Saudi Arabian Oil Saudi Arabian Oil Reserves Reserves Question: Question: What are the actual What are the actual petroleum resources of Saudi Arabia? petroleum resources of Saudi Arabia? Client: Client: Total Total Firm: Firm: Global Energy Research Global Energy Research Associates Associates Firm Members: Firm Members: Allyson Schmutter, Sara Allyson Schmutter, Sara Brainard, Justin Placitella, Alex Brainard, Justin Placitella, Alex Pabst, Doug Heisen Pabst, Doug Heisen
Transcript
Saudi Arabian Oil Saudi Arabian Oil ReservesReserves
Question:Question: What are the actual petroleum What are the actual petroleum resources of Saudi Arabia?resources of Saudi Arabia?
Client:Client: Total Total
Firm:Firm: Global Energy Research Associates Global Energy Research Associates
Firm Members:Firm Members: Allyson Schmutter, Sara Allyson Schmutter, Sara Brainard, Justin Placitella, Alex Pabst, Doug Brainard, Justin Placitella, Alex Pabst, Doug Heisen Heisen
Saudi Arabian Oil ReservesSaudi Arabian Oil Reserves
Peak OilPeak Oil ProjectionsProjections Criticisms of Peak OilCriticisms of Peak Oil Global Oil DemandGlobal Oil Demand GeopoliticsGeopolitics Total’s current and future operationsTotal’s current and future operations
Table of ContentsTable of Contents
Peak Oil TheoryPeak Oil Theory
M. King Hubbert 1956M. King Hubbert 1956 Oil is finite, Oil is finite,
nonrenewable resourcenonrenewable resource Peak occurs when half Peak occurs when half
of reserves have been of reserves have been used - then production used - then production declinesdeclines
Applies to individual Applies to individual fields as well as fields as well as regional and global regional and global supplysupply
WorldWatchWorldWatchenergybulletin.net
Factors Influencing Peak OilFactors Influencing Peak Oil ProductionProduction: slowing down in 33 of the 48 largest oil-: slowing down in 33 of the 48 largest oil-
producing countriesproducing countries The EconomistThe Economist
ReservesReserves: most remaining oil is impure, inaccessible : most remaining oil is impure, inaccessible - more expensive and difficult to extract- more expensive and difficult to extract WorldWatchWorldWatch
DiscoveryDiscovery: declining, too slow to meet growing : declining, too slow to meet growing demanddemand The EconomistThe Economist
DemandDemand: sharply increasing, will rise by 35-50% by : sharply increasing, will rise by 35-50% by 20302030 Energy PolicyEnergy Policy
Peak Oil Concerns for Peak Oil Concerns for Saudi ArabiaSaudi Arabia
Business Week
All info on reserves kept secretAll info on reserves kept secret Backing away from swing Backing away from swing
producer status - not meeting producer status - not meeting increasing demand as agreed increasing demand as agreed toto The EconomistThe Economist
Saudi engineers report Saudi engineers report difficulty with production, difficulty with production, decline in reservesdecline in reserves Multinational MonitorMultinational Monitor
Not in producers’ interests to Not in producers’ interests to reveal peak or decline - reject reveal peak or decline - reject theorytheory Environmental Quality Environmental Quality
ManagementManagement
RecommendationsRecommendations
• • Peak oil is a significant and Peak oil is a significant and legitimate concept - not a question of legitimate concept - not a question of if, but whenif, but when
• • Essential to determine extent and Essential to determine extent and potential of Saudi resources - must potential of Saudi resources - must apply pressure to gain further apply pressure to gain further detailed info and not rely on vague detailed info and not rely on vague statementsstatements
Saudi Oil FieldsSaudi Oil Fields 264.2 billion barrels of 264.2 billion barrels of
proven oil reservesproven oil reserves Accounts for more than Accounts for more than
1/4 of the world’s total 1/4 of the world’s total supplysupply
Consists of 13% of global Consists of 13% of global productionproduction
World’s number one World’s number one leading oil producer and leading oil producer and exporterexporter
Government has full Government has full control and ownership of control and ownership of the Saudi Aramco the Saudi Aramco CompanyCompany
• Texas and Saudi Arabia crude oil productionTexas and Saudi Arabia crude oil production•The orange points indicate 2006 and 2007 production The orange points indicate 2006 and 2007 production estimates for Saudi Arabia (crude oil + condensate).estimates for Saudi Arabia (crude oil + condensate).
[Jeffrey Brown]
[The New York
Times]
Pro Peak Oil ProjectionsPro Peak Oil Projections Saudi’s biggest fields already past their peaks – 6 of the Saudi’s biggest fields already past their peaks – 6 of the
major fields produce 95% of Saudi oil (Simmons)major fields produce 95% of Saudi oil (Simmons) Global oil production will peak 2011-2012 at 93 mbpd Global oil production will peak 2011-2012 at 93 mbpd
(Skrebowski)(Skrebowski) ““Imminent peakist view” - 2.275 to 2.785 trillion barrels Imminent peakist view” - 2.275 to 2.785 trillion barrels
peaking from 2005-2015 (Nehring)peaking from 2005-2015 (Nehring) ““Delayed peakist view” - 3.39 to 5 trillion barrels Delayed peakist view” - 3.39 to 5 trillion barrels
peaking from 2020-2040 with a plateau of 15 to 30 peaking from 2020-2040 with a plateau of 15 to 30 years (Nehring)years (Nehring)
Oil Depletion Analysis Centre predicts global oil Oil Depletion Analysis Centre predicts global oil production will peak by 2011 – peak of regular oil was production will peak by 2011 – peak of regular oil was 2005 and heavy oil in 2011 (Howden)2005 and heavy oil in 2011 (Howden)
Association for the Study of Peak Oil assesses 1.46 Association for the Study of Peak Oil assesses 1.46 trillion barrels left to peak at 2010 (Carroll)trillion barrels left to peak at 2010 (Carroll)
Anti-Peak Oil ProjectionsAnti-Peak Oil Projections BP – world has “proven” reserves to last until BP – world has “proven” reserves to last until
2037 (Howden)2037 (Howden) 3.7 trillion barrels left with production increasing 3.7 trillion barrels left with production increasing
at least until 2031 (Jackson)at least until 2031 (Jackson) Global production will increase to 130 mbpd, Global production will increase to 130 mbpd,
plateau at 2030, and fall at 2050 (Yergin)plateau at 2030, and fall at 2050 (Yergin) Global resource oil base is projected at 3.74 Global resource oil base is projected at 3.74
trillion barrels – 3x larger than Peak Oil theory trillion barrels – 3x larger than Peak Oil theory (Cambridge Energy Research Associates)(Cambridge Energy Research Associates)
Total undiscovered fields amount to 758 billion Total undiscovered fields amount to 758 billion barrels, 704 billion are trapped in shale, 662 barrels, 704 billion are trapped in shale, 662 billon are in the Middle East (CERA)billon are in the Middle East (CERA)
Saudi Global ProjectionsSaudi Global Projections
World has more than 100 years World has more than 100 years worth of crude oil in supply worth of crude oil in supply
Produced 1 trillion barrels ~ 18% of Produced 1 trillion barrels ~ 18% of earth’s potential of 5.7 trillion barrelsearth’s potential of 5.7 trillion barrels
4.7 trillion remaining barrels should 4.7 trillion remaining barrels should last more than 140 years at current last more than 140 years at current production ratesproduction rates
[Bhushan Bahree]
Saudi Government Saudi Government ProjectionsProjections
Saudi Arabia has 264 billion barrels in Saudi Arabia has 264 billion barrels in proven reserves as of 2008proven reserves as of 2008
Possible reserves – 100 billion barrelsPossible reserves – 100 billion barrels Undiscovered reserves – 200 billion barrelsUndiscovered reserves – 200 billion barrels Current rate of production of 9.5 mbpd will Current rate of production of 9.5 mbpd will
last 80 yearslast 80 years Current production rate will last 100 years Current production rate will last 100 years
when considering probable and possible when considering probable and possible reservesreserves
[Ministry of Petroleum and Mineral Resources]
RecommendationsRecommendations Skeptical of the Saudi estimates in that detailed production Skeptical of the Saudi estimates in that detailed production
information has not been released in over 20 years (Gerth).information has not been released in over 20 years (Gerth). Unknown whether or not Saudi fields can produce at Unknown whether or not Saudi fields can produce at
increasingly high rates for an extended period of time increasingly high rates for an extended period of time (Gerth).(Gerth).
Experts have assessed that the fields cannot endure this Experts have assessed that the fields cannot endure this type of stress (Gerth).type of stress (Gerth).
It is my opinion to stay consistent with the theory of Peak It is my opinion to stay consistent with the theory of Peak Oil. Oil.
I predict that global production will peak at about 2015, I predict that global production will peak at about 2015, while Saudi reserves will last until 2030.while Saudi reserves will last until 2030.
Petroleum DemandPetroleum Demand
Why Petroleum Why Petroleum Demand MattersDemand Matters Supply and DemandSupply and Demand Strained Resources?Strained Resources?
““Energy Forecasts call for Saudi Energy Forecasts call for Saudi Arabia to double its output in the Arabia to double its output in the next decade and after”next decade and after”
The New York TimesThe New York Times This year- worldwide oil demand This year- worldwide oil demand
to increase 800,000 b/dto increase 800,000 b/d International International
Energy AssociationEnergy Association Rise in demand by more than 1/3 Rise in demand by more than 1/3
by 2030by 2030 ““Outlook for Energy: A view to Outlook for Energy: A view to
2030”2030” Energy Consumption globally to Energy Consumption globally to
rise by more than 50% in next 25 rise by more than 50% in next 25 yearsyears
““Facing the Hard Truths about Facing the Hard Truths about Energy”Energy”
ExxonMobil's quarterly shareholders publication.
Petroleum DemandPetroleum Demand Developing WorldDeveloping World
Soaring demand in Soaring demand in the Developing Worldthe Developing World
China China Leading Demand Leading Demand
GrowthGrowth Oil and Gas JournalOil and Gas Journal
New VenturesNew Ventures Exxon Mobile and Exxon Mobile and
InternationalInternational US, China, Saudi ArabiaUS, China, Saudi Arabia
Newfound InterestsNewfound Interests ChinaChina
Sino-Saudi relationshipSino-Saudi relationship
RecommendationsRecommendations Watch the changing geopoliticsWatch the changing geopolitics
Some say it isn’t important- we Some say it isn’t important- we disagreedisagree
Specifically ChinaSpecifically China Be aware of future possibilities:Be aware of future possibilities:
Iran-Israel War? Iran-Israel War?
Photo Art- Wordpress.com
Total’s Upstream Activities in Total’s Upstream Activities in Middle East and Saudi Arabia Middle East and Saudi Arabia
BBC News
Strong relationship Strong relationship with Middle East with Middle East
United Arab Emirates, United Arab Emirates, Qatar, YemenQatar, Yemen
No upstream No upstream activities in Saudi activities in Saudi Arabia Arabia
““Total in 2007,” 2007 Annual Total in 2007,” 2007 Annual Publications, Publications, Total Corporate Web Total Corporate Web SiteSite. 2007 . 2007
Far weaker relationship Far weaker relationship with Middle Eastwith Middle East
Service stations and Service stations and marketing marketing
Policy change Policy change
““Total in 2007,” 2007 Annual Total in 2007,” 2007 Annual Publications, Publications, Total Corporate Total Corporate Web SiteWeb Site. 2007.. 2007.
Total’s Downstream Total’s Downstream Activities in Middle East and Activities in Middle East and
Saudi Arabia Saudi Arabia
Tehran Times
Jubail RefineryJubail Refinery
June 2008 Agreement June 2008 Agreement 400,000 bpd400,000 bpd Estimated cost $10 Estimated cost $10
billionbillion Oil from Manifa oil Oil from Manifa oil
field field
““Jubail Refinery Project to cost Jubail Refinery Project to cost over $10bn,” over $10bn,” Arab NewsArab News. May . May 17 2008.17 2008.
Kao, Ikuko, “Total sees Saudi Kao, Ikuko, “Total sees Saudi Jubail refinery start up in 2012,” Jubail refinery start up in 2012,” Reuters News UKReuters News UK. March 11 . March 11 2008. 2008.
Energy Information Administration
Jubail Refinery, A Sound Jubail Refinery, A Sound Investment?Investment?
Two views: Cautious and Optimistic Two views: Cautious and Optimistic
Jeffrey Brown and Saudi Arabia Jeffrey Brown and Saudi Arabia
Tables 1.0 and 1.1Tables 1.0 and 1.1
InvestmeInvestmentnt
($)($)
Barrels Barrels PerPer
Year Year
ProfitProfitMargin Margin
($) ($)
PaybackPaybackPeriodPeriod(Years) (Years)
HighestHighestQuarterlyQuarterlyAverage Average
10 billion 10 billion 146,000,0146,000,00000
6.1886.188 11.0711.07
LowestLowestQuarterlyQuarterlyAverage Average
10 billion10 billion 146,000,0146,000,00000
1.9851.985 34.4934.49
HighestHighestYearlyYearlyAverage Average
10 billion 10 billion 146,000,0146,000,00000
5.6575.657 12.1112.11
LowestLowestYearlyYearlyAverage Average
10 billion 10 billion 146,000,0146,000,00000
2.8422.842 24.1024.10
Payback Period (Years)Payback Period (Years)
Quarterly Average Quarterly Average 19.5419.54
Yearly Average Yearly Average 17.0817.08
Table 1.1 –Payback Period for Table 1.1 –Payback Period for Jubail Refinery (Geometric Jubail Refinery (Geometric Average)Average)
Table 1.0 -Payback Period Table 1.0 -Payback Period forforJubail Refinery Jubail Refinery
Recommendations based on cautious Recommendations based on cautious view view
Recommendations based on Recommendations based on optimistic view optimistic view
Recommendations for Recommendations for Future Petroleum Future Petroleum
OperationsOperations
Conclusion of Conclusion of RecommendationsRecommendations
Peak oilPeak oil Peak Oil is a significant and Peak Oil is a significant and
legitimate concept - not a legitimate concept - not a question of if, but whenquestion of if, but when
Essential to determine extent and Essential to determine extent and potential of Saudi resources - potential of Saudi resources - must apply pressure to gain must apply pressure to gain further detailed info and not rely further detailed info and not rely on vague statementson vague statements
ProjectionsProjections Staying consistent with the theory of Staying consistent with the theory of
Peak Oil. Peak Oil. Predicting that global production will Predicting that global production will
peak at about 2015, while Saudi peak at about 2015, while Saudi reserves will last until 2030.reserves will last until 2030.
Petroleum DemandPetroleum Demand Keep up-to-date on demand Keep up-to-date on demand
statisticsstatistics Ever-changingEver-changing Specifically ChinaSpecifically China
Look towards investments with Look towards investments with Chinese companiesChinese companies
Downstream investments in Saudi Downstream investments in Saudi ArabiaArabia
GeopoliticsGeopolitics Watch the changing geopoliticsWatch the changing geopolitics
Some say it isn’t important- we Some say it isn’t important- we disagreedisagree
Specifically ChinaSpecifically China Be aware of future possibilities:Be aware of future possibilities:
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