Goldman Sachs claims Saudi has peaked

UndercoverElephant · Post by **UndercoverElephant** » 11 Jul 2011, 20:46

http://www.energyandcapital.com/article ... sachs/1626

Despite claims by analysts and even OPEC that Saudi Arabia will be able to increase output to meet growing market demand, Goldman believes that the Saudis have reached their peak oil output.

This stems from circumstances in 2008, when oil surpassed $100 a barrel.

This was plenty of reason to boost market supply, but Saudi Arabia hit its peak at 9.5 million barrels a day, according to the Wall Street Journal.

Now, despite claims by the IEA that Saudi Arabia has the potential for a 12 million barrel-a-day capacity, Goldman has estimated a shortage in supply.

bigjim · Post by **bigjim** » 11 Jul 2011, 22:46

Oooh 'eck, this is it!

UndercoverElephant · Post by **UndercoverElephant** » 11 Jul 2011, 22:58

bigjim wrote:Oooh 'eck, this is it!

Looks that way. Should be interesting to see whether Saudi denies it. I suspect they will say nothing.

RGR · Post by **RGR** » 12 Jul 2011, 00:37

[quote="bigjim"]

RGR · Post by **RGR** » 12 Jul 2011, 02:39

[quote="UndercoverElephant"]

2 As and a B · Post by **2 As and a B** » 12 Jul 2011, 07:06

UndercoverElephant wrote:http://www.energyandcapital.com/article ... sachs/1626

Despite claims by analysts and even OPEC that Saudi Arabia will be able to increase output to meet growing market demand, Goldman believes that the Saudis have reached their peak oil output.

This stems from circumstances in 2008, when oil surpassed $100 a barrel.

This was plenty of reason to boost market supply, but Saudi Arabia hit its peak at 9.5 million barrels a day, according to the Wall Street Journal.

Now, despite claims by the IEA that Saudi Arabia has the potential for a 12 million barrel-a-day capacity, Goldman has estimated a shortage in supply.

I don't get it. This may indeed be 'peak production.' But if they drilled more wells, then they could increase production. But at a potential loss of total recoverable oil. Maybe it suits the Saudis to keep the oil price high.

BTW, if you enclose urls in the URL tags, they will be available as clickable links for all time.

ziggy12345 · Post by **ziggy12345** » 12 Jul 2011, 08:32

Saudi peak production could be due to a combination of factors. It could be the geology so that no matter how many well you drilled you cannot increase production. Or it could be the number of rigs you can feasibly operate has reached a maximum. At the moment there are around 125 rigs operating in the desert. Mainly they are doing maintenance on existing wells and installing ESP's electrical submersible pumps. This is to increase production when reservoir pressure is low. These 125 rigs are just able to maintain the current production. More likely they do not have the infrastructure to produce any more crude. if the current infrastructure is at maximum capacity to increase production would require massive investment and take several years to come on stream. If the fields then cannot deliver the crude what’s the point?

JavaScriptDonkey · Post by **JavaScriptDonkey** » 12 Jul 2011, 10:19

Does this mean the GS have been reading these boards?

Still, I have to agree a bit with RGR - what 'this' are you on about?

Saudi peaking just reduces their ability to oversupply a market place in order to control the price of oil for their US masters. Oil will in the future float pretty much as it has for the past few years, pricing frivolous uses out and encouraging alternative technology.

It will have financial implications but I think that the zombie hoards are a while a way just yet - there is still an awful lot of oil left to burn.

UndercoverElephant · Post by **UndercoverElephant** » 12 Jul 2011, 10:27

JavaScriptDonkey wrote:Does this mean the GS have been reading these boards?

Still, I have to agree a bit with RGR - what 'this' are you on about?

Saudi peaking just reduces their ability to oversupply a market place in order to control the price of oil for their US masters. Oil will in the future float pretty much as it has for the past few years, pricing frivolous uses out and encouraging alternative technology.

It will have financial implications but I think that the zombie hoards are a while a way just yet - there is still an awful lot of oil left to burn.

"This" probably just meant "the point where Peak Oil goes fully mainstream." GS calling Peak Oil is a long way from where we were just two or three years ago, when there was almost no mainstream acceptance of what was happening.

"This" could alternatively mean a fast crash. Since September 2008 I have been tending towards the belief that a fast crash was going to be avoided by TPTB continually changing the rules of the game in order to smooth the transition. Now I'm wondering again whether the day might come that the cashpoints just stop working. At the very least, I can imagine a scenario where the entire global financial system collapses and we have to start again with a load of new currencies, this time backed with precious metals. If this were to happen then the standard of living in the UK would drop disastrously overnight. Everything would change.

Ludwig · Post by **Ludwig** » 12 Jul 2011, 10:49

UndercoverElephant wrote: "This" could alternatively mean a fast crash. Since September 2008 I have been tending towards the belief that a fast crash was going to be avoided by TPTB continually changing the rules of the game in order to smooth the transition.

But they haven't been doing that, they've just been throwing really bad money after bad. Transition is the last thing on their minds. Rather than putting the brakes on, they're accelerating - propping up BAU for absolutely as long as they can until it suffers a terminal collapse of credibility. Because they have no other ideas.

Now I'm wondering again whether the day might come that the cashpoints just stop working. At the very least, I can imagine a scenario where the entire global financial system collapses and we have to start again with a load of new currencies, this time backed with precious metals. If this were to happen then the standard of living in the UK would drop disastrously overnight. Everything would change.

Yes, that "overnight" is the terrible thing. There will be social panic on a scale never before witnessed in history.

Ludwig · Post by **Ludwig** » 12 Jul 2011, 10:55

2 As and a B wrote: I don't get it. This may indeed be 'peak production.' But if they drilled more wells, then they could increase production.

No, think about it: the production of the existing wells is declining. Unless every new (and presumably less efficient) well can make up for the decline of an existing well, production falls.

PS_RalphW · Post by **PS_RalphW** » 12 Jul 2011, 11:08

I wouldn't change my opinion of the status of Saudi oil supply on the basis of a report from Goldan Sachs. They are a major oil investor who will say whatever they want to manipulate the market in their favour.

The complexities and uncertainties of Saudi production is the great topic over at TOD, and there is a web site (don't have the URL to hand) which uses google maps data to track the development of SA oil well drilling in minute detail, comparing what happens on the ground with official SA reports.

The biggest unceratinty is that SA never report actual production, and allow no independant overview of their reserves, etc.

Actual exports are most accurately estimated by counting the number of ships leaving port, and how deep they are in the water to see how much oil is inside.

SA offered extra crude to their Asian customers this month, and they turned it down (at the current market price), so I guess SA is still trying to control the market. Interesting that they didn't offer the crude to Europe, given our desparate need for light sweet, so I guess they were trying to flog the 'orrible stuff that is hard to refine.

smoke and mirrors.

Cabrone · Post by **Cabrone** » 12 Jul 2011, 11:14

Saudi is the big one....just glad I have had 7 years to get my head around and prepare for the effects of an energy descent.

Last night's meal was entirely home grown\produced except for a little bit of chicken and that makes me feel a little more comfortable about what's coming.

I'm not an uber doomer on PO, I think we'll pull through but it's going to be tough and an awful lot of people are going to have to make an awfully big mental transition before we reach a stable(ish) new reality.

Post by **adam2** » 12 Jul 2011, 12:07

We dont know for certain if SA are able to increase production or not, we can only speculate.
IF however they are able to increase production, it would appear that they do not wish to, presumably to support prices and make the reserves last a little longer.

Therefore it would appear that SA have peaked, for all practical purposes, the fact that they MIGHT be able to increase production is of no consequence if they choose not to.

And remember that if they do have spare capacity for now, it is slowly being eaten away by depletion, so any alleged spare capacity at present does not mean that any spare capacity will be available in a few years time.

Oil production elswhere is being constrained by unrest, and might in theory increae if peace breaks out.

frank_begbie · Post by **frank_begbie** » 12 Jul 2011, 12:13

I think Saudi Arabia are scraping the barrel now.

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