Alt Energy Not the Answer, Says Saudi Oil Minister

Forbes.com

CERA Week
Christopher Helman, 02.11.09, 12:00 PM ET

 

 

 

HOUSTON–Saudi Arabia’s oil minister, Ali Ibrahim al-Naimi, in a speech Tuesday night issued a warning against overzealous boosterism of non-fossil fuel energy sources in a time when oil prices have become “unsustainably” low.

“Promoting alternatives could chill investment in the oil sector,” he said, in a dinner address to the CERAWeek energy conference in Houston. “It would be a nightmare if alternatives don’t meet expectations.”

That’s because meeting global energy needs requires constant investment on a scale unmatchable by economically uncompetitive sources like solar, wind and biofuels.

“Scale is important in the global system. The massive scale of the global energy system makes rapid change costly and impractical,” al-Naimi said.

No part of that global energy system is more massive than Saudi Arabia’s. The kingdom produces some 8 million barrels of oil a day and provides a vital supply cushion in times of geopolitical stress. Policy is to maintain 2 million bpd of production capacity that Saudi Aramco can turn on at nearly a moment’s notice. Al-Naimi stated that this year, spare capacity will reach 4.5 million bpd upon completion of the Khurais project. “We are investing now to help supply uninterrupted energy when the global economy recovers,” said al-Naimi.

But Saudi Arabia’s appetite for more mega oil investments could fade with sustained lower oil prices. Already, for 2009, lower oil revenues have pushed the Kingdom into deficit spending; al-Naimi said the difference will be made up by drawing on the “little reserves we have accumulated.”

Though he said there is “no consensus on what is a fair price of a barrel of oil,” he indicated that today’s price of $39 a barrel is too low. The right price, he said, is low enough to facilitate global economic growth but high enough to incentivize development of not just marginal oil and gas fields but even renewable energy sources.

That’s right, renewables. “In time, the world will transition away from fossil fuels, but we don’t know what fuels,” al-Naimi said. He said he had instructed solar researchers at the new King Abdullah University of Science and Technology of his desire that Saudi Arabia in 10 years be generating solar electricity equivalent to the energy content of its exported oil. “We have a lot of sunlight.”

Until then, he said, increased energy efficiency and conservation is the cheapest form of energy. If only it were enough. “Fossil fuels are here to stay for 30 to 50 years. I don’t think we have a choice.”

 

Original Article

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3 responses to this post.

  1. Posted by Cush In SF on February 12, 2009 at 11:41 pm

    Wonderful people everywhere in the world. Isn’t it great that some think so much of themselves that nothing else matters. We cannot have alternate energy sources or the Saudi lifestyle will disappear. Price of oil will go up again. It was extremely high as a way to bribe the Gulf countries and Russians to support the Iraq operation with the violence down in Iraq, there is no need to pay them. The Russians will start war somehow to push the price up again. The Saudis don’t have to worry for long.

  2. Maaaan, you know there is such thing in the web like search engine, http://google.com if you don’t, go there to understand why this post is bullshit

  3. Posted by Cush In SF on February 22, 2009 at 1:12 am

    don’t get it. i know thre is search engine but why is the post bullshit??? I don’t know what you think of the Saudi and Kuwaiti and the rest over there but they have the most luxurious lifestyles in the world at the cost of selling the Earth’s natural resources for (most of oil history) nothing. some countries have no other resources and thus economic base and have to sell oil to support their populations but these jerks don’t have population and a very small minority pocket billions and trillions of dollars off resources that belong to the entire planet. That is wrong. if the price of oil goes down, they can go to hell with their bullshit lifestyles. On the other hand, this guy says without high oil prices, fewer people want to invest in their economies…………. May be true but small point compared to what comes out of their economies….Read the article again please……..or explain to me what you are talking about. thank you

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