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Saudi Oil: Far from Twilight (hit piece on Matt Simmons)

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Barrett808 Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Aug-10-06 05:45 PM
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Saudi Oil: Far from Twilight (hit piece on Matt Simmons)
Edited on Thu Aug-10-06 05:45 PM by Barrett808
Saudi Oil: Far from Twilight
Posted on Aug. 09, 2006
By Michael Lynch

With the recent problems in the oil market, renewed attention has been focused on the theories of M. King Hubbert and a new generation of oil supply modelers, who believe that geological resources are scarce and a peak in global oil production is near. In fact, these analysts usually geologists are unfamiliar with statistical modeling and dont recognize that they are engaged in curve fitting, not scientific analysis. The repeated failures of their predictions and their refusal to address substantive criticisms of their theories and methods are damning indictments of their claim to be scientific.

The most recent controversy over Saudi oil has focused on assertions that the Saudis are experiencing insurmountable problems in their oil fields, that their reserves are overstated, and that their production is near a peak. A debate two years ago between Matthew Simmons and Nansen Saleri at the Center for Strategic and International Studies failed to quiet the alarmist voices, although again, the alarmists did not address the substantive issues that were raised. Colin Campbell, for his part, subsequently used some of the data provided by Saleri and ignored others (such as oil in place) and massaged some of the numbers to conclude that Saudi proved reserves data are actually original reserves that is, the combination of cumulative production and proved reserves. His evidence for this: the resulting numbers were approximately similar.

One red herring comes from the opposite side of the equation: the global need for Saudi (and OPEC and Arabian Gulf) oil. Most recent official forecasts project that sometime in the next quarter-century, the world will require as much as 20 to 25 million barrels per day from Saudi Arabia to meet global demand. Even though that would only represent a reserves-to-production ratio of 30 to 1 still triple the U.S. level numerous analysts have suggested such expectations are absurd and physically impossible.

Again, this demonstrates the alarmists relative ignorance of the history of oil market forecasting. Since the Iranian Oil Crisis in 1979, nearly every forecast has predicted a near-term peak in non-OPEC supplies, and soaring OPEC production and market share, with Saudi Arabia the primary contributor. However, not only has OPEC production just regained its 1979 level, but its market share has been flat, if not declining, for a decade, since its post-1986 recovery.

(more)

http://www.energytribune.com/articles.cfm?aid=184

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