Saudis say they have enough oil for globe (But Iran Needs Nuclear Reactors -- Oh Yeah)

Arab World News ^ | 17 May 2005 | AP via Arab World News

[Cornpone]

WASHINGTON - Saudi oil minister Ali al-Naimi said Tuesday the kingdom has plenty of oil in the ground to meet global demand for now and would raise production if prices rose too high.

"I stand here to tell you that Saudi Arabian reserves are plentiful, and we stand ready to raise output as the market dictates," al-Naimi said in a speech.

He acknowledged that the perception of a tight market has contributed to higher prices.

"Very high or unstable prices are not in the interest of producers," he said, adding that oil producers also suffer when the world economy slows.

Al-Naimi said the challenge for the global energy market is greater than just increasing crude oil capacity. He said the industry must remove refining bottlenecks, improve efficiency and conservation, and provide better data on supply and demand, among other things, until the world no longer relies on hydrocarbons to meet its energy needs.

He said that in the meantime, technology would help producers extract oil at lower costs and use energy more efficiently.

Al-Naimi's speech came the same day the Organization of Petroleum Exporting Countries released its monthly oil report, which trimmed forecasts for world daily oil demand for the year by 80,000 barrels a day to 83.94 million barrels. The OPEC report cited weakening economic growth and high prices.

The report also said OPEC would have to pump at its highest-ever rate this winter because of sharply weaker oil output from non-OPEC producers.

Crude futures fell Tuesday, trading near three-month lows. Light, sweet crude for June delivery slipped 16 cents to $48.45 a barrel in morning trading on the New York Mercantile Exchange. It settled at $48.61 a barrel Monday after hitting an intraday low of $47.60.

Saudi Arabia has previously pledged to boost its oil production capacity to 12.5 million barrels a day by 2009, an increase of almost 14 percent from the current ceiling, under which the country now pumps 9.5 million barrels daily. Saudi Arabia has said that, if necessary, it will eventually develop the capacity to produce 15 million barrels a day.

"The resource is there," said oil analyst James Burkhard at Cambridge Energy Research Associates in Cambridge, Mass.

Just how high Saudi production actually rises by the end of the decade depends on global demand and how much extra supply becomes available from non-OPEC suppliers, Burkhard said.

CERA forecasts that non-OPEC production could rise by 3 million barrels per day or more between 2006 and 2008. That estimate is based on scheduled projects in countries such as Angola, Azerbaijan, Kazakhstan, Brazil, Canada and Russia.

In 2004, world oil consumption rose by 3.5 percent, according to the International Energy Agency, which is forecasting demand growth to slow to 2.2 percent in 2005.

"What everybody is watching for is what price level is going to trigger a response from OPEC," said oil analyst John Kilduff at Fimat USA in New York, a brokerage unit of French bank Societe Generale. "If they react too early, we'll go right back up."

Kilduff said OPEC reacted too quickly to falling prices last year, a reference to OPEC's decision in December to cut output by 1 million barrels per day. Then in March, after prices had shot up, the cartel returned half that amount to the market.

Prices peaked above $58 a barrel in early April, but have since retreated due to rising supplies in the United States, a strengthening dollar and evidence of slower demand growth in China.

Kilduff said the oil market is also much less jittery these days about potential terrorist activity and political instability that could disrupt Saudi Arabia's oil output.

[crz]

They are full of it! The Sauds fields are depleted and on the way down. Besides all that, they are worried of reports of American alternative fuels coming on market such as bio diesel fuels-or real deisel fuel, since diesels were originally made to run on peanut oil or any other type of combustable oils.

[LibertarianInExile]

That is exactly it. All this "we've got plenty of oil, look, prices are dropping!" is crap because now they know we're pissed about $2 a gallon gas. F them. I will be buying into as much solar as I sensibly can, and I'm gettin' me one o' them thar hybrid Escapes when I can afford it. Screw the Saudis and the rest of the oil thieves.

And I won't feel so bad about any more gummint handouts to solar, nuke, and real alt-fuel companies, because I know Bush is trying hard to help the oil companies sell hydrogen. That fake alt-fuel is an oil company dream--they love it because they'd still get to produce the hydrogen with oil-fired generators and plants.

[SevenMinusOne]

They are full of it! The Sauds fields are depleted and on the way down.

No it is not - The Saudi's do have more than enough oil to sustain the markets for the next 25 years easily.

Supply is only a 1/4 fraction of the current problem. Refinery capacity is a much bigger issue (and why we (America) import already "refined" product at larger levels then ever!).

The spec guys are also driving the market price well above where it should be (and why we should have stopped putting oil into SPR long ago) - It would have took less than 30 days to break the spec market (a barrel has $5 to $10 specked into it right now)

[hoosierboy]

Prices peaked above $58 a barrel in early April, but have since retreated due to rising supplies in the United States, a strengthening dollar and evidence of slower demand growth in China.

I want to know why the slower demand in china? I thought they were the new emerging market, or are they getting more of their oil from russia?

[crz]

The biggest oil fields in that area are pumping in excess of 60 to 70% water. Up to 77% I read in some oil publications. They are building up pressure by pumping water in to extract the oil and when you get that high in percentage, it means the field is getting depleted.

But I agree that supply is only one quarter of the problem. No new refinery capacity in what?.. 30 Plus years?

[Wolfhound777]

The spec guys are also driving the market price well above where it should be..

Yup, it most be those evil speculators again. Even they can't move the market against the commercials. The reason we have $2 + gas prices is because the value of the dollar has eroded. In reality, gas isn't any more expensive now than it was twenty years ago. It just takes more dollars to purchase the same amount. Thank your neighborhood Federal Reserve Bank and leave the specs alone. At least the specs provide liquidity and assume the risk of the trades thereby providing a real service. In contrast, the Federal Reserve just offsets all its bad decisions on the tax payers outright by government bailouts and by the invisible tax called inflation caused by a worthless fiat money.

[SevenMinusOne]

Saudi has two "reserve" labeled oil fields that are absolutely huge! - and are fully equipped to be up and running within a short time frame - The Saudi's currently only use these fields at limited times -

I would also take a hard look at those numbers suggesting 60% to 70% water (there are many reasons to be hyping such statistics...on all sides).

But one thing is certain, Saudi has more than enough oil for the foreseeable future - Though we should still be doing ANWAR (which would put about 1 million + barrels onto the World market....which is currently running around 85 million)

And of course new refineries are needed. This goes without saying (except to the MSM and Democrat Party). That we haven't built a new refinery in 25 years is simply ridiculous to anyone who is willing to be intellectually honest for one second.

[SevenMinusOne]

At least the specs provide liquidity and assume the risk of the trades thereby providing a real service

I could agree with you a little here (with regard to the spec guys) IF the US taxpayer wasn't footing the bill into SPR (and covering the Spec guys as$es along the way - especially on a tight barrel market).

And this is what proves you wrong. If we stopped putting into SPR the barrel of oil would drop $5 to $10 within 30 days (which means that the spec guys are taking advantage of American taxpayers footing a SPR bill).

[SevenMinusOne]

the Federal Reserve just offsets all its bad decisions on the tax payers outright by government bailouts and by the invisible tax called inflation caused by a worthless fiat money.

Agree with you here as well - I have long thought taxes should be paid off of your $ "exchange" value and not the "nominal" value.

[Wolfhound777]

You will have to explain the mechanics of the SPR thing to me. How does it work, how do the taxpayers cover the speculators? By speculators are you talking about hegefunds? I usually use speculators in the context of individual traders trading for their own accounts.

[hinckley buzzard]

The reason we have $2 + gas prices is because the value of the dollar has eroded.

The Canadian dollar has strengthened significantly but gas has gone up just as much in Canada, a big oil exporter, as it has in the US.

[Wolfhound777]

Fiat money increasing against other fiat money doesn't mean much. It still takes more Canadian dollars to buy the same amount of oil for the same reasons as the USD.

[jec41]

And of course new refineries are needed. This goes without saying (except to the MSM and Democrat Party). That we haven't built a new refinery in 25 years is simply ridiculous to anyone who is willing to be intellectually honest for one second.

It is not ridiculous if you don't expect your feedstock to significantly increase. In fact it should be telling us something. Are they refusing to build refineries because they don't like money? The Saudi reserve fields are unproven and are only a fraction of what they are presently producing. Saudi will never produce more than a million barrels (if that) over present production rates and production will decrease as it has in Iran. Water driven fields even deplete faster. Higher prices has driven demand down the last few months but this is short term. Enjoy it while you can. As a Saudi said, my grandfather rode a camel, I drove a car, my son flies a plane and my grandson will ride a camel.

[crz]

The Saudi oild fields are not as nearly as big as those on the north slope of Alaska. And we all know why we cant drill that oil now dont we.

[SevenMinusOne]

The Saudi reserve fields are unproven and are only a fraction of what they are presently producing.

Absolutely incorrect -

Saudi will never produce more than a million barrels (if that) over present production rates

They already have produced at rate of more than a million barrels of what they are producing today (they cut production in 2001, 2002, and 2003...at more than a million barrels).

There is more than enough oil for the foreseeable future. Oil will be back in the mid $30 price range by the end of the year (sooner if we'd stop SPR) - (this will happen with continued growth in the American and World economies).

[SevenMinusOne]

It is not ridiculous if you don't expect your feedstock to significantly increase. In fact it should be telling us something. Are they refusing to build refineries because they don't like money?

They aren't building them because of environmental laws prohibiting them here in the United States - The fact is the Saudi's have built plenty of new refineries in the past 25 years (over there) - That is why we are shipping so much more "already refined" crude into the United States today.

[jec41]

There is more than enough oil for the foreseeable future. Oil will be back in the mid $30 price range by the end of the year (sooner if we'd stop SPR) - (this will happen with continued growth in the American and World economies).


Your argument is not new. Its the same one made in th early 70"s when the US producers claimed we had plenty of oil. Well, I've spent many a day hunting it and if its there its well hidden. In the late 50's early 60's you could still buy gas for 12 cent a gal in Houston. I have brought it for 8 cent in a gas war. Any oil, geology, or chemical engineer will tell you very quick that any field that has to be hydro pump has peaked. If I remember correctly the Saudi field has to have 700,000 gal. of salt water pumped into it everyday just to maintain production. This field has lost pressure and cannot simply be pumped or production would be less than half of present production. Salt water is used to pressure the field and because the oil is lighter will float on top. However the cut they are getting at the wellhead is about 65% oil and 35% water. The water is then drained off and the oil sent to be refined. However in a water driven field product can drop quickly and unexpectedly and when it reaches 50% water you have to increase your water input to maintain production and it becomes very expensive. In some water driven fields depending on the oil sand slope production can cease instantly when water becomes the cut and you can only produce at other wells that are higher on the sand slope. Happened here, Iran, North Sea and 50 other fields and it is happening in Saudi.

[righttackle44]

"Saudis say they have enough oil for globe."

They don't. George "I'd Rather Live in a Cave" Noory and Whitley "The Abductee" Streiber, say they don't.

[SevenMinusOne]

Your argument that oil is running out.... is not that new either - It was in those same 70's we heard the World would deplete all known oil reserves by the year 2000 (if oil consumption continued at the rates of the 70's) -

Well, my God, we have not only NOT run out of oil we have been consuming it at rates ten to twenty fold the rates of the 70's and we still have more oil than we know what to do with.

The Saudi's have "known" oil reserves that aren't even tapped yet - (the only problem with ME oil is it is sour crude) - But they have more oil then we can possibly use in the next 25 years -

Russia has oil fields that are gigantic - we have several large oil fields off the coasts that are very large - Running out of oil is not a problem for the foreseeable future and that is a fact.