(From the diaries -- Plutonium Page)Adel al-Jubeir, to Americans one of the most familiar Saudi faces and the top foreign policy adviser and public relations flack for Saudi Arabia's Crown Prince Abdullah, said Wednesday, "The world is more likely to run out of uses for oil than Saudi Arabia is going to run out of oil." Ahhhhhhhh. Big sigh of relief.
Over the next five years, the Saudis have promised to boost production from their current 9.5 million barrels a day to 12.5 million. Al-Jubeir claims that the Saudis could pump at this level for the next 50 years.
To say that skeptics abound is an understatement.
Contrary to al-Jubeir's glowing report, Sadad Al-Husseini, who not so long ago retired as Head of Exploration at the Saudi-owned Aramco, believes the US government has wildly overestimated both Saudi Arabia's and global reserves.
Among the fools of U.S. energy policy - who include Democratic members of the House of Representatives who voted last month to approve a version of the Cheney-Bush plan introduced in 2001 - that 12.5 million figure is just a milestone along a ramp-up that is supposed to put Saudi production at 22 million barrels a day by 2025. An outrageous scenario.
By now, everybody who doesn't glaze over when an energy story appears knows about "peak oil." That's the point at which we earthlings have extracted half the planet's total petroleum reserves. The point at which oil prices permanently soar as reservoirs permanently dwindle. The point at which, if the world isn't prepared, economic, social and political disaster ensues. If you
haven't yet heard, you can read about it
at the Association for the Study of Peak Oil and Gas or in Kenneth Deffeyes's new book,
Beyond Oil. Or you can read Jerome a Paris's fine set of
running Diaries on the subject at Daily Kos. Or Kevin Drum's
five-part series. Or 50 other places.
As recently as a couple of years ago, "peak oil" was still the province of a few supposedly fringe types that the oil industry and policy-makers gave as much credence as they would psychic seismology. Slowly, they're coming around.
Ultra-pessimists think we've already reached the worldwide peak or soon will. Pessimists give us another 5 to 10 years to get there. (Count me among those.) Optimists say 20 years. Super-optimists say 30 or 40. I guess you'd have to call Adel al-Jubeir a super-duper optimist.
The trouble with all these peak predictions is that reporting of reserves, as we've learned of late, are notoriously unreliable, based in part on outright lies. For instance, Shell has admitted its estimates were hugely overstated. Over the past several years, there have been unaccountable leaps in how much oil some countries claim to have. Even more precarious are predictions of future discoveries.
Worldwide petroleum reserves now stand at 1.277 trillion barrels, according to the U.S. Geological Survey. "Reserves" are supposed to have a specific meaning: oil that geologists know is in the ground, that nobody disputes: proven oil. Shell and other book-cookers have made even these once undisputed figures suspect.
Then there's undiscovered oil. Educated guesswork determines how much of that there is. Undiscovered oil + proven reserves = Estimated Ultimately Recoverable oil (EUR in the jargon).
As might be expected, EUR predictions range wildly, from about 1.8 trillion barrels to about 3.8 trillion barrels. Super-optimists like to cite the 3.8 trillion level, but the USGS World Petroleum Assessment 2000 team, which actually made this high-end forecast, give it only a 5% chance of actually being true.
USGS said there is a 95% chance of 2.1 trillion barrels remaining outside the United States. Add in U.S. reserves and undiscovered oil in the States, and you get a global EUR total in the 2.4 trillion-barrel range. The team also suggests a 50-50 chance of there being 3 trillion EUR barrels worldwide.
But let's be super-duper optimists for the moment. Let's say that even the 5 per-centers have underestimated. Let's assume there are 5 trillion barrels of recoverable oil still in the ground. Ample enough, surely?
Until you do the math. Worldwide consumption in 2005 is just short of 84.5 million barrels a day - 31 billion barrels a year - with the consumption rate rising 2% annually. In 1995, the world only consumed 25.6 billion barrels.
This means, that between now and 2055, if we maintained the current rate of increase in consumption, the world would gobble 2.664 trillion barrels of oil - more than what the USGS gives as the amount of oil we can pretty much count on. And that super-duper optimistic vision of 5 trillion barrels? All of it gone by 2077.
We won't suddenly dry up in 2055 or 2077. Decades before then, oil will become hugely expensive, and that alone will reduce consumption. People who today worry about the potential economic effects of $50 per barrel oil could be praying for a drop to $150 per barrel long before I'm dead. Unless, of course, we head down a new energy path. Although they still consume prodigious amounts of oil, the Europeans - and even the Chinese, whose oil consumption is skyrocketing - have embarked on policies that will help them ease the transition to the era of pricey petroleum. Not to mention reducing the effect that burning all these hydrocarbons would have on the atmosphere.
But in the United States, in spite of all the evidence, our leaders are backing what ought to be called the Adel al-Jubeir approach. Plenty of oil, they say, we just have to find it, drill it, pump it, refine it and sell it, and if you environmentalists and ranchers will get out of the way, we can get on with it.
As for the al-Jubeir's claims, the Saudi kingdom has kept its oil stats a closely held secret for 20 years. But for the country to have made significant new finds about which zero information has trickled out stretches credibility. And if it has no new finds, even pumping 12.5 million barrels a day will be tricky over the short run, much less 22 million barrels a day two decades from now.
Indeed, Matthew Simmons, an oil investment banker who has been in the business for 30 years and who was interviewed at The Agonist recently, believes that Saudi Arabia may already have passed peak oil or be close to it. He makes a compelling case in his book, Twilight in the Desert. Among other things, he says, speeding up production - as the Bush Administration has urged the Saudis to do - will reduce the ultimately recoverable amount because the favored technique requires injections of seawater, among other methods.
Yet, in the face of all the evidence and all the warnings, the House energy bill that passed last month (and the one the Senate is taking up on Monday) are brimful of pork and fantasy. And likely to be on the President's desk, as he has requested, by the end of August.
Take the poll.
Cross posted at The Next Hurrah