(GS) Beyond “Peak Oil” – Thoughts on Oil & the Middle East

Matthew Simmons

A book that I [Penn Energy] have read and highly recommend is Twilight in the Desert by Matthew Simmons, who was a Houston-based analyst and investment banker in the energy field for several decades. 

He died last year. He is best known for championing the ‘Peak Oil’ thesis, which was first broached by M. King Hubbert, a U.S. geologist, who accurately predicted that U.S. oil production would peak in the early 1970′s.

The World Beyond ‘Peak Oil’

Using Mr. Hubbert’s work, others, including Mr. Simmons, have predicted that global oil production would peak around 2005-2010, or, perhaps, effectively, soon after. Anyextra production would have to come from either: unconventional sources, such as oil sands or other heavy deposits, or oil shale; deepwater or arctic frontier plays; or by using extraordinary enhanced oil recovery (‘EOR’) methods in existing fields, wells or formations, perhaps to the extent of overproducing and damaging these older, or ‘legacy,’ conventional reservoirs. More >>>

SAUDI ARABIA: OIL RESERVES AND PEAK OIL

Sheik Sadad al-Husseini

Saudi Arabia: March 23 2011 - Sadad al-Husseini, the man in charge of exploration and production at the Saudi state-owned company Aramco for 12 years until 2004 revealed his  opinion of the Saudi and World Oil poistion in a leaked cable from 2007.

Saudi Aramco dominates exploration and production in the kingdom.

Al-Husseini is quoted as disagreeing with his former company’s estimate of total reserves in Saudi Arabia, the world’s largest oil producer.

“He believes that Aramco’s reserves are overstated by as much as 300 billion barrels of ’speculative resources.’ He instead focuses on original proven reserves.”

And as global demand recovers, driven by India and China, the price of crude oil has risen sharply. In the long term, Al Husseini sees an “underlying reality that global demand has met supply,”, “Due to the longer-term constraints on expanding global output, al-Husseini judges that demand will continue to outpace supply and that for every million-barrels-per-day shortfall that exists between demand and supply, the floor price will increase by $12 (per barrel),”. More >>>

An explosive mix: Uncertain geologic knowledge and hazardous technologies

On March 11, 2011, a magnitude 9.0 earthquake struck off the east coast of northern Honshu Island in Japan, causing devastating tsunamis and killing thousands. The quake and ensuing tsunami resulted in the catastrophic failure of many of the reactors and associated facilities at the Fukushima Daiichi nuclear power plant. The crisis at the Fukushima plant continues to unfold at this moment.

Was this earthquake unexpected? Yes and no. We live on a dynamic Earth. Our active Earth actually surprises many people who live calm lives in areas unaffected by the processes of a planet constantly in the course of reshaping its surface. The reason Japan even exists is due to the large subduction trench that lies to its east, the source of the recent earthquake. So, though earthquakes in that zone did not exceed magnitude 7.8 in the twentieth century, it is not totally unexpected that such a high-magnitude quake would occur there. More >>>