1. Saudi Arabian Oil Reserves Question: What are the actual petroleum resources of Saudi Arabia? Question: What are the actual petroleum resources of Saudi Arabia? Client: Total Client: Total Firm: Global Energy Research Associates Firm: Global Energy Research Associates Firm Members: Allyson Schmutter, Sara Brainard, Justin Placitella, Alex Pabst, Doug Heisen Firm Members: Allyson Schmutter, Sara Brainard, Justin Placitella, Alex Pabst, Doug Heisen

2. Saudi Arabian Oil Reserves Peak Oil Peak Oil Projections Projections Criticisms of Peak Oil Criticisms of Peak Oil Global Oil Demand Global Oil Demand Geopolitics Geopolitics Total’s current and future operations Total’s current and future operations Table of Contents

3. Peak Oil Theory M. King Hubbert 1956 M. King Hubbert 1956 Oil is finite, nonrenewable resource Oil is finite, nonrenewable resource Peak occurs when half of reserves have been used - then production declines Peak occurs when half of reserves have been used - then production declines Applies to individual fields as well as regional and global supply Applies to individual fields as well as regional and global supply WorldWatch energybulletin.net

4. Factors Influencing Peak Oil Production: slowing down in 33 of the 48 largest oil- producing countries Production: slowing down in 33 of the 48 largest oil- producing countries The Economist The Economist Reserves: most remaining oil is impure, inaccessible - more expensive and difficult to extract Reserves: most remaining oil is impure, inaccessible - more expensive and difficult to extract WorldWatch WorldWatch Discovery: declining, too slow to meet growing demand Discovery: declining, too slow to meet growing demand The Economist The Economist Demand: sharply increasing, will rise by 35-50% by 2030 Demand: sharply increasing, will rise by 35-50% by 2030 Energy Policy Energy Policy

5. Peak Oil Concerns for Saudi Arabia Business Week All info on reserves kept secret All info on reserves kept secret Backing away from swing producer status - not meeting increasing demand as agreed to Backing away from swing producer status - not meeting increasing demand as agreed to The Economist The Economist Saudi engineers report difficulty with production, decline in reserves Saudi engineers report difficulty with production, decline in reserves Multinational Monitor Multinational Monitor Not in producers’ interests to reveal peak or decline - reject theory Not in producers’ interests to reveal peak or decline - reject theory Environmental Quality Management Environmental Quality Management

6. Recommendations Peak oil is a significant and legitimate concept - not a question of if, but when Peak oil is a significant and legitimate concept - not a question of if, but when Essential to determine extent and potential of Saudi resources - must apply pressure to gain further detailed info and not rely on vague statements Essential to determine extent and potential of Saudi resources - must apply pressure to gain further detailed info and not rely on vague statements

7. Saudi Oil Fields 264.2 billion barrels of proven oil reserves 264.2 billion barrels of proven oil reserves Accounts for more than 1/4 of the world’s total supply Accounts for more than 1/4 of the world’s total supply Consists of 13% of global production Consists of 13% of global production World’s number one leading oil producer and exporter World’s number one leading oil producer and exporter Government has full control and ownership of the Saudi Aramco Company Government has full control and ownership of the Saudi Aramco Company [Dr. Gawdat Bahgat]

8. [The New York Times]

9. Field Discovery Date Production Start (a)(b)(c)(d)(e)(f) Dammam193819381.051.0450.3251.51.5 Abu Hadriyah 194019631.761.0551.8401.8 Abqaiq1940194612.812.5513–1912.815.0 Qatif194519513.298.626.06.0 Ghawar1948195183838566–15082.0105 Fadhili194919640.950.961.0 Safaniya- Khafji 1951195732.322.541.1621–5536.127.23 Khursaniyah195619652.343.334.14.1 Khurais195719638.78.516.7813–198.58.7 Manifa1957196417.11122.7911–2317.017.1 Abu Safah 19637.816.66.157.57.85 Berri196419677.31214.9410–2512.014.0 Zuluf1965197310.648.518.2311–2010.614.0 Fereidoon- Marjan 196610 Marjan196789.264.5754.0 Size Estimates for Saudi Arabia major oil fields in billions of barrels [http://graphoilogy.b logspot.com/]

10. Texas and Saudi Arabia crude oil production Texas and Saudi Arabia crude oil production The orange points indicate 2006 and 2007 production estimates for Saudi Arabia (crude oil + condensate). The orange points indicate 2006 and 2007 production estimates for Saudi Arabia (crude oil + condensate). [Jeffrey Brown]

11. [The New York Times]

12. Pro Peak Oil Projections Saudi’s biggest fields already past their peaks – 6 of the major fields produce 95% of Saudi oil (Simmons) Saudi’s biggest fields already past their peaks – 6 of the major fields produce 95% of Saudi oil (Simmons) Global oil production will peak 2011-2012 at 93 mbpd (Skrebowski) Global oil production will peak 2011-2012 at 93 mbpd (Skrebowski) “Imminent peakist view” - 2.275 to 2.785 trillion barrels peaking from 2005-2015 (Nehring) “Imminent peakist view” - 2.275 to 2.785 trillion barrels peaking from 2005-2015 (Nehring) “Delayed peakist view” - 3.39 to 5 trillion barrels peaking from 2020-2040 with a plateau of 15 to 30 years (Nehring) “Delayed peakist view” - 3.39 to 5 trillion barrels peaking from 2020-2040 with a plateau of 15 to 30 years (Nehring) Oil Depletion Analysis Centre predicts global oil production will peak by 2011 – peak of regular oil was 2005 and heavy oil in 2011 (Howden) Oil Depletion Analysis Centre predicts global oil production will peak by 2011 – peak of regular oil was 2005 and heavy oil in 2011 (Howden) Association for the Study of Peak Oil assesses 1.46 trillion barrels left to peak at 2010 (Carroll) Association for the Study of Peak Oil assesses 1.46 trillion barrels left to peak at 2010 (Carroll)

13. Anti-Peak Oil Projections BP – world has “proven” reserves to last until 2037 (Howden) BP – world has “proven” reserves to last until 2037 (Howden) 3.7 trillion barrels left with production increasing at least until 2031 (Jackson) 3.7 trillion barrels left with production increasing at least until 2031 (Jackson) Global production will increase to 130 mbpd, plateau at 2030, and fall at 2050 (Yergin) Global production will increase to 130 mbpd, plateau at 2030, and fall at 2050 (Yergin) Global resource oil base is projected at 3.74 trillion barrels – 3x larger than Peak Oil theory (Cambridge Energy Research Associates) Global resource oil base is projected at 3.74 trillion barrels – 3x larger than Peak Oil theory (Cambridge Energy Research Associates) Total undiscovered fields amount to 758 billion barrels, 704 billion are trapped in shale, 662 billon are in the Middle East (CERA) Total undiscovered fields amount to 758 billion barrels, 704 billion are trapped in shale, 662 billon are in the Middle East (CERA)

14. Saudi Global Projections World has more than 100 years worth of crude oil in supply World has more than 100 years worth of crude oil in supply Produced 1 trillion barrels ~ 18% of earth’s potential of 5.7 trillion barrels Produced 1 trillion barrels ~ 18% of earth’s potential of 5.7 trillion barrels 4.7 trillion remaining barrels should last more than 140 years at current production rates 4.7 trillion remaining barrels should last more than 140 years at current production rates [Bhushan Bahree]

15. Saudi Government Projections Saudi Arabia has 264 billion barrels in proven reserves as of 2008 Saudi Arabia has 264 billion barrels in proven reserves as of 2008 Possible reserves – 100 billion barrels Possible reserves – 100 billion barrels Undiscovered reserves – 200 billion barrels Undiscovered reserves – 200 billion barrels Current rate of production of 9.5 mbpd will last 80 years Current rate of production of 9.5 mbpd will last 80 years Current production rate will last 100 years when considering probable and possible reserves Current production rate will last 100 years when considering probable and possible reserves [Ministry of Petroleum and Mineral Resources]

16. Recommendations Skeptical of the Saudi estimates in that detailed production information has not been released in over 20 years (Gerth). Skeptical of the Saudi estimates in that detailed production information has not been released in over 20 years (Gerth). Unknown whether or not Saudi fields can produce at increasingly high rates for an extended period of time (Gerth). Unknown whether or not Saudi fields can produce at increasingly high rates for an extended period of time (Gerth). Experts have assessed that the fields cannot endure this type of stress (Gerth). Experts have assessed that the fields cannot endure this type of stress (Gerth). It is my opinion to stay consistent with the theory of Peak Oil. It is my opinion to stay consistent with the theory of Peak Oil. I predict that global production will peak at about 2015, while Saudi reserves will last until 2030. I predict that global production will peak at about 2015, while Saudi reserves will last until 2030.

17. Petroleum Demand Why Petroleum Demand Matters Why Petroleum Demand Matters Supply and Demand Supply and Demand Strained Resources? Strained Resources? Demand Growth Demand Growth Increasing Projections “Energy Forecasts call for Saudi Arabia to double its output in the next decade and after” The New York Times This year- worldwide oil demand to increase 800,000 b/d International Energy Association Rise in demand by more than 1/3 by 2030 “Outlook for Energy: A view to 2030” Energy Consumption globally to rise by more than 50% in next 25 years “Facing the Hard Truths about Energy” ExxonMobil's quarterly shareholders publication.

18. Petroleum Demand Developing World Developing World Soaring demand in the Developing World Soaring demand in the Developing World China China Leading Demand Growth Leading Demand Growth Oil and Gas Journal Oil and Gas Journal New Ventures New Ventures Exxon Mobile and Sinopec Exxon Mobile and Sinopec Petroleum Economist Petroleum Economist Recommendations Recommendations Keep up-to-date on demand statistics Ever-changing Specifically China Look towards investments with Chinese companies Downstream investments in Saudi Arabia U.S. Energy Information Administration (EIA)

19. Geopolitics Why Geopolitics Matter Why Geopolitics Matter “Oil is a political commodity” “Oil is a political commodity” The New York Times The New York Times Stability in the Middle East and Saudi Arabia Stability in the Middle East and Saudi Arabia Example: 9/11 hijackers Example: 9/11 hijackers Some History Some History U.S./ Saudi Arabia’s Special Relationship with Oil Examples: DeGolyer Discovery, Aramco etc. Exception: 1973 embargo Associated Press Photograph

20. Geopolitics Geopolitics Stability and Roadblocks Stability and Roadblocks Internal Internal A government controlled by oil A government controlled by oil Regional Regional Arab-Israeli Conflicts Arab-Israeli Conflicts International International US, China, Saudi Arabia US, China, Saudi Arabia Newfound Interests Newfound Interests China China Sino-Saudi relationship Sino-Saudi relationship Recommendations Recommendations Watch the changing geopolitics Some say it isn’t important- we disagree Specifically China Be aware of future possibilities: Iran-Israel War? Photo Art- Wordpress.com

21. Total’s Upstream Activities in Middle East and Saudi Arabia BBC News Strong relationship with Middle East Strong relationship with Middle East United Arab Emirates, Qatar, Yemen United Arab Emirates, Qatar, Yemen No upstream activities in Saudi Arabia No upstream activities in Saudi Arabia “Total in 2007,” 2007 Annual Publications, Total Corporate Web Site. 2007

22. Far weaker relationship with Middle East Far weaker relationship with Middle East Service stations and marketing Service stations and marketing Policy change Policy change “Total in 2007,” 2007 Annual Publications, Total Corporate Web Site. 2007. “Total in 2007,” 2007 Annual Publications, Total Corporate Web Site. 2007. Total’s Downstream Activities in Middle East and Saudi Arabia Tehran Times

23. Jubail Refinery June 2008 Agreement June 2008 Agreement 400,000 bpd 400,000 bpd Estimated cost $10 billion Estimated cost $10 billion Oil from Manifa oil field Oil from Manifa oil field “Jubail Refinery Project to cost over $10bn,” Arab News. May 17 2008. “Jubail Refinery Project to cost over $10bn,” Arab News. May 17 2008. Kao, Ikuko, “Total sees Saudi Jubail refinery start up in 2012,” Reuters News UK. March 11 2008. Kao, Ikuko, “Total sees Saudi Jubail refinery start up in 2012,” Reuters News UK. March 11 2008. Energy Information Administration

24. Jubail Refinery, A Sound Investment? Two views: Cautious and Optimistic Two views: Cautious and Optimistic Jeffrey Brown and Saudi Arabia Jeffrey Brown and Saudi Arabia

25. Tables 1.0 and 1.1 Investme nt ($) Barrels Per YearProfit Margin ($) PaybackPeriod(Years) HighestQuarterlyAverage 10 billion 146,000,0 00 6.18811.07 LowestQuarterlyAverage 10 billion 146,000,0 00 1.98534.49 HighestYearlyAverage 10 billion 146,000,0 00 5.65712.11 LowestYearlyAverage 10 billion 146,000,0 00 2.84224.10 Payback Period (Years) Quarterly Average 19.54 Yearly Average 17.08 Table 1.1 –Payback Period for Jubail Refinery (Geometric Average) Table 1.0 -Payback Period for Jubail Refinery

26. Recommendations based on cautious view Recommendations based on cautious view Recommendations based on optimistic view Recommendations based on optimistic view Recommendations for Future Petroleum Operations

27. Conclusion of Recommendations Peak oil Peak oil Peak Oil is a significant and legitimate concept - not a question of if, but when Peak Oil is a significant and legitimate concept - not a question of if, but when Essential to determine extent and potential of Saudi resources - must apply pressure to gain further detailed info and not rely on vague statements Essential to determine extent and potential of Saudi resources - must apply pressure to gain further detailed info and not rely on vague statements Projections Projections Staying consistent with the theory of Peak Oil. Staying consistent with the theory of Peak Oil. Predicting that global production will peak at about 2015, while Saudi reserves will last until 2030. Predicting that global production will peak at about 2015, while Saudi reserves will last until 2030. Petroleum Demand Petroleum Demand Keep up-to-date on demand statistics Ever-changing Specifically China Look towards investments with Chinese companies Downstream investments in Saudi Arabia Geopolitics Geopolitics Watch the changing geopolitics Some say it isn’t important- we disagree Specifically China Be aware of future possibilities: Iran-Israel War? Total’s Operations Total’s Operations Base operations planning on both cautious and optimistic views