BIG SURPRISE: ARAMCO CHIEF SAYS MORE OIL IS THE ANSWER

Abdallah S. Jum'ah, the president/chief executive officer of Saudi Aramco (the biggest oil company in the world), told an oil conference the world should not ignore fossil fuel resources and “move precipitously to unproven alternatives.” That’s such a paranoid viewpoint.

Nobody intends or expects to do anything wasteful or irresponsible. The idea is to build an infrastructure for PROVEN alternatives and PROVE NEW alternatives while using the fossil fuels necessary to sustain economic growth. Development of New Energy infrastructure will add to that economic growth.

Slowly, methodically, industriously, New Energy (solar, wind, ocean energies and next generation biofuels) will be woven into the go power of the future.

Jum’ah touts unconventional oil sources as if their production will be the same as that of oil from conventional reserves. But that is not true and Jum’ah knows it. Getting petroleum products out of oil sands and oil shale will be very expensive and highly greenhouse gas emissions-intensive.

The only acknowledgement Jum’ah seems to make of the inconvenient truths facing the world are a few platitudes about carbon-capture-and-sequestration (CCS) and improved efficiencies. Jum’ah: "Alternatives are simply not ready to shoulder the load [from fossil fuels], nor will they be in a position to do so anytime soon."

The Peak Oil crowd will get a kick out of Jum’ah’s assessment of world oil reserves: "Even if we leave aside the potential of coal-to-liquids, gas-to-liquids, and biofuels, the world's total in-place endowment of conventional oil and nonconventional fuels ranges between 13-16 trillion bbl. To put that number in perspective, to date the world has consumed roughly 1.1 trillion bbl, or between 7-9% of the in-place endowment."

It’s good to know what the neighbors are thinking about, isn’t it?

Think how long all that oil will last when the world shifts over to plug-in hybrid electric vehicles (PHEVs) and electric vehicles (EVs)!

For alternative views on world oil reserves, see The Oil Drum or the many reports by Matthew Simmons. See especially Simmons' presentation to the Minnesota legislature early in February.

For so much potential output, Aramco's output has been curiously flat. (click to enlarge)

CERA: Aramco chief calls for energy planning, cooperation
Sam Fletcher, February 13, 2008 (Oil & Gas Journal)

WHO
Abdallah S. Jum'ah, president/chief executive officer, Saudi Aramco; the US Department of Energy (DOE); the International Energy Agency (IEA)

WHAT
Jum’ah called for planning and cooperation between industry and government to allow development of conventional and unconventional oil reserves so as to meet unconstrained world oil demand “for many decades.”

World output, given Jum'ah's bright assessment, is also curiously off. (click to enlarge)

WHEN
Both DOE and the IEA predict fossil fuels will be required for 82-87% of total energy demand through 2030.

WHERE
- Saudi Aramco is the Saudi Arabian national oil company. Founded by Chevron and Texaco and nurtured with assistance of Exxon and Mobil in the World War II and post-war eras, it was progressively nationalized between 1973 and 1972.
- Saudi Aramco plans $90 billion in developments within Saudi Arabia and around the world over the next 5 years. That includes a joint venture renovation of a Port Arthur, Texas, refinery.

Probably the best Peak Oil information and discussion on the web. (click to enlarge)

WHY
- One widely reported assessment of world oil reserves is 3 to 6 trillion barrels. Variables include economic circumstances, technology, environmental factors, government policy and what Juma’ah called "…regional and global political trends…" which sounds like a veiled implication about concerns with climate change.
- Like many in the oil industry, Jum’ah is appropriately impressed with technological tools like enhanced oil recovery, extended-reach wells, calculated well completions, geosteering and reservoir mapping, monitoring and management. Jumping from technological sophistication to overconfidence in an endless supply seems presumptuous, if not downright unwise –especially since the American Society of Petroleum Engineers last year predicted the peak of the world’s oil supplies is foreseeable.
- Most oil authorities predict unconventional oil reserves will be very expensive and emissions-intensive to exploit. Some thing the costs will be prohibitive.
- Aramco plans to up its present 11 million barrel/day capacity to 12 million barrels/day in 2009.

While the Aramco chief is optimistic, many observers are less so. (click to enlarge)

QUOTES
- Abdallah S. Jum'ah, Saudi Aramco: "The world simply cannot afford to leave massive quantities of oil, gas, and coal in the ground and move precipitously to unproven alternatives, while still hoping to satisfy future growth in global energy demand."
- Jum'ah, on enhanced recovery: "At Saudi Aramco, we are starting to raise recoveries in some fields to the level of 70% of original oil-in-place. In fact, I have challenged our professionals to set that recovery level as the target for as many of our oil fields as possible."
- Jum'ah, on the oil sands and oil shale: "We should tap the vast potential of nonconventional resources, where the principal challenges are not finding these resources but overcoming a variety of technological, environmental, and economic hurdles associated with their production and processing…The special challenges facing higher, economic recoveries from the unconventional heavy oil and oil shale resources include the need for cutting-edge R&D and development of ground-breaking technologies in addition to the allocation of necessary gas and water sources…"