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Calif. Field Goes from Rush To Reflection of Global Limits
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Christophe de Margerie, chief executive of the French oil giant Total, says the "optimistic case" for future global output is 100 million barrels a day. That's just 15 million more than the current figure. If de Margerie is right, global oil demand is on track to outstrip maximum possible supply by the middle of the next decade.
With so many fields in decline, the International Energy Agency said in a sobering July 1 report that "over 3.5 million barrels a day of new production will be needed each year just to hold global production steady." That amount is so great that it would fill up a reservoir the size of Kern River every year.
The prophet of limited supply is Matthew Simmons, a voluble Houston-based consultant who says the world hit its sustainable peak oil level in May 2005. He argues that even Saudi Arabia's super-giant Ghawar field -- with original reserves of 82 billion barrels and covering a 160-by-30-mile expanse -- is in decline. A self-labeled "Darth Vader of darkness," he travels the world and preaches his message in presentations to investors, military officers and Chinese officials.
According to his philosophy of "peak oil," supply is so tight that the price of oil, even at its current level, is still too low. He predicts it is headed to $500 a barrel.
At the other end of the debate is Saudi Oil Minister Ali al-Naimi, a voice of optimism. "I am bullish about the role of technology in meeting future and current needs," Naimi said at a meeting in Washington. "Tight conditions in oil markets have caused some observers to speculate that oil supplies are at or near their peak," he said. "I believe such views are short-sighted and ignore the extent to which technology has enabled us to find and produce oil." If technology enables the portion of oil recoverable from Saudi fields to rise 1 percent, he noted, that would amount to 3.5 billion barrels, or about a year's worth of Saudi production.
Naimi's role is to assuage a nervous market. He blames the continued run-up in prices on "speculators." And he asserts that Saudi Arabia would be able to meet the world's rising demand for years to come.
Many experts find themselves between these two poles.
Sadad Husseini, who spent 31 years as a petroleum engineer for the Saudi state oil company Aramco, says Saudi Arabia faces challenges as it cranks up its production capacity to 12.5 million barrels a day. That's 2 million barrels a day more than the record production it reached during the Iran-Iraq war almost three decades ago. "They're developing everything they can," Husseini said.
Though Saudi Arabia drilled fewer than 300 new wildcat, or exploratory, wells from the early 1930s through 2006, Husseini said even a sharp increase in exploration in Saudi Arabia wouldn't uncover the type of super-giant fields that made the kingdom the center of the petroleum universe.
"Usually, the largest fields are the easiest ones to discover," he said. "Whenever you go someplace, when you go offshore or anything, you discover the biggest fields because they're the easiest ones to catch. It doesn't mean that there aren't other ones, but they will be smaller and not as long-lasting. With the exception of the Red Sea, Saudi Arabia is pretty well explored."
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