Satellite images cloud Saudi oil decline theory

By Matthew Robinson

NEW YORK, Dec 5 (Reuters) - Satellite images may scuttle theories that the world's biggest oil field in Saudi Arabia is in decline, Bernstein Research said on Wednesday.

A jump in drilling activity in recent years at the giant Ghawar oil field has raised concerns Saudi Arabia is struggling to maintain oil output and has fueled "peak oil" theories that global production is poised for a collapse.

But satellite images show that much of the rise in drilling activity has centered on two major expansion developments by state oil firm Saudi Aramco, instead of on keeping older parts of the field producing with enhanced recovery techniques, Bernstein said in a research note.

"The majority of the increased activity in the Ghawar field can be explained by the Haradh-III, and the Hawiyah natural gas liquids recovery mega-projects which were not designed as a quick fix to Ghawar's supposed rapid decline," the note said.

Bernstein said the report was an initial analysis of satellite data from 2004-2007, with a final conclusion expected in the coming months.

Theories that Ghawar will soon fall into decline may be based on little or incomplete data from the OPEC nation on the state of its oil sector, the report said.

"Without accurate and detailed data on what Saudi Aramco is undertaking, or with a poor understanding of current Ghawar decline rates, many conspiracy theories have arisen, which argue that we are on the cusp of global peak oil production," the research note said.

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