Admitting that the worldwide oil supply is rapidly being depleted seems to be something that leading politicians and industry executives simply won't do.
However, there are a growing number of observers who feel that this indeed might be the case. Those who feel this way point to the state of affairs in Saudi Arabia, the top oil producer for the past 30 years, or so. For quite some time, industry watchers have postulated that Ghawar, the biggest oil field in the world, has reached its plateau of production.
If you don't know anything about Ghawar, it is by far the biggest conventional oil field in the world, measuring an estimated 175 miles by 20 miles. Currently, some say that the field produces between 4.5 and 5 million barrels of oil per day by outside observers, more than 6 percent of global production. The officially stated maximum sustained crude production capacity is 8.5 million barrels per day, though actual daily output is a closely-guarded state secret. Thus far, approximately 60 billion barrels have been pumped out of Ghawar since production began back in 1951.
Ghawar's total proven reserves, also known as 'recoverable' oil, still left in the ground, have been pegged at just over 70 billion barrels by Saudi Aramco, which is the largest nationalized oil company in the world. The word 'recoverable' is extremely relevant, as the total amount of oil in the ground is less significant than the amount that can easily be pumped out at a given level of extractive technology. While modern techniques can certainly boost the amount of oil that can be extracted per oil field, the question of how expensive the operation turns out to be remains extremely pertinent. Once oil extraction becomes too difficult, and therefore expensive, it becomes economically infeasible to attempt to remove the remaining supply.
Saudi Arabia is watched very closely because of its importance in the worldwide oil markets. It has long been known as the world's biggest producer of oil, and has acted as a 'swing producer,' regulating oil extraction rates to balance to the global market in concert with the other nations in the Organization of Petroleum Exporting Countries (OPEC).
A number of worrying signs clearly indicate that Saudi Arabia's largest field might be in permanent decline. In April of 2006, a Saudi Aramco spokesman shocked listeners by making the observation that its first discovered fields are now declining at a rate of 8 percent per year. This, of course, implies that Ghawar may have 'peaked.' The spokesman continued that steps were being taken to offset the decline, but that the only valid solution to declining crude oil supplies is to locate new fields, and it has been documented that new findings have not kept pace with burgeoning worldwide demand.
If Ghawar is indeed in decline, it likely means that the overall production around the world is as well. Of the 'super-giant' oil fields, four are officially past their peak production: China's Daquing, Mexico's Cantarell; Russia's Samotlor; and Kuwait's Burgan. Though Ghawar has not officially been so declared, it is clear that the handwriting is on the wall.
