Saudi Arabia Bullish On Oil's Future

Kingdom's Oil Minister Tells <b>60 Minutes</b> U.S. Oil Addiction Is Here To Stay Due To Lack Of Alternatives

CBS All Access
This video is available on CBS All Access

The good news is that the price of oil is falling - a lot; it's also the bad news if you're determined that the U.S. should kick its addiction to foreign oil. President-elect Barack Obama says now is the time to do that, even with the economy in recession.

But Saudi Arabia, the world's largest oil supplier - with the U.S. as its number one customer - is pulling all the levers and spending billions to keep the oil age going.

60 Minutes correspondent Lesley Stahl went to Saudi Arabia a few weeks ago to meet one of the most powerful men in the world, Ali Al-Naimi, the Saudi oil minister and de facto head of the OPEC oil cartel.

"If most Americans had an opportunity to sit down with the oil minister of Saudi Arabia, the thing they would like to know is where you think the price of oil's gonna be, say, in about six months. Is it gonna be up or down?" Stahl asked.

"You want my classic answer?" Al-Naimi replied.

"No. I want your honest appraisal…and your judgment," Stahl asked.

"My honest judgment is if I were to know what the price of oil six months from now, I would be in Las Vegas. Okay?" Al-Naimi said, smiling.

He may be smiling, but this is a man with serious heartburn and vertigo. The price of oil has been soaring and sinking up and down uncontrollably. Asked why oil prices spiked to $147 a barrel in July, Al-Naimi told Stahl, "Basically, there was what's called a 'fear premium.'"

"And the fear was that Saudi Arabia itself had peaked out. That you'd reached your ceiling of how much available oil is left in your overall reserve. So, what's the truth?" Stahl asked.

"The truth is here is the kingdom with more than 260 billion barrels. And I firmly believe that the potential to add another 200 billion barrels of oil are there to be found," Al-Naimi said.

If the oil minister of Saudi Arabia had one message, it was that there is no need for those fears.

And to make the point, the Saudis let 60 Minutes see facilities that will increase the country's capacity from about 10 million barrels a day to more than 12 million. And they're going to the ends of the Earth to do it.

One of those desolate places is Shaybah, a desert wilderness where temperatures can reach 135 degrees. The Saudis say that 18 billion barrels of oil lie beneath the red sand dunes, more than four times the proven reserves of Alaska.

To tap into it, the kingdom's national oil company, Saudi Aramco, had to build an oasis there. Awayyid Al-Shammari oversees the mega-project at Shaybah, an area of the kingdom known as the "Empty Quarter."

"We're on soft sand. We're not talking about a hard surface here," Stahl remarked.

"Yeah," Al-Shammari acknowledged. "The logistics are impossible. The first thing we had to do is build our own road in order to access this field."

"Once that was done, we had to remove one hundred million cubic feet of sand just to make the runway that we are currently using," he explained. "We had to remove a sand dune in order to connect two flat areas to do that."

Al-Shammari said they also had to build a pipeline 400 miles in length. "And you can imagine the challenge of building that pipeline in a topography like this."