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BOOK REVIEW: ‘Twilight in the Desert’ Offers Convincing Proof That Saudi Oil Reserves are Exaggerated; Author Urges ‘Trust but Verify’

Posted by kinchendavid on July 27, 2006

Reviewed By David M. Kinchen

Hinton, WV  – I missed reading one of the most important books of 2005, “Twilight in the Desert” by Matthew R. Simmons (John Wiley & Sons, 448 pages, $24.95, just out in paperback for $16.95 with 464 pages). I saw a copy of the book on the coffee table of my host while visiting Chicago earlier this month and began reading it. I took it with me on the train and decided to review it (Don’t worry, Greg, I’ll send it back!)

Subtitled “The Coming Saudi Oil Shock and the World Economy,” this important book by a Texas investment banker – he’s CEO of Houston-based Simmons & Company International, specializing in energy – disputes the claims that Saudi Arabia has the world’s largest petroleum reserves and can ramp up production to meet any demand.

“Twilight in the Desert” is an often heavily technology-laden book, offering detailed field-by-field assessments of Saudi Arabia’s key oilfields, comparing actual production potential with the often pie-in-the-sky claims by the kingdom’s oil company. Simmons provides a history of Saudi Arabia and its peculiar friendship and relationship with the U.S. that began in the early 1930s when American oilmen began exploring for oil in the kingdom shortly after it was founded in 1932.

Since speed-reading is back in vogue and the first 250 pages or so are packed with information about every oil field in the Kingdom, here’s my suggestion: Start at Part Four, Page 261, where Matt Simmons gives us his conclusions based on all the available Society of Petroleum Engineers (SPE) reports that he mentions in the first part of the book.

We should, he suggests, be very, very skeptical of the “two principal claims endlessly reiterated by the Saudi Arabian petroleum authorities:”

1. The proven oil reserves remaining in the aging giants and an array of lesser fields amount to something over 260 billion barrels.

2. The desert kingdom will be able to raise oil production to the level of 15, 20 or even 25 million barrels per day demanded by long-term energy forecasts.

Simmons says that the Saudis have been struggling to maintain production levels of seven or eight million barrels a day from the world’s largest oil fields – fields that have been producing since 1938 and have been major producers for more than 40 years.

“Exploration results have not been encouraging, and few of the smaller fields, the lesser ‘royalty’ or ‘commoners’ have produced significant quantities of oil,” Simmons writes. It’s a fact of petroleum life that “major oil fields peak, decline and deplete…although production can then be maintained at low rates almost indefinitely with with sufficient effort.”

This is the case with most lower 48 U.S. fields which have been producing – counting Drake’s field in Pennsylvania which began producing in 1859 – for more than 140 years. They’re still pumping oil near Beverly Hills High School and in the Baldwin Hills area of L.A., as well as the oil fields around Bakersfield. The East Texas oilfields, producing some of the best quality oil in the world, are still pumping out oil more than a century after Spindletop began producing near Beaumont, TX in 1901.

OK, forget what I said about jumping ahead to Page 261 for a minute and page back to Page 50, where Matt Simmons brings up the name Seymour Hersh – in my opinion our best active investigative reporter. Sy Hersh questioned Saudi reserve claims in a March 1979 New York Times story headlined: “Saudi Oil Capacity Questioned.” Hersh is a take-it-to-the-bank reporter.

Matt Simmons: “His story claimed that Aramco had systematically overproduced the major Saudi oilfields from 1970 to 1973 because the senior managers (essentially all employees of Chevron, Texaco, Mobil and Exxon) feared nationalization was imminent, and the shareholders wanted to extract as much wealth from these fields as fast as the oil could be produced.”

Sensibly, Simmons urges a review of Saudi production sustainability claims by an international forum. Considering the secrecy of the desert kingdom, this sounds unlikely.

Simmons: “As Saudi Arabian oilfields age and the world’s need for oil steadily rises, the probability increases month by month, year by year that we are approaching an oil-curtailing twilight in the desert kingdom that has provided the greatest single contribution to the world’s oil supply at the least expensive cost. When this desert twilight arrives, the world faces an energy future, and in turns an economic future, far different from the one that all current forecasts and human expectations assume. The need to begin creating an energy blueprint for a world that has passed peak oil output is so urgent that the citizens of all nations, in unison, need to demand energy data reform. The time to trust but verify is now, before twilight arrives and darkness begins to set in.”

“Twilight in the Desert” is a thought-provoking book that should spur our efforts to secure renewable sources of energy. In the long run, we’ll be out of oil sooner or later, so we must prepare for this condition starting yesterday.

The author’s web site: http://www.simmonsco-intl.com

Publisher’s web site: http://www.wiley.com/business

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One Response to “BOOK REVIEW: ‘Twilight in the Desert’ Offers Convincing Proof That Saudi Oil Reserves are Exaggerated; Author Urges ‘Trust but Verify’”

  1. Book Review: Twilight in the Desert…

    If you haven’t already read this book, you should consider doing so. I’m not going to write a full review, as there are already several good ones out there (see the links below). But if you’ve been following my commentary on Petrobras, and the econo…

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