313. STUART STANIFORD BLOWS CALL ON SAUDI ARABIA
On March 3, 2007, Stuart Staniford made some very ominous, pee-your-pants-type predictions about Saudi Arabia in the post "Saudi Arabian Oil declines 8% in 2006".
He shows the decline in this graph, illustrating Saudi production data from the various indicated sources (click to enlarge):
Using this graph, Stuart determines that the Saudi's are caught in unstoppable, plummeting decline, as indicated in the following passage (emphasis mine):
My intepretation is that the bump in the middle of the year that separates the two lines is due to the impact of Haradh III coming on stream. So that tells us that, given some extra production capacity, Saudi Aramco immediately threw it into the production mix. And the effect of that? It lifted the plummeting production curve up by 300kbpd, but did nothing to change the gradient of the plummet. That suggests that the Saudis had nothing else to throw at the problem.
It also suggests that last year's underlying Type II decline rate, before megaprojects like Haradh III, was 14%.
Overall, I feel this data is clear enough that I'm willing to go out on a limb and conclude the following:
* Saudi Arabian oil production is now in decline.
* The decline rate during the first year is very high (8%), akin to decline rates in other places developed with modern horizontal drilling techniques such as the North Sea.
* Declines are rather unlikely to be arrested, and may well accelerate.
* Matt Simmons appears to be right in Twilight in the Desert, but the warning did not come until after declines had actually begun.
[Update: Steve Andrews of ASPO-USA correctly points out to me in email that Matt Simmons began warnings about Saudi Arabia as early as December 2003, significantly before the publication of the hardback version of the book in mid 2005. I relied on an over-hasty check of Amazon which has the paperback publication date - mea culpa.]
I suggest that this is likely to place severe political strains on Saudi Arabia within a year or two at most.
What actually happened in 2007?
Dialing up the 2007 production stats for Saudi Arabia over at the EIA, we get:
No decline. Nothing unusual. Just standard, steady-state production like we've come to expect from Saudi Arabia.
How did they arrest the plummet, Stuart? With those tank farms Matt Simmons claims they've been using to cover their decline ever since "Twilight in the Desert" came out?
The most ironic part: Stuart includes an "Update" crediting prediction of the Saudi plummet to Simmons all the way back in 2003! So... given that the plummet has failed to materialize, we are now going on 5 fucking years of Simmons prattling on about the Saudi's going over a cliff any day now. And it still hasn't happened! (Let's all pray that the Saudi's don't start raising production any time soon. I don't think any of us wants to contemplate the horrible tsunami of mockery and ridicule that would unleash.)
[Note: Two posts today, folks. Don't miss #312 below. It's even better than this one. Oh... and don't forget to push the Digg button!]