Former Saudi Aramco executive says oil reserves claims wrong
All sorts of people have been weighing in on the price-of-oil situation lately. Could the current price be a bubble waiting to burst or is it reflective of flat production levels mixed with the rising demand from India and China? If former Saudi Aramco executive, Sadad Al-Husseini, is right, $130 oil might be a bargain-basement price in the near future. It's his contention that the "proven" reserves that are claimed to exist by oil-producing countries are substantially inflated with "probable" reserves being added to the former figure, as well as tar and oil sands. How many non-existent barrels might there be? Try 300 billion.
Mr. Husseini makes the claim in an article in Petroleum Intelligence Weekly, disagreeing with that publication's numbers and "common methods" of reserve estimation. He says the estimates include "unconventional hydrocarbons, inaccessible oil accumulations and unconfirmed recoveries, none of which fit the current definitions of proven or probable reserves." An example he sites, according to our source article from NewsMax, is the 140 billion barrels of Canadian bitumen estimate that is often reported as "proven" reserves. He believes only a small fraction of that amount could be turned into a useful fuel.
Perhaps the oil-supply future will become more clear with the completion of a study this November by the International Energy Agency. They are considered a reliable source of oil information and are currently analyzing depletion rates and are talking with usually-secretive governments. We suspect that many "experts" will continue to weigh in on the topic long before the study's release.
[Source: NewsMax]
Reader Comments (Page 1 of 1)
jim 9:02AM (6/01/2008)
Often the concept of 'peak oil' and the current price per barrel get conflated in an illogical manner. It is possible and quite likely that an oil price bubble exists and will burst. What would cause the fall in the short term, the 6-18 month price of oil, would be moderation of demand and increased production, essentially pumping whatever oil we do have faster.
This can occur even if we are past 'peak oil'. Of course this is not sustainable and eventually the predictions of $200+ for a barrel of oil will come true. And remember as the price rises, known reserves that in the past were abandoned or not exploited due to the cost of extraction, might now be profitable to bring online adding to supply.
Additionally there maybe undiscovered reserves in locations that have been deemed to expensive to explore and extract that high price makes cost effective.
Historically 'peak oil' shown on a graph may appear to be a plateau rather than a jagged line or even a bell curve.
A key question for advocates of the current price of oil is a bubble is, when the bubble breaks, what will be the price of oil? The answer will probably be significantly higher than what the price of oil was when the current upsurge in cost began.
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harlanx6 9:59AM (6/01/2008)
Sorry, He just doesn't pass the BS test. Energy has increasing demand most certainly, but the market will provide the necessary supply. It will, however, not be a smooth process, but economic factors are more at play here than actual resource availability.
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BlackbirdHighway 10:38AM (6/01/2008)
When OPEC changed the rules, so that each country's quota was based on proven reserves, most of the OPEC members greatly increased their proven reserves overnight. None of them allow any outside observers to confirm these reserve numbers.
Do you think they suddenly found a lot more oil, or do you think they just wanted larger quotas?
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stevefazek 12:43PM (6/01/2008)
Have you noticed the people who are pushing for higher and higher oil are the ones who have alot of money to gain from these prices.
Also i wonder how long china can sustain these grossly unrealistic subsidies to the price of their fuel.
It has been the cheap energy thats driven their growth. Well that and no environmental and labor regulation.
As consumers spending shifts from chinese crap to oil and food. How much longer before their exports start to drop? Its the exports and Debt the us goverment has thats paying for cheap chinese energy. We are paying 2,000 dollars a second in interest.
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Mike Z 1:03PM (6/01/2008)
He is both right and wrong. While the rules behind counting reserves is a game were there are several version of the rules that are applied.
The good news is that the SEC guidance for US publicly traded countries is highly conservative and therefore private oil company’s likely hold more in reserves than they publicly state.
In addition, the upside potential of tar sands with the development of in situ production of tar sands and Venezuelan heavy oil in the future could dramatically increase the size of the world oil reserves. The massive caveat of course is the word ‘could’
Whether the current reserves of tar sands is correct is a different question, but I don’t know about you but at $135/barrel if I like in Canada I would be digging up my backyard with a pickaxe and shove right now.
Now whether this can counteract the possibility of a material misstatement on the part of NOCs who compose a majority of the world’s oil reserves is a big question.
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Rei 3:18PM (6/01/2008)
Um, huh? 140 billion barrels for tar sands is inflated? There's 1.7 *trillion* barrels in Athabasca alone. 140 billion is a gross *underestimate*. The recovery rate is very high, whether from surface mining or in-situ.
FYI, NewsMax is basically a tabloid.
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why not the LS2LS7? 4:06PM (6/01/2008)
Please don't publish stuff from NewsMax. You may see this as environmental news, but if they get this accepted as "news" then their Newsmax' supporters will use it to justify drilling in ANWR, which is pretty much anti-environmental.
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Domenick Yoney 4:32PM (6/01/2008)
#6 & #7: Normally I would avoid NewsMax but Petroleum Intelligence Weekly, where the original article appeared is behind a subscription curtain and I could find this interview covered anywhere else. (I'm still washing my hands. Ugh!)
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snakesausage 6:08PM (6/01/2008)
I was doing some research on the oil and gas prices and found this: http://www.engdahl.oilgeopolitics.net/Financial_Tsunami/Oil_Speculation_II/oil_speculation_ii.html
I do not know what the truth is but the way I see it the ones that are not going to profit from "peak oil" and "heavy demand increases" are the ones that are more believable. One indicator that it is unregulated speculation causing the run-up in price is when the government announced that it was going to investigate the oil price dropped $4 almost immediately.
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Wave54 7:16PM (6/01/2008)
@ #9
That article is definitely worth the read. I had just seen the preceding piece by the same author.
http://www.engdahl.oilgeopolitics.net/Financial_Tsunami/Oil_Speculation/oil_speculation.HTM
It sure paints a different story on the effects of speculation and how it can artificially create a demand spike when petroleum supplies are actually higher and verifiable demand is down.
I found the author's assertion that OPEC has lost its control over oil pricing to the commodities markets in NY and London intriguing. Yet, many are so quick to point fingers at OPEC whenever prices rise.
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disgusted 7:19PM (6/01/2008)
The CFTC announcement of an "investigation" is surely a bad joke. These are the same people that gave exemption after exemption so that huge financial interest would be allowed to participate in these markets. They blurred the distinction between forward contracts and futures, etc, etc, etc. Nothing will change under this administration. Bush/Cheyne were elected to deliver higher oil prices abd they definitely did.
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