The Age of Easy Oil: Just Beginning?

The oil minister of Saudi Arabia says that the nation's oil fields still have plenty of cheap and easy crude yet to be pumped. Saudi Arabia's and the world's largest oil field -- Ghawar -- is said to still contain at least 88 billion barrels of oil alone. And most of Saudi Arabia has yet to be thoroughly surveyed for the scores of smaller, still undiscovered fields that remain.

"I am sorry to disappoint people, easy oil is not over," Ali Al-Naimi told reporters in Riyadh on the occasion of OPEC's 50th anniversary.

"How can you say that easy oil is over, when we still have over 88 billion (barrels) in the Ghawar field...You can dismiss that notion that easy oil in Saudi Arabia is gone," he added.

Ghawar, the world's largest onshore oilfield has been in production since 1951.

Proponents of the theory that global oil output is at or near its peak have said Saudi reserves may be less than stated and that fields like Ghawar may be under strain.

...Each barrel of oil equivalent cost an average of just over $3 to discover last year, compared with just $1.18 in 2001, according to upstream consultant Wood Mackenzie.

Saudi Aramco is undertaking a $16 billion development at its Manifa offshore oilfield. The field would pump 900,000 barrels per day (bpd) of heavy crude by 2024. [ID:nLDE65E1QY]

Naimi said the development of Manifa will allow the kingdom to tap into heavy oil production and was not a signal to the end of the easy oil age.

"That is one of the reasons but we also need it for new refineries that are built."

Asked about depletion rates in fields, Naimi said the kingdom has sufficient production capacity at 12 million barrels per day (bpd) and has a strategy of preserving its resources and developing new sources of energy.

"We have the production capacity and we don't have to deplete our reservoirs as fast as someone who's just there for investment...so we don't really have to pull our reservoirs as hard as we should," Naimi said.

...The kingdom had reached a production rate of up to 70 percent at some of its fields.

Naimi said the world would remain dependent on fossil fuels for at least 50 years and reiterated his country was looking into other forms of energy.

OIL PRICES

For now Naimi said the market is balanced and a price range between $70-80 per barrel was fair to both consumers and producers, giving no indication on what action could be taken in OPEC's next meeting in December. _Reuters

Commercial oil development took off in North America long before it did in the middle east. Roughly a thousand times more exploration has gone on in North America for oil deposits over the past 160 years than in Saudi Arabia, the Persian Gulf, or the rest of the middle east.

While the Peak Oil Doom! business may be booming among many folks who have nothing better to do, among those who are into solving problems, reality must be taken into account.