Monday, February 21, 2005


Expert says Saudi oil may have peaked

"If Saudi Arabia have damaged their fields, accidentally or not, by overproducing them, then we may have already passed peak oil. Iran has certainly peaked, there is no way on Earth they can ever get back to their production of six million barrels per day (mbpd)."

I love the ebb and flow of predictions as we skittish up to the peak. I tend to look at what Matt Simmons says favorably - he is miscast as a Republican in that he speaks the truth unto power. Plus, he is an acknowledged expert in his field of energy investment, unlike the likes of me.

Saudi is the big one. Keep watching the numbers. I'll do my best to keep everyone up to speed. At some point, they are going to start dumping tar on the market where sweet crude used to exist. Straw can be spun into gold, but the EROEI can be a bear.

With Saudi at their current capacity, the oil markets are tight. When Saudi falls off the table, the fear and loathing begin.

Several people are commenting on this story today -The Correction, Lowem, and at Resource Insights there is some additional info and analysis of Matt Simmons predictions.


At 8:59 AM, February 24, 2005, Anonymous Anonymous said...

I tend to look at what Matt Simmons says favorably - he is miscast as a Republican in that he speaks the truth unto power.interesting remark.

re bush:
"I'm a passionate fan of Governor Bush...he's a very serious guy, he is a unbelievably quick study, and he clearly understands a lot about energy and takes it very seriously."

re krugman's editorials
" I thought it was just scumbag stuff."

worth reading in full.

At 11:56 AM, February 24, 2005, Anonymous Anonymous said...

I have a question for you somewhat related to this discussion. I have noticed on this board and elsewhere in discussions regarding oil sands there is little discussion of in situ drilling methods (whose environmental impact is relatively benign.) Also I have seen the energy cost of drilling overstated many times. It costs only one dekatherm (1 mmBTU)per barrel of oil produced through the most expensive drilling process; this typically yields 6 mmBTUs per barrel of crude. I have seen the notion advanced that oil sand extraction is a net energy loser, which is highly questionable considering the basic economics (according to Suncor and just about any other major oil sand producer the cost of recovery per barrel is below $20 net of everything, with ample profitability in the mid-20's at Cushing.) And a net pickup of 5 mmBTUs of energy per barrel, obviously. This is part (I think) of what is animating recent LNG and natgas E&P activity; the spillover demand anticipated by oil sand development in Athabasca and elsewhere.

At 6:28 PM, February 24, 2005, Blogger JMS said...

Sorry, I didn't see your comments right off.

I am too worried about in-situ drilling, and I agree that the energy costs are low.

Oil sands are not an energy loser. However, they produce a low grade of oil that does have a cost attached to refining it, if that is its destination.

Finally, I rely on ASPO as a primary source for these types of issues.

At 10:32 PM, February 24, 2005, Blogger JMS said...

RE simmons - yes he says nice things about bush.

I was more talking about the fact that he isn't a typical republican economic brainless booster of the status quo - free markets etc.

Thanks for that article btw.

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