Saudi Arabia admits it has hit peak oil?

Here’s the most important country in the world to us telling us something that isn’t true – read the headline below- enough oil for 80 years?  Yes BUT IF:

IF they have 264 billion barrels of oil and IF they don’t ever increase the amount they are pumping today.

But here’s the untruth:  Saudi Arabia knows that demand is going to increase over the coming years.  OPEC itself said so in this WSJ article last Friday:

“OPEC now expects growth of 4.4 million barrels a day in oil demand from this year to an overall 89.9 million barrels a day in 2014.”

The article below says that Saudi Arabia has a spare production capacity of “near 4 million barrels per day.”  What this means is that baring any significant new discovery, the most they could pump per day would be about 12 million barrels to cover additional demand.

And they’ve been looking for more oil in Saudi Arabia for decades without luck. Yet the Saudi’s claim that they are making finds each year to offset what they pump.  I have never found an outside observer that corroborates that.   Instead what most experts believe is that the Saudi’s are simply inflating their estimated reserves.  See Matt Simmons’ “Twilight in the Desert”

So let’s assume that demand will force the Saudi’s to pump all they say they can – 12 million per day.  At that rate, they will exhaust their reserves in about 60 years. The bad news is that Saudi Arabia has 75% of OPEC’s reserves.   If their supply can only last 60 years, then how quickly will the rest of the world’s supplies deplete?  And more importantly, what will happen to the price of oil as supply tightens dramatically? $$$

The alternative is that Saudi Arabia never increases the amount it pumps.  But you know what?  Same result. $$$

There’s no way out of this conundrum.  Peak oil isn’t something that is solvable.  All we can do is adapt.  Will we adapt while’s there’s time to take thoughtful measures?  Or will we wait till the oil shock forces us into action?

——-

Saudi Arabia Has Enough Crude for 80 Years, Naimi Says

By Christian Schmollinger Bloomberg Businessweek

Nov. 1 (Bloomberg) — Saudi Arabia, the world’s largest oil supplier, has the capacity to produce crude for the next 80 years even without additional discoveries, Oil Minister Ali al- Naimi said in a speech in Singapore.

“With 264 billion barrels of proven reserves, at current production levels, the kingdom could continue to supply crude oil for another 80 years even if we never find another barrel,” al-Naimi said today at the Singapore Energy Summit. “However, we are finding those new barrels.”

Saudi Arabia is adding reserves equal to the amount it is extracting each year, al-Naimi said. State-run Saudi Arabian Oil Co. last year completed a capital spending program of more than $100 billion, the biggest in its history, the minister said.

Saudi Aramco maintains spare production capacity near 4 million barrels a day, Chief Executive Officer Khalid al Falih said in September. The country pumped 8.23 million barrels a day in October, according to Bloomberg estimates.

Government policy focused on green energy is hurting the competitiveness of fossil fuels such as oil and natural gas, al- Naimi said. While the focus “unlevels the playing field,” fossil fuels will have to “bridge the gap” until green energy is affordable, he said.

–Editors: Alexander Kwiatkowski, Jonas Bergman

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