ABU DHABI (Reuters) – Global oil reserves are plentiful and will last for many years to come, said Nansen Saleri, who until last year oversaw the world’s largest reserves in top exporter Saudi Arabia.
Some industry observers have argued that oil supplies were at, or near, their peak and have questioned whether big producers were sitting on as much oil as they claim.
But Saleri, who headed reserve management at state oil giant Saudi Aramco from 1998-2007, told Reuters in an interview on Monday that the bigger challenge for the industry was not a shortage of reserves but increasing recovery from those already known.
Saleri was tight-lipped when asked about Saudi oil reserves, which account for over a fifth of the world’s discovered oil.
“The world is not close to running out of oil, there are plenty of supplies,” Saleri, now chief executive of U.S.-based Quantum Reservoir Impact, said.
“My own estimate of total global recoverable oil reserves is six trillion barrels plus, and we have only produced one trillion barrels.”
DOUBLING RECOVERY RATES
Around 90 percent of recoverable reserves were in the hands of state-owned national oil companies, Saleri said.
Increased resource nationalism among reserve holders and the lack of technology of some national oil champions were preventing maximum oil recovery in many countries, but this could be resolved, he said.
“These are serious issues that need careful attention, but one should not equate the current set of problems as being a permanent bottleneck to future supplies,” he said.
“To make the assumption that somehow national oil companies will forever be unable to exploit their resources efficiently is wrong. Look at Saudi Aramco, it is as effective and capable as any IOC (international oil company) that I am aware off.”
State oil companies needed to modernize themselves, acquire new technology and bring modern management techniques to oil production, he said.
If they did so, they could almost double recovery rates to around 66 percent from around 35 percent now, he said.
Improving recovery rates should be seen as a civic responsibility, he said.
“It’s good business – you lower your capital expenditures, you lower your operating expenses and you increase your revenue stream because you sustain higher production for a longer period of time.”
Saleri, who studied in the United States and started his career the Californian unit of Standard Oil, said the recent slide in oil prices showed a return to market fundamentals.
Oil has fallen to around $68 a barrel from a July peak of over $147.
“What happened recently with the collapse of oil prices was an overdue correction, amplified by the global financial crisis,” said Saleri.
High oil prices had increased the competitiveness of alternative energy sources and would benefit consumers in the long run.
“Oil is no longer the only player anymore, there are so many other alternative energy sources that are coming in, you have wind energy, solar, nuclear, gas, clean coal,” Saleri said.
“From the oil-industry perspective, it may not be good news, but from a global perspective it’s great news. In this environment when energy is attracting so much attention and capital, we are likely to see a lot of breakthroughs.”