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The Ghawar Oil Field: How Much Is Left?
[Analysis] Decline of the world셲 largest reserve could cripple the global economy
David S. Elliott (de2797)     Print Article 
Published 2007-02-14 17:18 (KST)   
Back in 2001, before the issue of energy scarcity ever entered my mind, I read a chilling online article called "Ghawar Is Dying" that bluntly speculated about the massive global upheavals modern industrial society would suffer if the largest oil field in Saudi Arabia were indeed running dry.

The article represented an eye-opening, paradigm-changing revelation for me, as I began to understand how very fragile the way of life that millions of people take for granted actually is. If access to abundant amounts of cheap oil were suddenly cut off, virtually every person living in the developed world would experience a precipitous drop in their standard of living, as most of the available creature comforts would disappear like a puff of smoke. After copiously researching the topic, discussions with friends and acquaintances became more and more strained as I realized that not only were they were just as clueless as I had been, but no one wanted to even contemplate the possibility of a decidedly grimmer future.

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For those who don't know much about Ghawar, it is by far the largest conventional oil field in the world, measuring an estimated 175 miles by 20 miles (280km by 30 km). Currently, the huge field is said to produce between 4.5 and 5 million barrels of oil per day by outside observers, which is over 6 percent of global production. The officially stated maximum sustained crude production capacity is 8.5 million barrels per day, though actual output is a closely-guarded state secret. Thus far, approximately 60 billion barrels have been pumped out of Ghawar since production began back in 1951.

Noting that no oil fields approaching the size and capacity of Ghawar have been discovered since, noted energy analyst Jack Schaefer said in a recent online column, "The importance of Ghawar and other older giant fields to global oil production cannot be overstated." Ghawar's total proven reserves, or recoverable oil still left in the ground, have been pegged at just over 70 billion barrels by the Saudi Aramco, the nationalized oil company which is the largest of its type in the world.

The word "recoverable" is particularly important, as the gross amount of oil in the ground is less significant than the amount that can easily be harvested at a given level of extractive technology. While modern techniques can certainly boost the amount of oil that can be extracted per oil field, the question of how expensive the operation turns out to be remains extremely pertinent. Once oil extraction becomes too difficult, and therefore expensive, it becomes economically infeasible to attempt to remove the remaining supply.

In recent years, a number of prominent oil industry insiders have raised pointed questions about the stated proven reserves still remaining in Ghawar. Matthew Simmons, one of the world's leading energy experts, has very publicly declared that production from the huge oil field -- and Saudi Arabia as a whole -- has reached its highest peak and will likely decline in the coming years. He forcefully argues this point of view in his best-selling book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.

Simmons is joined in his pessimistic stance regarding the global oil supply by other informed figures, such as well-known geologists Kenneth Deffeyes, author of Beyond Oil: The View from Hubbert's Peak, and Colin Campbell, who penned The Coming Oil Crisis and The End of Cheap Oil.

In addition, noted energy commentator James Howard Kunstler has continued to sound the alarm about what he views as an unsustainable American lifestyle. The suburbs draw particular ire from Kunstler, and he details his prediction of its coming collapse due to energy scarcity in his 2005 book, The Long Emergency: Surviving the End of the Oil Age, Climate Change, and Other Converging Catastrophes.

The namesake for Deffreyes' book, M. King Hubbert first promulgated the theory that would become known as "Peak Oil." Hubbert asserted that the graphical depiction of an oil field's production resembled a bell curve, meaning that once the point of peak production was reached, easily obtainable supplies would likely rapidly decline. Hubbert accurately forecast that production in the United States would peak in the late 1960's to early 1970's.

This prognosticated decline in U.S. oil production is no longer a matter of debate, but the amount of proven reserves in Saudi Arabia and some other Persian Gulf countries certainly is. In particular, industry observers have noted that reported reserves have, in many cases, remained the same over long periods of time although significant amounts of oil continue to be harvested. For example, Abu Dhabi, one of the United Arab Emirates, claimed reserves of 92.3 billion barrels from 1988 to 2004. However, during that time period approximately 14 billion barrels were extracted.

According to Schaefer,
"The 'official' reserve estimates are reported by government-owned oil companies and are often bloated to suit political and geopolitical interests. Fact is, many OPEC governments see their respective country's oil reserves as more political than geological. And they use the numbers as a way to add to the value of their 'stock' in the geopolitical market.

"No one's sure exactly how much more crude OPEC's oil fields still contain. But there's strong evidence to suggest the official oil reserve numbers put out by OPEC governments have been fudged on purpose... Back in 1989, Saudi Arabia claimed to be sitting on a total of 170 billion barrels of oil. But only a year later -- without the discovery of any major new oil fields -- the official reserve estimate somehow grew 51.2 percent to 257 billion barrels. Unbelievable indeed. One has to wonder exactly how any country increases its oil reserves by 87 billion barrels without finding any major new fields. In fact, there's no way they could."
Saudi Arabia comes under particular scrutiny because of its importance. It has long held the mantle as the world's largest producer of oil, and has acted as a "swing producer," increasing and reducing oil extraction rates to balance to the worldwide market in concert with the other nations in the Organization of Petroleum Exporting Countries (OPEC).

Not surprisingly, there was widespread concern -- even alarm -- over a 2005 report by a major bank which indicated that Ghawar had peaked. Analyst Don Coxe, working for the Bank of Montreal, became the first representative of a major financial institution to state unequivocally his belief that Ghawar was in irreversible decline. The Canadian bank analyst did not mince words: "The kingdom's decline rate will be among the world's fastest as this decade wanes... Most importantly, Hubbert's Peak must have arrived for Gharwar, the world's biggest oilfield."

Part of the "recoverable" oil equation concerns the methods used to increase an oil field's production. One of the most common ways of doing so is by injecting massive amounts of water, which has the effect of forcing deep-lying oil deposits to the surface where they can be harvested.

It is not a particularly good sign when a substantial amount of water is being used to "goose" production in a particular field. With consistent use of this technique, the volume of water that comes out along with the oil increases, while the amount of oil correspondingly decreases. Eventually, the yield contains mostly water, at which point the oil field is no longer worth operating.

Thus, it is indeed disquieting to note that the volume of water used to obtain Ghawar's oil has been steadily increasing. In fact, on a daily basis, an astounding 7 million barrels of seawater is being injected into the old oil reservoir to increase the oil flow. According to industry experts a few months ago Ghawar was producing 55 percent water -- in other words, more than half of the fluid brought to the surface was not oil.

In fact, a number of signs clearly indicate that Ghawar is in decline. Back in April 2006, a Saudi Aramco spokesman admitted that its mature fields are now declining at a rate of 8 percent per year. This, of course, implies that Ghawar may have peaked. The spokesman went on to say that measures were being taken to offset the decline, but that the only true solution to declining oil supplies is to locate new fields, and it is beyond debate that discoveries have not kept pace with growing global demand. Roughly 80 percent of oil being produced today is from fields discovered before 1973. Indeed, the discovery rate of multi-billion barrel fields has been declining since the 1940's; that of giant (500-million barrel) fields since the 1960's.

So, if Ghawar is confirmed to be in decline, it likely means that the entire world is as well. Of the four oil "super-giant" oil fields, three are officially in decline: Mexico's Cantarell, Russia's Samotlor, and Kuwait's Burgan. Though Ghawar has not "officially" been so declared, the implications of the facts noted above are clear.

The question of whether Ghawar's production is in permanent wane is of vital importance for the global industrial society, yet it has never been broached in a serious way by the mainstream media. To me, it is a very ominous development when such an issue can get shunted to the side, while useless celebrity gossip gets top the billing.

As Chip Haynes, the author of the first noted article, so eloquently puts it:
"So is the Ghawar dying? Does it matter? There may come a time when all the SUVs in Los Angeles will roll to a tank-dry halt. After the riots and the wars, after the yelling and screaming and dying, what's left of humanity (if we have any humanity left) will stand up, dust itself off and get on with Life. The Ghawar, virtually unknown today, will be all but forgotten by then. The troubles of Saudi Arabia and the Middle East will cease to be a common feature of the nightly news, as they would no longer have anything to offer the West -- nothing left to fight over. Just footnotes in a history book."
©2007 OhmyNews
Other articles by reporter David S. Elliott

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