csua.org/u/b74 -> english.aljazeera.net/NR/exeres/80C89E7E-1DE9-42BC-920B-91E5850FB067.htm
Send Your Feedback As oil prices remain above $45 a barrel, a major market mover has cast a worrying future prediction. Energy investment banker Matthew Simmons, of Simmons & Co International, has been outspoken in his warnings about peak oil before. His new statem ent is his strongest yet, "we may have already passed peak oil". The subject of peak oil, the point at which the world's finite supply of oil begins to decline, is a hot topic in the industry. Arguments are commonplace over whether it will happen at all, when it wil l happen or whether it has already happened. Simmons, a Republican advis er to the Bush-Cheney energy plan, believes it "is the world's number on e problem, far more serious than global warming". Speaking exclusively to Aljazeera, Simmons came out with a statement that , if proven true over time, could herald by far the biggest energy crisi s mankind has known. "If Saudi Arabia have damaged their fields, accidentally or not, by overp roducing them, then we may have already passed peak oil. Iran has certai nly peaked, there is no way on Earth they can ever get back to their pro duction of six million barrels per day (mbpd)."
Simmons believes Iran's oil production has also peaked The technical term for damaging an oilfield by overproduction is rate sen sitivity. In other words, if the oil is pulled out of the ground too fas t, it damages the fragile geological structure of the field. This can ma ke as much as 80% of the oil within the field unextractable. Of course, at the moment, virtually every producer is at full tilt. One of the first hints that Simmons got over possible Saudi Arabian overp roduction was from researching an obscure US Senate committee meeting in 1974. Field damage "A whistleblower in Saudi Aramco, Saudi Arabia's oil company, was first r eported in The Washington Post. He had claimed that Aramco had been over producing the giant Gharwar field and that if they did not slow down, th ey would damage the reservoirs. "The committee, which swore witnesses in under oath, produced over 1400 p ages of documentation on the subject, it included some specialist advice which advised cutting Saudi production to 4mbpd to maintain production levels." Currently, at near maximum production, Saudi Arabia is producing about 9m bpd, though recently they claimed they could potentially produce 12mbpd or even as much as 20mbpd. "The faster you pull a reservoir, the faster you pull out all of the easy -to-produce oil," explains Simmons. "What happens is that you lose massi ve amounts of what the oil industry calls oil-left-behind still inside t he field. These issues, as you can see, have been known about for years. " Overproduction "If you look at what Iran is doing, they are actually going to inject nat ural gas to the tune of 2bcf (billion cubic feet), through a 72in pipe i nto their Aghajari oilfield. This is in order just to boost production from 200,000bpd to 300,000bpd.
In 2004 Shell said it had lost 20% of its reserves Simmons also says the same thing happened with the oil company El Paso la st year. "At the same time as the Shell write-off, El Paso realised they had been producing their fields too hard. As a result they had to write off 41% o f their reserves." In 2004 Shell first announced it had lost about 20% o f its oil reserves. Another clue came as Simmons discovered a ferocious debate that had been going on inside Saudi Aramco about overproduction. "The company claimed in the early 1970s that it would be able to produce 20 to 25 mbpd, then by 1978 it was 12mbpd. Precious resource "Luckily for them, demand quietened down in the 1980s. People thought whe n they cut production that they were simply trying to drive up oil price s, but in fact they were resting their fields to limit the damage. "But then came the first Gulf war and they were forced to crank productio n up again and they have been fighting the problem ever since. "In 1981 in their own book, Aramco and its World, something they give out to new employees and such, they openly talked about how maximising prod uction would permanently harm their fields and that maximum production c ould not continue. They thought demand would fall and the fields would b e sustained. The reasons for maximising production are not always obvious, they can be technical, but also geo-political. Do you want to conserve your fi elds and produce slowly? Would you rat her be a market leader with all that brings, or a smaller, less powerful producer?" The idea that Saudi Arabia could force its production up to 12mbpd or hig her is met with scorn by Simmons. "If we say they have not peaked and then they choose to further increase production, they will only has ten their field decline, and waste huge amounts of valuable oil into the bargain. And oil, as we are only now coming to realise, is the world's most precious resource."
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