Saudi Arabia's state-owned oil company Saudi Aramco endorsed calls by some industry analysts to expand information on global oil supplies as a way to stabilize mercurial oil markets.
"It's a step in the right direction to have more comprehensive objective-based analysis," said Nansen Salieri, manager of reservoir management for Aramco. "We have overall support for these concepts," he said. Salieri further noted that Aramco would be an advocate for a future global hydrocarbon inventory initiative.
Saudi role
Salieri's May 6 comments were precipitated by an Offshore Technology Conference panel discussion in Houston on whether oil reserves are being exhausted sooner than later. Although not a panel participant, Salieri was given the opportunity by organizers to respond to what appeared to be one of the few areas of consensus among the speakers—the need for accurate, uniform reserve data to encourage investment and soothe market jitters.
Saudi Arabia, which holds the key spare capacity the market relies on to cushion unforeseen supply shocks, has been subject to growing criticism by some industry observers for being too tight-fisted with reserve data (OGJ, Mar. 8, 2004, p. 24).
The country has over the past few years taken steps, through its membership in the Organization of Petroleum Exporting Countries, to improve international oil statistics. OPEC, along with the International Energy Agency, the Asia Pacific Energy Research Center, the Latin-American Energy Organization, the European Union, and the United Nations, is a member of the Joint Oil Data Initiative (JODI), for example.
JODI members are scheduled to meet in Amsterdam May 22-24 through the International Energy Forum to review ongoing suggestions to make data more transparent for both producing and consuming nations.
Nevertheless, reverberating concerns over missing OPEC data, coupled with fresh Wall Street worries that companies exploited vague US Securities and Exchange Commission reserve criteria to overstate holdings, is fueling interest in the issue.
Some have suggested that various industry associations, perhaps in conjunction with a neutral scientific body, should create a standardized methodology for estimating reserves.
Matthew Simmons, chairman and CEO of Simmons & Co. International, said that until there is "far better" transparency on the world's giant oil field production and decline rates, the world can only guess at its future oil supply. He said there is an urgent need in particular for better data on Saudi Arabia's larger oil fields "as the welfare of the world's economy depends on it."
Peak vs. no peak
Panel speakers included Simmons, along with a university professor of geoscience, an energy economist, and a consultant who represents a petroleum scientist group that advocates the so-called "Hubbert's Peak" viewpoint on the peak oil issue.
The theory that oil resources are rapidly depleting is named after Shell Oil Co. scientist King Hubbert who, against the conventional wisdom of 1956, predicted US oil production would peak far earlier than experts anticipated. His followers today say his forecasts are coming to pass in most of the world's existing oil basins, and that will precipitate an oil supply crisis within the next 2 decades.
Simmons said that without more information it is unwise to embrace today's conventional view that world oil production has not yet peaked.
"With production from giant fields providing such a significant share of the world's oil supply, it seems important to understand the decline rates that each of these fields experience and to determine what future decline rates are likely to be," he said.
The 'optimists'
Panelists William Fisher, a professor of geosciences at the University of Texas at Austin, and Mike Lynch, an energy economist who is a research affiliate at the Massachusetts Institute of Technology, held the antidepletionist view that it's unlikely that world oil suppliers are close to peaking.
Fisher said that ultimate oil recovery estimates are "all over the place" from nonexistent to robust estimates. But a convincing case can be made that the world has not yet seen peak oil supply due in part to the fact that field reserve growth is robust, and the sources of that growth are many and varied, he said.
Lynch also endorsed the view that it is unlikely the world is going to be running out of oil in the near future. He noted that no one disagrees with the notion that petroleum resources are not infinite or that depletion is occurring or raises costs.
Further, he acknowledged that forecasting both discoveries and supplies is extremely difficult because of the uncertain nature of field size and because of the heavy influence of individual national economic conditions. But that does not mean one should assume the oil is vanishing, he said.
"Scarcity can be very roughly estimated by looking at a number of factors, including costs and reserve values, discovery size, drilling intensity, and well productivity, and none of these supports the alarmist views of a peak in world oil production over the next decade or two," Lynch said.
