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Page added on July 7, 2016
Controversy over Saudi oil reserves
Rystad Energy, a small Norwegian oil and gas data firm released a contentious study several days ago, which concluded the US held more recoverable oil reserves than both Saudi Arabia and Russia. Although Rystad underlined that “more than 50 per cent of remaining [American] oil reserves is unconventional shale oil,” with an estimated 60 billion barrels in Texas alone, serious environmental and health risks were associated with their extraction.
Still, the report raised highly controversial points about Saudi holdings, and opined that Riyadh will not be able to extract and export its black gold for very long.
The question was not new, and while many wondered whether Saudi Arabia would soon run out, this was mostly fiction.
Of course, state secrecy meant that few outsiders knew with any degree of accuracy what the country’s actual reserves were, and what were the correct total production levels to date.
According to the Organisation of the Petroleum Exporting Countries (Opec) Annual Statistical Bulletin for 2015, proven reserves stood at 266 billion barrels that, at current production rates (10.2 million barrels per day in 2015) will last another 70 years.
Rystad, and before it Matthew R. Simmons, a prominent figure in the field of peak oil studies who wrote Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy in 2005 that asserted the unreliability of Middle Eastern oil reserves, these estimates were highly doubtful.
In its latest report, Rystad estimated Saudi proven reserves at a mere 70 billion barrels, while it claimed that probable reserves were about 120 billion barrels.
Even if new field discoveries are added to these figures, the consulting group avowed, reserves would potentially grow to somewhere between 168 billion and 212 billion barrels, still substantially lower than the official data.
Clearly, the insinuation here is that Saudi Arabia is doctoring numbers to maintain proven reserves more or less at the same levels since the mid-1980s, when the 260 billion barrels figure first appeared.
Of course, the controversy did not start with Rystad but was raised by US officials working in Saudi Arabia several years ago, as WikiLeaks cables revealed in 2011.
In 2007, when these cables were written, the focus was crude oil prices, which would surely escalate and fast if Saudi Arabia’s reserves were proven to be lower than many believed.
Several of the cables called on Washington to heed senior Saudi government oil executive warnings, one of whom apparently declared that Saudi Arabia’s crude oil reserves may have been overstated by as much as 300 billion barrels, nearly 40 per cent less than acknowledged.
In fact, one of the US Consular reports from Dammam reported that Abdallah Al Saif, an Aramco senior vice-president for exploration, claimed that Saudi Aramco had 716 billion barrels of total reserves, “of which 51 per cent are recoverable, and that in 20 years Aramco will have 900 billion barrels of reserves,” which raised eyebrows.
At the time, an Aramco geologist disagreed with the senior executive and told the American diplomat of his worries that, if true, meant the actual figures floated between the 300 and 416 billion barrels figure — much higher than what Simmons, Rystad and others affirmed.
What remained unclear, then as now was the actual recoverable levels of oil, and though Riyadh exported — as well as consumed — over 94 billion barrels between 1945 and 2015, it was logical to assume that the day would eventually come when production will have to reach a peak.
For now, however, the data disputes are limited to professional oil analysts, although anti-Saudi elements may have to recalibrate their contempt, especially if Aramco, one of the world’s largest companies, enters into a successful marketing scheme to sell 5 per cent of its downstream assets as proposed by Deputy Crown Prince Mohammad Bin Salman.
16 Comments on "Controversy over Saudi oil reserves"
Rick Bronson on Thu, 7th Jul 2016 9:33 pm
Who can produce Oil at the cheapest cost will get the first market.
Saudi’s are sure winners here and the US oil production is going down drastically because of shut down of many rigs.
yoshua on Thu, 7th Jul 2016 11:58 pm
Saudi Arabia’s latest project was Manifa oilfield, offshore in shallow water, with 27 man made islands, producing 900.000 b/d of heavy oil. The project is estimated to have cost $10 billion and is uneconomic with today’s oil prices.
If Manifa was the best of Saudi reserves in line to be developed then the next in line will be even worse.
Survivalist on Fri, 8th Jul 2016 1:58 am
Extracting oil from Manifa is clear evidence that the low hanging fruit in Saudi Arabia is gone. Manifa is offshore oil contaminated with vanadium. It is stated that the API of Manifa oil is 28. They are no doubt pumping water into Manifa as fast as they can. This link is old but it’s interesting.
http://petroleuminsights.blogspot.com/2011/06/manifa-to-yield-500000-bd-by-2013-and.html#.V39MaEsrKUk
Personally I think Saudi Arabia is gonna hit the wall pretty soon (no later than 2020, just a hunch). Once it does oil prices will sky rocket and the global economy will be destroyed. Peak oil is peak food. Peak food is peak people (due to famine). Peak people is a Hobbesian scramble to make it through the population bottleneck.
shortonoil on Fri, 8th Jul 2016 7:22 am
“Rystad Energy, a small Norwegian oil and gas data firm released a contentious study several days ago, which concluded the US held more recoverable oil reserves than both Saudi Arabia and Russia. “
What Rystad Energy did “not” say is that the US has more oil that can be profitably extracted than Saudi Arabia or Russia. This is merely a rehash of the EIA fallacy of assumption that if oil is technologically extractable it will be extracted. The fact that no one can afford to extract most of this oil moves it from reserves to resource.
It is well known that the world has a huge deposit of liquid hydrocarbons remaining. How much of that deposit can be, or will be extracted is very much in question. It is a question that we believe that we have answered.
http://www.thehillsgroup.org/
joe on Fri, 8th Jul 2016 10:05 am
NATO advancements against Russia are certainly alarming. Yet im sure that its temporary. Will the we still be defending Estonia in 500 years? Probobly not. The only question worth asking is this, when will the oil charade end. Without NATO the EU would be drinking Russian oil and gas at very high prices. With NATO the EU has to get its oil and gas via Turkey and other US allies, even (lmao) from lng tankers during the mad fracking dream time.
Obviously Saudi is running out, I mean they are SELLING out. Only a stupid fool coudnt see that. The trick is to keep things stable. The only way to keep Arabia ‘Saudi’ is to make them the only thing standing in the way of Iran and the Shia majority oil regions. Thus the muscles flexing in Yeman and executing Shia Clerics. Sadly its not gonna work. UBL himself said so. The Saudis are not legitimate because they allowed Christians to live on so called sacred muslim lands, its so precious that dirty western feet cant damage the delicate sand. Thus the irrationalional meets the scientific, which to say the core of every political and economic issue that seems to exist right now.
rockman on Fri, 8th Jul 2016 12:44 pm
Rick – Do you mean producing existing wells or producing new wells? I can assure you that the Rockman is spending less per bbl to produce his existing wells then the KSA…far less.
marmico on Fri, 8th Jul 2016 1:08 pm
the Rockman is spending less per bbl to produce his existing wells then the KSA…far less.
Bull shit PODMAN. Provide the proof. ROTFLMFAO. While we are waiting on the audited proof, stick your nose out of the window and suck in some of that Baytown Refinery air.
Roger on Fri, 8th Jul 2016 9:51 pm
Yoshua,
“Saudi Arabia’s latest project was Manifa oilfield, offshore in shallow water, with 27 man made islands, producing 900.000 b/d of heavy oil. The project is estimated to have cost $10 billion and is uneconomic with today’s oil prices.
If Manifa was the best of Saudi reserves in line to be developed then the next in line will be even worse.”
Bingo!
Likewise, if they actually have 266 billion bbls — 70 plus years worth at current production rates — why can’t they get another 2 MM bbls/d. That is, deliver the12 MM bbl/d they have been promising for the last 10 yrs (more recently I believe they upped it to 20 MM bbl/d !).
If the money is in the bank (or recoverable oil in the ground) there’s no need to discuss it … the production volumes will speak for themselves.
The only “spare capacity” SA has is that contained in the propaganda releases from the IEA….very scary thought.
Boat on Fri, 8th Jul 2016 10:06 pm
Roger,
No need to up production. There is still a glut.
GregT on Fri, 8th Jul 2016 10:13 pm
“No need to up production.”
Wow. You’re batting 100 today Boat. No point in ramping up more costly production. The economy can’t even recover @ $50/bbl oil.
Boat on Sat, 9th Jul 2016 10:54 am
GreggieT,
I don’t care about the economy. In fact a slowly declining economy along with a declining population would be a great goal.
GregT on Sat, 9th Jul 2016 1:44 pm
“In fact a slowly declining economy along with a declining population would be a great goal.”
Agreed, and that is exactly what we are going to get. Position yourself wisely Kevin. You have nobody to blame but yourself if you do not.
Mark Ziegler on Sat, 9th Jul 2016 5:21 pm
Will the US ever produce more oil than they consume? How many hundreds of years will it take to extract all the newfound recoverable oil in the US?
JuanP on Sat, 9th Jul 2016 8:32 pm
Boat “In fact a slowly declining economy along with a declining population would be a great goal.”
I am glad to be able to agree with you on something again!
Boat on Sat, 9th Jul 2016 9:25 pm
Mark Ziegler,
That would depend on who has the cheapest oil to produce.
John on Sun, 10th Jul 2016 4:26 pm
One things for sure Europes 1.2 kid population will rise very very quickly except the soon to be quicker than u think majority new religion will be muslin