As the debate on the crude peak theory intensifies, emanating confusing and often contradictory signals, it is becoming increasingly difficult to comprehend the real state of affair in this vital industry — energy.
On one hand there is no dearth of dooms day theorist claiming the end of the hydrocarbon era sooner rather than later, while there are people, equally qualified if not more, who say the peak is still far off. New fields, still to be discovered and emerging technology will continue to fuel the modern day machine for many, many more decades, if not centuries to come.
The very notion that crude production may peak within the next few years rests on two eventualities. First, that there is not much oil left to be discovered and, second that new technology won’t make much of a difference. The situation however, is not that stark!
The fact remains that some of the oil rich areas of the world are still to be fully exploited. Some of the most oil rich areas in Russia, the Caspian Sea, and the entire Middle East including the huge Empty Quarters, the delta areas of Africa, Greenland and the deepwater parts of the Gulf of Mexico have scarcely been explored.
Even with the US according to the US Geological Survey, more than 131 billion barrels of oil and 1,000 trillion cubic feet of gas still remain to be discovered. After a five-year study, the US Geological Survey recently raised its previous estimate of the world’s crude oil reserves by 20 percent, to a total of 649 billion barrels. The agency further felt that once exploration in some interesting areas begin in earnest; the number could increase even further.
Then with access to better technology, it is now believed that an estimated two trillion - and I repeat two trillion - barrels of oil are beneath the soil in shale in the states of Colorado, Utah and Wyoming. And then there is growing interest in Canada’s oil bearing tar sands - which are believed to be holding another 1.5 trillion barrels of oil.
In the meantime, the OPEC is planning to add more than five million barrels per day capacity over the next five years. According to recent announcements the organization’s production capacity would rise to 38 million barrels per day by 2009 from the current 32.5 million bpd. This increase could be even bigger if new investments planned in Iran go on stream. OPEC produced 30.34 million bpd on average during September, an increase of 130,000 bpd from August. According to OPEC officials an additional 6.5 million bpd of non-OPEC oil would also come on stream by 2009. This additional capacity of 12 million bpd by 2009 would be enough to offset the projected 7-8 million bpd increase in global crude consumption, the OPEC Secretary General Adnan Shihab-Eldin emphasized during the a meeting of the 21-member Asia-Pacific Economic Cooperation (APEC) forum on energy and mining.
However, not every one contributes to this. There are critics to be found all around and Matthew Simmons is not alone in the crusade - mainly directed at Saudi Arabia. According to a recent New York Times story: “Doubts about Saudi Arabia’s assurances of how much it can expand capacity - and for how long - have been raised in a secret intelligence report and in a separate analysis by a leading government oil adviser.”
The Times added the following: “A senior intelligence official, who insisted on remaining anonymous said that the Saudi plans to increase production by nearly 14 percent in the next four years were not enough to meet global demand. Even the Energy Information Administration recently scaled back its expectations of how much more oil the Saudis could pump in 20 years.”
According to the New York Times: “there are doubts about the Saudi assertions. Edward O. Price Jr., the former head of exploration for Saudi Aramco and an adviser to the United States government on the Gulf oil during both Iraq wars has also been questioning some of the data. According to him twenty years ago, a detailed study by geologists from four large American oil companies then in partnership with Aramco found little in the way of undiscovered oil resources, he said.” He thus questions the basis of addition of some 150 billion barrels to the Saudi reserve estimates.
According to the Times, Price in this connection also met in the United States his former colleague at Saudi Aramco, Dr. Nansen G. Saleri of reservoir management last year and discussed the issue of the addition to the Saudi reserve estimates.
