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Ali al-Naimi...need I really say more?
Posted by Prof. Goose on September 27, 2005 - 6:35pm
http://quote.bloomberg.com/apps/news?pid=10000006&sid=afVg.BEwF2Jw&refer=home
Discuss. (and thanks to the many who sent this to us...) DuncanK says it all right here.
Saudi Arabia, the world's largest oil producer, will "soon" almost double its proven reserve base, adding 200 billion barrels to the current estimate of 264 billion, said the nation's oil minister, Ali al-Naimi....."There will be plenty of oil available to meet future demand," al-Naimi said today in Johannesburg. Prices are high now because "the petroleum industry faces infrastructure constraints and bottlenecks that are causing market volatility and restricting its ability to bring oil from the ground to the consumer."
Time history of claimed reserves for various OPEC countries. Data is from BP Statistical Energy Summary + al-Naimi's new claim.
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The question I'm wondering about is: what is the Saudi regime's exit plan? You can't tell whoppers about the most important commodity in the world on this scale for ever.
I don't like that logic wherever it appears.
For example, Stuart, I am beginning to wonder whether you might be engaging in some perverted activity in the privacy of your own home. Sure, you can deny it, but that's what all perverts do. If you don't want to be called a pervert, you can damn well let me install surveillance cameras in your home so I can monitor your activity 24-7. I think you're a pervert.
See how slick that works?
I mean, should we know about the state of food production in the world? The state or drinking water? The pollution levels in the air, soil and water?
But sadly, even in these domains we don't have all the information...
Required by who? Here's the question nobody is answering: What if the Saudis just say "No, we're not going to provide transparency. You're just going to have to trust us." What then? What's the "or else"?
Where's the burden of proof fall here, JD? On those here at TOD or on Saudi Arabia? Who made the claim and therefore has got to make their case?
My condo is for sale. I suppose I could increase its value if I told you that I've done some exploratory drilling in my living room that reveals that I'm sitting on 0.5 bbo. Suppose you doubted that. Well, I guess the burden on proof would fall on me to show you that I wasn't telling a whopper, wouldn't it? Of course, I've got no history of oil production in my house but then again Saudi Arabia has published no documented evidence that they've got more oil reserves than they have recently said either. Both claims (oil in my living room and Saudi reserves) are subject to outside objective inspection and verification. I suspect both claims have exactly the same validity as well.
Y'all can have access to it if you keep me in power.
ca·nard n. 1. An unfounded or false, deliberately misleading story.
Sorry Dave, I take the scientific approach. Nobody has conclusively proved anything either way about the Saudi reserves, so I remain an agnostic. Maybe they're lying, maybe they aren't. We don't have enough info to answer the question.
If you want to believe that the Saudis are lying, despite having zero evidence to back that up, be my guest. Just don't try to fraudulently pose as a scientist while doing so.
Without evidence one way or the other, the only thing we can do is create hypotheses.
One is that since the Saudi can't raise production to stabilize the market, they are upping their theorical reserves in the hope of reassuring people and calming things a bit. Kinda like saying: "Oh, you want something now? Don't worry, you'll have something good later. But for now, just trust us."
Maybe that's what's happening, maybe not. I really wish we had a way to find out, though.
The scientific approach, OK. let's talk about that. I will spend some time on this since its important. Science involves radical claims sometimes (e.g. Plate Tectonics in the middle 20th c.) but such claims also require some initial evidence and empirical verification (via correct predictions - such claims are falsifiable). Here we get into an interesting situation. Suppose a crack (not Cocaine) team of petroleum geologists got to examine the Saudi data and fields. Suppose, based on their inspection, that it was plausible that their new reserve numbers were true. I think that would be the best we could do -- given the uncertainty -- and I would provisionally accept their claims pending empirical verification (actual production) down the line. The term "agnostic" would be beside the point, wouldn't it?
On the other hand, suppose I am told nothing and can not adjudge plausibility at all. Then I can say I have 0.5 bbo URR in my living room -- well, I won't reveal the real numbers -- and you're just gonna have to believe me or not, huh? I've got the stuff, wanna invest?
While it might be unscientific to claim the Saudi's are lying with only circumstantial evidence, holding a belief that they probably are would not be unscientific at all. Occam's razor and all that.
To fail to hold the Saudi's up to skeptical challenge, in the absense of evidence to support their claim, would be utterly unscientific.
--J
Here is a case where we would all be very happy to see data supporting these claims.
Is it possible that real data will come out?
http://www.resourceinvestor.com/pebble.asp?relid=12906
To put 16 billion in perspective, there are well over 100 billion in new oil sands projects in Alberta alone underway, right now, and tens of billions more on the drawing boards.
Drill down, pardon the pun, a little deeper: one simple, little project that will net in its first phase 110,000 bbl/day has a price tag of $6.8 billion CAD.
All that for a mere 110k bbl/day ... now tell me with a straight face that the Saudis can afford a simple, little, 16B$ refinery project, whether they have more oil, or less oil, than they said they had last year...
www.welovethesaudioilminister.com.
Sorry, repeated from another thread.
http://www.welovetheiraqiinformationminister.com/
P.S. Pinnochio was suppose to make the announcement of the new reserves but there were severe nose issues.
There is no "proof" when you are trying to estimate the situation under the ground in another country that appears to be being deliberately deceptive and won't give you access to their data. There is inference, there are judgement calls, there is evidence. "Proof" will only come when we have an audit, or when their production collapses. Since the future of civilization is at stake, we all have to make our best judgements in the meantime.
But Twilight in the Desert sure makes a pretty convincing case to me. When Mr al-Naimi says that much of the kingdom is unexplored, we can refer to Chapter 10, where Simmons discusses and references all the extensive exploration efforts described in Saudi Aramco technical papers suggesting that there is very little promising exploration left to do in Saudi Arabia.
When Mr al-Naimi says that there are 460 billion barrels of oil left, and knowing that they've produced 110 billion barrels, we can refer to Appendix C, where it is documented that when the American companies who owned Aramco left in 1979, they estimated original oil in place at 530 billion barrels. So Mr al-Naimi is now claiming we are going to have a 107.5% recovery rate of the oil in the ground based on the last estimate of OOIP by anyone who faced short term consequences for lying - there's been hardly any discovery of new fields since 1979. What is he proposing to do - strip mine his oil fields?
Consider this thought experiment: The Saudi claims are false, and the reserves of all conutries are essentially identical to what we thought they were before this news broke. A band of terrorists manages to completely cripple the Saudi oil fields. (How? Doesn't matter--make up your own science fictional scenario.) The price of oil would hit low earth orbit in hours.
We have a system that's a series of bottlenecks (and potential bottlenecks), like a half-dozen or a dozen valves one after the other in a pipe. Currently, most of the valves are turned down far enough that we're getting just enough oil through to keep the markets from going nuts. Suddenly discovering that there's way more oil that can eventually be pumped into the far end of the pipe doesn't improve the rate at which it can come out the near end. The only way to do that is to have enough oil entering at the far end and to open up all the valves at least a little.
I'm skeptical about the Saudi claims, but I would love to be proved wrong.
Ahhh, man, I thought they were good jokes. Anyway, suppose I claim you are a Newt, which is But you think you are not a Newt -- though it's looking like you are -- but anyway, is the burden of proof on me to show that you are indeed a Newt or on you to demonstrate to me that you're not?
Gosh I don't even know I exist and I'm not the creature of some sophisticated matrix.
Your scientific approach is really helpful, but science also postultes that anything that is not proven is not considered true. Do aliens exist? Possibly. But until it's proven they don't. In the grey area of what is unproven which commands out of science life you just express opinions and make bets.
I think we are all betting on that he is lying. And here is a simple reason: before the 70-s saudi oil and exploration was handled by american companies. If there were undiscovered fields of that scale the chances they were missed are 1 to zillion. And for the existing discoveries we have the official figures. So either way they are lying (at least with 99% confidence) - which bet would you take? On the previous lie or on the newer one?
At least my common sense tells me to disregard both.
http://www.intertanko.com/tankernews/artikkel.asp?id=9552
The oil is there. You personally may want to pretend that heavy oil is not oil, but that's not going to stop China and others from refining and using it.
Is that an article of faith which you have to agree with in order to be a real peak oiler?
I don't agree with it. I think that "the Saudis do nothing but lie" is an emotional, extremist position which is not backed up by the facts.
Even so, if those reserves are sour nasty crap oil that costs $150/bbl to refine (after refitting our refinery capacity to adapt to it, etc.), what the hell good does it do anyway?
If the Saudis had the light sweet crude to do so, it would be rational of them to put it to market and make a ridiculous amount of money, not sit on it and wait for demand to be destroyed...wouldn't it?
If SA stopped pumping the world would know and complain about the obvious strategy. However, if they did have more light sweet than they're admitting, and just not pumping out the sweet as quick as possible, that would be a nice increasing side stream.
However, the only way that this is really good long term advice is if one believes that oil is semi-easily replaceable once it becomes more expensive. And the result would only be feasible in a culture where one was very forward looking instead of trying to grab as much as possible as soon as possible. Most people alive today seem to belong in that crowd.
To put it another way, what do the Saudi's gain by claiming to have a new, extra 200 bbl? (Not challenging. Just clueless and interested in the speculations of those better informed).
-john (WTHFDIK ... I believed Clinton)
Methinks they are acting on behest of their handlers in DC, spinning furiously that no oil crunch is looming.
$4 a gallon gas would be a political nightmare for Dubya.
My guess is that there are two motives here.
The first is that if they admit that the age of oil is ending, that they fear political instability. Namely a revolution, coup or something else.
Secondly they fear demand destruction, and the search for alternative fuels. This is probably secondary however.
Doesn't it strike you that Al-Naimi's claim is more in the realm of a Biblical "revelation" than a reasonably established scientific estimate? Where's the data, the reports? Saudi engineers? C'mon, Halfin, you're not buying this are you?
Don't get me wrong: my love for the Saudi Oil Minister is steadfast -- though there does seems to be a psychological overcompensation problem due to the fact that OPEC is becoming more and more irrelevant to our current problems.
John: Hello Ali, how are you today?
Ali: Ah John, my friend! How is your beautiful wife and lovely children this day?
John: Oh, good thanks, Ali. But they want more bread. My breadmaker's going flat out!
Ali: Ah, bread, yes, the food of life!
John: yes, but I need some more flour. I used 10 bags yesterday! Oh, I see you only have 9 bags on your shelf!
Ali: Yes, but I have many more lovely bags out the back.
John: Do you? Can I see them?
Ali: Oh no John, I cannot let just anybody see my great piles of flour! Trust me, my back room is full to brimming with lovely white flour for you.
John: Really?
Ali: Yes, but you know what your problem is John? You only have one breadmaker!
John: But I can't afford to buy another one.
Ali: Ah but if you buy another breadmaker, tomorrow I will have 15 bags of lovely flour for you.
John: Oh. Maybe I'll just go down to Miguel's and buy some of that wholemeal stuff and make a bio-loaf by hand.
Ali. Oh no, John! You must not be doing this!
John: Why? It tastes much better and it's better for me. It doesn't give me as much wind.
Ali: Ah, but think of your little Susan, isn't she allergic to that disgusting wholemeal stuff? And little Johnny only likes the white bread, you know he won't eat that brown barbage.
John: I guess you're right, Ali.
Ali: Do yourself a favour John. Go and buy that extra breadmaker and I'll give you all the flour you want!
John. Oh well, I guess there were a few dollars left on one of credit cards....
- Stop talking this vegetarian bulshit! We will never run out of meat! I have 264 mammoths in my backyard and if I look harder I will find 200 more!
:)
we know he's been promising to boost production to 11 mbpd to calm oil prices for years now, but most everybody seems to think saudi's still stuck at 9.5 mbpd.
he's been making wild promises to deliver 12 or 15 mbpd, in the face of widespread speculation that saudi has already peaked in light sweet production, and has sour lying around that they cant sell because of limited refinery capability for heavy sour stuff.
and now, square in the face of emerging evidence of the worst damage ever to usa oil and natural gas production machinery, naimi supersizes his reserves....
...this amid already rampant speculation about usa govt manipulation of oil and gas markets to stave off panic....
then this, post-katrina, pre-rita:
well, that'd kind of fit in with cheney's plan to convert to hydrogen, i guess.what's a poor boy to think?
Scene 5: Burn the witch!
For those that make great claims beware the sophisticated methodological falsificationist (for which I am one). Basically, unless there is some evidence of a grand claim that replaces a prior claim (270 to voila! - 470!), the prior known should not be replaced. Please see this site and I highly recommend his work.
www.lse.ac.uk/resources/LSEHistory/lakatos.htm
(yeah, my students don't like it either. they'd rather I make fun of Kuhn in another way...something about my protective belt and paradigm shifts...)
Have a good one living in New Zealand, I wish I was there....
New Zealand is a frontier with pretensions, and still figuring out its own identity. It's very new--no people at all (and no land mammals) until the Maori landed here in the middle ages. It's a little socialist hotbed, with government healthcare for all, heavily subsidized universities, and high taxes to pay for it all.
How will New Zealand do when oil peaks? Electricity is well placed, say 66% hyrdro and 9% geothermal, adamantly 0% nuclear. We had a great gas field, but used it up converting it to either methanol or gasoline, whichever was more profitable at the moment. We do have coal and trees, with low population density. The cities, especially Auckland, will be a mess. The country towns have a good shot. You should come and visit while the planes are still flying.
Is the Saudi oil minister lying? Who the hell knows...He may truly believe what he is saying...that doesn't make what he is saying true. There a nice comment in the LA Times this morningabout how belief and science sometimes get in the way of eachother.
To make an informed decision, we need good information. Some of us feel, that given what is out there right now, it is a pretty safe bet to be somewhat pessimistic in the medium term (15 years or so) to be sure. Others are much more pessimistic than that (i.e., peak is now). But, there is a better than good chance that we are wrong (well actually in the interest of disclosure I don't believe that; but my reading of other's posts here suggests that they do believe that, who I am to say they are wrong)
Prof. Goose, your a social scientist right? What are your thoughts on this front. I think JD's "agnosticism" comes with a pair of blinders, because the (mis)information coming from the Middle East is more complex than just oil reserves (though that issue drives many of these other ones).
The misallocation of wealth in that country makes it ripe for a major revolution if their citizens begin to believe their meal ticket is no better than Monopoly money. Hell, with 15 of the 19 Sept. 11th hijackers coming from Saudi Arabia, maybe the revolution's already begun?
What if old Ali is telling the truth??!! We are still screwed in the long term.
We can no longer even entertain a modicum of skepticism regarding the human contribution to global warming via the ever increasing burning of fossil fuels. If the Saudis do have another 200 bbl oil, so what??!! We have to stop burning fossil fuels post haste!!! Or should we just wait until global warming leads to the complete collapse of the human monocultural econiche? (If it is not already too late)
Seems to me, as far as policy considerations are concerned, we are stuck between the hammer of peak oil and the anvil of global warming. In either case, a radical and immediate move to reduce our use of fossil fuels -- across the board -- is in order.
Of course, you can be a cynic about it (as I believe Dick Cheney is): get what you can, as much as you can, for you and yours as fast as possible before it is too late, for a Hobbesian future awaits! Amass wealth, build a private army, and tell everyone else to go f*** themselves.
On a related note, did you catch the clip of Cheney being told to go f*ck himself?
It was brilliant...see for yourselves:
http://thinkprogress.org/2005/09/08/cheney-runs-into-trouble-with-the-locals/
Many people who have thought about this issue believe that the abrupt spate of late 1980s proven reserve increases had more to do with OPEC production quotas than with geology. I think that the near zero rates of proven reserve increases before and after that round of increases probably bears that out.
Certainly, the government of Saudi Arabia knows a hell of a lot more about oil exploration than I do. So who am I to question their remarks? On the other hand, how can a figure remain nearly steady for 15 years and then suddenly double? That just doesn't seem very likely. Halfin's right that URR would be expected to increase in light of higher prices, but would that increase happen all at once, and in such a huge amount? Given all this, I suspect that Naimi is just putting the statement out there for two reasons:
1) to calm the oil markets after prices kept rising even though he promised 19 times that Saudi Arabia would increase production, and
2) to take that big spotlight that's been shining on Matthew R. Simmons and move it anyplace else.
I can't prove this, but I can still suspect it.
* There are three relatively small areas not yet explored, a strip along Iraq, the deepwater Red Sea, and "the bottom end of the Empty Quarter." Could the 200 billion barrels have come from one of those places?
I think the real reason behind such pronouncements is that they feel they have lost their position as swing producer and being arab don't want to lose face especally to the infidel west.
As for Saudi Arabia losing face to the infidel west - not sure what you mean. Can you explain. SA seems to be a key ally and the government criticized for its closeness to the infidels. Being a swing producer and loss of power is however a good point and articles are starting to emerge questioning the relevance of OPEC and with SA central to the cartel, they may be feeling insecure -- this is something worth discussing.