What Will the Rest of the World Do If Saudi Oil Runs Out Early?  

Rigzone has picked up The Independent's article about the possiblity of Saudi Arabia running out of oil faster than currently envisioned.

Mr Simmons, the chairman and chief executive of a Texan energy investment bank, is calling for a new global standard of transparency for all serious oil and gas producers. He argues that 90 per cent of Saudi Arabia's oil comes from just five or six fields - of which the three most important were established before 1950.

He points out that reserves estimates have risen from 110 billion to 160 billion in 26 years without major new discoveries. He warns that Saudi oil production may be close to peaking, pointing to the increasing use of high-pressurised water to maintain production in some fields.

"At some point in time the 'water sweep' will end and the high reservoir pressure will drop. This is simply the ageing process of any oilfield," he says, pointing to the North Sea as an example.

His concerns have caught the attention of the US government's Energy Information Administration, which tracks data across the world's major producers. It is worried that the Saudis' fields are suffering from an annual rate of decline of between 5 and 12 per cent, meaning it would have to add 600,000 and 800,000 barrels a day in new capacity each year just to compensate.

Mr Simmons is not alone in gloomy forecasts for an end of oil production. The Association for the Study of Peak Oil believes the Middle East no longer has sufficient spare capacity to play a "swing role" in the market. It sees annual production peaking at 30 billion barrels in 2010 and declining to 12 billion by 2050.