With a quarter of the world's proven oil reserves and some of its lowest production costs, Saudi Arabia produces over 4 gigabarrels (600 million tons) of oil per year (17 tons per second) and is likely to remain the world's largest oil exporter for the foreseeable future.[citation needed]However, there are serious political risks involved in Saudi Arabian domination of the world oil market.[citation needed]In spite of recent increases in oil income, Saudi Arabia faces serious long-term challenges, including rates of unemployment of at least 13 percent, one of the world's fastest population growth rates (its population grew sixfold since 1960), and the need for political and economic reforms [1].
According to the Oil and Gas Journal[citation needed], Saudi Arabia reports it has 262 gigabarrels of proven oil reserves (65 years of future production), around a quarter of proven, conventional world oil reserves[citation needed]. Although Saudi Arabia has around 80 oil and gas fields, more than half of its oil reserves are contained in only eight fields, and more than half its production comes from one field, the Ghawar field.[citation needed]
One challenge for the Saudis in maintaining or increasing production is that their existing fields sustain 5-12 percent annual decline rates, meaning that the country needs new capacity each year to compensate.[citation needed] The challenge is that the Ghawar field, found in 1948, has produced about half its total reserves, and is starting to run into production problems — notably, there are rumors that it is now producing more water than oil. Other Saudi fields are not only smaller, but more difficult to produce.[citation needed] Historically, when Saudi Arabia has run into production problems in other fields, it has simply shut them in and stepped up production in Ghawar, but if Ghawar runs into problems that no longer will be possible.[citation needed]
Since Saudi Arabia is the world's largest producer of oil, their reserves are analyzed very closely and estimates vary on the amount of economically recoverable oil in Saudia Arabia.[citation needed] The raw data are not available to outside scrutiny. The International Energy Agency has predicted that Saudi oil output will double during the next two decades, projecting production of 7 gigabarrels per year in 2020, although this seems unlikely, if only for political reasons.[citation needed]
A dissenting opinion regarding Saudi oil reserves came from Matthew Simmons who claimed in his 2005 book "Twilight in the Desert" that Saudi Arabia's oil production is declining, and that it will not be able to produce more than current levels — about 4 gigabarrels per year [2]. In addition to his belief that the Saudi fields have hit their peak, Simmons also argues that the Saudis may have irretrievably damaged their large oil fields by overpumping salt water into the fields in an effort to maintain the fields' pressure and thus make the oil easier to extract.[citation needed] Simmons interpretation of normal oilfield practice into a future crisis has been refuted by reservoir engineers at CERI.[3]
Since 1982 the Saudis have withheld their well data and any detailed data on their reserves, giving outside experts no way to verify the overall size of Saudi reserves and output.[citation needed] However, experts question the Saudi claim that recent declines in production are due to lack of demand (which no other producer has experienced), and pointed to the fact that the number of drilling rigs in Saudi Arabia has tripled with no comparable increase in production as similar to what happened in Texas when US production peaked and started to decline in the 1970s.[citation needed] This could mean that many Saudi oil wells have peaked and have begun the decline toward the end of their economic usefulness.[citation needed] Only with verifiable data can production and reserves increases or declines be demonstrated.[citation needed] According to the U.S. Energy Information Agency, Saudi oil production declined about 8% during 2006 to 8.75 million barrels per day in December.[4](wikipedia)
According to the Oil and Gas Journal[citation needed], Saudi Arabia reports it has 262 gigabarrels of proven oil reserves (65 years of future production), around a quarter of proven, conventional world oil reserves[citation needed]. Although Saudi Arabia has around 80 oil and gas fields, more than half of its oil reserves are contained in only eight fields, and more than half its production comes from one field, the Ghawar field.[citation needed]
One challenge for the Saudis in maintaining or increasing production is that their existing fields sustain 5-12 percent annual decline rates, meaning that the country needs new capacity each year to compensate.[citation needed] The challenge is that the Ghawar field, found in 1948, has produced about half its total reserves, and is starting to run into production problems — notably, there are rumors that it is now producing more water than oil. Other Saudi fields are not only smaller, but more difficult to produce.[citation needed] Historically, when Saudi Arabia has run into production problems in other fields, it has simply shut them in and stepped up production in Ghawar, but if Ghawar runs into problems that no longer will be possible.[citation needed]
Since Saudi Arabia is the world's largest producer of oil, their reserves are analyzed very closely and estimates vary on the amount of economically recoverable oil in Saudia Arabia.[citation needed] The raw data are not available to outside scrutiny. The International Energy Agency has predicted that Saudi oil output will double during the next two decades, projecting production of 7 gigabarrels per year in 2020, although this seems unlikely, if only for political reasons.[citation needed]
A dissenting opinion regarding Saudi oil reserves came from Matthew Simmons who claimed in his 2005 book "Twilight in the Desert" that Saudi Arabia's oil production is declining, and that it will not be able to produce more than current levels — about 4 gigabarrels per year [2]. In addition to his belief that the Saudi fields have hit their peak, Simmons also argues that the Saudis may have irretrievably damaged their large oil fields by overpumping salt water into the fields in an effort to maintain the fields' pressure and thus make the oil easier to extract.[citation needed] Simmons interpretation of normal oilfield practice into a future crisis has been refuted by reservoir engineers at CERI.[3]
Since 1982 the Saudis have withheld their well data and any detailed data on their reserves, giving outside experts no way to verify the overall size of Saudi reserves and output.[citation needed] However, experts question the Saudi claim that recent declines in production are due to lack of demand (which no other producer has experienced), and pointed to the fact that the number of drilling rigs in Saudi Arabia has tripled with no comparable increase in production as similar to what happened in Texas when US production peaked and started to decline in the 1970s.[citation needed] This could mean that many Saudi oil wells have peaked and have begun the decline toward the end of their economic usefulness.[citation needed] Only with verifiable data can production and reserves increases or declines be demonstrated.[citation needed] According to the U.S. Energy Information Agency, Saudi oil production declined about 8% during 2006 to 8.75 million barrels per day in December.[4](wikipedia)
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