Stuart Standiford, one of the editors at the Oil Drum, has posted a sobering article: Saudi Arabian oil declines 8% in 2006. Standiford has been taken a skeptical stance toward the some of the more outspoken advocates that Saudi Arabia and therefore the world are in production decline.
Here is the money quote:
Overall, I feel this data is clear enough that I’m willing to go out on a limb and conclude the following:
* Saudi Arabian oil production is now in decline.
* The decline rate during the first year is very high (8%), akin to decline rates in other places developed with modern horizontal drilling techniques such as the North Sea.
* Declines are rather unlikely to be arrested, and may well accelerate.
* Matt Simmons appears to be right in Twilight in the Desert, but the warning did not come until after declines had actually begun.
I suggest that this is likely to place severe political strains on Saudi Arabia within a year or two at most.