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Oil Prices: Saudi Arabia’s digging deep

Posted April 25, 2008

“Saudi Arabia has a problem. And it’s the same one that every oil-producing nation will face someday: Its oilwells are drying up.” — Jason Simpkins

by Jason Simpkins

Baltimore – (TFN): The Kingdom of Saudi Arabia is the world’s leading petroleum exporter. Officially, it has reserves of about 260 billion barrels of crude oil - approximately 24% of the world’s total proven petroleum reserves.

But Saudi Arabia has a problem. And it’s the same one that every oil-producing nation will face someday: Its oilwells are drying up.

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Oil Prices: Saudi wells running dry

Saudi Arabia’s largest and most productive field, the Ghawar field, produces about five million barrels a day - accounting for more than half of the kingdom’s total production and 6% of total world output. But Ghawar was discovered in 1948 and has required large-scale injections of seawater to artificially pressurize the well since the 1970s. There’s no telling when the last drop of oil will be purged from the biggest oil find of the 20th century, but there’s no doubt Ghawar has seen better days.

As investing legend Jim Rogers pointed out in a recent interview with Money Morning Investment Director Keith Fitz-Gerald Saudi Arabia has claimed to have the same amount of oil it did 20 years ago, but logic seems to run contrary to that assertion. Read on to learn more.

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