Peak Oil Saudi Style

One of the less discussed aspects of the peak oil debate is the link between data quality and the utility of the peak oil projections. This was well understood by M. King Hubbert, the methods originator, but has received less emphasis in more recent forecasts. Hubbert originally applied the his method to the US in 1956 and continued to develop the method for several decades thereafter. Throughout this period Hubbert focused on estimates of US peak oil and openly acknowledged the method was essentially useless for forecasting world peak oil. His reasoning had nothing to do with any inherent limitation in the method but, rather, on concerns about the quality of the data necessary for estimating a global peak. At the time of the Cold War, data on proven reserves and past production from behind the Iron Curtain was sketchy at best. Without quality input data, Hubbert knew the predicted global peak would be of questionable value and, hence, he focused his attention on the US case where data was readily and comparatively transparently available.

Fast forward to the present. Subsequent to the collapse of the Soviet Union, quality data about proven reserves and past production in the large areas of the world have improved dramatically. The major exception to this claim is the Middle East. In the 1950's and 60's oil production in the Middle East was essentially under the control of large multi-national oil companies which had their headquarters in the US and Europe. As a result, the information was comparatively public and subject to scrutiny to insure its validity. One major result of the Arab Oil Embargo of 1973, however, was to shift control of production from these foreign firms and re-establish control with the Arab states. Since that time, knowledge about reserve additions and other key figures have been closely held by the individual states and, hence, the quality of the information necessary for making informed projections of peak oil from these areas has become increasingly poor.

This is the background to a series of diplomatic cables that were recently released on Wikileaks and display US concerns about a looming peak in Saudi production -- something that the Saudi's claim in of little immediate concern. Simply put, the cables show that the US fears the Saudi's have been fudging the data and that the amount of oil remaining is significantly less than they claim.

The Guardian has provided a nice summary of the cables and their concerns with links to the key documents.