The Saudi Oil Reserve Mystery

Posted By on June 28, 2005

Twilight in the Desert by Matthew R. SimmonsMatthew R Simmons, a Harvard educated Texas investment banker’s recent book leaves more questions than it does answers to the accuracy of Saudi oil reserves. Mr. Simmons through the 422 pages of his current book claims that the secrecy and mystery behind the regularly stated claims that the Saudis’ proven reserves are 25% of the worlds oil and that their current production of 10 million barrels of oil could be doubled. Simmons believes that Saudi Arabia is deceiving the world and themselves.

BP Proven Reserves Graphic
Twilight in the Desert by Matthew R. Simmons and BP Graphic

To counter the claim, Peter Odell of Rotterdam’s Erasmus University points out that “since 1971, over 1,500 billion barrels have been added to reserves. Over the same 35-year period, under 800 billion barrels were consumed. One can argue for a world which has been ‘running into oil’ rather than ‘out of it’.” (see graphic above) What Mr. Odell doesn’t point out is that the oil added to the reserves is not easy to extract, in fact some extraction is not even possible with today’s technology.

Before doubting the Saudis’ claims, Mr. Simmons had an opportunity to tour the Aramco factilities in 2003. He became suspicious of their claims of 25% of the world’s reserves and continued his research, turning to the Society of Petroleum Engineers electronic library to review papers by field geologists. After reviewing over 200 papers by Aramco personnel, Simmons concluded that 90% of the Saudis production comes from 6 giant fields. These fields were all discovered before 1967 with the 2000 square mile Ghawar field being the largest. (largest in the world)

Prospecting by Aramco geologist continues outside these know fields, but have found nothing significant. The concern by Simmons is that these 6 fields are producing at near capacity and have been for 40 years. At some point these field will begin to show their age and perhaps are already as they require extensive water injection to maintain the current flow of crude. Mr. Simmons doubts that Aramco can increase output as the Saudi’s claim. He believes they may have already peaked.

In this mystery, are the Saudi’s believing what they want to believe and deceiving the world for continued dominance? Perhaps we are in for a major shock if the deception proves to be true. If you are seeking another “Peak Oil” book, I highly recommend Twilight in the Desert.
Oil Rich

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Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.
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