"First, a few words about the author of Twilight in the Desert. Matthew ("Matt") Simmons is not a militant environmentalist or anti-oil partisan; he is chairman and chief executive officer of one of the nation's leading oil-industry investment banks, Simmons & Company International. For decades, Simmons has been pouring billions of dollars into the energy business, financing the exploration and development of new oil reservoirs. In the process, he has become a friend and associate of many of the top figures in the oil industry, including Bush and Cheney. He has also accumulated a vast storehouse of information about the world's major oilfields, the prospects for new discoveries, and the techniques for extracting and marketing petroleum. There is virtually no figure better equipped than Simmons to assess the state of the world's oil supply. And this is why his assessment of Saudi Arabia's oil production capacity is so devastating."

The Saudi oil bombshell, by Michael T Klare is published in the Asia Times, whose domain seems to be down at the moment. Some excerpts:

"Saudi Arabia is about to face the exhaustion of its giant fields and, in the relatively near future, will probably experience a sharp decline in output. "There is only a small probability that Saudi Arabia will ever deliver the quantities of petroleum that are assigned to it in all the major forecasts of world oil production and consumption," Simmons writes in Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. "Saudi Arabian production," he adds, italicizing his claims to drive home his point, "is at or very near its peak sustainable volume ... and it is likely to go into decline in the very foreseeable future."

In addition, there is little chance that Saudi Arabia will ever discover new fields that can take up the slack from those now in decline. "Saudi Arabia's exploration efforts over the last three decades were more intense than most observers have assumed," Simmons asserts. "The results of these efforts were modest at best."

If Simmons is right about Saudi Arabian oil production - and the official dogma is wrong - we can kiss the era of abundant petroleum goodbye forever. This is so for a simple reason: Saudi Arabia is the world's leading oil producer, and there is no other major supplier (or combination of suppliers) capable of making up for the loss in Saudi production if its output falters...."

And...

"To fully grasp Saudi Arabia's vital importance to the global energy equation, it is necessary to consider the DoE's projections of future world oil demand and supply. Because of the rapidly growing international thirst for petroleum - much of it coming from the United States and Europe, but an increasing share from China, India and other developing nations - the world's expected requirement for petroleum is projected to jump from 77 million barrels per day in 2001 to 121 million barrels by 2025, a net increase of 44 million barrels. Fortunately, says the DoE, global oil output will also rise by this amount in the years ahead, and so there will be no significant oil shortage to worry about. But over one-fourth of this additional oil - some 12.3 million barrels per day - will have to come from Saudi Arabia, the only country capable of increasing its output by this amount. Take away Saudi Arabia's added 12.3 million barrels, and there is no possibility of satisfying anticipated world demand in 2025.

One could, of course, suggest that some other oil producers will step in to provide the additional supplies needed, notably Iraq, Nigeria and Russia. But these countries together would have to increase their own output by more than 100% simply to play their already assigned part in the DoE's anticipated global supply gain over the next two decades. This in itself may exceed their production capacities. To suggest that they could also make up for the shortfall in Saudi production stretches credulity to the breaking point."

So, what's up with the Saudis?

"In the end, therefore, it comes down to this: America's entire energy strategy, with its commitment to an increased reliance on petroleum as the major source of our energy, rests on the unproven claims of Saudi oil producers that they can, in fact, continuously increase Saudi output in accordance with the DoE's predictions.

And this is where Simmons enters the picture, with his meticulously documented book showing that Saudi producers cannot be trusted to tell the truth about future Saudi oil output....

...Essentially, Simmons' argument boils down to four major points:

• Most of Saudi Arabia's oil output is generated by a few giant fields, of which Ghawar - the world's largest - is the most prolific.

• These giant fields were first developed 40 to 50 years ago, and have since given up much of their easily extracted petroleum.

• To maintain high levels of production in these fields, the Saudis have come to rely increasingly on the use of water injection and other secondary recovery methods to compensate for the drop in natural field pressure.

• As time goes on, the ratio of water to oil in these underground fields rises to the point where further oil extraction becomes difficult, if not impossible. To top it all off, there is very little reason to assume that future Saudi exploration will result in the discovery of new fields to replace those now in decline....

...By drawing on these technical studies - cited here for the first time in a systematic, public manner - Simmons is able to show that Ghawar and other large fields are rapidly approaching the end of their productive lives."

Caveat reader - but something to think about.

UPDATES:

• IAGS has audio, a transcript and even slides from Matthew Simmons' presentation.

• The CS Monitor has an article from several experts giving the opposing view. (Hat Tip: Arjan Dasselaar of Zacht Ei)

• WSJ OpinionJournal is asking the same question.