Junk your SUV and buy an electric scooter. Recent claims by various OPEC leaders that the world has plenty of oil left are bunk, alleges Sadad Al-Husseini, a former top executive at Saudi Aramco, Saudi Arabia’s state-owned oil company.
Oil-producing countries are inflating the size of their oil reserves by as much as 300 billion barrels by padding supposedly proven reserves with “probable” reserves and tar and oil sands, according to Husseini.
Such hypothetical reserves are “not delineated, not accessible and not available for production,” Husseini said at a recent energy conference in London.
Oil production has now reached its peak and will begin dropping in 15 years or less, earlier than most other experts predict.
In an article for Petroleum Intelligence Weekly, Husseini took issue with the publication’s survey on oil reserves, criticizing common methods for estimating oil reserves.
Oil companies mix proven finds with probable reserves that may have only a 50 percent chance of getting out of the ground, he wrote. They also count “unconventional hydrocarbons, inaccessible oil accumulations and unconfirmed recoveries, none of which fit the current definitions of proven or probable reserves.”
Take the 140 billion barrels of Canadian bitumen that’s regularly reported as proven oil reserves. In reality, Husseini alleged, only a small fraction of that will be converted to useful fuels.
Siberian hydrocarbons, reported as reserves, call for massive investments to extract and refine, and cannot be considered reserves.
Counting probable reserves and tar and oil sands is controversial, admitted Petroleum Intelligence Weekly. The problem is that definitions vary.
Plus, oil companies and governments are often secretive, claiming information about their oil is a security issue.
Oil producers, according to Husseini, are also overly optimistic about new extraction techniques. They presume they’ll work well everywhere, instead of analyzing their usefulness field by field.
Adding to the confusion, the U.S. Geological Survey and others have mixed up reserves with resources, combining proven and probable fields with speculative, undiscovered hydrocarbons.
That, he said, has prompted speculation that global oil reserves may be over twice current estimates.
While Husseini is an oil-production pessimist, others are coming around to his view.
Prompted by uncertainty about world oil supplies, the International Energy Agency is studying depletion rates at about 400 oil fields in its first-ever study of world oil supply.
"The prices are very high, and demand did not respond in the last few years as much as one would have expected," said IEA Chief Economist Fatih Birol. "The growth in terms of production was not great. We did not see enough investment."
The study, due out in November, will predict supplies through 2030. The fear is that demand will outstrip supply, sending prices through the roof.
Oil companies and governments have been cooperative with the IEA, but analysts were skeptical that the agency would get a complete picture from often-secretive oil producing nations.
The Paris-based IEA is seen as the world's most reliable independent source of oil information, and its new forecasts are likely to further upset markets.
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