A Credible Threat?

Average Saudi daily oil production (left scale), by month, from EIA, JODI, and IEA, together with Baker Hughes oil rig count (right scale). Jan 2000-present. Click to enlarge. Sources: IEA Oil Market Reports, EIA International Petroleum Monthly Table 1.1a, JODI, and Baker Hughes.

So I was awoken from my peak-oil slumber by this fairly extraordinary oped in the Washington Post. It consists of a series of threats by Nawaf Obaid, a "an adviser to the Saudi government", who is expressing opinions that are "his own and do not reflect official Saudi policy", but nonetheless speaks in short clear declarative sentences about what the Saudi government will do if the US withdraws from Iraq.

Some choice grafs:

Just a few months ago it was unthinkable that President Bush would prematurely withdraw a significant number of American troops from Iraq. But it seems possible today, and therefore the Saudi leadership is preparing to substantially revise its Iraq policy. Options now include providing Sunni military leaders (primarily ex-Baathist members of the former Iraqi officer corps, who make up the backbone of the insurgency) with the same types of assistance -- funding, arms and logistical support -- that Iran has been giving to Shiite armed groups for years.

Another possibility includes the establishment of new Sunni brigades to combat the Iranian-backed militias. Finally, Abdullah may decide to strangle Iranian funding of the militias through oil policy. If Saudi Arabia boosted production and cut the price of oil in half, the kingdom could still finance its current spending. But it would be devastating to Iran, which is facing economic difficulties even with today's high prices. The result would be to limit Tehran's ability to continue funneling hundreds of millions each year to Shiite militias in Iraq and elsewhere.

So, is this last threat credible? Well, I updated my graph of Saudi oil production and rig count, added the IEA estimates to those of EIA and JODI. The result is above, and detail showing the production slide this year more clearly is below. How many rigs is Obaid proposing that the Saudis now rent, I wonder?

Average Saudi daily oil production, by month, from EIA, JODI, and IEA. Jan 2004-present. Graph is not zero scaled. Click to enlarge. Sources: IEA Oil Market Reports, EIA International Petroleum Monthly Table 1.1a, JODI, and Baker Hughes.

So then we are left to judge whether this threat is more or less credible than the last:

To be sure, Saudi engagement in Iraq carries great risks -- it could spark a regional war. So be it: The consequences of inaction are far worse.
A shooting war between Saudi Arabia and Iran would certainly make for interesting times in the oil markets...

(FWIW, my guess is that the US won't withdraw from Iraq in an orderly way soon. The Bush administration doesn't want to, and it's in the best political interests of Democrats to make a public show of calling for withdrawal while privately making sure not to do anything that would force the administration to change it's politically disastrous course before the 2008 elections. So the whole mess will probably continue to snowball a while longer -- until something so bad happens to American troops that public revulsion for the war becomes uncontainable.)

You're fucking shitting me. Hahahahahaaa. How's Jim Morrison? I just happen to tune in right now and get the first post in? Too funny. Welcome back, buddy. I was getting tired. I can't do these graphs all myself, y'know.
What a nice way to welcome him and his efforts back.
Nate - are you up early, working late or travelling in europe?
i guess also a)
definitely not c)
I was waiting for him. It's obvious I love him more than anybody here. No?

You were just a little bit too slow. The Oil CEO is quick.

Welcome Back Plotter!

Welcome back, your graphs were your ticket back
Welcome back, to the same old site that you laughed about
Well the names have all changed since you hung around
But those dreams have remained and they're turned around
Who'd have thought they'd lead ya (Who'd have thought they'd lead ya)
Here where we need ya (Here where we need ya)
Yeah we tease him a lot cause we've got him on the spot, welcome back,
Welcome back, welcome back, welcome back.

Truly, welcome back Stuart.

PS: I apologize for little Arnold Horshack (you know which one he is) he can't help himself.
LMAO - oily as Horshack - that really is perfect.  Same for the theme song you chose to welcome back Mr. Plotter.
As you know, the best charts have got lots and lots of lines on em.  Khebab has learned this and now leads the way.

Just happened to be looking at North Sea rig count yesterday - was more than surprised at what this showed:

You know me, Cry Wolf, I love lines.
So what about Microhydro's lines? aaaaaaghhh!
Hello Euan,

Good question.

  1. Are they being retired for age, rust, safety reasons, and unsuitability for ultra-deep exploration?

  2. Or are they being moved to the Mideast to help ramp up E&P there?

  3. Or are they just being mothballed for lack of any decent drilling propects at $60-75/barrel--Yikes!

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?
Hello Bob, I find it amazing that you guys are still up - what's the time in Phx?

All the North Sea rigs are either semi-subs or jack ups - i.e. highly mobile.  During down times, they get stacked up in an area called the Morray Firth - just north of where I stay - and go rusty.  Then during boom times they come out of retirement.  What seems to have happened during this "mega-boom" is that rigs have come out of retirement and been moved else where (I'd guess Africa).  Simple case of companies drilling where exploration and production prospects are best.

I'll be writing a bit more on this next week.

Hello Euan,

Hard to sleep when the World appears to be going to Hell.  It is 4am here, but I am kinda of a night owl anyways, but heading for some shuteye shortly.  Looking forward to your future post.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

paint your wagon
They were moving else where in during the bust and as the boom started elsewhere and earlier than in the North Sea (start ups here are sluggish), they stayed away.

Also: Entry level costs are higher, safety compliances, new kit, zero emissions / spillage compliance etc means that if you loose two rigs, only one may come back.

It has been the same throughout each boom - bust cycle since 1986. After each bust, fewer rigs in operation.

Two of the Moray Firth rigs are heading off across the Atlantic to the US.
I have heard a couple of Gorrilla Heavy duty Jack ups are coming across to the North Sea.

Swings and roundabouts

But the general trend has been down for a few years now.

But, the high rig rates may now offset the high entry costs.

Trouble is, high rates can mean fewer wells per Exploration budget.

We will see.

I'm just saying. I kind of find it ironic. I'm the last person here who needs to ask permission for my behavior.

Stuart and I go way back. Way back before all of you.

I'll say what I want. I made my choice. 666.

MicroHydro's boring.

When this graph is compared with the one for the lower 48, which showed no pick up in production despite the increased rig count, it is difficult to argue that KSA is not at peak.  I guess it will take the next spike in price to convince most.  
With regard to the Saudi's plan to flood the oil market and thus deprive the Iranians of funds - what happens when they cannot supply the market and the Iranians oil revenues increase?
When this graph is compared with the one for the lower 48, which showed no pick up in production despite the increased rig count, it is difficult to argue that KSA is not at peak.

It may well be; But its also possible that SA wants to upgrade its idle capacity for hegemonic market purposes. For decades SA has had excess capacity for times of high demand that often were on hold, and its only recently that they have been unable to produce at will.
Why do you say that? You know nothing of 1973? Or you have some inside knowledge of some things the rest of us know nothing about?
Care to explain what happened in 1973 ?

Saudi produced 11% more in 1973 than it did in 1972 - pretty much the same increase as earlier years - ever wonder why the global hubbert slope is so smooth on the way up (to 1973) ?

it is difficult to argue that KSA is not at peak

Huh? No it's not. It's not difficult to argue that you are a crack addict. In fact the reason why nobody tries is because it is so easy.

Yeah, I'm real curious. What's your theory of the week? Go for it. Try something new. Cuz we're sick of hearing the same old shit. Thanks.

you're not talking about your old shit, aren't you?
I tend to agree. For years the Saudis have sought to maintain an excess production to preserve their position as swing producer. With the flat-line trend of the past year or so, it seems they may be eating into that excess and producting at nearly 100%. The exponential growth in rig count suggests they are trying to bring new production online before they start to see declines... Unfortunately, as the exponential shape suggests, they are having some difficulty.

True, it's possible this is to start some price war with Iran, or get a stockpile of funding to finance support of a particular faction in Iraq, but more likely some people in the kingdom of Saud have noticed a concerning trend....

Either way, we'll know by summer...

So, it wasn't tod pleadings, but an oped in the dc post that was irrisistable... may we infer you've been doing something useful in the corridors of power to save the free world as we know it?  Was it your manipulations that gave the dems the gavel(s)? I'll take silence for modesty.
Welcome back.  

Interesting to see how much good 3x rigs are doing the saudis.

Referring to the article, if sunnis want the us to stay, they might show a sign.  So far it looks very much as if they prefer a view of our backsides.

RE: Jkissing's comment about the lack of results following the increase in rigs. Perhaps this is a naive question. . . but here goes anyway.  Is there a time lag here? The rig count starts to go vertical in about January 2005. Assuming that some of these rigs did strike oil, how long would it usually take for newly-discovered oil to come on stream and show up in the statistics?
We don't know. There obviously must be a lag. But nobody has tracked this kind of thing. Extremely hard to do. We're trying. More questions?
Yes, another question.

When was the Peak of Light Sweet Crude(PLSC)?

My feeling is that its' importance is underestimated. After this EROEI is definitely going down accros the board. Maybe we should work with PLSC as being the peak, instead of All Liquids, or even C + C.

Added benefit would be there is no need anymore for "discussions" between Westexas and Hothgor/Hutter.

Well. We don't know the answer to these questions. There has been no peak.

There has been no peak of LSC. Deffeyes has been very wrong for the last five years. Very wrong.

I have a hard time with it. I like to be right. I'll say 87 before 79. Peakist/Hubbertians are saying 85 no matter what.

Sorry, I have to scale/interperet for C+C. But we can ride Deffeyes' numbers.

I'll pursue this again in the morning.

Deffeyes has been very wrong for the last five years. Very wrong.

Deffeyes has always predicted a crude + condensate peak for a time period between 2004 and 2008, most likely in late 2005, and (EIA) crude + condensate production so far has consistently been below the 12/05 number.

He observed,  a few year ago, that the world may have peaked in 2000, earlier than his predicted range, but that was not a prediction.

 Thanks for saying this (once again).
Amphora - rigs are used for 4 principal activities:

  1.  Drilling production wells on existing fields
  2.  Drilling water / gas injection wells on existing fields
  3.  Well workovers - cleaning gunk out of existing wells to improve flow rates
  4.  Exploration wells.

My guess would be most of the rigs will be used for 1, 2 and 3.  So your question really is how long to drill and hook up new development wells - ball park figure of three months.

If they make a big new discovery - your talking 5+ years to bring it on.

I appears that about 15 rigs were enough for #3 for KSA, with capacity for some #1 & #2.  We have FAR more rigs working for Aramco today. Few, if any, of the new rigs are doing workovers (yes more are done as the price rises, but not THAT many more).

So we are in-fill drilling and developing mature fields at a dramatic rate or new/immature fields (Manifa among them) are being developed.

Half of the US GoM offshore rigs (almost 90) have been leased by Aramco and are being towed to the "other Gulf" (from memory).  I do not see those rigs in the graph above (yet).

I suspect that KSA is looking for new prospects (including NG) offshore) and developing what is known.  Still, the rig #s are outstanding given that most KDA production is onshore.

Best Hopes,


Yes, there's a lag.  The oil industry types at PO.com said the lag was typically three years, I think.  Or something like that.  
Good. Keep doing that. It works good.
US e&p's typically take 20 days spud to spud when drilling around 5-7000 ft deep.  Infill drilling requires minimum new pipelines, etc, particularly when volume is not increasing much, if any.  So, in an assembly type operation, new wells could come on line every 20 days for every rig drilling.  FOr sa, they have been adding rigs very steadily, so the new rigs should be adding to production almost as soon as they arrive on site.  In some cases in the us permits are required, presumably not necessary in sa.

A new discovery is completely different, requiring new infrastructure etc before the first well can come on line. However, once again aramco presumably does not need to wait for permits, so this type of delay probably does not occur there.  If on shore and not, say, deep in the rub-al-khali, I would guess a new discovery could begin producing within 3 years. Of course, rigs would not begin drilling in regions where the infrastructure is not yet in place; every available rig will be drilling for immediate production somewhere.  

With 3x rigs drilling and, apparently, declining production, one might conclude that new wells are producing less than 1/3 what they used to.  And, the situation may be worse - it used to be that a fraction (half?) were drilling for oil, others for ng and water, while with declining oil production one might assume that most new rigs are drilling for oil.  

All rather alarming, if true... perhaps there is some other explanation. In the absence of such, I will assume that sa will not be adding to world production when quotas come off.

There seems to be renewed interest in NG in KSA.  Statements about more coming on0line etc.

Perhaps field development somewhere requires large amounts of NG to be injected, or KSA needs more domestically (instead of buying NG from Qatar, etc.).


Just to clarify - the numbers above are strictly oil rigs.  BH also say there are 23 rigs drilling for NG in KSA, which is roughly double the counts through 2005.  That gives a total of 76 between oil and gas.  Schlumberger's count for the combined total is 84 in October.  Not sure the reason for the discrepancy, but it may be as simple as counting as of different dates in the month.  Schlumberger says that 74/84 are operating on land, while Baker Hughes says 69/76 are on land.  So if you are correct that there are 40 odd offshore rigs on the way to KSA from GoM, that is going to cause the counts to rise a lot higher yet.
Looks like blind panic to me.  Imagine hundreds of rigs drilling away through the endless sands...

Meanwhile we will see less production in our own gulf as more and more rigs are poached.

So, it wasn't tod pleadings, but an oped in the dc post that was irrisistable... may we infer you've been doing something useful in the corridors of power to save the free world as we know it?

:-)  I suppose it's fair I explain somewhat.  I've been a) earning a living, and b) working my way towards starting another company which may, I fondly hope, eventually help with the problem, albeit in an indirect way.  I also found after I came back from summer vacation that I just wasn't obsessed with the subject any more.  I kind of think I mostly understand the issues, my views on the subject have been pretty stable for 6-9 months, and each additional days reading and/or writing wasn't making much difference to my understanding (and therefore wasn't that compelling).  I kept meaning to come back and never getting to it....

So going forward, I'll probably post occasionally, but not with the frequency of before.

I probably speak for many in hoping that you find time to update your curves on occasion.  But, we realize that new companies can be absorbing, too.  GOod luck.

Stuart consider looking into the economics of peak oil. I've accepted that peak is either here or very close now the intresting question is how will the effects of peak oil unfold.

So far I've identified what I feel is one sure post peak event. The loss of asphalt for road construction. This is caused by two effects.

1.) More complex refineries able to upgrade a barrel to higher value products.
2.) Heavy oil refineries that use coking and thus have less residuals.
In general I feel the whole residual oil market bunker fuel asphalt etc will have see the a reduction. Remember that tar sands are really upgraded asphalt.

Just like for global warming we had to make predictions we need to find and show real effects of peak oil.
Then a MSM reporter can easily go to an oil company and ask why they are not making asphalt or bunker fuel ...

Thus although the production side of peak oil is I agree now a matter of watching the stats the response and effects are dynamic and worth understandng. History is unfolding right before our eyes in fact its the end of a age.

Welcome Back.

Trinidad and Venezula tar deposits can almost be used "as is" for roads (per native, in Trinidad the roads dept just scoops it up and then lays it down.  Takes longer to cure (up to a week in hot sun) but does fine after that.

Best Hopes for enduring bicycle paths,


Trinidad was according to my history reading the original source of asphalt. Also as a side note rock dust was also used as a binder early on I wonder if we won't go back to it  ? Maybe even microwave our roads to sinter them.

True you can but we are now upgrading these deposits not selling them as asphalt.
But watching the dynamics of this is whats interesting. Asphalt is a needed commodity but on the same hand its only useful if its cheap. Expensive asphalt is basically worthless.

That's what makes it interesting to watch.
It my big pick as the peak oil canary.

On top of this we can add in the major recession and housing bubble bust which mean local governments will be bleeding money over the next few years and I think you will see roads crumble much sooner than I predicted (2010-2015).
I think we are going to see a real downturn in miles of improved roads starting as early as 2008.

I have no idea where to get numbers for the EU  but it would be really nice to see if they are having road building problems.

If you drive through poor sections of town esp in northern climates you should watch the state of private parking lots
and see if they are allowed to degrade.

Care to discuss the relatively stable view on the subject you are coming to?

I also think I'm reaching this stage, I just find it interesting to follow how things are unfolding towards the viable alternatives. The other unknowns are related to how much our continuing complacency will cost us in the end.

It good to see you back again, as i speak for many! You post some very good stuff!

(FWIW, my guess is that the US won't withdraw from Iraq in an orderly way soon. The Bush administration doesn't want to, and it's in the best political interests of Democrats to make a public show of calling for withdrawal while privately making sure not to do anything that would force the administration to change it's politically disastrous course before the 2008 elections. So the whole mess will probably continue to snowball a while longer -- until something so bad happens to American troops that public revulsion for the war becomes uncontainable.)

I suspect your right, and i don't think the general american public
have the fortitude, guts or will to see this through. And you called the democrats correctly!
 make a public show of calling for withdrawal while privately making sure not to do anything that would force the administration to change it's politically disastrous course before the 2008 elections.

The US media doesn't help things either, they seem to be the american version of Al Jazerra. Until the US media stands behind this country i feel we are DOOMED, thats why i have not watched TV, news or other!. I am tired of being spoonfed worthless bullshit. Thats why i will not vote Democrat or Republican blindly, but rather will study/guage each candidate based on what they stand for!
Perhaps independant is the way to go!

Hope to see you come around more
 We value your information.

Nice to see you back Stuart. Just another graph:

They can drill at will, they'll no more oil. They are just trying to keep up the pace.

Stuart - I assume that is a similar graph that you presented at ASPO. Any idea what % of those rigs are onshore? Its an ominous graph, but a cornucopian might say they are drilling offshore due to higher prices, when they didnt have incentive before (I dont believe this, but possible)

what program do you make those pretty graphs in??

I meant no disrespect, Nate. Stuart obviously has Thomas Pynchon status. I'm jealous. What can I say? I like jkissing's questions. Sooner or later, you gotta answer the questions. I like Hitchens' piece on Fallaci in this month's Vanity Fair.

I like Scarface. Good movie. "First...

Stuart Welcome back. We all missed you.

The KSA threats seem to be a a warning to both the USA to stay involved in the region and Iran to stop meddling. Their real strategy is to look strong in the face of a very difficult situation emerging.

If Iraq breaks into pieces then Iran would have more influence and KSA would have no choice but to arm the Sunnis.  Iraq only makes KSA unstable. The Shites around Ghawar could well decide where their loyalties lie.

Iran's proxies Hamas and Hezzbollah have caused consternation for both Israel and the US. The recent skirmishes in Lebanon have only hardened them as a fighting force. They were well armed and put up a very credible fight given Israeli Airpower and tanks.  

With KSA oil production going backwards they must still give the illusion of having something up their sleeve.

It would be questionable whether the Saudi Army would want to fight Iran or whether you would get a situation of a palace revolt.

The Saudi oil sword is not just about increasing supply but scaring the US into not even thinking of leaving the region as a vanquished Army as production is cutoff  would have dramtic effects for the West.

Iran's recent show of strength with latest missiles easily capable of hitting Saudi Arbaia would keep many in the kingdom awake at night. Along with new anti aircraft missiles bought from Russia.

We live in very interesting times.

Another interpretation could be that this 'startling announcement' out of the KSA was actually coordinated with some folks in DC. This makes some sense: it provides another
argument, one that can be more directly expressed in terms of US strategic interest, for 'staying the course' in Iraq at a
time when the further presence there is becoming less tolerable the world around. More importantly, it provides
that argument of startegic interest in a way that puts the
matter out of american hands - "see, we need to stay here
because if we don't these other folks are chomping at the
bit to start a fight".. In addition, the fact that it came as an unofficial comment from a less senior voice should send off warning bells as to its authenticity. Anybody can say anything. It it not the first time a lower-level official was send to say something that for obvious reasons couldnt be part of official policy but needed to get some media time anyway. There had to be someone saying it or else the media wouldnt have had anything to pick up and run with.
Extremely unlikely that such a 'threat' reflects the policy
in the real decision-makers in riyadh (or in teheran for that matter).
Rudolf Diesel -

What you have desribed is exactly the same as my take on this bizzare and rather uncharacteristically bellicose statement by Saudi Arabia.

I also don't think it's a coincidence that it comes close on the heels of Chaney's recent visit.

The Bush regime has struggled to maintain any halfway credible excuse to occupy Iraq. We started off with WMDs, then bringing democracy, then quelling outside terrorist insurgents, then bringing stability to the fledgling government, then to contain a nascent civil war.

And now emerges yet another reason to stay in Iraq: to keep Iran and Saudi Arabia from fighting each other (either directly or by proxy via the Sunni and Shiite militias).

I too think that while the Saudi Royal family has bought billions of dollars worth of war toys from the US defense industry, they really don't have the stomach for using any of this stuff in anger. Hell, somebody might get hurt.

I myself think the big question is to what extent the US is twisting Saudi Arabia's arm to adopt this posture and to what extent they are really willing to go along with it. If the Bush regime screws this situation up like it has just about everything else, the job will be complete: we will have totally alienated practically every major oil-producing country in the Middle East.

"I myself think the big question is to what extent the US is twisting Saudi Arabia's arm to adopt this posture and to what extent they are really willing to go along with it. "

I think you have this situation interpreted backwards.  I believe it is Saudi Arabia that is twisting the arm of the US.  

SA called for Cheney to come to pass along this message, "Are you ready to start Phase II of Operation Restructure Middle East?"

Could be.  

Maybe the US actually has less clout with Saudi Arabia then many of us thought.

At any rate, the overall situation has all the makings of The Big One.

I see you really do not understand this relationship. The King of Saudi Arabia always tells the US president when he wants to see him. For formality's sake, the King often travels to the US but that is because it is also a grand opportunity to parade himself before the world. But go look it up yourself. The King of Saudi Arabia gets treated very differently from most heads of state visiting Washington, DC. We are and have been Saudi Arabia's mercenary hires. In exchange for that duty, we are granted access to Saudi Arabia's oil (through the free market, such that even if we don't buy their actual oil, the presence of their oil in the market makes our purchases more affordable). KSA's first and foremost concern must be whether the US will uphold its end of this bargain. These statements were not intended for Iran even. Iran already knows that Saudi Arabia hates them. In fact, a US withdrawal would likely lead to direct funding of Al Qaeda to fight Iran. (Al Qaeda is Sunni.) These statements were intended for Washington, reminding the US that any withdrawal could start a regional war for which the US will be blamed by everyone, from Europe to China.
"reminding the US that any withdrawal could start a regional war "

Which is exactly what the Iranians want - their shia-pet brand of Islam is the "true" one after all and the 12th Imam will of course be on their side when he returns during the ensuing Chaos.  

The Iranians make a big show of threatening Israel but the House of Saud is their Primary Target.  

As long as they keep islamic minds focused on Israel as the threat, they can continue to undermine the region and build their Foreign Legions with the cooperation of the locals.

The irony is that Iran is the new moderate in the region :)
And the bigotry of the "intellectual and rational" Pollitically Correct Herd allowed them to pose as "moderates" and get away with it.

Surprise: Oil Woes In Iran

Yet Iran has a surprising weakness: Its oil and gas industry, the lifeblood of its economy, is showing serious signs of distress.

The Iranian David Koresh took full advantage of cultural and religious ignorance that blinded the bigots of the West.

Now the Ayatollahs of the Apocalypse will help along the Chaos necessary for the return of their 12th Imam.

Too bad for the bigots.

I wonder when we would have seen Peak Oil production if the world were the perfect little test-tube the engineers and geophysicists imagined it to be?

GZ...I think you are "spot on" in your discussion.  I am starting to think more and more that the entire Iraqi adventure was cooked up in the House of Saud and forced upon Washington as a "do it or else" scenario.
I hadn't thought of it this way before.  It puts those 19 Saudi hijackers in a somewhat different light, doesn't it?
And truth will be lost in the growing vortex of the T1 Chaos that has already begun.

We are post peak - it does not matter what the Peak Production Woulda, coulda, shoulda been IF there were peace.  There is Never Peace Post-Peak Resource for any critter and Homo Sap is an idiot for ever thinking it would be different for him.

Sure does...also the fact that "x" number of Saudi family members were let fly back home on 9/13/01.  Refer to Ruppert's works for details.
Correction...I think it was on 9/12/01.
Why would they do that?
Because they oppose an Iran that becomes the dominant power in the region. It's like politics anywhere - different people want to be on top. In this case, the Saudis want to remain at the top of the ME sandpile but now Iran wants that position too. I am not saying that Saudi Arabia did demand action against Hussein but I am saying that they might have done so.
I cannot locate the source, but the information I have read stated that KSA sought to prevent a US intervention in Iraq.

Remember that one aspect of the Iraq intervention was this notion of bringing change to the entire ME, initiating a transition toward elected democracies. Such a venture was a direct threat to the KSA. They would not have supported it.

They also were not happy with Saddham but remember Iraq was constrained, the US and UK conducted overflights and could and did bomb at will, the Iraqi economy was under scrutiny, its oil exports curtailed. During this period Iraq did not present a threat to its neighbours. It was certainly much less a threat to KSA then the forces unleashed through the ill advised American Jihad.
There is another interpretation. Prior to the KSA op-ed there was a news announcement regarding Iran extending a $1 billion loan to the current Iraqi government. See the following:

Iran to aid Iraq with $1 billion loan to help tackle insecurity
Compiled by Daily Star staff
Thursday, November 24, 2005

Iran has pledged to give Iraq a $1 billion loan and help with tackling insecurity, Iraqi President Jalal Talabani said at the end of a ground-breaking visit to the Islamic state. On the ground, gunmen in Iraqi army uniforms shot dead an ageing Sunni tribal leader and three of his sons in their beds, relatives said.


Malaki, in coverage of his meeting with Bush, made reference to his government seeking weapons the US has been reluctant to provide, chiefly armoured vehicles and helicopter gunships. At present the USAF controls the air and the Iraqi army travels in pickup trucks.

This loan arrangement did not get great coverage in western media. But I am sure it resulted in strong reaction from KSA. The Iraqi Shia aquisition of a real armoury, and the close relationship with Iran, would be intolerable to KSA and viewed as a threat. I suspect this is the reason for the WaPo op-ed and also what prompted the VPs recent visit to KSA.

There has been other disconcerting news regarding KSA seeking to improve export outlets to the Red Sea and Med. Primary reason for this is to avoid Iranian stranglehold on exports via Hormuz. See the following (best I can find):


the Tapline corridor has remained a potential export route for Persian Gulf oil exports to Europe and the United States. At least one analysis has indicated that the transportation cost of exporting oil via the Tapline through Haifa to Europe would cost as much as 40 percent less than shipping by tanker through the Suez Canal. In early 2005, rehabilitation of the Tapline at an estimated cost of $100 to $300 million was one of the strategic options being considered by the Jordanian government to meet oil needs.

Saudi Pipeline Developments. +saudi+pipeline&hl=en&gl=us&ct=clnk&cd=7

There was another recent news item regading KSA development of another pipeline to the Red Sea but I cannot locate it.

My reading of all this is that the ME is slowly spinning out of control but the American people are blind to the consequences.

They already have Yanbu (5 million bpd capacity) on the Red Sea coast but barely use it.

The greater problem for the Saudis is getting their oil to customers in the Far East, where the Gulf terminals at Ras Tanura and Ras Ju'aymah enable a much shorter journey time to Asian markets (via the Straits of Hormuz)

"My reading of all this is that the ME is slowly spinning out of control but the American people are blind to the consequences."

PERFECT with two exceptions - the ME has already spun out of control and it's virtually the entire world that is blind to not only the consequences but to the causes.

It's much easier to pick a simplistic scape goat.  Just as the  geopoliticians at the UN.

PERFECT with two exceptions - the ME has already spun out of control and it's virtually the entire world that is blind to not only the consequences but to the causes.

Who to believe.  The rest of the world or your opened eyes?  

People who spend years studiung the situation, have spent years looking at the past actions on present events.

Or do I believe a guy who likez the letter Z, has no plan beyond localization (which he calls a BS position anyway) and has no plan to address the 'radical izlamizitz' beyond jump'n up and down while pointing and saying "ZCARRY people over there!"


It's much easier to pick a simplistic scape goat.  Just as the  geopoliticians at the UN.

You have already picked your goat - "radical islamists".  Make sure its nice and tender with more flogging.  

How are you morally superior again?

Joule, you and others see the situation only through the lense of your prejudice towards the evil Bush/US/neocons etc.  

You don't understand the complexities of the region and it's history so they all appear to be mear puppets of "The Masters" you have conditioned yourself to hate.  

Bush et. al are NOT in control.  No one is.  

It would be nice if it really were as simplistic as you imagine - the Solution to the problems would then also be simple.  

Joule, you and others see the situation only through the lense of your prejudice towards the evil Bush/US/neocons etc.  

VS your wierd position that the 12 iman is a  comm'n.

Lordy, lordy lody.   Who to believe.   Your rants?

You don't understand the complexities of the region and it's history so they all appear to be mear puppets of "The Masters" you have conditioned yourself to hate.  

And somehow you've risen abouve such cultural conditioning?  Amazing.  

Such God among us mear mortals you must be.

He's a zionist among goyim, it's the same thing.
Ahh, hence his love for the letter Z.
Or perhaps he knows about more alien bases in Iran like in Iraq.


I dunno if the body politic will feel threatened... stay, or we drop the price in half... Well, it would threaten the administration's oil patch buddies, but not many voters. Better if they had whispered it while holding hands...
Their statement was not well thought out for several reason, not least because it is not believable.
And provides a good reason to pull out.
My take on it (which could be dead wrong)

Saudi Arabia knows that production is flat / declining (more than they are prepared to admit publically).

But, if production takes a nose-dive and there is no "justification" for it (for example, "we've deliberately cut back on production because the price wasn't right". Aye,right, as they say round here. With the price still above the immediate post-Katrina levels, which were themselves significantly above the "norm" for the time, clearly the price issue is just an excuse), then the price will climb, and even CERA might start to mention the "peak" word.

So, a justification to have the price climbing due to market jitters (Saudi Arabia and Iran will fight each other; A vastly increased troop presence is needed to maintain order, which might not be sufficient; Play the Israel card for extra instability) will be fine. It doesn't really matter which excuse is used, provided none of them mention "price going up because production going down"

A valid threat? Doesn't matter. What matters is diverting attention away from production issues and also driving up the oil price

I think this would only happen if they were truly desperate meaning BIG time decline now!!!  This is not out the realm of possibilities.
This will probably not be read because I posted so late, but my thinking on the whole ME imbroglio is based on a statement by Sadam Hussein made at the start of the GWi.  To wit, "This will be the mother of all wars."  Which of course, was scoffed at by everybody, except for the Arabs.  Then, there's '93 WTC attack, attack on US personnel housing outside Riyadh, the embassy bombings in Kenya and Tanzania, the Cole, and finally 9/11.  Hum, just random incidents?  I thinknot.   The Arabs over many years have realized that they've been in the gunsights of the West, and GWi proved it, since GHWB said that the USA had no interest in internal Arab affairs.  Sadam fell for the lie, and Iraq, the strongest Arab state was pulverized.  GWB let slip the situation when he called the War of Terror a 'Crusade'.  Now, I realize this is all more subtle than most people are accustomed, but if you care to read a sufficicently diverse number of MSM publications all the way thru, you can find multiple indications of secretive societies, such as the Bilderberg, and other strange occurrences.  
  There are excellent anti-psychotic drugs that will help you with your paranoid delusions. "Bilderbergs", hadn't heard of them since the John Birch Society all died or got Alzheimers.
Bilderberg held their latest yearly gab fest in Ottawa Ontario this summer.  It was reported in the Ottawa Citizen, the Toronto Star, and the Toronto Globe and Mail, that I know of.  I suggest that you need to remove the rose-colored blinders from your eyes and examine the available evidence rather than using the fantasies that clearly have been embedded in your brain.
The Bilderbergs are real and very active.  I live in Ottawa, and was made quite aware of their meeting here earlier this year.  There is a very good Wikipedia entry on the group, and another on the meeting attendeeds over the years.  I don't subscribe to some of the darker fulminations about their nefariosity, but there's no doubt it is a large group of very powerful individuals, who meet very privately every year to discuss world events and policy (apparently).  The Wikipedia entry on the purpose of the group reads:

The original intention of the Bilderberg Group was to further the understanding between Western Europe and North America through informal meetings between powerful individuals. Each year, a "steering committee" devises a selected invitation list with a maximum of 100 names. Invitations are only extended to residents of Europe and North America. The location of their annual meeting is not secret, and the agenda and list of participants are openly available to the public, but the topics of the meetings are kept secret and attendees pledge not to divulge what was discussed. The official stance of the Bilderberg Group is that their secrecy prevents the members' discussions from being manipulated by the media.

Groups like this and the Council on Foreign Relations are real enough, but they're also secretive enough that it's easy to impute conspiratorial motives to their workings.  I'm pretty much agnostic on that, except to to observe that any well-connected group of powerful people will tend to act in their personal and collective self-interest.

Note that "Bilderberg" is a name given them by the common man. I don't even know if they have a name for themselves. As the note says, it's mainly an informal annual meeting of select individuals where they discuss world affairs "off the record" and apparently "let their hair down" on various issues. Could they be conspiring in some manner? That depends on what you mean by conspiring. Are they conspiring in a criminal sense? I doubt that. But I do believe they seek to form a consensus on key issues. Often they obviously fail (witness Iraq) but other times they probably succeed.
If Iraq breaks into pieces then Iran would have more influence and KSA would have no choice but to arm the Sunnis.

Do any of us really believe anything that KSA tells us? They are bluffing again. If they openly support the Sunni's and confront Iran, that would make them vulnerable to attack. One missle could do untold damage to a KSA oil export platform.

Also, the Sunni's in KSA are Wahabis. They are much more fundamentalist than the Sunni's in Iraq. In fact, the Wahabis would unlikely want to fight for the Sunni's in Iraq. If anything, the Wahabis would like to have a revolution in KSA and create a Theocracy just like Iran.

The leaders of the Middle East might be clamoring for KSA to help the Sunni's in Iraq, but the average citizen in the Middle East has other issues on their mind than going to war against Iran.

Iran (like Israel) is currently viewed as an alien nation in the Middle East, since they are not Arabs, but Persian. They have few allies and the other nations want to keep Iran contained. This Op-Ed piece has nothing to do with KSA supporting the Iraqi Sunni's. It is about Iran and Iran's influence.

And a big welcome back to Stuart from me, as well.  I've really missed those graphs, so I'm hoping he'll be posting them, even if he does nothing else here.

Amongst all the discussion on the drilling rigs and whether we're seeing the results in production already of the wells they've been drilling, one thing stands out.  The rig numbers are massive increases over those of previous years and the graph just keeps going up.  Something must have changed to get them to do that.  I suspect it's just what it looks like - panic drilling in response to peak production, just like what happenned in the Lower 48 in the 70s.  We'll know in a couple of years, though.

On a broader topic, though, I suspect some contributors are not very well-informed about world affairs.  This is not, mostly, their fault, since the US media are terribly unreliable about events outside the US.  North Americans hear very little from the mainstream media about foreign affairs and what they do hear is terribly distorted by the foreign policy objectives of both major parties in Washington.  Here in Australia, we get to find out a bit more.  And, anyway, I've been paying attention - it always helps to read to the end of the article, because that's where you'll find the facts that don't fit the editorial line.

So, here are a few things that need to be considered.

(a) Neither Hamas nor Hezbollah are Iranian proxies.  Hezbollah, like them or loathe them (my preference is the latter), is a genuine party of the Lebanese Shi'ites.  Because their arms come from Iran, the regime there has a veto over Hezbollah's military operations.  That's a long way, though, from turning them into Tehran's proxies.  Hamas is even less influenced by Iran.  They were actually the creation of Israel (yes, you read it right!) in order to counter the secular & then-dominant PLO.  They slipped the leash in the late 80s, but I believe they're likely to be still deeply penetrated by Israeli intelligence.  As a religious party of the Palestinians, Hamas is Sunni (they're also completely repugnant, but that's a separate issue).  They'd happily accept any support from Iran (or elsewhere), but I can't see them following any orders.

(b) Discussion of the consequences of a hypothetical break-up of Iraq should include the awareness that the Ayatollahs of Najaf and Karbala are senior to the Iranians.  The idea that Sistani would take orders from Khamenei is as credible as the concept of the Pope taking orders from the Archbishop of Boston.  An Islamic Republic of Basra would have good relations with Tehran, but it would be nobody's puppet.

(c) The only credible aspect of the WP oped is the prospect of Saudi Arabia giving support to Sunni militias in Iraq.  The House of Saud would be sorely tempted to do this, because a Shi'ite Islamic Republic in Basra would be an inspiration for the Shi'ites of Saudi Arabia to become politically more assertive.  This would be a grave threat to the House of Saud, because their Salafist doctrines (see: http://en.wikipedia.org/wiki/Salafi ) are a variety of Sunni Islam, while the oil producing region of the Kingdom is mainly inhabited by Shi'ites.  It is entirely conceivable that the vile Saudi monarchy could decide to forstall trouble in its oil provinces by keeping it on the boil in Iraq.

(d) Talk of open wars or the closing of the Strait of Hormuz is alarmist and the authors of these ideas are peddling them to frighten people into supporting some US or Israeli action to "stabilise" the situation instead.  Most people circulating the speculation take it as good coin, of course, but we need to understand the motives of the people who make these propositions up.  That is not to say that these scenarios are impossible, but rather that they are doomsday options for the Saudi &/or Iranian governments.  They'd only do it if their backs were well & truly against the wall.  Iran, for instance, didn't try to close the Gulf of Hormuz to shipping until well into the Iran/Iraq war of the 1980s and only because the Saudi & Kuwaiti monarchies were funding (big time - we're talking about very large cheques here) Saddam's war against the Iranian Revolution.

(e) The Ayatollahs are seriously on the nose in Iran.  Nobody goes to the mosque any more and the clergy are derided as corrupt.  The only reason the country is still an Islamic Republic is that the government of the day doesn't have full control of the State.  Instead, the clergy hold constitutional vetoes and appoint the judiciary.  Further, they have a veto over election candidates.  You can't stand for any election unless they certify you as a "good Muslim".  They struck out most reform candidates last time on those grounds.  Having been presented a list of Islamists to vote for, the Iranian electorate in 2005 chose the one with the most popular economic policies.  Since then, the best thing the Ayatollahs have going for them is the series of military threats emanating from Washington.  This is typical "rally round the flag" stuff.  As a comparison, imagine that China started making military threats against the US.  Iraq or no Iraq, that'd get Condi or Jeb elected in 2008.

Thanks, very informative.
Hello Stuart,

Welcome back--Hope you can stay awhile!

Your Quote: "A shooting war between Saudi Arabia and Iran would certainly make for interesting times in the oil markets..."

Yoowwww! This would be really ugly to think about...How long before the importing countries would get involved to try and peacefully separate these warring key exporters?  Or would the importers just join the Saudis to all gang up on Iran?

What if the US is backing the wrong horse...er, camel?  If KSA is about to geologically cliffdive while Iran keeps pumping away or possibly even finds more FFs: is it time to politically switch camels in midstream?

Assuming KSA can pump lots of oil to drive down prices: does Iran still have sufficient natgas exports to still ride out the storm?  If the winter is cold and Russia fails to hold up their end of natgas exports--Europe will pay top dollar for any natgas to try and stay warm.  But, I suppose Europe would burn [relatively?] cheap crude once natgas demand went through the roof.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?  

There are very few oil burning power stations in Europe. Here in the UK oil accounts for less than 1%  of electricity generation The swing here is to coal as the price of gas goes up. I expect some coal fired stations could be converted to take oil but I don't now how fast.I believe the European Large Combustion Plants Directive would prohibit a change in fuel if this led to increased sulphur emissions.

Yes and welcome back Stuart.

Stuart - so every morning brings a surprise.  As I see it there are three possible explanations for the Saudi production v rig count chart:

  1. Their supergiants are dying (I can't recall who it is right now, but someone round here keeps beating that drum) and the Saudis are crapping themselves.

  2. The Saudis have reverted to their long time role as swing producer, and the production decline reflects withhheld capacity.  Why then the frantic drilling activity? - two possibilities:

a. They are building capacity to support the market in the event of a US strike on Iran

b. They are building capacity to flood the market and strike an economic blow against Iran (and all other oil producers).

This latter explanation, referred to in your post, is one that reached me several weeks ago via my broker who was at a talk given by Charles Gave - the plunge in price followed.

IMO these are listed more or less in order of descending probability.  We must never forget that Iran controls access to Hormuz - and if they saw a deliberate economic attack comming from KSA - I wonder how long they would allow all the Saudi and Emirate's oil (and Qatari gas) to pass through the golden gate way to the Indian Ocean?

WT is the one who keeps harping to that doom.  The Saudis were unable to sell all their oil at the beginning of this year and began a very gradual cut back.  They also stated they were investing 10s of billions of dollars into increasing their spare capacity cushion.  Are they declining?  It's possible, but its to soon to tout that trumpet.

(The above is an inside joke that I expect Hothgor to understand but very few others.)


(Attempts to dodge the pyroblast...)

Large irony among many other ironies in the Middle-East is that this scenario would align KSA and Israel on the same side in terms of emnity toward Iran and possible miltary action against Iran. Who knows, maybe Israel will surreptitiously finance Al-Qaeda..... oops, recursive loop to 9/11 conspiracy stuff.
Israeli movie crews filming and cheering as Saudi hijackers gave the USA a pretext it could use to go into Iraq?  That rabbit hole gets weird really fast...
imo option 2 is not believable because a) they traditionally worry when oil goes 'too high', b) they said oil was too high last spring/summer, c) the price continued to an all time high thru sep, and d) during all of this their output declined while rigs were already up 2.5x. There is a lot of evidence that their fields are in permanent decline, and many reasons, not least clinging to power, for them to deny.

True, high production of substitutes, including ethanol and oil sands, both essentially conversions of ng to oil, boosted liquid fuel production to the extent that prices fell dramatically, bringing opec back from the near dead, maybe for a last hurrah. But sa ever significantly boost production above 9M/d seems unlikely on existing evidence.

JK. I tend to align myself with those who warn against writing off KSA too soon.  However, in reading through a lot of the posts here, the most rational explanation of all those new rigs is drilling up Khurais - 300 wells were mentioned.  It seems likely then that Khurais has not yet been commissioned - and this is essentialy reserve capacity that is being built - against a backdrop of natural decline else where.  Unlike their supergiants, Khurais will probably start to decline from year one - and that is the greasy pole the Saudis now must cling to.

So I suspect we are enetering a new phase in KSA production history where they will have to work very hard to offset underlying decline - and this is a fight they will ultimately lose.  Number watching next year promisses to be interesting.

light sweet oil,mmmm, light sweeet ooil..ahgahagaa

"Middle East  - Saudi Arabia - Khurais - initialy 20,000 to 40,000 barrels a day, but production variable and requiring pressurisation in an area far from the sea (currently mothballed) -  reserves about 23 billion barrels - light sweet oil type - commenced 1964, mothballed 1980's due to poor flow requiring high investment to 'rework' and extensively pressurise -  peak production was 144,000 barrels a day in 1981.
Note: The Saudis hope to drill 400 wells in order to achieve 1.2 million barrels a day of new production, and install additional gas/oil separation, stabilisation, and treatment plants, at a cost of over $3 billion dollars. They plan to aggressively fracture and pressurise the carbonate to achieve this relatively high initial flow rate. Very high rates of water injection (4.5 million barrels of seawater a day) will be required to achieve the target. The hope is to achieve this in 2009. The first phase, yet to be completed, will deliver about 150,000 barrels a day."


What is your source - Article somewhere? Personal knowledge?

Scraps of info that appear on TOD, in internet articles from the oil industry and industry commentators; 'scrap booked' and modified as new or amended info appears.
A lot of info appears on TOD etc, but is hard to recall/retrieve.

(Thus Prof Gooses recent 'shake the box' on the nature of TOD and a need for an oil wiki).

Recording as we go along is how I cope with info overload.

No, I didn't record the source of the info bites that make up my comment as presented.

I feel a song coming on..." if I only had time...tra la la la...if I only had time"


If they are using vertical wells, each rig should drill around 18 wells/year.  So, with an extra 36 rigs so far, they should be able to drill 500 wells/year. Certainly should have enough holes by 2009...
Frankly, I don't think there is any chance khurais will produce what they are predicting. they are under 9M/d now in accordance with the new quotas, which might be masking unavoidable declines. regardless, I doubt they will ever produce 9Mb/d again.  otoh, they won't need to, considering the likely price increases by 2010.
I think that you don't understand the politics of KSA.  What is in place is a 'royal house', the Saudis, who have become detached from the people because they are corrupt and have become lazy.  They are also robber barons, in that they take the bulk of the FF revenuses for themselves, leaving a small portion for the people of SA.  The most likely explanation for current official KSA policy is the desire of the House of Suad to continue this game as long as possible, and they won't jeopardize it by going to war with Iran.  In extremis, they'll pack their bags and go.  Weird statements by minor functionaries should generally be disregarded.
"...This field, or the most productive part of it, north Ghawar, is flagged for the possibility of catastrophic decline within several years due to the aggressive extraction methods (around 7 million barrels of seawater a day are pumped into this vast field, with injection starting in 1965). The area of highest production by far has been in the ultra permeable carbonates of North Ghawar, producing at the rate of around 4.5 million barrels a day, but containing only 20% of total (albeit massive) reserves in the Ghawar complex. The rest of the  huge Ghawar field produces naturally at only about 300,000 barrels a day, according to Simmons. Haradh, for example, currently needs 500,000 barrels of water a day of injected into it to maintain a flow rate of 300,000 barrels of oil a day! At 2006, the 'water cut' is estimated at at least 35%, maybe more. The 'natural decline rate of Ghawar is around 8% year on year - but held up by serious re-pressurising. To sustain the same production rate as present, the less free-flowing middle and southern part of Ghawar will have to have double the number of drilling rigs in place by the end of 2006, and by 10 years from now, will need 2,000 drilling rigs in place - a number close to the current total of rigs in the world."

for another possibility


Ummmm....72myz...are you new here?  And if so, who are you?
1. ish
2.High Petrol Prices - unfolding
Period: 140 million years to 2005
History of the rise of the cheap petrol economy - commentary and speculation on its fading
or use this TinyURL-
There is some incredible information in this reference.  Have we seen this before, anyone?  If so, I missed it.


Being employed in a large retail company as a data analyst, I have seen pieces of the two below statements first hand.

Loss of business confidence and continuing flat spending causes some cut backs:
Businesses trim the only costs they can - staff numbers and working hours. Slight rise in unemployment ratchets the retail spending slow-down. Gross national product cuts back.

Businesses retrench:
Managers are increasingly pessimistic, and act accordingly. Vacancies are left unfilled. Staff numbers are reduced. Investment is put on hold. Salary increases are stopped. Business decision-making is taken in 'cautious' mode, emphasising short-run objectives rather than planning for what is an uncertain future. Gross national product falls.

WOW - I haven't finish but oh my god this is <good> :(

I'm afraid the most credible threat here will be wider conflict in the ME in general. I sense, as I've repeatedly stated, there are some very powerfull interests at work to obscure PO, and leave oil in the ground at the same time. Denial Yergin will have his "above ground factors". IMO, sooner or later, wider ME war is unavoidable.

IMO, sooner or later, wider ME war is unavoidable.

I tend to agree with you PaulusP.  In 2005, the Gulf states produced around 24 million bpd.  Its not inconceivable that the whole lot goes up in smoke.

Hello Euan,

Here is a wild & crazy idea that just occurred to me:

What if we just follow the money, the money to the KSA and Iranian topdogs only. Princes=Sunni, Mullahs=Shias.

What better way to keep the 'fear premium' maxed out in the importing countries than to always threaten a huge ME war between Shia-Sunni.

Yes, 1,000 Sunnis/week & 1,000 Shias/week dying in battles across the entire ME landscape offends our western sensibilities, but with the 1,000 year competition tradition between these two Islamic faiths--to the Sunni-Shia topdogs this might be entirely acceptable losses to maximize income for themselves and keep up a massive economic transfer from the West to both Islamic faiths.

In short: I don't see Ahmadinejad and the Crown Prince personally strapping on the Jihadist's explosive belt and heading to Baghdad anytime soon--they can get their religious peons to do that while they kick back with a scotch & soda and count the money.

Bob Shaw in Phx,Az  Are Humans Smarter than Yeast?

Bob, I think the energy infrastructure in the ME is extremely vulnerable. I'm thinking of the aborted attack on Abqaiq a couple of years ago.  Had that been successfull..  I'm not sure that Saudi Princes will have a big say in the outcome of any broader conflict.

Every day that passes the OECD becomes more reliant on imported energy and every day that passes the level of dissorder also seems to be increasing, not just in Iraq.

"I'm thinking of the aborted attack on Abqaiq a couple of years ago."

That was February of this year (http://www.arabnews.com/?page=1&section=0&article=78354&d=25&m=2&y=2006)

Saudi oil infrastructure (http://www.eia.doe.gov/emeu/cabs/saudi.html) is horribly exposed to terrorist attack. The attempt on Abqaiq was intended to be a spectacular attack by three suicide bombers in SUVs on the world's biggest oil facility, with the emphasis on "spectacular".

More recent events (http://www.cnn.com/2006/WORLD/meast/11/27/iraq.main/index.html) have shown that a more targeted and pragmatic use of weaponry on static targets can yield "better" results from the terrorists' perspective.

Aside from the obvious "spectacular" targets at Abqaiq, Ras Tanura, Ras Ju'aymah and Yanbu, Saudi has 10,000 miles of pipelines, dozens of pumping stations and hundreds of wells which are practically impossible to defend 24/7/365. If Al-Qaeda targeted these facilities in the way that insurgents have targeted the Northern Pipeline and associated infrastructure in Iraq, there would be almost no way for some attacks not to succeed and the price of oil would surge massively and instantly.

That might focus a few minds on conservation and  alternatives.....

Time passes more slowly than I thought - was it really just February?!

I guess you say a lot of things here I was trying to avoid saying.

On the brighter side of things, I believe the Saudis to be extremely pragmatic in trying to ensure that domestic attacks do not occur. Though it would be impossible to prove, I am sure that the Saudi Royal Family (not to mention other Gulf States) pays vast amounts of protection money to Al-Qaeda to ensure that it does not attack the "homeland".

In this respect I think the attempted attack on Abqaiq was more of a "reminder" to Saudi about its "obligations", rather than a real attempt to cause damage. As I have said there are far easier targets to pursue if that were the real intention.

In the case of Saudi sending troops, weapons and/or money to protect the Sunnis in Iraq, I am sure that the message was intended to mean something to all three of USA (don't withdraw troops), Iran (don't escalate the problems) and Al-Qaeda (we will continue to support you outside Saudi, the quid pro quo being you do not attack inside Saudi). Whilst I do not expect to see Saudi regular forces being deployed outside the kingdom's borders, I anticipate that weapons, funding and irregular forces (aka insurgents) are readily available for the protection of Sunnis in Iraq.

I do not think that Al Quaeda is a monolithic organization, like a Mafia family, that you can pay and keep happy. Look at the Madrid bombings: just a group of Moroccan hashish petty traffickers, with no known contacts with anyone within the Al Quaeda top hierarchy, buy some local dynamite and implement an Al Quaeda threat disseminated through open channels. ¿How would such a group of discontented Saudis learn that the monarchs are paying Bin Laden? ¿Would Bin Laden go on TV and say "Death to America and its stooges, except the House of Saud that just gave me some millions"?

What protects Saudi oil installations is, I think, the repressive apparatus. Amnesty International did a review of the judicial system, and it is medieval.

Your take on Madrid is much to the point.
Bin Laden is dead and has been for a long time. His "communiques" are not in his trademark classical Arabic rhymes. Even if he is alive and just not doing so well, it hardly matters since Arabs believe him dead and would need a lot to even partially revise. Al Qaeda has done nothing in a long long time.
Zawahiri has no charisma, no personal sway. No one believes in Al Qaeda except insofar as it continues to be a perfect bogeyman. For those who like to employ bogeymen and children who believe in the Bogeyman.
Like I said on another thread, the whole thing is complete and utter bullshit that the Saudis have been put up to saying by the US for propaganda purposes. And this is because the only excuse that plays in the West anymore re US involvement in Iraq is 'We've got to stay to stop a CIVIL WAR!!!' Of course when the US says it only dolts believe it, so now the Saudis have been put up to claiming that the US needs to remain in Iraq to (wait for it... comedy doesn't get any better than this) PROTECT THE SUNNIS. Yes, Saudi Arabia is demanding that the US stay in Iraq to protect the very people it is most determined to kill in very large numbers, the very people who are resisting it with the most determination.

It's complete and utter rubbish. And that is without saying anything at all about oil reserves.

There will be no fighting whatever between Saudi Arabia and Iran, ever, ever, ever. The Saudi elite is interested in using Islam to fleece the masses into financing their own highly un-Islamic lifestyles of the best whiskey and the best foreign whores. Fighting is not part of the deal.

But doing what Uncle Sam tells you to is, and always has been.

I add my voice to Franz's.

Let me be quite clear, anyone who is under the impression that the Saudi elite is going to go to war with any other nation or that it is going to send weapons and men to fight on the Sunni side in Iraq is suffering from a severe case of delusion.

True, the Saudi have spent fortunes on Defence but this is an insurance policy to make sure that the governments representing the companies that are benefitting from this munificence are on-side. It has nothing to do with actual warfare.

Let us look a little at the history of the region. For millenia, what passes today for Saudi Arabia was split into two main parts - the part alongside the Persian Gulf and the part alongside the Red Sea.

By the way, if you really want to know where Jehovah's Promised Land is - it is the Northern part of the stretch along the Red Sea - an Egyptian academic proved it by studying place names. By the same token, the Lost Tribes of Israel are embedded in the genes of the people living along the West coast of Saudi Arabia.

The part along the Persian Gulf (Eastern Province) has always been closely affiliated to Persia (Iran). It had a similar relationship to the Persian Empire as Mexico and Canada currently have to the USA. The Western part of Saudi Arabia (Hejaz) has always been closely connected to Egypt. The desert in between was a sort of Mediterranean Sea that could only be traversed by desert Arabs with their camels.

The Saudi Elite are past masters at realpolitik - that is how they have survived for so long. Currently, the star of the USA is on the wane in that region and that of Iran is shining brighter. The Saudis will bend over backwards (and forwards) to please the Iranians. The USA will be sent to the doghouse.

As for Iran, contrary to popular nonsense being written in MSM, their elite cannot quite believe that they are still in power and they are most anxious to stay in that happy position. They do not wish to occupy the South of Iraq (although it was part of their Empire for a long time). They want to be surrounded by stable, but weaker, states. For example, they have done far more rebuilding in the Herat region of Afghanistan than all Westerners have in the rest of that country. I could go on in this vein for a long time, but this is a site about oil, not foreign affairs.

"I could go on in this vein for a long time, but this is a site about oil, not foreign affairs. "

I believe the two are intertwined to a high level.  I am quite interested in hearing more on your discussion above.  The Drumbeats are more open to this type of thread.

"True, the Saudi have spent fortunes on Defence but this is an insurance policy to make sure that the governments representing the companies that are benefitting from this munificence are on-side."

I believe the Saudi 'defence' spending is more about recirculating petro-dollars.

May be true, Maybe not. Like a lot of stuff, make up your own minds:


"I summon my blue-eyed slaves anytime it pleases me. I command the Americans to send me their bravest soldiers to die for me. Anytime I clap my hands a stupid genie called the American ambassador appears to do my bidding. When the Americans die in my service their bodies are frozen in metal boxes by the US Embassy and American airplanes carry them away, as if they never existed. Truly, America is my favorite slave."

King Fahd Bin Abdul-Aziz, Jeddeh 1993

Well said!

Stuart Staniford, good to hear from you, being as you are the trusted supplier of stats and graphs, and an interestingly provacative point to return on.

Some stray thoughts:
(a)  Wonder if Bin Laden and his boys intended the outcome they seem to be getting, i.e., Shi'ites overrunning Sunni's and taking control of wealth that had formerly been going to fellow Sunni's, and possibly risking the hegemony of the Shi'ites in the Persian Gulf", if the hated enemy the  Americans walk out? Fascinating lesson in "unintended consequences".

(b) Confused situation:  If the Saudi's say they will cut oil supplies to hold the price up, the Western press says "they're bluffing, they can't do it, they need the money, and they won't let other competitors sell oil to what should have been their customers.  If the Saudi's say, "we will raise supply, we can stand the cheaper oil price, but Iran can't" the Western press says, they're bluffing, they can raise production, they are maxed out."  So what we seem to believe in at this point is that Saudi Arabia, with the largest known oil reserves in the world, is unable to either raise production or lower production!  Of course, the folks on TOD seem to feel they cannot sustain current production.  Folks, we have to assume they are able to do one of the three!  So distrusted are the Saudi's that even when they claim they will do any of the three existantentially  possible actions, they are accused of being able to take no option they specify.  The whole discussion is losing any value or validity.

(c) http://www.hydrocarbons-technology.com/projects/khurais/
Khurais and offshore.  Don't underestimate them.

(d)  Iraq and U.S.  could take strange turn.  The Democrats are starting to see that (a) we can't leave and (b) we can't stay, another case where all the choices that are existantially possible are impossible, one more enigma of modern planning (You have two options, failure and failure).  So, a bomb goes off in the heart of Bahgdad, down comes a very large complex, killing most of the Occupational Authorities, the Democrats demand that we take control of the situation immediately, or we will be slaughtered, and in the hysteria, they are able to extract a massive money and troop commitment to "fix this catastrophic horror that President Bush and the Republicans have left us with."  They may even get a draft going.  The above has two immediate effects:  It wipes out a corrupt and incompetent occupational leadership, and gets the blood of the Americans up to raise taxes, and give the military what it takes to restore order on the ground.  Dems play FDR, promising we will never send your sons to war, and then play Johnson using/creating rage to get a blank check, ala the Gulf of Tonkin.

Lastly, LPG (propane) has finally started to act like it should, with the price taking off.  At least now I now it is not a magic fossil fuel, exempt from all normal rules.

Again, good to see Stuart's work back on TOD.

Roger Conner  known to you as ThatsItImout

Re: Rigs in KSA

In the press release by Aramco that you provided (thks vm) lies the answer to the rig question. According to the company, 23 rigs will be employed to drill 300 wells for the development of the Khurais field, starting in 2006 (Halliburton got the contract, of course).

The rig chart by SS shows almost exactly 23 rigs more operating now in KSA than at the beginning of the year.

And I totally agree with you that we should never underestimate the Saudis when it comes to oil. I add that we should also never underestimate the importance they attach to their role as founders and leaders of the Muslim faith and Arab tradition.

The Sauds had no part in the foundation of Islam.  Islam started in the area characterized above as being the land of the twelve lost tribes, the western portion along the Red sea.  It was not part of the territory ruled by the Sauds until after the WWi, before which it was ruled by Turkey.  
Very true -the Sauds were  tribal leaders (and they arose much later), not founders of Islam. I meant that Arabs that lived in what is today SA had a role in the founding of it.

Nevertheless, the Saudis currently style themselves as the keepers of the faith. The holy cities of Mecca and Medina are in their land and everyone's hajj (trip to Mecca) is tightly controlled by them. Therefore, they themselves regard their religious role as extremely important.


Khurais and offshore.  Don't underestimate them.

In 1980 Khurais produced 68,000 barrels per day. In 1981 Khurais produced a record 144,000 barrels per day. The next year production from Khurais began to fall off dramatically. Then in 1983 Saudi inituated a massive gas injection program for Khurais in order to stop the dramatically dropping production from Khurais. They were unsuccessful.

Khurais has been a troubled field right from the start. Now it is believed that 300 new wells in the area and a massive water injection program will increase production twenty fold, (from current production levels).

Do not overestimate future production from Khurais.

Let me remind you that all Saudi's new projects, except Shaybah, are schems to extract more oil from very old and very tired declining fields. Anyone who believes these projects will actually, in the long run, add any production to these old fields is simply dreaming.

Ron Patterson

Also remember that Saudi Arabia must come up with approximately 800,000 barrels per day of new production, each year, just to keep up with depletion. For the four years, 2006, 2007, 2008 and 2009 they must come up with 2,400,000 barrels per day, total, just to keep up with the average of 9,550,000 barrels per day, average, that they produced in 2005.

That simply ain't gonna happen. I am predicting that Saudi production will be around 8,000,000 barrels per day by the end of 2009.

Ron Patterson

I remember reading in the MSM on Good Friday of this year the Saudis announcing that they expected their production to decline by 8% for this yeara and cumulatively every year hence.  It was somewhere in the small articles section of the Business Section of the Globe and Mail [Toronto, Canada].
Mamifa may be very old, but it is not very tired, having been produced lightly decades ago and then shut in for most of it's life.  Properly developed (with a refinery that can handle high vanadium, currently under construction), I think it can be counted on for over a half million b/day from what I have read.

Best Hopes,



This is OT, but an email to the address on your profile bounced.  I was struck by your post on the new diesel fuel esp. where you said you were getting rid of 2 diesel vehicles.  I have been seriously thinking about getting an old Mercedes to run on biodiesel, and know someone who will be selling one with low mileage and in great condition in March.  Your comments have given me major second thoughts.  I would not be driving this car very much, and so am not so concerned about price, but if problems with petrodiesel impact availability of biodiesel that would obviously be an issue.  I'm currently in Atlanta, where we have one biodiesel outlet near where I live, but may be relocating to the Pacific NW where there are large biodiesel plants, running mainly I believe on soy oil imported from the Midwest.  I'd greatly appreciate your thoughts - my email is on my profile.  Thanks!!

eventually (unfortunately)we will be going Fischer Tropsch coal to liquids processing which creates diesel fuel. So with additional GHGs, you will have your diesel supply in the years to come.
The only reason I would buy one is to use biodiesel.
Just to liven up the discussion.  As some of you may know, there was a very successful mortar/rocket attack on Camp Falcon which is on the Southwest corner of Baghdad.  The ammo dump bit the dust in very spectacular fashion [google Camp Falcon, there are or at least were good videos].  Some analysts have opined that the most spectacular explostion were mininukes.  To hit the ammo dump with just a few mortar shells/rockets would imply that the perpetrators had the coordinates.  

What if the attack was designed to cover up the theft of some mininukes?  

What if the attack was designed to cover up the theft of some mininukes?  

For there to be a coverup, there would 1st have to be admission of existance of such in that location to begin with.

I thought the US official position was no real damage done by the attack.

But lets move such talk to the drumbeat eh?

If you  look closely at the footage provided by
google (in JUS/Al jazzeera original newscast)
Three seconds after the original flash dies out
you can distinguish a big structural chunk of
(i guess) a building falling in flames to the left
of the mushroom.
Even a .5Kt atomic would have generated enough heat
to vaporize structures made of steel.
the size of the mushroom and the speed at which
the cloud goes up is not consistent with the heat
generated by a  nuclear flash.
But they sure had lots of explosives there.
FOB Falcon was finished that night, along with
all its infrastructure and war materiel (including
Abrams, bradleys, hummers etc.)
One report in a .mil space talked about crews
doing explosives cleanup very fast except on a
300m radius of the main explosion. That is a lot
of real Estate that was wiped out.
Large chemical explosions look a lot like small nukes, save for the fission product.  If any nukes went off as groundbursts, there would be plenty of folks with radiation poisoning from the fallout.

What would the US need with mininukes in Iraq?

An army tactical nuke in storage going off due to being hit by a mortar round cannot happen. You can get messy radioactives but you cannot get a nuclear detonation. I cannot vouch for air force, navy, or marine tactical nukes but I am not aware of any significant differences in tactical nuke design or procedure from the army. The design of our tactical nukes has not changed in decades either.

I'm not going to say anymore than that because I don't recall what is still classified and what is not but I worked with that stuff in a younger life. A tactical (mini) nuke in storage is not going to go off - end of discussion.

I'm sure you're right.  
My thinking was based on the design for plutonium weapons like Fat Boy, which as you know is a hollow plutonium ball ringed by explosive charges, which must of course be set off exactly simultaneously by special electric circusits and charges.  My scenario is that the heat being generated penetrates the casing and sets off these charges, but maybe not quite perfectly, so there's a partial detonation.  Plus the supercharging mechanism wouldn't go off, so leaving only the naked plutonium implosion/explosion.  
I don't know everything about these, just what's available on Wikipedia.
As someone else on this board always also  says, dont forget that SA itself consumed
  1. 1.77 mbpd
  2. 1.85

(didnt have more recent data from EIA than table 1.2)

AND that consumption in SA increases yearly about 0.05 mbpd. (average trend the last decades, recently its more)
approximate 2005: 1.9, 2006:1.95 and now we are over around 2 mbpd thus...

So, how much of that 9.5 mbpd flat (or SINKING) line will be available for export as time passes?


So I got 35 comments so far. We gonna start taking bets on when Stuart actually posts next? How many times? And when. I say twice after 55.
i dunno      what are these rigs doing    are they drilling wildcats ?   you might expect a 2 yr delay before any increase in production     otoh are they drilling developement wells ?  2 yr delay would be a looooooong time    are they drilling "acceleration" wells ?   not much positive acceleration here
One of the common misconceptions is that a rig is a magic produce of oil.  Certainly if a rig count goes up then the oil production will go up proportionately.  The rig count increase starts a year ago on Stuarts chart, but it is likely some of those rigs have not completed their first well.

If these are multilateral, herringbone "smartwells", it is very likely that the wells spudded early last year are near the end of the drilling process but still need pipelines to transport the oil.  Unless they truck the oil, which is unlikely.

My guess is also that experienced crews did not magically appear in Saudi.  They also will have  a learning curve as they bring Pakistani's in to drill the wells.  There are  reasons besides geology why a rig count can go up without an increase in production.

I can't give you the time length between spud and production in Saudi.  In the US it could be indefinite if it is a dry hole.  Spud to production time where I am now is within 3 months.   That is only 2 laterals however, unlike the herringbone config with 7 or more.  Also the smartwell configuration has the downhole pumps that would be an unkown as to how long to install.

the rig count started up about 12-04 as close as i can tell   that is 2 yrs ago
You would really have to know the well plans to estimate the time to drill and complete a well.   My guess that is all "tight hole".  Earlier comments on 20 days spud to spud are not an accurate estimate.

Since this the crux of this discussion is whether Saudi can increase production and the relationship is with number of rigs consider this...  One horizontal program that I was involved was drilled for 5 years before the waterflood  began.  All of the initial production during that 5 year period of time was fairly modest until the the "big picture" of field development was in place.

Consider a subsurface structure such as an anticline-you don't punch holes randomly across it.  Horizontal wells are drilled across this structure for optimum drainage in relation to the waterflood or fireflood.  Individual holes are only like parts of a huge subsurface construction project.

Multilateral wells take longer than vertical wells and they also have greater potential for something going wrong.  Rotary steerables have helped with penetration rates in places like Saudi but they are not "bulletproof".

I do not bet against Saudi as far as production increase as they wrecked my life already once- yet if they can't do it this time they have "shot their wad"

yes i knew a stew in denver one time all she wanted to do is get drunk and screw   just like in the jimmy buffet song   .................
i really do appreciate the fact yer sittin .... here            
 your voice  sounds so wonderful................          
but yer face dont look too.... clear
Ah! Who cares. Kirk Kerkorian. Dusted. You heard it here first. Coming to you live. The Oil CEO. Hehe.
CEO - my guess would be, and this is a really wild guess, and that is that Stuart might have gone to bed.
Tell me when he wakes up. We'll see if you are as good as my spies.
Welcome back Stuart- your very powerful but clear graphs have been used here down under to great effect in educating Aussie pollies on what is happening on peak oil. What about the possibility that SA is worried most about the breakup of Iraq into 3 sectors with Iran getting access to southern oil fields via Sadr brigades? And then invading Kuwait to get more juicy oil fields, even if their reserves are now way down?

It is no use SA threatening the US, if the Madr brigades (& Iraq Govt) turn their guns on the US forces -it will be like Custer and the battle of little big horn. They will have to fight their way out, southwards on ONE highway being fired at by the Shias who control southern Iraq- a nightmare for GW Bush and the US military, surely?

Hi, Stuart.
Nawaf Obaid is an adjunct fellow with the Arleigh A. Burke Chair in Strategy at CSIS, as well as managing director of the Saudi National Security Assessment Project, a consultancy based in Riyadh. He is also the private security and energy adviser to HRH Prince Turki Al Faisal, the Saudi ambassador to the United States. He is the author of The Oil Kingdom at 100: Petroleum Policymaking in Saudi Arabia (Washington Institute for Near East Policy, 2000) and coauthor, with Anthony Cordesman, of National Security in Saudi Arabia: Threats, Responses, and Challenges (Praeger/CSIS, 2005). Mr. Obaid holds a B.S. from Georgetown University's School of Foreign Service, an M.A. in public policy from Harvard University's Kennedy School of Government, and has completed doctoral courses at the Massachusetts Institute of Technology's Security Studies Program.
I'm not sure this tells us anymore about the "credibility" of the threat but background is often useful.

What is now clear is that the Saudis are in a panic about the unraveling of Iraq. I see Obaid's statements as a form of hubris and a wistful yearning for the "good old days" of the 1970's. It is irresponsible to make such empty threats. They can not control the oil price by flooding the market anymore. Even all of OPEC can not do this, and we are talking about a split in that organization.

Saudi engagement in Iraq would be foolhardy. Containment of the conflict would be their best policy. Iran does not want a general war either. All of this is bad for business, and, in the worst case, disastrous for the oil supply. Another interpretation is that Obaid is sending somebody a signal but what that message is, and for whom it is intended, is not clear to me.

Yes... a generalized war would be bad for oil sales.

But we keep thinking that such a disaster would be about us... as oil consumers.

The sellers would suffer hugely. Their populations are in extreme overshoot. When the money goes away so do the food supplies and probably a good bit of the water as well, being either desalinized or pumped from deep wells. Those regimes cannot survive a major famine. And they clearly cannot live peaceably with each other.  

So... we may need to buy oil, but they just as surely need to sell it.

I think you are right, these statements smell of panic and hubris.  It would be facinating to know exactly what message Cheney took to KSA last week, but this reaction suggests they didn't like what they heard.

There is still quite a bit of uncertainty about how things will play out in Iraq, but a couple of policy changes are emerging.  Disengagement from the sectarian violence and aquiesence to the Shiite dominated central government.  The Washington Post reported today that the US may abandon talks with Sunni militias.  This would leave the US training and equiping the Shiites (and Kurds).  This cannot make KSA's Sunni rulers happy.  If the Shiites, backed by both Iran and the US (strange but true) humiliate the Iraqi Sunnis how will that affect stability in KSA?  Will their Sunni population stand by?  Will their Shiites remain passive?

As the US disengages in Iraq, Iran is filling the vacuum.  Iraq appears to be transforming into a Iranian style Shiite democratic theocracy.  Not what the US intended and not what KSA wants on its border.

"As the US disengages in Iraq, Iran is filling the vacuum.  Iraq appears to be transforming into a Iranian style Shiite democratic theocracy.  Not what the US intended and not what KSA wants on its border. "

But it is EXACTLY what Iran is gunning for and what the apologists and NeoConned minds never think about.  Too many people want to belive the US/West is "in control" and through the gates of this ignorance and bigotry rides the Iranian Ayatollah's of the Apocalypse.

The Iranian Ayatollahs are the Muslim equivalent of David Koresh - and the middle east will soon resemble Waco, Texas in February 28th, 1993  

The Iranian Ayatollahs are the Muslim equivalent of David Koresh - and the middle east will soon resemble Waco, Texas in February 28th, 1993  

For this to be true, the leadership class would have to be willing to fight, the US would have to sorround them with an overwelming dispaly of force, they would have to have nothing better than a few guns while the US had tanks, they'd have to listen to heavy metal music at high volume played for hours, and the US military would have to win the fight.

Alas, I don't think the US Military has enough large speakers to play heavy metal music to make your comparison work.

That and the surronding and winning angle.  

Just a guess, but I'm thinking the signal is for the Democrats and the people of the US not to pull out. Wonder why Ceney was in Saudi? This semi-official piece is the result,and I bet oil prices will now go through $100 a barrel no matter what happens in short order. Everbody profits except the peons, I mean citizens of the western world.
Yesterday I read somewhere (probably here) that Cheney did not decide to go to SA last week, but was SUMMONED by the king to perhaps read him the riot act about Iraq.
The Saudis do seem frustrated and threatened by Iran's growing influence.  And they are right in thinking that oil wealth is enabling Iran rise.  But they are mistaken if they think that they can match Iran's influence.  They can match them dollar for dollar and gun for gun.  But they cannot match the seductiveness of what Iran is offering, empowerment.  Iran is a democracy, maybe not as pure a democracy as the we may want.  But they are a democracy and they also are standing up to the region's outside opressors - the US and Israel.  

KSA ia a monarchy, what is more medieval than that?  All the dollars in the world are not going to take the Middle East back to 17th century, or the 1970's for that matter.

You read it in Washington Post.
An interesting point noted in the TV reports is that Cheney's prvate meeting with the King was "short", which I assume means 15 to 20 minutes or so.

Another insult meant to carry a point IMHO.  No debate or "discussions", just short, declarative sentences (politely couched in diplomatic language) after traveling halfway around the world.

I suspect Cheney spent more time with the underlings in more detailed meetings.

Best Hopes for Reality based planning,


This is the most eye opening post (IMO) in months. Your guess is probably as close to reality for the future as anything I can foresee or have read. The first chart puts an eye opening perspective on future KSA oil production. Welcome back.

"Now the only thing that remains unresolved is the resolution of the problem."

  I'd bet that the Saudi Arabian threat is hollow. If they could in fact raise production to crash the price of crude, the Iranians would rightfully reguard it as an act of war and stop tanker traffic on the Persian Gulf. It wouldn't take but a couple of speedy small boats loaded with C4 to blow big holes in a tanker and make every tanker owner in the world extremely reluctant to risk their ships in the entire Persian Gulf area. With the right plausible deniability, it couldn'tt even be reguarded as an act of war. The price of crude would go through the roof worldwide.
   Also, except for the US and possibly brave little Yemen, who's gonna ally themselves with the Saud Royal Family? They have a population of 22 milllion as opposed to the Iranians 70 million or so, but will they risk death for a bunch of arrogant scum who keep almost all the revenue for themselves?The Israelis risk total distruction for the folks who have funded Arab extremeists for 40 years? The Kuwaitis?

  I was protesting this stupid war before the US invaded, and thought it sounded like the old Uncle Remus story of the Tar Baby. Brer Fox put one foot on the Tar Baby and then tried to use another foot to get loose. Finaly Brer Fox had all four feet stuck to the Tar Baby. There ain't no way to get loose of Iraq. I'm sure sorry those stories are so politicially incorrect that they have been out of print since the Civil Rights movement because there is a lot of wisdom in those old folk tales.

Yeah, the only thing definitively clear in the Middle-East right now is that nobody can do anything that has a definitively clear outcome. It seems like any raising of the stakes just stokes a general fire higher, with unpredictable consequences, with the exception that the Price Of Oil would likely go higher (unless KSA can really 'flood the market'.... and on it goes, ain't speculation fun).
The Tar Baby analogy is great...been using this one ever since we invaded. There is no good solution to this, that's why it's called a quagmire.  The folks who say they know how to win or get out are lying.

I would like to add my own warm words about your return to the ones already to be found on this thread.  You were greatly missed - by many.

Let me just say, "When Stuart talks, people listen".

Welcome back to the addiction that is difficult to break...TOD.

YEEEHAH! A big Texas welcome back to Stuart!
Your articles are half of the reason I look at TOD,
(the other half is WT).
Stuart, welcome back! with the other contributors that have recently joined TOD (Rembrandt, Euan, Jerome, Luis), CERA will have to give away their reports for free pretty soon!

I have posted the following chart a few moths ago on PO.com:

Rockdoc, an industry insider gave me the following answer:

Once more...reality check time. You cannot look at number of active rigs and equate it to immediate additional production, it's not like some tap you just turn on. First of all the rigs are being used for a number of things, gas exploration is still a big deal for Aramco, they are continually drilling lateral sidetracks from existing horizontal wells in order to manage water production, they are drilling infills in many of the fields and there are all sorts of recompletions going on. The oil brought on-stream from these wells shows up not as additional new production but as replacement for wells that have been shut-in. There has been, in fact, very little in the way of exploration wells drilled for oil in the past three years. As well there is a considerable time lag from the time a well is drilled until you see any new production, this is especially true with Aramco as they have taken the view to drilling all of their producers and injectors prior to bringing a particular field on-stream. In this way they can build a full field simulation model that will allow them to monitor production and determine the correct intervention techniques in the future. So todays drilling does not equate with todays or even tommorrows new oil. This was apparent at Haradh III where they were drilling new MRC wells over the past two years and production did not start until the second quarter of this year. Similarily they have been drilling new wells in Shaybah with the idea to bringing on additional production late in 2007/early 2008 and they started the drilling campaign in Khurais late 2005 and that production is not planned to come on stream until 2009/2010. The time-lag of 2-3 years seen in Saudi is actually much better than noted in most places in the world where a lag of 5 years between discovery and first production is quite normal.

Zardoz with regards to Heinberg's comment it doesn't make any sense at all as was discussed on another thread. The production drop recognized in Saudi Arabia is only on the order of 300 Kbpd (they had max production of 9.5 MMbpd a year or so ago and in June were down to 9.2 MMbpd). If Ghawar is down 2 MMbpd where the heck is that 1.7 MMbpd of additional production coming from? Aramco has already said they are producing flat out in most of the fields so until the projects are all on stream (late 2009) that much extra production capacity is not contemplated.

There are basically four possibilities for the recent production drop:

  1. The "We can't find any buyer for our oil" argument where demand for crude oil is down due to high prices (or a recession).
  2. Saudis are addicted to high prices and they want to maintain them around $60 (don't forget that they wiped out their huge national debt within the last two years!).
  3. They have a real supply problem and they are having trouble maintaining production at current levels.
  4. There is a temporary drop just before new supply can be provided from new projects around Shaybah and Khurais.

Saudi Arabia domestic demand for oil is one of the highest per capita in the world (24.8 barrels/capita) and their population will probably double in 2050 (see here):

Their production has to grow at least by 1.5%/year in order to maintain exports at current levels and satisfy domestic demand.

So we should wait and see what the graph looks like in 2007?
Iran will not let us wait until 2007.

The Pinch At Peak makes the Ayatollahs squeak.
GeopoliTICS will Cap The Wells


You seem to be obsessed with the idea that Iran is about to start a major war in the ME, because they are "crazy radical Islamists". I totally disagree with you.

I have been studying Iranian history and culture as well as the Persian language for many years, and I have seen no indication of the Tehran regime wanting a war with anybody. This regime is not really radical in any meaningful sense, it is just very conservative (not neoconservative, meaning radical, either). The Supreme Leader Ayatollah Ali Khamenei (who, BTW, is not Persian but Azeri) has said many times that Iran is not a threat to any of her neighbours and will never initiate an armed confrontation with any other country.  He has also said that nuclear weapons would be against the religious beliefs of the clergy that run Iran.  President Ahmadinejad has been mistranslated as saying "he wants Israel wiped off the map", when in reality he has said nothing to suggest Iran may actually attack Israel. He has merely expressed a wish that "the Zionist regime vanish from the pages of history", which doesn't imply killing Jews, in Iran it is understood as a reference to dismantling the current apartheid system in Israel/Palestine. After all, if the Iranian regime wanted to kill Jews, or expel them from the ME, surely they would start with their own Jewish community (who appear to feel safe in Iran, according to many reports).

I should also like to point out that many serious Israeli commentators, such as the country´s leading military historian Martin van Creveld (professor at the Hebrew uni) and Ephraim Halevy (former director of Mossad) think Iran is no threat to Israel and a military attack against the Islamic Republic would not serve Israel's interests.

Also, prior to the US invasion of Iraq, none of Iran's neighbours considered her a threat, but since Iraq has been destabilized, to put it mildly, and pro-Iranian groups will presumably run the country in the future if there is to be any pretense of democracy, now some of the neighbours are getting nervous. Nonetheless, all the countries in the area (excluding Israel) have at least decent working relations with Iran. Finally, Iran was willing to make a deal with the US in 2003, and it would have been ready to recognise Israel too as part of that deal, but the Bush admin shunned the offer.

Things are not always what they seem, especially in the MSM and the Jerusalem Post.

I think everyone here understands this except SOP.  There's no use arguing with him about it.  He's completely irrational on this subject.
That's what I've always thought actually, and this is the first time I've felt a need to reply to him/her. From now on I shall continue to ignore them... I blame the wine (Friday night, 9 PM...) :-)
Humphh.  It's still Friday afternoon here.  The longest part of the week...
Not when you are at home with 12 inches of snow on the ground...ha!!!
Amen.  Thank-you, Jussi.
The pseudo-intellectual bigots of the West swallowed hook, line and sinker.  

They didn't understand the mind of the fanatics and assumed they were "rational" like them.

The Mullah's were masters at playing your prejudiced minds.

I apologize for peeing on your carpet but the House is on fire and I did not have the time or the energy to learn your language and play your "civil" games.

Best of Luck in your profoundly locales.

Could you learn to use capitolization properly then? It has to take more energy to randomly insert upper case letters.....

You didn't address Jussi's points.  Call him a liar, call each of his individual points lies, but don't enter a blanket condemnation without dealing with information that contradicts your views.  But then dealing with facts has not been a strong point for people who describe their enemies as "witches" since the Inquisition and the Salem trials.

Meanwhile, here's one fact you should at least fabricate a conspiracy theory to explain away:

Ahmadinejad was an opposition candidate.  The clerics ran one of their own for the presidency and lost.  Ahmadinejad is a layman who ran as a radical outsider against the clerics by appealing to the poor.  Since the presidency has no power in foreign affairs it wasn't a big loss for the clerics, but why should they even have gone to the trouble of running a famous cleric and then rigging it so that he would lose?

Simpleminded Americans refuse to accept that there has never been such a thing as a fully totalitarian regime.  There are always factions.  If Ahmadinejad wants to start a war so he can overrule the constitution and take all power for himself, well, the ironies for Americans are obvious.

You remind me of a 1970-era book by a psycho Red-hater called "Death of A Nation" claiming that the near-war between the Soviet Union and China was all a big Commie hoax to conquer the world.  In fact Brezhnev tried to get Nixon to join in an attack on China, but Nixon's alliance with China grew into one of the causes of the fall of the USSR.  At least those old Red-bashers could argue that Stalin killed over 20 million of his people and Mao even more, that the USSR had occupied a half-dozen countries and that it had 10,000 nukes pointed at us and an army of ten million men.  None of these apply to Iran, yet you want us to destroy it at the likely eventual cost of millions of its people - which we didn't do to Russia.

Maybe if we had left Iran and the secular Mossadegh alone in 1953 you wouldn't be calling for another damned war now.  Let's find out.  Is your agenda religious bigotry, racism, or stealing oil?

An article on Iranian Jews,


From memory, they have one seat on the Iranian Parliment set aside for a Jewish representative, because their #s might not allow them to democratically elect one via districts.

Best Hopes for Truthful understanding,


Very nice rebuttal...I'm glad you took the time, even though I know it will be fruitless in convincing the intended audience.  

Texas and US Lower 48 oil production as a model for Saudi Arabia and the world
Jeffrey J. Brown & "Khebab", GraphOilogy

Based on the Hubbert Linearization (HL) method and based on our historical models, we believe that Saudi Arabia and the world are now on the verge of irreversible declines in conventional oil production.
first published May 25, 2006.
I don't buy 1) as credible (or rather - it's basically an instance of 2) - the only reason they couldn't find buyers is they wouldn't lower the price enough to allow buyers to afford it).  I agree 2), 3) and 4) are hard to disambiguate.  One piece of evidence that somewhat argues against 4) is the fact that Haradh III supposedly bought an additional 300kbpd on as of April, but Saudi production has been drifting downwards since.  So will the Shaybah expansion and Khurais reopening do what Haradh III couldn't (ie increase production)?
Reprint from Reuters.

Saudi Aramco eyes plans for capacity rise after '09

State oil company Saudi Aramco is evaluating projects to boost crude oil production capacity beyond a target of 12.5 million barrels per day (bpd) by 2009, a senior Aramco official said Monday.

Saudi Arabia, the world's top oil exporter, has fast-tracked oilfield expansion plans to raise output capacity and maintain spare capacity of at least 1.5 million bpd to meet growing world demand or cover unexpected shortfalls in supply....

"We have an inventory of fields to develop ... all of those are candidates for expansion as well as new (development). But they are still being evaluated," said Khalid al-Falih, senior vice president for industrial relations at Aramco....

He said Aramco was conducting more seismic studies to evaluate and "sharpen" the ranking of its portfolio of fields.

Saudi Arabia has increased its output capacity to 11.3 million bpd and additional increments are scheduled to be completed by 2009 to lift capacity to 12.5 million bpd.

Development of the Moneefa oilfield is expected to bring 900,000 bpd online by mid-2011.

Falih said Aramco was planning a 250,000 bpd increment from the Shaybah oilfield but that it had not set a time-frame for the project. This would be in addition to the 250,000 increment expected to come onstream from Shaybah by 2008.

"The next increment from Shaybah will take us from 500,000 to 750,000, which is already in implementation ... The next increment after that will take us to 1 million bpd," he said...

Saudi Oil Minister Ali al-Naimi has said the capacity expansion plan to 2009 entailed increments totaling 2.35 million bpd from seven fields. Of that, around 1.5 million bpd are net additions that will raise capacity to 12.5 million bpd, while the rest would offset natural decline...

Flood the market to cripple the Iranians? I think not.

capacity expansion plan to 2009 entailed increments totaling 2.35 million bpd from seven fields. Of that, around 1.5 million bpd are net additions that will raise capacity to 12.5 million bpd, while the rest would offset natural decline...


An offical statement on the rate of natural decline in KSA !

835,000 b/day decline (pretty decent % BTW) but over how many years ?

Any ideas on context (# of years ?)

Add doemstic consumption increases on order of 100,000 b/day/year for net exports.


As far as I'm concerned, "capacity" is a number like "proved reserves".  There is only KSA's word for it's existence, and no evidence of an actual ability to raise production beyond about 9.5kbpd in response to problems in the world market (eg the 2005 hurricanes).
According to the EIA, productive capacity is any oil production that could be brought on-stream in a month's time.

Stuart, welcome back!

I think you meant 9.5 million bpd rather than 9.5 kbpd.

Below is SA state annual budget (src: Saudi Arabian Monetary Agency):

That's why I believe:

  1. Saudi Arabia needs high oil prices in order to maintain the state current level of expenditures
  2. a flooding of the oil market to counter Iran is highly improbable
I dont understand this.
Why, with oil prices so high, is their deficit increasing?

Either they are terrible money managers, they are building out huge new decadent castles or the net energy of their energy infrastructure is declining rapidly. Ideas?>

The red line was expected deficit. The blue line is actual deficit. Look at it again.

Is the production graph based on the Saudi's claimed reserves?

Something like that (URR around 375 Gb), the details are here.
I am very confused by the comment of Rockdoc in this post and the lack of comment on it.

"Zardoz with regards to Heinberg's comment it doesn't make any sense at all as was discussed on another thread. The production drop recognized in Saudi Arabia is only on the order of 300 Kbpd (they had max production of 9.5 MMbpd a year or so ago and in June were down to 9.2 MMbpd). If Ghawar is down 2 MMbpd where the heck is that 1.7 MMbpd of additional production coming from? Aramco has already said they are producing flat out in most of the fields so until the projects are all on stream (late 2009) that much extra production capacity is not contemplated."

Is there reason to suspect Ghawar is down 2 MMbpd?  This is far above what I've heard, ie that Ghawar is at or pre peak.  

What's Up????  And if so, where is the 1.7 MMbpd coming from?

Re: Is there reason to suspect Ghawar is down 2 MMbpd?

No because it would imply that Saudis have found 1.7 mbpd from other fields with little spare capacity to compensate for that loss. Ghawar is probably at peak right now.

"Ghawar down by 2 MMbpd" is a claim made by Richard Heinberg last August, see discussion here.

"CERA will have to give away their reports for free pretty soon!"

Frankly, a thousand dollars is looking pretty cheap for the advantage of information unencumbered by the idiocies of CEO, SendoilPlease...

I hated Oil CEO when I first came here.....

but like mold he grew on me.


Seriously, Oil CEO is very sarcastic and doesn't take time to  put sarcasm tags on his text. If you think he is a big fat jerk.... you probebly don't get his sense of humour.

I think he degrades the value of the information presented here.  Yes most of the value lies in the lead post, but in the threads others contribute via clarification, correction and so on, including the odd worthwhile challenge.  But what should be an interesting stroll, becomes an exhausting marathon jumping over streams of excrement.  I wish there was an ignore button.
Go fuck yourself. I've been reading your stuff for some time. Nobody can figure you out. And nobody really cares. OK, so you finally got me to respond. Live it up. The only reason I'm even half paying attention is because you insist on insulting me. Geez, there's a gimmick. Nobody's tried that before. Asshole. What were you thinking? You were going to be the one that lived. Oh look, Leanan agrees. What a surprise.

Tony Montana

Or don't like his sense of humor...
I think his insertion of drunken vulgarity at the start of the comments to Stuarts post was an act of vandalism that will quite possibly drive away new people guided to theoil drum by reddit, digg, ect. Its egocentric in the extreme.and says worlds about his 2 AM drinking habits.

oilceo, did you ever think about joining AA?  

Ever think about leaving AA, Bob?

Sorry. "oilmanbob." Ever think about leaving?

How presumptious of you.

Ever think about doing some reading and skipping the TV and the internet?

Whatever time it was where you are, it was only 9:30 here and you can't spell and do punctuation at the same time. You may want to think about adjusting either your Lipitor, your valium, or start taking about half as many percs as Rush Limbaugh lives on.

Hello? Tkk, Tkk, Tkk, Hello! Is thing thing on?!


"Freedom begins when you tell Mrs Grundy to go fly a Kite"
- R A Heinlien
Khebab, out of interest, where does your 13.5 mmbpd 2020 number come from? Also suspect that population growth may accelerate as fuel shortages / high prices force migration from areas that have not to areas that have energy.  You cannot of course forecast beyond 2050 here - KSA a net oil importer - from where?  They will of course reduce their production long before they reach the point of break even.  I keep wondering what the Norwegians will do with their gas in that regard.

Leanan's comment here abouts is probably somewhat wise - in that there is a danger of looking at fine detail of data too frequently.

Stuart - what's this JODI data you refer to - have I been asleep, just plain dumb - I've never been on that site before.

Re: Khebab, out of interest, where does your 13.5 mmbpd 2020 number come from?

Well, it's an old simulation I've made a while ago assuming an URR interval for SA around 375 Gb and based on a Stochastic Generalized Bass Model I've tried to develop. It's probably very optimistic but it gives an idea of what an unconstrained production from SA would look like.

Re: They will of course reduce their production long before they reach the point of break even.

Do you mean consumption?

Re: what's this JODI data you refer to

JODI= Joint Open Data Initiative

No, I meant cut back on production.  When they do peak, and see their production falling and can project future "imports" that cannot happen, they must surely cut their production to spin out what they have.

I'm quite sure the Norwegians will start to have a similar debate some time, if not soon, in the comming years.  The UK is going to become very heavily dependent on Norwegian gas - I just don't see them ramping up their gas production forever so that we Brits can squander it - like we did our own.

JODI is the Joint OIl Data Initiative (link in the graph sources above).  It's a multi-lateral effort to supposedly improve transparancy in the oil market by getting everyone to agree on a common set of numbers.  As you can see, that hasn't been quite the effect....
Wasn't this pushed hard by Simmons or was it around before he came out with his big "data transparency" plea?
Folks, consider this a reminder to positively rate these articles (using the icons under the tags in the story title) at reddit, digg, and del.icio.us if you are so inclined.  Also, don't forget to submit them to your favorite link farms, such as metafilter, stumbleupon, slashdot, fark, boingboing, furl, or any of the others.

These posts are a lot of work, and the authors appreciate your helping them get more readers for their work however you can.

Deja Vu All Over Again

This year Saudi Arabia (KSA) is at about the same stage of depletion (based on HL plots) at which Texas, the prior swing producer--the producer that effectively controlled world oil prices for 35 years and the one that defeated two attempted Arab oil embargoes--started a terminal decline (in 1973).

1973, the first year of the terminal decline in Texas production, corresponded to a four fold increase in oil prices.  From trough to peak, oil prices went up by about 1,000% from 1970 to 1980, triggering the biggest drilling boom in Texas history.  The number of producing wells increased by 14% from 1972 to 1982.  Production dropped by about 30% from 1972 to 1982.

Granted, the field distribution for KSA is vastly different than Texas, but that is also true for the North Sea and the Lower 48.  The North Sea and the Lower 48 peaked at the same stage of depletion.

Khebab has demonstrated mathematically (at least for the Lower 48 and Russia, which have together accounted for more than one-third of total world oil production to date) that the first half of production is a very good indicator of future cumulative production.   This means that KSA's production has to fall, probably at close to a 5% long term net decline rate, similar to what we have seen in Texas.   Net is after new wells, workovers, recompilations, etc.  

Remember the Saudi stock market crash?  What did the Saudi princes know, and when did they know it?

Finally, the Saudis are vastly more exposed to a decline in their biggest field than Texas was to the decline in its biggest field (more than 50% versus about 7% of total production).  The absolutely best case for Ghawar is that it producing one third water--after being redeveloped with horizontal wells.

"Remember the Saudi stock market crash?  What did the Saudi princes know, and when did they know it?"

WT, I apologize for my ignorance here, but what are you suggesting?  Please explain for the dolts like me who pay close attention to your work.

Venezuela Versus Saudi Arabia

Venezuela has long life unconventional (bitumen) reserves.

IMO, Saudi Arabia is going to show about a 5% per year decline.  

So, which stock market should go up and which should be down?



Following is a link to an (apparently) different index, that shows the Venezuelan stock market for 2006:  

http://www.marketwatch.com/tools/quotes/intchart.asp?symb=1808151&sid=124022&freq=1&time =8&siteid=mktw

Bloomberg (12/1/06):

Venezuela's IBC index rose 3707.8 to 46,741.54, led by Banco Provincial SA, the country's fourth-largest bank by assets.
The point of this whole exercise is that the Saudi stock market started crashing at exactly the same time that Saudi production started falling (as Ghawar started crashing?).
It looks like Ali Naimi has come up with two new reasons for Saudi production cutbacks.

Saudi Oil Minister Wants Stockpiles Cut

 Published: December 01, 2006 12:11 PM  

CAIRO -(Dow Jones)- High oil inventories in the U.S. are keeping the global oil market "significantly" out of balance, Saudi Arabia Oil Minister Ali Naimi said Friday.

 "The market is significantly out of balance," Naimi told reporters on arrival in the Egyptian capital ahead of Saturday's meeting of the Organization of Arab Petroleum Exporting Countries.

 "Inventories in the U.S. are high, not low, that is why the market is out of balance," Naimi added.

 When asked what would balance the oil market he said: "Take 100 million barrels out," without elaborating.

 Later Naimi said: "If you look at OECD (Organization For Economic Cooperation and Development) levels they are about 2.3 billion (bbl), a year ago they were 2.1 billion to 2.2 billion (bbl) so there is a surplus of at least 100 million barrels."

 Naimi was referring to oil stocks held in countries belonging to the Organization of Economic Cooperation and Development.

 Naimi added that "reducing supplies" would remove the 100 million bbl surplus.

 Ministers from the Organization of Petroleum Exporting Countries are worried that growing global oil inventories could lead to weaker demand and pressure oil prices lower.

 Several OPEC ministers have said this could mean the group may need to cut crude oil output again when they next in Nigeria in December.

 OPEC pledged in October to cut supplies by 1.2 million b/d from the beginning of November, but a Dow Jones Newswires survey showed the group had only cut about half that amount.

 Asked if all OPEC countries had implemented the cuts agreed in Doha in October, Naimi said "I think so."

 However, Naimi wouldn't be drawn on whether a further cut would be needed to balance the market.

 "We need to meet first and look at the data and then decide accordingly," Naimi said.

 Crude oil demand over the current quarter and early next year looks all right, Naimi said.

 "Demand in the fourth quarter (2006) and the first quarter (2007) are OK - there is no problem," Naimi told reporters when asked about his outlook for crude oil consumption.

 The two quarters are typically a time of strong oil demand as refineries ramp up production of heating fuels to supply consumers during the northern hemisphere winter.

 Naimi also said he was worried about the impact of the weak U.S. dollar on oil revenues.

Ministers from the Organization of Petroleum Exporting Countries are worried that growing global oil inventories could lead to weaker demand and pressure oil prices lower.

Saudi Arabia Oil Minister Ali Naimi's comments appear to be inconsistent.
As swing producer KSA has always wielded the threat of opening the manifolds and driving down the price to render non-opec production uneconomic and destroy the potential return of substitutes such as PV,wind, better insulation etc.

From this reasoning, Naimi should be happy about the high level of global inventories. If inventories are full then we are on the verge of a glut and the situation is ripe for KSA to add additional production, drive down the price, destroy the market, kill the competition. In his earlier WaPo op-ed Naimi made exactly this threat. KSA made this threat a reality in early 1980s and the fear of recurrence has prompted western under investment in production for the past 20 years. This threat has derived from KSA's position as swing producer. It is their hammer; it is the only real threat they have.

So why is Naimi arguing against a circumstance that permits KSA to make good on its threat, that makes it easier for the swing producer to use its hammer and destroy the market fundamentals, to hurt Iran and every other producer, to kill the economics of Kazakhstan, Angola, Verkhnechonskoye and all the others?

Why is the KSA oil minister taking a position inconsistent with the established past position of his employer?

There may be other answers but my interpretation of the above is that KSA is afraid of market economics resulting in a drop in oil prices. Why should KSA be afraid of this when this is the very threat KSA makes to the market as swing producer? Because they cannot afford it.

We already have evidence that KSA has significantly increased their rig count. Past posts on TOD give an investment cost estimate of $19 a bbl and an operating cost per bbl of around $10. It must cost a lot to pump those millions of bbls of injected water and cost even more to separate it out again on production. So we have cost a estimate of $30 a bbl and royalty expectation of between $20 and $30 a bbl (this is the money KSA needs to earn to keep the Prince's in horses and 747, fund the madrassa's, pave a few roads, provide potable water and a few services to its citizens). This interpretation is supported by Naimi's concern over the revenue impact of a declining USD.

If this analysis is correct then KSA cannot afford a price drop. If the price were to drop much below current levels then KSA would have to cut back somewhere. A cutback in E&P means KSA is then unable to find and bring to production all that theoretical oil that overhangs the market. The opportunity cost of maintaining E&P is that the Princes may need to forgo their horses and 747s. To put this in blunt terms KSA may be facing an economic straitjacket and given the nature of the society such a straitjacket increases the potential for internal implosion. Under this scenario Iraq is an open flame and KSA is a pool of gasoline slowly melting in the sun.
it's in the best political interests of Democrats to make a public show of calling for withdrawal while privately making sure not to do anything that would force the administration to change it's politically disastrous course before the 2008 elections

Indeed, the democrats realize that this is not a fixable situation.  They have a balancing act here- to make it look like they are trying to do something but making sure that Bush always blocks it so that they do not take any of the real responsibility (and hence blame) for Iraq.  My prediction is that Iraq could continue for decades in a state of disarray.  All the soldiers and funds in the world will not be able to "fix" it, nor will the US and the rest of the world let it deteriorate into a regional war.  Similar to how the world has not permitted Israel to destroy completely the Palestinians, but neither have they had the wherewithal to fix it (probably bc/ like Iraq, it is not fixable).

All the soldiers and funds in the world will not be able to "fix" it, nor will the US and the rest of the world let it deteriorate into a regional war.

Agreed that what we are looking at is an intractable problem but do not see how the world can influence the scope and scale of that problem. The entire might of the US military cannot control what takes place on the ground in Iraq.

I suspect that we may see the emergence of a proxy war with Iran backing the Iraqi Shia and KSA backing the Iraqi Sunni. KSA was against the US intervention from the start and cannot be happy with the impact the conflict is having on their co-religionists.

WRT Bush Administration options in Iraq, they're all bad:

a) go "big" i.e. large increase in troop strength - not possible, there are not enough American troops available.

b) go "long" - dragging out the military stalemate will only increase casualties and hate on all sides, and is politically unsupportable in the U.S.

c) go "home" - leaving (sooner or later) will result in the toppling of the weak imposed government.  There is no such thing as a nation called "Iraq", and there is little chance of installing another dictator to hold Churchill's creation given the profusion of weapons, militias and rising ethnic tensions.

The best option for long-term stability is one forgone in 1921, the creation of three states: Kurds in the north, Sunnis in the middle, and Shias in the south.

The technical term for having nothing but bad political/military options is "defeat".

The best option for long-term stability is one forgone in 1921, the creation of three states: Kurds in the north, Sunnis in the middle, and Shias in the south.

The establishment of Kurdish state would be viewed as a threat by Turkey due to the existence of a large Kurdish population on the Turkish side of the border. Turkey has already threatened military action in Northern Iraq if US did not police and suppress Iraqi Kurds cross border intervention.

Since nobody seems very pleased by Malaki I suspect we will see some form of putsch to install a new pro-American, pro-democracy, pro-western, pro-sunni, strongman i.e. a Saddam Ver 2. If Iraq is not in civil war now then a development such as this will surely trigger it. Cannot avoid the sense of a Guns of August trajectory in which the ME erupts in conflict. As a writer in the WaPo said today, current developments in Iraq make the Israeli/Palastinian situation look very positive.
How can we hope for a better saddamm than the one we've got? He's tanned and rested and he just might be open for a deal... let saddamm be saddamm.  

What better option does bush have?  And, even if the kurds and shias take gas (again), several surrounding states will be quite pleased while pissing off the iranians and al-queda.  Time for a little realpolitik.

I'm extremely worried about the reports according to which the Sunni insurgents are preparing to take the Green Zone. If they do stage a major attack and more or less incapacitate the current "government" (run by the Shia, mostly), the only outcome I can see is a long civil war between the Sunni and the Shia, in which Iran (militarily superior to any of the adjacent Sunni countries) will support the Shia militias whereas the Sunni groups will get support from KSA, Jordan and who knows where (I assume the US will eventually end up siding with the Sunni - there have been some signs of that recently - and that would just serve to polarize the whole situation and region with unpredictable consequences).

This reminds me of the idea that Andrew McKillop put forward in the book The Final Energy Crisis: in the end there'll just be a wipeout of the resources (oil and gas). Let's hope we'll never go that far.

Having said that, I still believe that, since Iran is militarily superior to any Sunni country in the region (apart from Pakistan, which would be ill-advised to join in), KSA and Iran will work out some form of deal, and it may well be mediated by their important allies, Russia and China. In fact, would it be impossible that the US would prefer an all-out war between the Shia and the Sunni, just to prevent the deals that many of the Gulf countries have made with China and Russia, among others, from becoming reality?

In all the anti-Iran hype, people seem to be ignoring recent articles indicating the Sunni resistance (not al-Qaeda, but the guys who build the IEDs) is close to bagging Baghdad.  Patrick Cockburn says that while the Shia have been fighting each other and trading atrocities with al-Qaeda, the real insurgents have quietly taken control of towns surrounding Baghdad.  They could cut off the roads and create a crisis for 5 million residents and the heart of the US occupation.  Or they could try a Tet-style raid into the Green Zone to destroy what little credibility the government still has.

I think SCIRI would be happy to abandon Baghdad and set up an Iranian satellite to its south.  That would leave SCIRI's rival Sadr in a bad way, with 2 million of his supporters among the surrounded.

My questions are: if the Sunni/Saudi alliance conquers Baghdad, but the Shia/Iranian alliance holds the rest of the valley, is that an empty victory?  Can the Sunnis block the two rivers and ruin the agricultural economy of the Shia?  Which side would be able to hold the southern oil fields, and would any oil actually get pumped under such conditions?

A straight-up fight between Iran and Saudi Arabia for control of Iraq's oil fields - does that sound like two producers trying to offset decline?

Consider another option. Al Qaeda is an American creation. Bin Laden was a CIA agent. Both were used in a proxy fight against the USSR in Afghanistan with the US supplying weapons, funds, etc. How did the US know so much about the underground fortress city in Afghanistan? We built it for them!

Bin Laden turned against the US when US troops entered Saudi Arabia during Gulf War I, something he considered a sacrilegious act. Before that time Bin Laden was our man.

Now think upon that for a moment. What if the House of Saud is full of hot air? What if the US decides that a nuclear Iran is unacceptable and is willing to pay any price to fight that? What if the US turns against the House of Saud, agrees to get US forces completely out of KSA forever, and then turns to backing Al Qaeda once again with arms while Bin Laden recruits his fighters. Imagine the US choosing to bow down to a fundamentalist Saudi Arabia in exchange for Al Qaeda fighting the war against the Shiites (Iran). Imagine the US exiting Iraq after partitioning it in three pieces - a Sunni state, a Shia state, and a Kurdish state. Given the right religious exhortation, the Sunni state would fight the Shias (they already are). Given the right funding and weapons the Kurds would fight the Shia in Iran because they are viewed as oppressors of other Kurds.

No, I do not consider the above likely but the situation is such a gigantic mess over there with all sorts of ins and outs, that it's important to remember how many times everyone over there has changed sides in this ongoing battle and how easy it would be for it to happen yet again, which would completely alter the political landscape. And it would be far cheaper to cut a deal with Bin Laden than to use our own forces. Remember, Saddam was our man once too which was part of the reason for the utter shock when he invaded Kuwait.

I agree that Turkey views the creation of a Kurdish state as a threat, and Turkey would need to be bought off in any partition deal, but I don't think achieving this end is an insurmountable problem.

I do think that relying on force to solve "Iraq's" problems is totally unrealistic.  Installing a Saddam Ver 2 is unlikely to be successful, given the strength and growing independence of the various parties, particularly the Kurds and Shias.

A better model than a Guns of August style descent into ME chaos is for Iraq to devolve like of Yugoslavia, another artifically created state that ultimately broke into religious/ethnic conclaves.  It wasn't pretty or easy, but the results seem stable.

It took NATO intervention to clean up the Yugoslavian mess. NATO won't touch Iraq. That leaves regional powers who are at each other's throats verbally already. Saudi Arabia may be able to fund the Sunnis in Iraq longer than Iran can fund the Shias but regardless, it looks to get even messier than it already.
I've been pessimistic about Iraq for a while, but the recent record crescendo of proclamations of fiasco, defeat, civil war, etc. are beginning to strike a contrarian note to me. Perhaps Iraq has hit "peak misery" this fall, with the situation about to take a turn for the better. We can hope.

And let me add a welcome back to Stuart. I agree with his premise on Saudi production in this article.  

I thought the presentation on The Daily Show the other night made the most sense, (as it often does...)
go big, go long, or go fuck yourself (stay the course).
url at digg.com is


only 2 diggs so far.

I have to say that I really enjoyed reading the lively posts this morning. Nothing gets people more energized than the prospects of war. I will cite WW I and WW II as my historical witnesses.


At the same time I saw news that OPEC officials are talking about cutting back at least another 500,000 barrels a day by the end of the year. I find that highly likely. It would make perfect economic sense for everyone, including KSA, especially if they are close to the peak. But then, I might be wrong. They might be acting irrationally out of fear of Iran's dominance. But I don't think so. I rather think they will be acting rationally out of greed.


What amuses me the most is that the US population is still far away from even having the smallest of all possible epiphanies about the size of the problem. Sales of light trucks are up for Toyota, while Ford has succesfully destroyed its own business with one bad product after the other. And GM is having a pipe-dream about plug-in SUVs. I am sure they will be able to transport a spool with at least ten miles of extension chord in the back of their trucks with 100kW electric motors.


What nobody is talking about, it seems, is how we can raise  EPA standards by 10mpg (at least) over the next five years and gas tax the SUV out of existence. Or how we can replace  most of our (hydro)carbon based energy sources with renewables.

This war will be fought at two fronts: one is Islam fighting about whose interpretation of the Prophet is correct until they will find that they are both wrong. This war is lost already. Except that a billion people or so don't know it, yet.

The other war will be fought by the developed world to keep our standards of living and expand them to two billion more people with ALL energy comming from renewables and nuclear sources within 50 years. This war will eventually be won, except that a couple billion people aren't even aware that it has already begun.

And now tell me that I am wrong.


Well, I can't agree with you that the earth will support another 2 billion automobile owners.  I don't see it.  Not only do you have an energy problem and a climate problem, you have a raw materials problem.
Agreed. Maybe I should have been more carefull in defining what I mean by "standard of living". Since I don't own an automobile, I got carried away. I hope you can forgive me that I call Singapore's excellent network of buses and London's underground and trains into all parts of the country a high standard of living. On that scale most places in the US simply suck.


Certainly an automobile is not essential for survival.  Unfortunately, we in the United States have built a society that would be completely non-functional without the automobile.  Worse, we have come to see the automobile as something that defines who we are -- strong, macho, free, bold, cool.  So, it isn't going to be easy to get Americans to give up their cars and -- unfortunately -- most of the rest of the world's newly affluent seem to be buying into the same nonsense.  
True - at the moment. But I think these things could all be fixed. Or, shall we say... they will have to be fixed? I also agree that a lot of people in the world are buying into the automobile as something that shows their strength. Certainly the Chinese do. But the Chinese are also suffering from all forms of lung disease thanks to their rather poor air quality. We shall see which force wins this tug of war... ego or physical illness?


Man, I never thought that I'd be saying this, but the relentless march toward chaos in the Middle East makes me nostalgic for our good 'ol buddy, Sadaam Hussein.

While he wasn't exactly a very nice man, and was seriously ethically challenged, he did keep the country together with an iron fist, made the trains run on time, and served as a buffer between Iran and Saudi Arabia.

So what if we occassionally had to bomb him to remind him not to violate the no-fly zone; so what if he oppressed a large segment of the population; and so what if he built obscenely oppulent palaces for his cronies and fellow thugs. All that was far preferable to what we are facing today. (See how easy it is for one's standards and principles to be defined downward.)

So, here's my brilliant solution: have Bush pardon Sadaam and reinstall him as Maximum Leader of Iraq. This will make the Saudis get back to doing kissy-face with the US, and maybe we can all go home. The Shiites won't be too happy about it, but they weren't very happy before.

My Grand Scheme will probably make just about as much sense as whatever decision-by-committee nonsense this Iraq Study Group will come up with, something which is obviously just a repackaging of the same old crap, so as to save what's left of the shredded remnants of Bush's failed presidency.

Viva Sadaam!

And the truely sad thing is that on some level you are even right...
Oh, this is just too funny; we have failed so badly in Iraq that people are now seriously talking about bringing Saddam back...and he was the  primary reason given for the "war" in the first place!  The very definition  of the dog chasing its own tail.
Empowering Saddham v2 would quell internal dissent in Iraq but would likely not be enough to bring all the surrounding states to heel.

So I think the solution is to install Saddham v2 and then provide him with weapons of mass destruction do he can deal with those pesky Iranians. A few nukes should keep the Azeris off balance, some mobile biological warfare vans would do for the Kurds, and a fleet of wingless pilotless aircraft would deal with the Saudis.

Welcome back, Stuart.  SA's production is key but not fundamental to the big picture.  Today, we've updated the Depletion Scenarios to reflect for the first time the IEA WEO2006 data in a plus 5-Tb environment.  With consumption at 31-Gb/yr while URR expands as 113-Gb per annum, the long term unfolding is less sensitive to what happens in SA.  While there are optimistic Outlooks out there with Saudi production as high 20-mbd, most of the reasonable ones have them at Aramco's 12.5-mbd target.

Footnotes for each Outlook at http://TrendLines.ca/economic.htm

"SA's production is key but not fundamental to the big picture."

Freddy, are you not a native English speaker? The more I read of you the more I find ridiculous language constructs thrown about as if to inflate your sense of self-importance. Something is key but it is not fundamental??? That statement beggars the imagination as to what sort of new nonsense you mean.

Let me help you out here:

34.    chief; major; important; essential; fundamental; pivotal: a key person in the company; key industries.

1.    serving as, or being an essential part of, a foundation or basis; basic; underlying: fundamental principles; the fundamental structure.
2.    of, pertaining to, or affecting the foundation or basis: a fundamental revision.
3.    being an original or primary source: a fundamental idea.

Now just what did you mean with that twisted statement? Clearly, linguistically, if something is key then it is fundamental and vice-versa. You made a classic political statement - i.e. a null and void soundbite meant to confuse but say nothing because it is semantically null. This leads to questioning your entire purpose here. I think I will look closer instead of ignoring your drivel and see how often you make meaningless statements disguised as high-falutin' rhetoric.

Good eye. The typical consultant's vocabulary tries to cover all bases so no one can call them on anything they say.

This happens in politics too, where the word "imminent" got used to indicate time frames from 5 minutes to 10 years. CYA, I say.

Freddy - I gotta say I just don't believe the scenarios that reach 100 mmbpd and stay there.

There are some simple facts that have to be taken on board.  I consider it extremely likely that the world's best oil fields have been discovered and are now substantialy depleted.  Every where you look, the new fields are second or third rate.  There may be lots of them - but we don't have the drill rigs, infrastructure or energy to develop them all.  Examples - Clair West of Shetland UK, Shtockman - Russia, Khurais in KSA - no way can these second and third rate assets replace the prime assets, many of which are now in decline.

In the UK, HPHT gas condensate fields have a short life span. Similarly, lots of small fields only last a few years each - it is a treadmill and we are in danger of falling off the back at any time.  I suspect that N American Nat Gas may be one of the first casualties - but there again I'm not an expert on N American Nat Gas.

There are many here who would like to have more optimists to argue with, so I for one appreciate you turning up to present the alternative point of view - even though I don't agree with it. By 2012 - I will have convinced you that I / we are right and you / the optimists are wrong.

Well, Euan, let me be impolite and answer with a question.  Last Autumn our Depletion Scenarios had an Avg URR of 2.808-Tb using the Outlooks plus two non-Outlook URR Estimates (API & OGJ).  Today it is 3.253-Tb using the Outlooks and 4 non-Outlook estimates (added IFP & Foucher).  That's 445-Gb in just 12 months; and compares with our 113-Gb/yr annual incrade in avg URR estimates when using a six-yr rolling avg.  Obviously the last two years are weighted by the new oil prices.  IEA's figure is based on $55/barrel but i'm not aware of the prices on which the other 15 are basing their estimates.  If URR is growing at this phenomenal rate and has attained this kind of magnitude, how do propose exhaustion of  that volume of oil without a lengthy plateau?

Without putting works in your mouth, u must either challenge the 16 URR's and/or use a less aggresive net depletion rate.
(mine is 2.76%).

OTOH, i may have misunderstood what troubles u and it is the peak rate (100-mbd) that is at issue ... not the plateaus.

URR & the schedule of production rates go hand-in-hand.  They must reconcile.

We went thru this at length with Chris Skrewobowski.  His plateau as we illustrate it was difficult for him to fathom w/o proposing a URR of 1.8-Tb.  It was easier in the days prior to ASPO-6 for him to live with the plateau 2042 than attempt to challenge the conventional URR's.  In the end, he adopted the second lowest published URR ... BP (2.244-Tb).  OPEC's was a tad lower but there is little opporunity to scrutinize their numbers.

Others at TOD and similar forums may wish to tackle a look at URR.  All four attempts by Peaksters at challenging the oilco's production targets failed by coming back with similar numbers in the medium term (five year) time frame.  If all liquids production is indeed headed towards 90 to 100-mbd, then the only way to challenge higher produciton or a very long plateau is to discredit the new URR estimates.

At the moment, 14 of the 16 URR estimates that we use are based on field analysis.  The Laherrere & Foucher (Khebab) estimates are mathematics based (HL).

Well, this thread has been very serious indeed. Now that Saudi Arabia's mouthpiece Obaid is making overt threats against the Shia' and there is civil war in Iraq, just as many have predicted & talked about all along -- and this threatens the world oil supply in an unprecedented way -- I believe it is time to thank those who brought this catastrophe our way. A big thank you to

  • W
  • Dick "Dick" Cheney
  • Don Rumsfeld
  • Richard Perle
  • Condy "Oil Tanker" Rice
  • Paul Wolfowitz
  • Karl Rove ("Mr Terror")
  • other neocon fellow-travelers too numerous to name
  • Diebold Voting Machines
  • The Supreme Court (sorry, Al)
  • and, last, but not least, all of the American Voters who voted for the first-listed, aforementioned clown in 2000 & 2004
A special thanks to Osama Bin Laden, who made all this possible and who believes that a "fair price" for oil is about $145-$200/barrel. He is surely right!

And now, it is finally time to

Shock The Monkey

Again, thanks one and all! -- for making our Wonderful World possible.

Dave, isn't it better to start one thermonuclear holocaust than to curse the darkness?
I don't know, Bob.

A special thanks to Osama Bin Laden, who made all this possible and who believes that a "fair price" for oil is about $145-$200/barrel. He is surely right!

Would oil in the range $150-$200 per barrel be sufficient to stop coal shipments to US coal-fired power stations?  Remember that half of American electricity supply is from this one source.  If so imagine the fallout as city after city succumbed to blackout tearing the fabric of US society to shreds within weeks if not days?  One would think that a protracted effort to bring down, or at least interrupt, the infrastructure that maintains Ghawar would cause similar havoc. If Osama could pull either of these two off then his ambitions against the West would be largely fulfilled.  The toppling of the Saudi regime that would ensue, upon expiry of the American support contract, and its replacement with an Islamic government would be the culmination of decades of fervent effort to bring this and the destruction of the United States about.

I think it's always interesting to take people at their word. Consider Obaid's presentation at CSIS in Washington, 09 NOV 2006: "Saudi Arabia's Strategic Energy Initiative: Safeguarding Against Supply Disruptions."

The two key takeaways imo are as follows,

  1. KSR is possibly ceding further substantial production growth to the FSU, and other non-OPEC. As an answer, they have decided to boost their own capacity, so that they remain the Go To Guys, so to speak. I'm particularly enchanted with their new, stated goal to be able to swing a tremendous amount of daily flows from their East Coast, to their West Coast. Frankly, it makes sense. KSR figures the FSU can have all sorts of spectacular Reserves. But if KSR has the best infrasturucture, then they much better leverage over flows.

  2. Obaid says in his presentation that Ghawar (and I quote) "has produced just under 50.00% of its reserves." (page 16 of above .pdf)

I notice some of the responses on the thread indicate people question the concept, that once the largest field peaks, one is very close to peak. Ghawar, as far as I'm concerned, is the Black Giant. So until I can see good reasona to think otherwise, when Ghawar peaks, the world will be very close to peak.

Thanks again for all your work. Your presentation in Boston was quite good.


KSA has been promising to raise capacity to 12.5 mbpd since 2004. Now he's making the same promise they made in  2004 and never fulfilled, and the same promise they made after Rita in 2005 and never fulfilled. Why should I believe it a third time? I have zero intention of believing KSA til they demonstrate it. If they do, then damn good for them but I don't think they can.
You sound like a complete idiot everytime u post this bullshit.  We've covered it three times at TOD.  The 2004 CSIS forum was the basis of our EIA/Aramco Outlook graph.  It is the only time we attempted our own Outlook; 'cuz the then current EIA projection was so ridiculous.  Aramco predicted in that Washington event that they would attain 12-mbd (max sustainable capacity (MSC) in 2016 and hold that level until at least 2033.

You really gotta stop using those princes as your sources.  They'll make u look like a jackass every time.

Does it make you happy when you degrade the level of discussion here with personal attacks, profanities, and irrelevant bullcrap? I can return the same with plenty more.

The point was that official KSA spokesmen have repeatedly made this claim and failed to deliver. If the official spokesmen for KSA cannot be trusted then who do you trust? You and your bullcrap idiot website? Sorry, I'd trust a dead toad before I'd trust a subhuman liar with egomaniacal pipedreams like you.

Re: 50%

Obaid is asst to the Ambassador.  He is likely quoting Aramco's main techie, Saleri, who said "Again, look at Ghawar as a total. It's only at 48 percent. Parts of Ghawar are completely undeveloped."

Methinx it's a case of vocabulary.  His intent was to say that 50% of the proven reserves are approaching 50%.  Saleri is confident that SA has 900 Gb in Ultimate 'cuz they keep adding new fields from the undeveloped area as older ones expire.

Stuart...just to illustrate how much you've been missed, please note that your thread today outnumbered the Drumbeat by about 70 posts.  This has not happened (guestimation) since the Drumbeat was conceived.  

Leanan...can you verify this?

This all reminds me of the return of the white and pure Gandolf.  

Nope, I've beat the Drumbeat before.

Re: This all reminds me of the return of the white and pure Gandolf

Get a grip.

Gandalf the Grey.
After falling to the Balrog in Moria and being presumed dead, Gandalf the Grey returns as Gandalf the White, replacing Saruman on the coucil of Istari since Saruman's actions caused him to forfeit the position of leadership.
Leanan...can you verify this?

No, 'cause it's not true.  :-)

Alright, Leanan and Dave...go ahead...burst my bubble.

I WAS exaggerating a bit with the Gandolf bit...

Don't worry about it.

Drogonfly41 - you and several other folks on this thread got some explaining to do.  Why have you missed Stuart so much?

If you followed posting habits from an anaytical sense you would see that on occasions the Drumbeat chit chat transfers across to the "main post" of the day.  I've seen Dave's post beat the beat on several occasions.

Stuart's post today was very timely from the perspective of drawing everyones attention back to the main theatre - where it is likely the final battle of peak oil and the world economy will be fought.

In reading posters comments I also learned 2 or 3 things here that I was not sure about before - I wonder what you learned if anything?

On TOD there are three kinds of viewers.  There are posters who post really valuable comments.  There are posters who post a load of crap.  And there are the vast majority who just visit the site and read the articles - close to 10,000 per day.

So I guess on behalf of all the other contributors here I would like to applogise for not providing content that is up to your expected standard.  However, if you check out the site meter you'll see that Stuart's post of yesterday did not in fact attract any more traffic to the site.  The last time the site meter actually got excited was the day the CERA report got published.  And the last time I saw it get really excited was when Luis posted on the Export Model - a post I imagine that maybe took him 3 or 4 weeks to prepare - if not longer.

Stuart, no disrespect intended - a very timely and perceptive post, I trust you will be back on a regular basis.  I got several things I still don't understand about the peak and post-peak world.

Dragonfly, you just got unlucky.

Euan Mearns
Contributor TOD Europe

Sorry, I meant no respect to TOD: Europe.  I agree there has been some high-level post and analysis since Stuart's departure.

Stuart is like a father-figure to some of us that went out for a pack of smokes and never returned.  Now, he's back.  I rejoice in that, not because his abilities are superior to any other contributor's, but because he is level-headed and his presence here serves to calm all the children to some degree.  

"respect"...switch to "disrespect" above.
New World Oil Balance at EIA now shows world supply of 84.98 for 3Q of '06....beating the previous record of 84.93 for 2Q of '05. Seem credible anyone? Where is it coming from. Is EIA doing biofuels, now? Is it legit(again, where would the new stuff be from-especially with the OPEC, KSA declines recently, and Russia flattening?). Sorry I haven't posted in a while, but I hope this is a good catch.
There has been no increase in supply at least since spring 2005. Very little since summer 2004. Exclude OPEC and the former USSR, and the world can produce no more than in 1996.
YAHOO reports that the security adviser was sacked by KSA.

Saudi security adviser sacked after Iraq article


"Saudi Arabia's government said last weekend there was no truth in Nawaf Obaid's November 29 article, which suggested the kingdom would back Iraq's Muslim Sunnis in the event of a wider sectarian conflict."

That action is not unexpected nor unanticipated.