So, Wikileaks has finally delivered some news you can use. A cable written by US diplomats in Riyadh towards the end of 2007 contains a clear and ‘insider’ forecast of Saudi peak production in the early 2020s. After meeting Sadad al-Husseini, former head of exploration and production for Saudi Aramco, the diplomats reported:

In a December 1 presentation at an Aramco Drilling Symposium, Abdallah al-Saif, current Aramco Senior Vice President for Exploration and Production, reported that Aramco has 716 billion barrels (bbls) of total reserves, of which 51 percent are recoverable. He then offered the promising forecast – based on historical trends – that in 20 years, Aramco will have over 900 billion barrels of total reserves, and future technology will allow for 70 percent recovery.

Al-Husseini disagrees with this analysis, as he believes that Aramco’s reserves are overstated by as much as 300 billion bbls of “speculative resources.” He instead focuses on original proven reserves, oil that has already been produced or which is available for exploitation based on current technology. All parties estimate this amount to be approximately 360 billion bbls. In al-Husseini’s view, once 50 percent depletion of original proven reserves has been reached and the 180 billion bbls threshold crossed, a slow but steady output decline will ensue and no amount of effort will be able to stop it. By al-Husseini’s calculations, approximately 116 billion barrels of oil have been produced by Saudi Arabia, meaning only 64 billion barrels remain before reaching this crucial point of inflection. At 12 million b/d production, this inflection point will arrive in 14 years. Thus, while Aramco will likely be able to surpass 12 million b/d in the next decade, soon after reaching that threshold the company will have to expend maximum effort to simply fend off impending output declines. Al-Husseini believes that what will result is a plateau in total output that will last approximately 15 years, followed by decreasing output.

So according to al-Husseini’s numbers, Saudi production will peak in the early-to-mid 2020s, probably at a level scarcely 2 million barrels per day higher than current output. But by then the loss of existing production to depletion means the world will need some 40-60 mb/d of new capacity just to stand still. If al-Husseini is right – and his overall message has been consistent for several years – he simply confirms what many have long suspected: Saudi Arabia is quite incapable of staving off the global peak or even quenching the oil price in the medium term.

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