Saudi Arabian Oil Reserves

1. Saudi Arabian Oil Reserves • Question: What are the actual petroleum resources of Saudi Arabia? • Client: Total • Firm: Global Energy Research Associates • Firm Members: Allyson Schmutter, Sara Brainard, Justin Placitella, Alex Pabst, Doug Heisen 

2. Saudi Arabian Oil Reserves Table of Contents • Peak Oil • Projections • Criticisms of Peak Oil • Global Oil Demand • Geopolitics • Total’s current and future operations

3. Peak Oil Theory • M. King Hubbert 1956 • Oil is finite, nonrenewable resource • Peak occurs when half of reserves have been used - then production declines • Applies to individual fields as well as regional and global supply • WorldWatch energybulletin.net

4. Factors Influencing Peak Oil • Production: slowing down in 33 of the 48 largest oil-producing countries • The Economist • Reserves: most remaining oil is impure, inaccessible - more expensive and difficult to extract • WorldWatch • Discovery: declining, too slow to meet growing demand • The Economist • Demand: sharply increasing, will rise by 35-50% by 2030 • Energy Policy

5. All info on reserves kept secret Backing away from swing producer status - not meeting increasing demand as agreed to The Economist Saudi engineers report difficulty with production, decline in reserves Multinational Monitor Not in producers’ interests to reveal peak or decline - reject theory Environmental Quality Management Peak Oil Concerns for Saudi Arabia Business Week

6. Recommendations • Peak oil is a significant and legitimate concept - not a question of if, but when • Essential to determine extent and potential of Saudi resources - must apply pressure to gain further detailed info and not rely on vague statements

7. Saudi Oil Fields 264.2 billion barrels of proven oil reserves Accounts for more than 1/4 of the world’s total supply Consists of 13% of global production World’s number one leading oil producer and exporter Government has full control and ownership of the Saudi Aramco Company [Dr. Gawdat Bahgat]

8. [The New York Times]

9. Size Estimates for Saudi Arabia major oil fields in billions of barrels [http://graphoilogy.blogspot.com/]

10. Texas and Saudi Arabia crude oil production The orange points indicate 2006 and 2007 production estimates for Saudi Arabia (crude oil + condensate). [Jeffrey Brown]

11. [The New York Times]

12. Pro Peak Oil Projections Saudi’s biggest fields already past their peaks – 6 of the major fields produce 95% of Saudi oil (Simmons) Global oil production will peak 2011-2012 at 93 mbpd (Skrebowski) “Imminent peakist view” - 2.275 to 2.785 trillion barrels peaking from 2005-2015 (Nehring) “Delayed peakist view” - 3.39 to 5 trillion barrels peaking from 2020-2040 with a plateau of 15 to 30 years (Nehring) Oil Depletion Analysis Centre predicts global oil production will peak by 2011 – peak of regular oil was 2005 and heavy oil in 2011 (Howden) Association for the Study of Peak Oil assesses 1.46 trillion barrels left to peak at 2010 (Carroll)

13. Anti-Peak Oil Projections BP – world has “proven” reserves to last until 2037 (Howden) 3.7 trillion barrels left with production increasing at least until 2031 (Jackson) Global production will increase to 130 mbpd, plateau at 2030, and fall at 2050 (Yergin) Global resource oil base is projected at 3.74 trillion barrels – 3x larger than Peak Oil theory (Cambridge Energy Research Associates) Total undiscovered fields amount to 758 billion barrels, 704 billion are trapped in shale, 662 billon are in the Middle East (CERA)

14. Saudi Global Projections World has more than 100 years worth of crude oil in supply Produced 1 trillion barrels ~ 18% of earth’s potential of 5.7 trillion barrels 4.7 trillion remaining barrels should last more than 140 years at current production rates [Bhushan Bahree]

15. Saudi Government Projections Saudi Arabia has 264 billion barrels in proven reserves as of 2008 Possible reserves – 100 billion barrels Undiscovered reserves – 200 billion barrels Current rate of production of 9.5 mbpd will last 80 years Current production rate will last 100 years when considering probable and possible reserves [Ministry of Petroleum and Mineral Resources]

16. Recommendations Skeptical of the Saudi estimates in that detailed production information has not been released in over 20 years (Gerth). Unknown whether or not Saudi fields can produce at increasingly high rates for an extended period of time (Gerth). Experts have assessed that the fields cannot endure this type of stress (Gerth). It is my opinion to stay consistent with the theory of Peak Oil. I predict that global production will peak at about 2015, while Saudi reserves will last until 2030.

17. Why Petroleum Demand Matters Supply and Demand Strained Resources? Demand Growth Increasing Projections “Energy Forecasts call for Saudi Arabia to double its output in the next decade and after” The New York Times This year- worldwide oil demand to increase 800,000 b/d International Energy Association Rise in demand by more than 1/3 by 2030 “Outlook for Energy: A view to 2030” Energy Consumption globally to rise by more than 50% in next 25 years “Facing the Hard Truths about Energy” Petroleum Demand ExxonMobil's quarterly shareholders publication.

18. Developing World Soaring demand in the Developing World China Leading Demand Growth Oil and Gas Journal New Ventures Exxon Mobile and Sinopec Petroleum Economist Recommendations Keep up-to-date on demand statistics Ever-changing Specifically China Look towards investments with Chinese companies Downstream investments in Saudi Arabia Petroleum Demand U.S. Energy Information Administration (EIA)

19. Why Geopolitics Matter “Oil is a political commodity” The New York Times Stability in the Middle East and Saudi Arabia Example: 9/11 hijackers Some History U.S./ Saudi Arabia’s Special Relationship with Oil Examples: DeGolyer Discovery, Aramco etc. Exception: 1973 embargo Geopolitics Associated Press Photograph

20. Stability and Roadblocks Internal A government controlled by oil Regional Arab-Israeli Conflicts International US, China, Saudi Arabia Newfound Interests China Sino-Saudi relationship Recommendations Watch the changing geopolitics Some say it isn’t important- we disagree Specifically China Be aware of future possibilities: Iran-Israel War? Geopolitics Photo Art- Wordpress.com

21. Strong relationship with Middle East United Arab Emirates, Qatar, Yemen No upstream activities in Saudi Arabia “Total in 2007,” 2007 Annual Publications, Total Corporate Web Site. 2007 Total’s Upstream Activities in Middle East and Saudi Arabia BBC News

22. Total’s Downstream Activities in Middle East and Saudi Arabia • Far weaker relationship with Middle East • Service stations and marketing • Policy change • “Total in 2007,” 2007 Annual Publications, Total Corporate Web Site. 2007. Tehran Times

23. Jubail Refinery • June 2008 Agreement • 400,000 bpd • Estimated cost $10 billion • Oil from Manifa oil field • “Jubail Refinery Project to cost over $10bn,” Arab News. May 17 2008. • Kao, Ikuko, “Total sees Saudi Jubail refinery start up in 2012,” Reuters News UK. March 11 2008. Energy Information Administration

24. Jubail Refinery, A Sound Investment? • Two views: Cautious and Optimistic • Jeffrey Brown and Saudi Arabia

25. Tables 1.0 and 1.1 Table 1.1 –Payback Period for Jubail Refinery (Geometric Average) Table 1.0 -Payback Period for Jubail Refinery

26. Recommendations for Future Petroleum Operations • Recommendations based on cautious view • Recommendations based on optimistic view

27. Peak oil Peak Oil is a significant and legitimate concept - not a question of if, but when Essential to determine extent and potential of Saudi resources - must apply pressure to gain further detailed info and not rely on vague statements Projections Staying consistent with the theory of Peak Oil. Predicting that global production will peak at about 2015, while Saudi reserves will last until 2030. Petroleum Demand Keep up-to-date on demand statistics Ever-changing Specifically China Look towards investments with Chinese companies Downstream investments in Saudi Arabia Geopolitics Watch the changing geopolitics Some say it isn’t important- we disagree Specifically China Be aware of future possibilities: Iran-Israel War? Total’s Operations Base operations planning on both cautious and optimistic views Conclusion of Recommendations