Saudi Arabia is considering selling part of the giant state-owned Aramco oil company, with at least ten times the oil reserves of Exxon Mobil. Well…….. nobody really knows, because Aramco inexplicably revised its reserves numbers upwards by a factor of almost two in 1988. Then, even though they’ve been pumping some 10 million barrels a day from their wells, the numbers just kept on creeping up, like magic…..
But if they’re selling, someone’s starting to feel the pinch of the oil price dropping like a stone. And who will buy? With what money? With Royal Bank of Scotland predicting $16 a barrel, and even worse, someone on the TV news last night talking about $10 (!), who in their right mind would buy Aramco, unless it was a fire sale?
Saudi has the world’s largest oil field, Ghawar, and it is severely depleted. This 2004 paper, Selected Features of Giant Fields, Using Maps and Histograms, has a wealth of information on the discovery and depletion of giant oil and gas fields
Do the math, this 2004 chart says Ghawar started with 97 billion barrels of oil and was, in 2004, over 81% depleted. Of course the rest of Saudi is not that depleted. They have three fields that have been producing only a few years, Khurais, Manifa and Shaybah. These three fields, along with their other old giants, have enabled Saudi to keep production between 9 and 10 million barrels a day. But it is highly likely that they are about two thirds depleted.
Arch Coal, the second largest mining company in the US, filed for bankruptcy on Monday.
It is another blow for the ailing fossil fuel sector, as it struggles to adapt to environmental regulations dampening demand.
US coal production fell to 900 million short tons in 2015, the Energy Information Administration revealed on Friday, a 10% decline on the previous year.
Normally at this time of year, nothing much happens on economic fronts, but all this unraveling is a bit nerve wracking…… It’s easy to play up the idea that this is the beginning of the end of the fossil fuel era, yet it’s hard to say with any certainty that that’s not what’s happening…….
As I write, West Texas crude is trading at $30.50.