Wikileaks has been credited with spilling the beans on stories ranging from torture to tax evasion but this week they might have lifted the veil on the biggest issue yet: peak oil.
For years, groups such as the International Energy Agency (IEA) and the US government have downplayed the prospect that the world might soon not be able to keep up with conventional energy demands.
But recent cables released by Wikileaks show the US government realized back in 2007 that Saudi oil reserves are likely grossly over-estimated and that conventional oil prices may start to spike in the very near future.
One of the leaked cables from the US embassy in Riyadh details a meeting between American diplomats and Dr. Sadad al-Husseini, the former Vice President for Exploration and Production for Saudi Aramco from 1992 until his retirement in 2004:
"In a presentation, Abdallah al-Saif, current Aramco senior vice-president for exploration, reported that Aramco has 716bn barrels of total reserves, of which 51% are recoverable, and that in 20 years Aramco will have 900bn barrels of reserves.
"Al-Husseini disagrees with this analysis, believing Aramco's reserves are overstated by as much as 300bn barrels. In his view once 50% of original proven reserves has been reached…a steady output in decline will ensue and no amount of effort will be able to stop it. He believes that what will result is a plateau in total output that will last approximately 15 years followed by decreasing output."
The cables also reveal:
“…the crux of the issue is twofold. First, it is possible that Saudi reserves are not as bountiful as sometimes described and the timeline for their production not as unrestrained as Aramco executives and energy optimists would like to portray.”
Interestingly, the IEA last fall finally broke with their long-standing position that conventional supplies are solid, warning that 80% of global production by 2035 will come from yet-undiscovered or undeveloped oil fields.
And where will all this new oil come from? Last summer’s disaster from the Deepwater Horizon showed how dangerous accessing remote oil sources can be.
Now comes a report from the US government showing that the US Coast Guard is woefully unprepared to deal with a similar spill in the arctic.
Only one of three Coast Guard ice-breakers is currently operational and cost-cutting members of Congress are unlikely to pony up the billions required to build additional capacity, even though that is exactly what has been recommended by retired Admiral Thad Allen who authored the report.
This week Shell Alaska dropped plans to drill offshore this year, in part due to problems meeting federal permitting requirements. Alaskan Republicans were furious in spite of the documented lack of resources to deal with even a minor arctic spill. Governor Sean Parnell fumed that this was another example of the “federal government dragging its feet, killing jobs and making us even more reliant on oil from the Middle East and elsewhere."
But as they say in business, there is no free lunch. Trying to wring more oil out of ever more remote and dangerous places will drive costs up and make alternative fuel technologies increasingly competitive. And if the Wikileaks cables from Saudi Arabia are any indication, that day may be much closer than we thought.
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