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Home >> Business
UPDATED: 08:44, September 15, 2006
Producers move to debunk "Peak Oil" forecasts: report
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Leading petroleum producers, including Saudi Arabia and Exxon Mobil Corp., are aggressively arguing that plenty of crude oil remains for world consumption, a move to counter critics who contend crude output is about to plateau, according to the Wall Street Journal on Thursday.

The argument, known as the "peak-oil" theory, has provided intellectual backing for the boom in crude prices and sowed doubts among some policy makers about crude's long-term reliability as an energy source.

Such doubts, coupled with concern over sky-high prices, have added impetus to the search for oil substitutes -- including in Washington, where President Bush declared the country was "addicted to oil" and sparked a boom in interest in ethanol.

Some in the industry are keen to fight the threat posed by such fears.

Abdallah S. Jum'ah, chief executive of Saudi Arabian state-owned Saudi Aramco, the world's largest oil company by production, argued on Wednesday during a speech in Vienna that the world has more than a century's worth of crude left at current production rates.

His talk followed similar remarks by a senior Exxon executive this week. Spokesmen for Exxon and Aramco said they were not coordinating their remarks, according to the report carried by The Wall Street Journal.

The belief that the Earth is running dry of oil is just one factor supporting crude prices. Oil supplies -- constrained by under-investment when crude prices were lower -- have increased more slowly than demand, leading to a thin margin of spare pumping capacity and higher prices, says the report.

Demand has shown signs of slowing and prices have fallen from a nominal all-time high of more than 78 dollars a barrel in July, although, adjusted for inflation, oil reached as high as 99.21 dollars in April 1980.

In New York on Wednesday, crude-oil futures rose 21 cents to settle at 63.97 dollars.

In a sign that oil-supply concerns are gaining currency, the U.S. Department of Energy has asked the National Petroleum Council, an oil-and-gas-industry research group, to investigate peak-oil claims.

The council launched a study that includes different industries and environmental groups.

It will survey existing studies and examine why they differ on how much oil and gas the world holds and what the response should be.

At an OPEC seminar on Wednesday, Jum'ah of Aramco said the world had produced only about one trillion barrels, or about 18 percent, of the earth's producible potential of 5.7 trillion barrels of oil.

"That fact alone should discredit the argument that peak oil is imminent, and put our minds at ease concerning future petroleum supplies," he said.

The remaining 4.7 trillion barrels should be enough to last more than 140 years at current output rates, he said.

Saudi Arabia, with a quarter of the world's proven crude reserves, has an interest in countering developments that would reduce demand.

"If you are sitting on the world's biggest oil deposits, you would want to prevent the premature development of alternatives to oil," said Herman Franssen, president of International Energy Ass.

Jum'ah said the Saudis "don't mind the development of alternatives to oil," because increasing energy demand means the world needs supplemental energy sources.

The chief executive, however, objected to government subsidies and other support that led people to believe that alternatives like ethanol were a "panacea" and were only "around the corner."

However, the oil industry says that while oil is finite, the known pool of obtainable oil grows as technology improves.

"I think there's a lot of misconceptions of what peak oil is," Raymond, who is leading the U.S. oil study, said in an interview with the business newspaper last week. "The resource base is continually changing, driven by economics and technology."

Source: Xinhua

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