Bank says Saudi's top field in decline (Aljazeera.Net)

Don Coxe, oil analyst with the Bank of Montreal, re-ignited the debate over Saudi Arabia's Oil reserves. The analyst says that Gharwar's (Saudi Arabia largest oil field) days are fated. "The combination of the news that there's no new Saudi Light coming on stream for the next seven years plus the 27% projected decline from existing fields means Hubbert's Peak has arrived in Saudi Arabia," says Coxe

He Specifically points to:

- KSA promise to increase production by 500,000 barrels was only satisfied by “heavy, sulphurous oil that only a few refineries had the spare capacity to use" and not “benchmark Saudi Light, the high-end product that any oil refinery can process”

- Declining field will cut target additional production of 5 m barrels by 2012 to 2.5 m

- Lack of transparency over Reserve calculations especially as there is an incentive under old OPEC rules to inflate these in order to obtain a higher country quota

- Poor management of Gharwar : Pumping large amounts of oil at the maximum rate can damage the geological structure of the field, usually referred to as "rate sensitivity". Basically the hole falls in on itself, making large amounts of oil within it un-extractable.

- Utilization of water injection on new and old fields in Saudi : “..Water flooding on newborn Saudi wells? Isn't water flooding [the] Viagra of ageing wells?"

Saudi has responded by saying that it will meet its production targets by the utilization of new technology and pointed out that some parts of the Kingdom remain unexplored.

Coxe concludes a bleak future for Saudi Oil and energy supply. "With Opec's excess capacity ... tapped out, oil consumers have lost their security blanket against petro-chills. Free markets ... can be messy and unpredictable, little people can get hurt."