Tuesday, October 24, 2006


Global Oil Production is Peaking and Civilization as we know it today is in big trouble.

Our Society is in a state of collective denial that has no precedent in history

Peak Oil is imminent & guaranteed by the natural laws that govern our physical world, and nothing in science, technology, or engineering can prevent it.


1. Peak Oil

2. The Saudi Arabia Case

3. Peak Oil Imminent

4. Impending Crisis

5. Economic Growth

6. Fallacy of Alternatives

7. Peak Oil & The 'War on Terror'

Peak Oil

The highlights

The world is not running out of oil. What the world is shortly running out of is its ability to produce high-quality cheap and economically extractable oil on demand. After more than fifty years of research and analysis on the subject by the most widely respected & rational scientists, it is now clear that the rate at which world oil producers can extract oil is reaching the maximum level possible. This is what is meant by Peak Oil. With great effort and expenditure, the current level of oil production can possibly be maintained for a few more years, but beyond that oil production must begin an irreversible decline and civilization is in trouble.

Running Out...........

It is now widely acknowledged by the world's leading petroleum geologists that more than 95 percent of all recoverable oil has now been found. We therefore know, within a reasonable degree of certainty, the total amount of oil available to us. Any oil well has roughly the same life cycle where the production rate peaks before it goes into terminal decline. This happens when about half of the oil has been recovered from the well. We have consumed approximately half of the world’s total reserve of about 2.5 trillion barrels of conventional oil in the ground when we started drilling the first well at a current rate of over 30 billion a year, meaning the world is nearing its production plateau.

Worldwide discovery of oil peaked in 1964 and has followed a steady decline since. According to industry consultants IHS Energy, 90% of all known reserves are now in production, suggesting that few major discoveries remain to be made. There have been no significant discoveries of new oil since 2002. In 2001 there were 8 large scale discoveries, and in 2002 there were 3 such discoveries. In 2003 there were no large scale discoveries of oil. Given geologists' sophisticated understanding of the characteristics that would indicate a major oil find, is is highly unlikely that any area large enough to be significant has eluded attention and no amount or kind of technology will alter that. Since 1981 we have consumed oil faster than we have found it, and the gap continues to widen. Developing an area such as the Artic National Wildlife Refuge in Alaska has a ten year lead time and would ultimately produce well under 1% of what the world currently consumes.


The grim reality of life:

The global oil decline is a certainty, guaranteed by the natural laws that govern our physical world, and nothing in science, technology, or engineering can prevent it. The consumption of a finite resource is simply a finite venture and the faster we use the quicker it peaks.


Oil is now being consumed four times faster than it is being discovered, and the situation is becoming critical


Global oil production is rapidly approaching its peak, even if natural gas liquids and expensive, destructive, risky deepwater and polar oil are included.

The Saudi Arabia Case

With more than fifty oil-producing countries now in decline, focus on the oil-rich Middle East has sharpened dramatically. Countries of the Middle East have traditionally been able to relieve tight oil markets by increasing production, but, as the this region nears its own oil peak, any relief it can provide is limited and temporary.

Saudi Arabia is a major oil producer with 73% of all incremental world demand being met by this country. The worrying fact is that 90% of their production comes from only 5 mega fields (one is the Ghawar field which is the biggest ever discovered), and are all at risk of unplanned production collapse. In 2004 there were warning signs of production falling into depletion. For years, Aramco, the Saudi national company, have injected enormous amounts of seawater (7 million barrels daily) into their biggest field to boost production. These methods have only temporary effects, and lead to accelerated rates of depletion in the future.

Matt Simmons, long time energy analyst who studied energy for 34 years, in his book “Twilight in the Desert” effectively confronts the complacent belief that there are ample oil reserves in Saudi Arabia and has created a compelling case that Saudi Arabia production will soon reach a peak, after which its production will decline and the world will be confronted with a catastrophic oil shortage. The factual basis of the book is over 200 technical papers published over the last 20 years which individually detail problems with particular wells or particular fields, but which collectively demonstrate that the entire Saudi oil system is “old and fraying” with reserves deliberately vastly overestimated.

Geologist Dr Colin Campbell in a 1998 article in Scientific American also details numerous discrepancies about estimates in Middle East reserves. The extent of reserves reported remained amazingly constant from year to year and then jumped dramatically. A similar unexplainable jump occurred in other countries in the Middle East, sometimes even in the total absence of exploration, strongly suggesting that OPEC's reserves are overstated.

Peak Oil Imminent

While many scientists have not reached agreement about the exact date that world oil production will peak, the degree of consensus among them is quite remarkable. Most agree that the Peak will happen sometime before 2010, suggesting that the world may be facing shortfalls much sooner than expected.

Recently, CNN and Britain’s Independent also point out the reality of Peak Oil, acknowledging that world oil and gas reserves are as much as 80% less than predicted.

A few years ago, political leaders in the United Kingdom made clear to the public it was “not a question of if but when terrorists where going to strike on British soil”, yet I am sure the terrorist bombings in London in July 2005 came as a surprise to most of us.


"The longer an event fails to happen, the easier it is to assume it is not (while odds of occurrence rise)"

(Silar Marner)

Based on Simmon’s analysis, sudden and sharp oil production declines could happen at any time. Even under the most optimistic scenario, Saudi Arabia may be able to maintain current rates of production for several years, but will not be able to increase production enough to meet the expected increase in world demand. There is no likely scenario that some new frontier can replace Middle East oil declines.

Senior Saudi energy officials have privately warned US and European counterparts that Opec would have an “extremely difficult time” meeting demand. Saudi Arabia calculates there is a 4.5m b/d gap between what the world needs and what the kingdom can provide. Repeated promises for increases in production have consistently failed to materialize.

If world oil production is about to peak or is already beyond its peak supplies will soon go into irreversible decline of initially 2% or 3% annually, while world demand is growing rapidly with 2% or 3% a year. This will result in a 4% short-come just a year after the peak and will rise to a 15% - 20% gap in 5 years.


The fossil fueled industrial age could have given everyone high quality, high durability goods, and permanently lifted worldwide living standards. What we did was produce at the lowest cost, lowest quality possible, a "disposable" product.


Insanity = “doing the same thing over and over again and expecting a different result”.


More and more commentators like Richard Deffeyes, Matt Simmons and T. Boone Pickens have targeted 2005 as the year of Peak Oil. Richard Deffeyes has backed his prediction with analysis based on R/P projections. Matt Simmons no doubt has factored an imminent peak in Saudi production into his calculations.

Exxon Mobil Corporation, one of the world's largest publicly owned petroleum companies, is the most forthright of the major oil companies having had the courage and honesty to quietly publish the declining discovery trend, based on sound industry data with reserve revisions properly backdated. Furthermore, the company is running page-size advertisements in European papers stressing the immense challenges to be faced in meeting future energy demand, hinting that the challenges might not be met despite its considerable expertise. Their report, “The Outlook for Energy: A 2030 View”, forecasts a peak in oil production in just five years. Chevron recently joined their campaign publishing an advertisement in national newspapers stating that the 'Era of Easy Oil is Over' (see here to view full ad).

The arrival of Peak Oil may be slightly delayed if worldwide demand for oil would fall. A global recession can hit demand for oil based products, independent of oil prices and is likely to be triggered by the global real estate bubble. If that bubble would burst, the loss of paper wealth would have a devastating effect on consumer spending and GDP. This would result in spare capacity building up again. Furthermore, the high price of crude itself can dampen demand. This problem is particularly noticeable in governments offering energy subsidies. This decreased consumption is not so obvious in cash-rich nations such as the USA or the EU, but it is there in a smaller measure. Nevertheless, this dampening adjustment would only be short lived and simply postpone the inevitable, only ensuring a steeper and more uncontrollable decline, but I acknowledge the possibility.


Initially it will be denied. There will be much lying and obfuscation. Then prices will rise and demand will fall. The rich will outbid the poor for available supplies. (ASPO, 2002)


Impending Crisis

We have taken our lifestyles and the cheap & abundant supply of oil all for granted. At the petrol station, we expect the pump will run to supply us with fuel to drive our SUV’s to run around town, work and school. But when oil becomes more scarce, it is very likely that these pumps will be the first to run dry, because they are at the end of the supply chain. But implications will be much worse than that.

It is not a question if but when the world economy will be confronted with a major shock that will stunt economic growth, increase inflation, and potentially destabilize the Middle East. It will make the Great Second Depression look like a dress rehearsal.

It is a coming crisis that few understand but with far reaching implications. Nations will fight over the remaining oil. There will be power black outs, war and famine. Without hydrocarbons, this planet can only produce enough food to sustain a population of 2.5 billion. The current world population is in excess of 6 billion and growing (UN projection: 7.3 billion by 2050). In the US, without industrial agriculture, it is estimated that only 2/3's of the current population can be fed (D. Preiffer). Fossil fuels effectively temporarily raised the carrying capacity of the earth.

Economic Growth

The main worry is not the present levels of resource use and ecological impact. It is the levels we will rise to given the obsession with constantly increasing production and consumption. The supreme goal in all countries is to raise incomes, “living standards” and the GDP as much as possible, constantly and without any notion of a limit.

If all the world’s people would have the same “living standards” as people in the rich world by 2070, given 4% growth until then, the total volume of world economic output would be 120 times as great as it is now. Even if we assume only 3% growth in rich countries and the Third World rising only to the present “living standards” of the rich countries, the multiple is 14. On current trends, China will by 2031 be requiring 99 million bpd, while at present the world already struggles to produce 84 million bpd.

Economists' view is that the market will solve all of our problems. They assure us that pollution, resource depletion, the collapse of ecosystems and the failure of agriculture will produce economic stimulus which will spur the discovery of new resources and the development of new technologies. The market would maintain equilibrium no matter how much people and the environment have to suffer as a consequence. But we must avoid any movement towards regulations which might restrict economic growth. They have no clue how economic growth can be maintained with a shrinking energy base.

Globalization is the endgame of capitalism, pushing for open access to resources throughout the globe while driving down labour costs to provide cheap products and maximum profits. All we have to do to share in the benefits of this supposedly generous system is to consume, consume, and consume more.

The present levels of production and consumption are grossly unsustainable. The determination to have a continual increase in income and economic output is simply unattainable. Yet it is impossible to get people or governments to even address this issue.

The fallacy of Alternatives

The public, business leaders and politicians are all under the false assumption that oil depletion is a straightforward engineering problem of exactly the kind that technology and human ingenuity have so successfully solved before. Technology itself has become a kind of supernatural force, although in reality it is just the hardware and programming for running that fuel, and governed by the basic laws of physics and thermodynamics. Much of our existing technology simply won't work without an abundant underlying fossil fuel base. In addition, physicist Jonathan Huebner has concluded in The History of Science and Technology that the rate of innovation peaked in 1873, and our current rate of innovation is about the same as it was in 1600. According to Huebner, by 2024 it will have slumped to the same level as it was in the Dark Ages. Hence, without sufficient innovation and a comfortable surplus of fossil fuels, we may simply lack the tools to move forward.

With this energy base dwindling, there is simply not enough time to replace a fluid so cheap, abundant and versatile. It is rich in energy, easy to use, store, and transport. Nothing has the bang for the buck of oil, and nothing can replace it in time - either separately or in combination. Wind, waves and other renewables are all pretty marginal and also take a lot of energy to construct and require a petroleum platform to work off.

Natural gas is a diminishing resource as well and cannot satisfy the growing demand for energy. US Gas supplies were so low in 2003 after a harsh winter that to preserve life and property supplies were close to being cut off to manufacturers, electric plants and lastly homes.

Ethanol has a net energy value of zero (not accounting for soil and water damage and other costs due to unsustainable agricultural practices) - it is subsidized as a boon to agribusiness and would have a negligible effect (Prindle, ACEEE).

Solar energy produces marginal net energy, but are still decades away at best from being a viable substitute given the recent rate of progress in efficiency and costs (averaging about five percent a year) and is nowhere ready to meet the world's energy needs. More importantly, solar photovoltaic cells (PVC) are built from hydrocarbon feed stocks and therefore require excess resources. It is estimated that a global solar energy system would take a century to build and would consume a major portion of world iron production (Foreign Affairs, Rhodes).

The widespread belief that hydrogen is going to save the day is a good example of how delusional people have become. Hydrogen fuel cells are not an energy source at all, but are more properly termed a form of energy storage. Free hydrogen does not exist on this planet. It requires more energy to break a hydrogen bond than will ever be garnered from that free hydrogen. The current source of hydrogen is natural gas - that is, a hydrocarbon. In the envisioned system of solar PVC & hydrogen fuel cells, every major component of the system, from the PVC to the fuel cells themselves will require hydrocarbon energy and feedstocks. The oil age will never be replaced by a hydrogen fuel-cell economy.

Coal is abundant, but its net energy profile is poor compared to oil, and will continue to diminish fast. Coal production is extremely harmful to the environment. One large coal burning electric plant releases enough radioactive material in a year to build two atomic bombs, apart from emitting more greenhouse gases than any other fuels. Coal is implicated in mercury pollution that causes 60.000 cases of brain damage in newborn children every year in the USA. Resorting to coal would be a very big step backwards and what we may face then may be more like the Dim Ages. More importantly, coal is distributed very unevenly with the top three countries (China, USA, USSR) possessing almost 70% of total. Much of the current oil and gas supply is in low-population countries, such as Saudi Arabia, that cannot possibly use all of the production for themselves. They are hence quite willing, indeed eager, to sell it to other countries. When oil and gas are gone, and only coal remains, and the few (large-population) countries that possess it need all of it for their own populations, it will be interesting to see how much is offered for sale to other countries

Obtaining usable oil from tar sands requires huge amounts of energy, as it has to be mined and washed with super hot water. From an energy balance, it takes the equivalence of two barrels of oil to produce three, which is still positive but poor in terms of energy economics. In the early days of conventional oil, this ratio used to be one to twenty.

Nuclear power plants are simply too expensive and take ten years to build, relying on a fossil fuel platform for all stages of construction, maintenance, and extracting & processing nuclear fuels. Additionally, uranium is also a rare and finite source with its own production peak.

Fossil fuels allowed us to operate highly complex systems at gigantic scales. Renewables are simply incompatible in this context and the new fuels and technologies required would simply take a lot more time to develop than available and require access to abundant supplies of cheap fossil fuels, putting the industrial adventure out of business.


Alternative energies will never replace fossil fuels at the scale, rate and manner at which the world currently consumes them, and humankind's ingenuity will simply not overcome the facts of geology & physics.


Peak Oil & the 'War on Terror'

If we had to actually reform the way that people live, or let go of some of it, the losses would be politically untenable. No politician, whether it is the gallant John Kerry or George W. Bush, will go near the issue at the consumer level. They know that if the suburban-sprawl economy is challenged there isn't a whole lot left behind it.

“America is still in denial about the energy problem and few politicians are prepared to accept painful solutions” (J. Cooper, congressman Tennessee, July 2005).

So unwilling to address the demand side of the problem, they have desperately attempted to protect and stabilize the supply side.

No sooner had President Bush and Vice-President Cheney settled into their official residences in January 2001, than they set out to rewrite their nation’s energy policy. A report was produced warning that the US faced ‘the most serious energy shortage since the oil embargoes of the 1970’s”. America had become dangerously dependent on imports and if overall energy demand continued to outstrip supply, it warned, the imbalance would “inevitably undermine our economy, our standard of living and our national security”. (FT, Jul ’05).


"Let's look at it simply. The most important difference between North Korea and Iraq is that economically, we just had no choice in Iraq. The country swims on a sea of oil."

"...for reasons that have a lot to do with the US government bureaucracy, we settled on the one issue that everyone could agree on: weapons of mass destruction."

(Paul Wolfowitz, US deputy Defence Secretary, 2003)


Michael Rupert, investigative reporter, also concludes that the so-called ”war on terrorism” is nothing but a war to control the last remaining oil reserves of the planet. It is not a coincidence that Iraq, Kuwait and Iran with the second (114 billion), third (98 billion) and fourth (94 billion) largest oil reserves in the world, have been so important to the United States (see BP Statistical Review 2005)

The Iraq war is not hard to understand. It wasn't an attempt to steal Iraq's oil. If that was the case, it would have been an uneconomic venture spending hundreds of billions of dollars occupying the place, not to mention the lives lost. It was not a matter of stealing the oil; it simply was a desperate attempt to retain access to it. It was an attempt to stabilize the region of the world that holds two-thirds of the remaining oil, namely, the Middle East.

Iran has been the latest target of the Bush administration, warning of possible military action, while the UN nuclear watchdog is preparing to publish evidence that Iran is not engaged in a nuclear weapons programme.


“An excess of anything in life promotes wastage until its decline becomes evident and irreversible"



Trouble in the World's Largest Oil Field-Ghawar
Copyright 2004 G.R. Morton This can be freely distributed so long as no changes are made and no charges are made.

July 4, 2004 Updated Sept 2006.

There are four oil fields in the world which produce over one million barrels per day. Ghawar, which produces 4.5 million barrels per day, Cantarell in Mexico, which produces nearly 2 million barrels per day, Burgan in Kuwait which produces 1.7 million barrels per day and Da Qing in China which produces 1 million barrels per day. Ghawar is, therefore, extremely important to the world's economy and well being. Today the world produces 82.5 million barrels per day which means that Ghawar produces 5.5 percent of the world's daily production. Should it decline, there would be major problems. As Ghawar goes, so goes Saudi Arabia.

The field was brought on line in 1951. By 1981 it was producing 5.7 million barrels per day. Its production was restricted during the 1980s but by 1996 with the addition of two other areas in the southern area of Ghawar brought on production, Hawiyah and Haradh, the production went back up above 5 million per day. In 2001 it was producing around 4.5 million barrels per day. There have been 3400 wells drilled into this reservoir

I have noted elsewhere that the data I am being told by engineers who have actually worked on Ghawar, that this decade will see it's peak. (Morton, 2004 PSCF in press). Others have noted how the percentage of water brought up with the oil has been growing on Ghawar. There are published reports that Ghawar has from 30-55% water cut. This means that about half the fluids brought up the well are water. Today the decline rate is 8%. Thousands of barrels per day of production must be added each year.

"The big risk in Saudi Arabia is that Ghawar's rate of decline increases to an alarming point," said Ali Morteza Samsam Bakhtiari, a senior official with the National Iranian Oil Company. "That will set bells ringing all over the oil world because Ghawar underpins Saudi output and Saudi undergirds worldwide production." JEFF GERTH, "Forecast of Rising Oil Demand Challenges Tired Saudi Fields," February 24, 2004 New York Times, Late Edition - Final , Section A , Page 1 , Column 3 http://www.peakoil.net/Newspapers/20040224NYTTiredSaudiFields.doc

Unfortunately for the world, few know the actual state of Ghawar. Cumulative production from the field is 55 billion barrels. In 1975 Exxon, Mobil, Chevron and Texaco estimated that the ultimate recovery from the field would be 60 billion barrels. Without a doubt, new technologies have moved EURs from that which was possible in the mid 1970s. But the Saudis claim that the field can recover another 125 billion barrels.(this info come from http://www.simmonsco-intl.com/files/IEA-SOM.pdf slide 25 accessed 7-5-04) For someone like me who has spent a lifetime in the oil industry trebling the recovery factor is a fantasy we all wish we could do. But no one has ever figured out how. Thus, I doubt very much their claims, especially in light of the maps shown below.

But this is what is happening

"Saudi oilmen are usually a taciturn bunch, guarding their data like state secrets. But this was post September 11 and Riyadh was wooing western journalists and trying to restore the Saudis' image as dependable, long-term suppliers of energy--not suicidal fanatics nor terrorist financiers. And it was working.
"Then the illusion slipped. On a whim I asked my hosts about another , older oilfield called Ghawar. It is the largest field ever discovered, its deep sandstone reservoir at one time had held perhaps one-seventh of the world's known oil reserves, and its well produced roughly one of every 12 barrels of crude consumed on earth. In the iconography of oil, Ghawar is the mythical giant that makes most other fields look puny and mortal. . . .
"At Ghawar,' he said, 'they have to inject water into the field to force the oil out,' by contrast, he continued, Shayba's oil contained only trace amounts of water. At Ghawar, the engineer said, the 'water cut' was 30%."
"The hairs on the back of my neck stood up. Ghawar's water injections were hardly news, but a 30% water cut, if true, was startling. Most new oilfields produce almost pure oil or oil mixed with natural gas--with little water. Over time, however, as the oil is drawn out, operators must replace it with water to keep te oil flowing --until eventually what flows is almost pure water and the field is no longer worth operating."
"Ghawar will not run dry overnight, but the beginning of the end of its oil is in sight." Paul Roberts, "New Tyrants for Old as the Oil Starts to Run Out, " Sunday Times (News Review), May 16, 2004, p. 8

But this year at the Offshore Technology Conference some were talking about a 55% water cut for Ghawar. Part of this is because the Saudi's inject large quantities of water into the reservoir and much of it comes back to the producing wells immediately though the system

"Saudi Aramco is injecting a staggering 7 million barrels of sea water per day back into Ghawar, the world's largest oilfield, in order to prop up pressure. It accounts for 30% of Saudi oil reserves and up to 70% of daily output." "Doubts grow about Saudi As Global Swing Producer," Aberdeen Press & Journal Energy, April 5, 2004, p. 15

But several people are becoming concerned about the ability of the Saudi's to maintain production. Here is a tidbit from the Aberdeen Scotland Newspaper of a few weeks ago.

"It seems a growing number of analysts are falling into line with the Simmons & Company International view that Saudi Arabia may be running out of steam and may not be able to perform the role of global swing producer for many more years, despite being credited with oil reserves in the order of 260 billion barrels. The Centre for Global Energy Studies hinted at the beginning of the year that the kingdom appeared to be heading for difficulties. Now one of its analysts has said that having reserves does not equate to production capacity. Citing the Haradh field, he said it required 500,000 barrels per day of water injection to get out 300,000 bpd of oil. Moreover the problem is even more serious in the Khurais field." "Doubts grow about Saudi As Global Swing Producer," Aberdeen Press & Journal Energy, April 5, 2004, p. 15

Since I am more and more working in the area of reservoir management, one of the things I have learned is that when you have to inject 500k barrels of water to get 300k barrels of oil, you will cycle water through that field like crazy. You won't up the pressure so you are probably cycling at least 200,000 barrels per day of water through the field.

For those who don't think there is a problem with the Saudi production, here are a couple of pictures of Ghawar from a 1996 report which shows the size of a 3d seismic section on the overall Ghawar field. The next picture is from the 3D showing the injection wells and the line in 1996 where the water had encroachd.

The Uthmaniyah area is the oldest producing area on Ghawar. But the next picture shows that to the right of the line the oil is gone and all that is left is water The solid circles are or were oil producers. the open circles with arrows through them are where the water is injected to the reservoir to push the oil towards the producers (On the picture below this is from the right to the left. You can see that in this area, in 1996 the water had encroached halfway across Ghawar.The water must have moved further to the west today, 8 years later.

the various areas of Ghwar are outlined at a map found at http://web.inetba.com/gregcroftinc/images/Ghawar_map.gif

What is the future of Ghawar and Saudi production? It is not good.

"All production comes from 'very old fields', with no major exploration success since the 1960s, and almost every field has high and rising water cut.
"Saudi Aramco is injecting a staggering 7 million barrels of sea water per day back into Ghawar, the world's largest oilfield, in order to prop up pressure. It accounts for 30% of Saudi oil reserves and up to 70% of daily output." "Doubts grow about Saudi As Global Swing Producer," Aberdeen Press & Journal Energy, April 5, 2004, p. 15


"The Wocap simulations for Saudi oil are presented in Fig. 5. They clearly show a long plateau at 8-10 million b/d. Here the main question is: How long can Saudi Arabia plateau at that level? Or in other words: Will it age gracefully? Much will depend on Ghawar. “
“With 100 billion bbl of crude oil produced so far, Saudi Arabia should not be far from the midway point of its proved reserves of 260 billion bbl—that means just 10 years at the going rate of roughly 3 billion bbl/year. Bearing in mind the "spurious revision" of 1990 that boosted proved Saudi reserves to 257. billion bbl from 170 billion bbl, the midway point could happen even sooner than that. “
“Furthermore, the 35 billion bbl produced during 1990-2002 has not been accounted for, as Saudi "proved reserves" were still being reported at 260 billion bbl by the close of 2001. “A. M. Samsam Bakhtiari, “Middle East Oil Production to Peak within next decade.” Oil and Gas Journal, July 7, 2003, p. 24

One of the interesting things about Ghawar is the nature of its reservoir which provides an argument against an ideology I fight all the time, Young-earth Creationism. Ghawar is largely made of dung, which would be hard pressed to be concentrated during a global flood and thus contradicts the young-earth creationist claims.

“Most massive and nonporous limestones contain textures made by invertebrate animals that ingest sediment and turn out fecal pellets. Usually, the pellets get squished into the mud. Rarely do the fecal pellets themselves form a porous sedimentary rock. In the 1970s the first native-born Saudi to earn a doctorate in petroleum geology arrived for a year of work at Princeton. I used the occasion to twist Aramco’s collective arm for samples from the supergiant Ghawar field. As soon as the samples were ready, I made an appointment with our Saudi visitor to examine the samples together using petrographic microscopes. That morning, I was really excited. Examining the reservoir rock of the world’s biggest oil field was for me a thrill bigger than climbing Mount Everest. A small part of the reservoir was dolomite, but most of it turned out to be a fecal-pellet limestone. I had to go home that evening and explain to my family that the reservoir rock in the world’s biggest oil field was made of shit.” Kenneth S. Deffeyes, “Hubbert’s Peak” (Princeton: Princeton University Press, 2001), p. 57-58

Back to the serious issue of Ghawar, an almost poetic ode to the death of Ghawar can be found at http://www.newcolonist.com/ghawar.html. As Ghawar goes, so goes the world.

Postscript: I went to a talk Oct. 2004 at the Society of Exploration Geophysicists Convention, on an attempt to collect 4D seismic over that field (4D is time-lapse 3d seismic. Two surveys are acquired in identical patterns after a period of time in which oil is produced from the field. we use it to monitor fluid flow). At Ghawar, the world's largest field, they began water injection when the field was put on line back in the early 50s. The initial injector well were just beyond the initial oil water contact of the Arab D reservoir. As the oil was extracted, a formerly producing well would be turned into an injector (a producer would become an injector), so you will see what it looks like today after lots of producers have been turned into injectors. Water is injected into the carbonate reservoir in order to maintain reservoir pressure and allow the field to be produced at 5 million barrels per day. If the pressure were to drop, the production rate would fall quickly. One of the things to keep in mind as you look at the model below is that the original oil column was 1300 feet thick. Today, the green layer is less than 150 feet thick. One must draw the necessary conclusions that most of the oil has been removed from Ghawar. The original article can be found at http://abstracts.seg.org/ease/techprog/downloadpaper?paper_id=817&assigned_num=762

You can see for yourself, that the area occupied by oil is not very large compared with where the initial injectors were placed. One friend, a reservoir engineer, to whom I showed this picture said "It's over! Kiss your life-style goodbye!"

A few weeks ago, I plotted the Saudi production from the EIA. I saw an interesting pattern. I waited another month and the pattern persists. Since January 2006, the price of oil has been climbing steadily. But starting in October 2005, the Saudi oil production has been steadily but slowly dropping. This pattern since April 2004 looks much like the production pattern I saw in the UK when I moved there in 2000. Thus, it made me wonder if the Saudi's have finally begun to drop. Here is the chart.

What I ask myself is this. The Saudis need the money (see http://home.entouch.net/dmd/saud.htm) so why would the Saudis restrict production at a time when the price is rising and setting a new price record? This is a curious thing and makes me suspect that all is not well with Saudi production. Only more time will tell, but if this is the first sign of Saudi decline, then the price of oil is about to scream up to higher levels.

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cited online at http://www.d-n-i.net/fcs/crisis_unfolding.htm

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