89. SADAD AL HUSSEINI
To support their doom argument, a lot of peak oilers are cherry-picking quotes from Sadad Al Husseini -- a retired executive of Aramco (the Saudi national oil company). A comment on this site (Peak Oil Debunked) is representative:
A senior Saudi oil geologist has stated to the New York Times that he believes Saudi oil will peak at about 12.5 to 15 million barrels a day. After that point, there can be no more growth in sour supply no matter what the world demands!Husseini certainly is an authority. Here's some background:
"When I asked whether the kingdom could produce 20 million barrels a day -- about twice what it is producing today from fields that may be past their prime -- Husseini paused for a second or two. It wasn't clear if he was taking a moment to figure out the answer or if he needed a moment to decide if he should utter it. He finally replied with a single word: No."
Once Saudi Arabia have peaked, then that's it -- the world has peaked. There will be no more economic growth of the oil dependent variety. Indeed, current industrys such as airlines will start to go broke. The New York times quote is from the comprehensive article below.
The Breaking Point (NYT article, Aug. 21, 2005, pdf)
It can be argued that in a nation devoted to oil, Husseini knows more about it than anyone else. Born in Syria, Husseini was raised in Saudi Arabia, where his father was a government official whose family took on Saudi citizenship. Husseini earned a Ph.D. in geological sciences from Brown University in 1973 and went to work in Aramco's exploration department, eventually rising to the highest position. Until his retirement last year -- said to have been caused by a top-level dispute, the nature of which is the source of many rumors -- Husseini was a member of the company's board and its management committee. He is one of the most respected and accomplished oilmen in the world.(Source: same as above)Things certainly do look bleak when you cherry-pick Husseini's comments, but let's put his remarks in context. Here's Husseini on the topic of Matthew Simmons:
Although Matthew Simmons says it is unlikely that the Saudis will be able to produce 12.5 million barrels a day or sustain output at that level for a significant period of time, Husseini says the target is realistic; he says that Simmons is wrong to state that Saudi Arabia has reached its peak. But 12.5 million is just an interim marker, as far as consuming nations are concerned, on the way to 15 million barrels a day and beyond -- and that is the point at which Husseini says problems will arise.(Source: same as above)And here's Husseini on the broader issues of peak oil:
Q (ASPO-USA, Steve Andrews): My question to you, and I would like to share your answer with attendees at the conference as well as with our state's Energy Office here in Colorado: Do you have an approximate range when you estimate that world oil production might peak? Given that you won't be able to join us [at the November 10-11 Denver peak oil conference], your comments on this point would be tremendously appreciated.As you can see, Husseini disputes the idea of an early peak, or a Simmons-style near-term decline in Saudi production. His assessment largely agrees with the results of the report by Koppelaar (see #86).
A. Thank you for your e-mail. In response to your question, the answer is a little long winded but this is an important matter that needs a clear response.
Oil capacity today is not production limited but rather processing limited. That is to say, the DOE reports the world's refining capacity has leveled at around 83 mmbd for some time and refinery expansions are slow and costly. We have seen new downstream capacity investments average 300 mbd/year over the last several years. Doubling that rate would still put major changes in refinery expansions well into 2010 and beyond. Therefore the refinery capacities are now the effective ceiling for oil production.
The DOE shows oil demand (presumably after refining) is increasing at something like 1.5 - 2.0 % per year. This was doable in the past because of the excess refinery capacity that prevailed until 2003/2004. From here forward, satisfying oil demand will require 1.2 - 1.6 mmbd of new refinery capacity per year or 4 to 5 new world-scale refineries every year. These normally require 4 - 5 years to execute at a cost of no less than $ 2 B per 100,000 b/d of capacity. With deep conversion and petrochemicals, the investments are even higher.
Because of these massive requirements, I believe the production outlook will be gradual production increases over the next ten years limited by slow refining capacity expansions.
Given the current outlook in terms of global exploration and development, the rate of investments in the oil value chain, energy prices, and the prevailing legal and political investment climate, I believe oil production will level off at around the 90 - 95 mmbd by 2015. This plateau can be sustained beyond 2020 at continuously higher oil prices and with rapid improvements in overall energy efficiencies throughout the world.Source*
*) Thanks to antimatter for this link.