Saudi Official: Oil Reserves Run Deep

(AP)  The world has tapped only 18 percent of the total global supply of crude, a leading Saudi oil executive said Wednesday, challenging the notion that supplies are petering out.

Abdallah S. Jum'ah, president and CEO of the state-owned Saudi Arabian Oil Co., better known as Aramco, said the world has the potential of 4.5 trillion barrels in reserves — enough to power the globe at current levels of consumption for another 140 years.

Jum'ah challenged oil ministers and petroleum executives at an OPEC conference in Vienna to step up exploration "and leave the minimum amount of oil in the ground."

"The world has only consumed about 18 percent of its conventional potential," Jum'ah said, contending that should lay to rest fears that the world is in danger of being tapped out within a few decades.

Many experts estimate that the planet's recoverable oil resource is at least 3 trillion barrels and potentially more than 4 trillion barrels. If global consumption rises about 2 percent a year from today's levels of about 85 million barrels a day, they say, the low end of that range would only be enough to last until roughly 2070.

Rex W. Tillerson, the chairman of Exxon Mobil Corp., said world demand for oil will increase by 50 percent in the next decade.

"When nations threaten to stop this flow, it stops economic progress worldwide," Tillerson said.

Industry leaders have gathered this week to take stock of new challenges at the conference sponsored by the Organization of Petroleum Exporting Countries.

Earlier this week, the 11-nation cartel agreed to leave its current production target of 28 million barrels a day unchanged, but made clear it would keep close tabs on falling oil prices and consider a possible cut in its output quota before the end of the year.

Crude prices have tumbled to five-month lows and have dropped by more than $12 a barrel since hitting record highs in mid-July. Analysts say a combination of ample supplies and an easing of political tensions such as the cessation of hostilities in Lebanon and progress in talks on Iran's suspect nuclear program have driven prices lower.

"When prices are high, passions can run high," Tillerson said. "Economic nationalism may gain in popularity" at the expense of developing global markets and the world economy, he said.

"The new era we face, like all of the previous ones, is not an era of easy oil — nor will it be an era of easy answers. But it can be an era of continued economic advancement," he said.

Jum'ah challenged explorationists to find enough new oil resources to add 1 trillion barrels to world reserves over the next 25 years, saying new technology and higher recovery rates would make it possible to hit that target.

Already, he noted, drilling is now going on as deep as 10,000 feet below the Gulf of Mexico and 7,000 to 8,000 feet elsewhere. Experts say a newly discovered petroleum pool beneath the Gulf of Mexico eventually could yield anywhere from 3 billion to 15 billion barrels.

[alphaa10-2009]

The practical issue is not how much oil there is, but how easily we can reach it. Even if speculative oil reserves (such as deep-ocean deposits some believe are extensive) are extensive, the challenge in reaching oil outside known and proven areas makes the price at the pump steadily more costly.

Another question is why the Saudis decided to plant this innocent little factoid about their vast oil reserves in the news, just as Iran raises its own profile in the MidEast in a direct challenge to Saudi hegemony. The Saudis certainly aren't getting a lot of respect from other quarters, as Hugo Chavez tries to expand his influence of OPEC.

[alphaa10-2009]

The practical issue is not how much oil there is, but how easily we can reach it. Even if speculative oil reserves (such as deep-ocean deposits some believe are extensive) are extensive, the challenge in reaching oil outside known and proven areas makes the price at the pump steadily more costly.

Another question is why the Saudis decided to plant this innocent little factoid about their vast oil reserves in the news, just as Iran raises its own profile in the MidEast in a direct challenge to Saudi hegemony. The Saudis certainly aren't getting a lot of respect from other quarters, as Huge Chavez tries to expand his influence of OPEC.

[mattfox2]

Jum'ah's statement is so ludicrous that is is beneath discussion. Even the most optimistic estimates place world oil reserves significantly lower than 3-4 trillion barrels. A quick glance over the available information will convince anyone that our oil supply is already stretched, and that the idea of that supply meeting a 2% increase in demand through 2070 is pure fantasy.

What troubles me most is that seemingly reputable news outlets such as this site publish articles such as this, but largely ignore the negative news. Last year, for example, the media trumpeted a huge oil find in the Gulf - in this case by Pemex - but failed to follow up when those initial estimates were revised downward by over 99%. The most recent find in the Gulf - Jack 2 - is being touted as the biggest find in recent memory, even while the numbers are highly speculative. 3-15 billion is a big range, especially when one considers that the ratio of natural gas to oil is not know, either. Given its great depth, the chances are that the majority of whatever is there will be gas.

Reporting these stories, as CBS News has done, is not only bad journalism, but is also irresponsible and dishonest. People need to understand that we are facing an uncertain energy future, so that we can all begin to adjust and prepare. Being duped into complacency is the last thing we need, and will only result in bigger problems down the road.

Shame on you, CBS.