’t help assuming.

The IEA report specifies that Ghawar has been developed in distinct stages, which have progressively raised the field’s capacity keeping the field at plateau. The most recent project involving the Haradh area in the southern part of the field was completed in 2006, tripling capacity to about 900,000 bpd. This has helped to offset natural declines in other parts of the field, the report agreed.

“The overall capacity of Ghawar is sustained by infill drilling and well work-overs to maintain flow pressure in various parts of the field. Reports suggest that enhanced oil recovery techniques are being used to boost capacity in the mature zones of the Shedgum and Uthmaniya areas, where extensive drilling programs have recently been undertaken,” the report added.

Coming form a second party, the above definitely enhances the credibility of the Kingdom. After all whatever Riyadh has been claiming all these months and years had some basis, one feels like strongly underlining here. Let’s give credit where it is due.

And by the way, many people, me including, could definitely heave a sigh of relief and go to bed with some comfort. After all we are not running out of crude. Thank you Fatih!