Energy investment banker Matthew Simmons, of Simmons & Co International, has been outspoken in his warnings about peak oil before. His new statement is his strongest yet, "we may have already passed peak oil".
The subject of peak oil, the point at which the world's finite supply of oil begins to decline, is a hot topic in the industry.
Arguments are commonplace over whether it will happen at all, when it will happen or whether it has already happened. Simmons, a Republican adviser to the Bush-Cheney energy plan, believes it "is the world's number one problem, far more serious than global warming".
Speaking exclusively to Aljazeera, Simmons came out with a statement that, if proven true over time, could herald by far the biggest energy crisis mankind has known.
"If Saudi Arabia have damaged their fields, accidentally or not, by overproducing them, then we may have already passed peak oil. Iran has certainly peaked, there is no way on Earth they can ever get back to their production of six million barrels per day (mbpd)."
The technical term for damaging an oilfield by overproduction is rate sensitivity. In other words, if the oil is pulled out of the ground too fast, it damages the fragile geological structure of the field. This can make as much as 80% of the oil within the field unextractable. Of course, at the moment, virtually every producer is at full tilt. The most important among them is Saudi Arabia; their Gharwar field is the world's biggest.
"The faster you pull a reservoir, the faster you pull out all of the easy-to-produce oil," explains Simmons. "What happens is that you lose massive amounts of what the oil industry calls oil-left-behind still inside the field. These issues, as you can see, have been known about for years."
There's more at the link, including an example of a company, El Paso, that ended up writing off 41% of the oil in their fields because they over-produced. The article ends with this cheery quote:
"This is dangerous stuff," warns Simmons. "If we say they have not peaked and then they choose to further increase production, they will only hasten their field decline, and waste huge amounts of valuable oil into the bargain. And oil, as we are only now coming to realise, is the world's most precious resource."
Hat tip to babble.