King Abdullah of Saudi Arabia has reportedly called for a halt to exploring for more oil in the country that already claims the world’s largest deposits of crude. The Saudis claim to have recoverable resources of 262 billion barrels, a number that hasn’t really changed since oil production started nearly 70 years ago.
In a report from Emirates Business , the King told an audience of students,
“I will reveal to you something that will make you laugh…..I was heading a cabinet meeting and told them (Ministers) to pray to God the Almighty to give it a long life,” King Abdullah told the surprised students.
“They asked me what that was but I again asked them to pray to God…then I told them it was oil…I told them that I have ordered a halt to all oil explorations so part of this wealth is left for our sons and successors God willing.”
Depending on who you choose to believe, the Kingdom of Saudi Arabia is either running out of oil or is sitting on deposits far larger than 262 billion barrels. The Saudis have never allowed independent verification of the Kingdom’s reserves.
Some, such as Matthew Simmons, believe that the original-oil-in-place has been depleted and that the Saudis have not told the truth about the size of the country’s remaining reserves. The difficulty that the state oil company, Saudi Aramco, has had with some of its recent exploration activities gives some credence to this view.
Saudi Aramco officials, though, claim that the Kingdom sits on top of 722 billion barrels of original-oil-in-place. The country has produced 110 billion barrels since production began out of about 265 billion barrels of recoverable resource. Saudi Aramco wants to increase its estimate of total oil-in-place to 900 billion barrels by 2020 and to increase recovery rates from a current extraction rate of about 35% of original oil to 50%-70% in the country’s major fields.
The Organization of Arab Petroleum Exporting Countries, which includes Saudi Arabia, claims to have 2,700 billion barrels of total reserves. Using current technology, the countries could extract about 1,809 billion barrels, meeting the world’s demand for petroleum for the next 60 years.
If Saudi Arabia follows through with its moratorium on exploration, the price of a barrel of oil will undoubtedly rise. That may be the King’s goal. Who knows?
It is definitely in the Saudis best interests to assert that there are vast undiscovered deposits under all that sand and then to imply that technology will improve enough to get the black stuff out of the ground. The question is, without independent verification, is it in anyone else’s best interest to believe them?