The omniscient InstaPundit notes a new book by investment banker Matthew Simmons predicting a crisis in Saudi Arabia's oil producing capacity.
From the book's blurb:
Twilight in the Desert looks behind the curtain to reveal a Saudi oil and production industry that could soon approach a serious, irreversible decline. In this exhaustively researched book, veteran oil industry analyst Matthew Simmons draws on his own three-plus decades of insider experience and more than 200 independently produced reports about Saudi petroleum resources and production operations. What he uncovers is a story about Saudi Arabia's troubled oil industry, not to mention its political and societal instability, which differs sharply from the globally accepted Saudi version.
Color me at least somewhat skeptical.
Simmons is a savvy guy and undoubtedly had good help to write this book, but lots of other smart guys have predicted the imminent end of oil before, especially following the oil price shocks of the 1970s. Time and again, the petroleum industry has proven the experts wrong -- at least on timing. Their studies and reports used to fill my shelves when I worked in the oil exploration industry.
Few dispute that most oil reserves will one day be depleted and become much more expensive while we get there, but I'd bet the policies of the Saudi regime have also prevented a thorough exploration of their country. After all, they've had (relatively) easy reserves to produce at will.
The U.S. has had two million oil & gas wells drilled over the last century. Saudi Arabia's well count probably numbers only in the tens of thousands. Turn that country over to entrepreneurial Western petroleum geologists and reservoir engineers and see what happens. It could be amazing.
On the other hand, the Saudi regime is so profoundly dishonest that Simmons may well be right. Who knows what they've done? Maybe Simmons does. We'll see.
Posted by Alan at May 11, 2005 12:36 PM