[Peakoil] Peak Oil: The Saudi Oil Problem, by Tam Hunt

[Antony Barry]

Tam Hunt is an attorney specializing in renewable energy law. He is the owner of Community Renewable Solutions LLC, a consulting firm based in Santa Barbara, California.

Tam recently offered another informative essay on the reality of Peak Oil, touching on the too-infrequently discussed topic of net oil exports - specifically those from Saudi Arabia.

I first mentioned this topic here, and followed up with a two-part series on the subject (here and here). Tam's recent article: "The Saudi Oil Problem" is a terrific, informative, and clearly-explained addition to this overlooked subject. More information is always a good thing, and Tam offers us all a typically well-written account.

I'm delighted to share it here - it's a great read. My thanks to Tam for giving me permission to post it. Enjoy!

We're worried about economic growth, or the lack thereof, presidential elections, and why Europe can't get its act together. But the big daddy of issues is global net oil exports.

Saudi Arabia is once again the biggest producer of oil in the world, surpassing Russia to regain its title. Saudi Arabia also happens to be one of the most repressive and undemocratic regimes in the world. The Economist magazine ranked Saudi Arabia 161st out of 167 countries in its most recent Democracy Index.

The Saudis have massive economic and demographic problems to deal with, including a pending peak and rapid decline in oil exports. You heard right: Saudi Arabia, the world's largest producer of oil, is facing a peak in its oil exports and a rapid decline thereafter.

There are solutions, however, to these very large problems, which I'll discuss further below.

Saudi Arabia's national oil company, Saudi Aramco, pumped about 11.5 million barrels per day for the last year, up from about 9.5 million in early 2009. The Saudis are pumping more oil now than they have in decades, along with the rest of OPEC, which is at a 23-year high for combined oil production.

Russia held the top spot for oil production for a couple of years, but Saudi Arabia has come roaring back since 2010. The U.S. is a distant third place with about 6 million barrels per day.

Net oil exports, are, however, a very different picture. The U.S. is famously the world's biggest importer of oil. While our production of oil has taken an unusual upward tick in the last couple of years, spurred by record high prices, and our consumption of oil has declined even further due to increased energy efficiency, conservation and a still-struggling economy, we still import about half of the oil we consume: a massive 9 million barrels of oil per day.

Saudi Arabia exports about 8 million barrels per day ("mbpd" from now on), with Russia not too far behind at about 7 mbpd.

So far, this is all fairly familiar data. However, what is not well known is the degree to which Saudi Arabia's massive oil exports are threatened by its demographics and a probable decline in its aging supergiant oil fields.

A new report from the U.K."s Chatham House (PDF) examines this problem in detail. They conclude that Saudi Arabia's oil exports will peak around 2020 and, under current policies, decline to zero by 2038. You read that right: decline to zero. This decline will occur due to the dramatic growth in consumption by Saudi Arabia's rapidly growing population and increases in per capita energy consumption. Saudi domestic consumption of oil is growing at about 7 percent per year, which leads to a doubling of consumption in just ten years.
Figure 1. Saudi Arabia's oil balance under "business as usual" projections ...


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