Emissions

Saudi Aramco chief dismisses peak oil fears

14 November 2007 – The global oil industry should aim to produce at least 3 trillion bbl from conventional recoverable resources in known fields and discoveries over the next several decades, according to the head of Saudi Aramco.

Aramco Pres. and Chief Executive Abdallah Jum’ah said at the World Energy Congress in Rome that this production figure was achievable from proved reserves, growth in existing fields, and discoveries. Usual estimates of recoverable resources are about 1.7 trillion bbl.

Jum’ah said the world “seems to have over 3 trillion bbl of recoverable conventional and nonconventional liquid fuel resources if we opt for extra-conservative assumptions and about 6 trillion bbl if we adopt the target scenario.”

Research and development will be crucial for improved oil recovery, and more technological work needs to be done to boost economic efficiency and use of oil in an environmentally sensitive manner, he said. Oil recovery stands at an average of 35% of oil in place around the world. Around 1 trillion bbl of additional reserves from known fields could be produced with pioneering technology and aggressive targets. At the conservative end, at least 200 billion bbl could be produced from conventionally recoverable oil resources in known fields, he said.

Peak oil
Jum’ah said past theories of peaking oil production had failed as more reserves had been found over time, and evolving technology meant that companies had tapped fields previously thought to be unworkable.

“Based on total global reserves of both conventional and nonconventional oil and the world’s current demand for oil of some 86 million b/d, we still have almost a century’s worth of oil under the conservative scenario…and nearly 200 years’ worth under the target scenario,” he stressed.

He is confident that global reserves will be increased under accommodating policies, favorable economics, and sufficient investment in research and development.

Under Aramco’s analysis, the Middle East is expected to be the major source of future oil finds. “Depending on just how conservative their assumptions are, analysts believe there are between 250 billion and 1 trillion bbl of conventional oil reserves still waiting to be found. Again, I urge our scientists to accept the challenge of a trillion barrels in new discoveries,” he said.

Estimates of conventional oil in place around the world vary between 6 trillion bbl and 8 trillion bbl depending on whether figures are conservative or at the higher end of the spectrum.

Nonconventional oil
Nonconventional sources of oil, found mainly in Canada, Venezuela, and the US West, will become increasingly important. Nonproducing regions have a huge stake in the future of petroleum.

Jum’ah said a conservative estimate for nonconventional resources is 7 trillion bbl, and a target scenario is 8 trillion bbl or higher. “A key area of contention is oil shales, since the characteristics of their accumulations, especially the degrees of resource richness, vary so much and their development has been perennially impacted by overwhelming challenges involving technology, economics, water and land impacts, and environmental concerns.”

His analysis suggested that ultimate recovery from nonconventional resources could range from 1 trillion bbl to more than 2 trillion bbl, depending on whether the figure is a conservative or target one. There is great scope for improved recovery, Jum’ah stressed. “I believe that recovery rates for oil shale will fluctuate over time but that the world’s need for liquid fuel supplies over the very long term, coupled with continued advances in technology, mean oil shales will eventually be viable for future generations,” he said.

IOC, NOC relationships
National oil companies (NOCs) control 50% of the world’s proved conventional reserves. According to the International Energy Agency, international oil companies (IOCs) have rights to about 30% of global reserves.

In contrast, Jum’ah said, nonconventional oil reserves are shared by multinational firms. “NOCs are generally more focused on the discovery and recovery of conventional oil, which accounts for virtually all of their reserve bases, while IOCs are targeting nonconventional resources to a larger extent.” He called on IOCs, NOCs, service companies, technology developers, and research institutions to cooperate in research and development.

“There are huge uncertainties associated with biofuels,” Jum’ah added. It is “difficult to predict their contribution to the energy mix.”

Biofuels’ growth depends on government policies and incentives rather than market fundamentatals, he said, adding that some biofuels demand a choice of using crops for food or fuel.

Jum’ah recommended that energy efficiency and using technology to make fossil fuels more environmentally friendly were the best ways to cut environmental impact of energy usage and consumption.