Discussion Of Saudi Arabia’s Oil Reserves Provokes Some Emotional Responses

My previous article on Saudi Arabia’s proved oil reserves provoked strong responses from some readers. In the words of the great Yogi Berra, “It’s deja vu all over again.”

My previous article on Saudi Arabia’s reserves really stirred up some emotions. Given some of the reactions I have seen, I want to clarify a few things.

First, that article wasn’t intended to be a proof that Saudi’s reserves are 270 billion barrels. It was instead a look at how some have concluded that Saudi’s reserves are far lower than this. My conclusion is that those methods don’t give accurate results when looking at other countries, and so I don’t believe they are valid critiques of Saudi’s reserves.

I believe that the reserves claims from Saudi are consistent across multiple lines of evidence. That doesn’t “prove” they have 270 billion barrels, but I think a comparison of other countries does disprove the skeptical critiques.

Let me address a little history, and then some reactions to the previous article. In a follow-up article I will examine the reserves and production history of multiple countries to see if I can find one that displays characteristics that would be consistent with the lower estimates of Saudi reserves (< 100 billion barrels).

Previous Saudi Discussions

I have been writing articles about Saudi Arabia for about 15 years. In 2005, the late Matt Simmons published Twilight in the Desert, in which he argued that oil production in Saudi Arabia was nearing terminal decline.

Following the release of his book, many pundits set out to prove that Saudi Arabia was indeed on the cusp of a terminal production decline. One popular article suggested Saudi oil production would be below seven million barrels per day and falling every year by 2010.

Articles were written in which a mathematical model called Hubbert Linearization (HL) was being used to forecast an imminent production decline in Saudi Arabia. Those models were used to make predictions, but they hadn’t been validated in real time with real case studies. Such validation is absolutely critical in model development.

As an engineer who uses models often in my work, I plugged in actual case studies to see if the model worked. It didn’t. In fact, I couldn’t find a single country in which HL would have accurately predicted the peak of a country’s oil production in real time.

What it could do was “predict” a production peak if it was fed years of production data after the peak had already occurred. In other words, it was good at predicting the past. But even then it tended to give ultimately recoverable resource (URR) values that slowly trended ever higher over time. (For more details, see my 2007 article Predicting the Past).

I didn’t set out to invalidate HL as a predictive tool. It was my intent to see if it worked, so I plugged in case studies. It didn’t, and I wrote a number of articles detailing my work.