The world's oil production may be about to reach its peak - forever. Such apocalyptic prophecies often surface in the middle of the northern hemisphere winter. What is unusual is that this time the doomsday scenario has gained serious credibility among respected analysts and commentators.
So serious that a network of scientists affiliated with European institutions and universities has formed the Association for the Study of Peak Oil and Gas (Aspo) with a mandate "to determine the date and impact of the peak and decline of the world's production of oil and gas, due to resource constraints".
Aspo's current best guess, shown in the accompanying graph, is that oil production will peak in 2008. Other analysts reckon the peak will be in about 10 years, but it's hard to find many experts who do not agree that world oil supply is going into decline some time soon.
If this is true, the inferences are large and obvious. Oil prices will stay high, while the world will have to conserve energy and develop alternative sources. Uranium is likely to be the big winner, along with energy storage systems. Yanks will have to stop driving gas-guzzlers.
Of course, doomsday scenarios have been well rubbished in the past because they never came true, notably the Club of Rome's prediction in the 1960s that the world was running out of resources.
With oil in the 21st century, however, the scenario has legs. The world is perilously dependent upon its 14 largest fields, which produce 20 per cent of our daily supply. On average they are 54 years old and we are not discovering the "elephants" needed to replace them.
The world now uses about 82million barrels a day, of which Saudi Arabia supplies some 10million, making it the world's largest oil exporter.
Saudi Arabia is supposed to have one quarter of the world's known oil reserves. The term "supposed to" is used because the Saudis do not disclose detailed breakdowns of their reserves. The smallest, doggiest oil explorer on the ASX provides more transparent data than Saudi Aramco, which operates the Ghawar field.
Ghawar, discovered in 1948, is the world's largest oilfield - a huge anticlinal structure 250 kilometres long and 30 kilometres wide with 3400 wells so far punched into it. Current production is almost 5million barrels a day, accounting for more than half of Saudi Arabia's production. Ghawar has been a monster field, but analysts claim it is now peaking and that the decline may be swift.
Saudi Aramco has robustly denied such claims. Nansen Saleri, the manager of reservoir management at Aramco, went to Washington a year ago to make presentations designed to quell the fears of the doomsayers.
Saleri reckoned Saudi Arabia could maintain capacity at 10million barrels a day, and could even ramp up production as high as 15 million barrels and sustain the higher level for half a century. However, he never said how he could do it. Nor did he release any field data.
More recently, Saudi Aramco's senior geological consultant, Abdulkader Afifi, toured the United States with a presentation on the Ghawar field. However, he only recited the known geological facts about Ghawar, with no comment about its present state or predictions about its future. The absence of detail lent force to the sceptics.
The greatest sceptic is Matt Simmons, the chief executive officer of the energy investment bank Simmons & Co International and a former consultant to US Vice-President Dick Cheney. Simmons has probably done the most research on Middle East oil reserves of anyone outside of Saudi Aramco.
He says: "It's been decades since we've actually found a giant oil field, because 100,000 to 200,000 barrels a day aren't actually giant oil fields, they're just kind of nice [they're really terrific if you own one] but if the world is consuming 80 million barrels a day, then a 100,000 barrel-a-day source of supply is really a proverbial spin [sic] in the lake."
He discovered that over the past half a century, seven fields had produced 90per cent to 95per cent of Saudi Arabia's oil. At Ghawar, a mere 7 per cent of the field at the northern tip (the Ain Dar/Shedgum region) accounted for 2million of its 5 million barrels a day.
It is never economic to recover all the oil from a field. Saudi Aramco has claimed it can effectively recover some 75 per cent of the oil in Ghawar. Simmons says that in reserves of that type 45 per cent recovery is the world record.
Recovery from Ghawar (particularly Ain Dar/Shedgum) has been maintained by pumping in seawater at the rate of seven million barrels a day to drive up the oil in the reservoir. When water injection is used to pressurise a reservoir - as it has been for decades in Saudi Arabia - some of it (called "the water cut") circulates and is extracted with the oil.
Most fields become uneconomic when the percentage of water coming up with the oil is 40per cent to 50per cent. At Ghawar it reached 36.5 per cent, but Saudi Aramco now claims it is under control at 35 per cent.
Simmons points out the reduction is because the company is no longer recovering the oil through vertical wells but by tapping the wells horizontally. Simmons says: "These [the horizontal wells] are basically just hiding from a rapidly emerging gas cap and hiding in the middle of the ever-thinning oil column as the water column is rising to the top of the field."
Simmons' scepticism is shared by Aspo. A paper on Saudi Arabia in Aspo's December newsletter pointed out that of the entire 85 recognised Saudi oilfields, only about a dozen have ever produced and only half of them have produced significant quantities.
Ali Morteza Samsam Bakhtiari, a senior official with the Iranian National Oil Company, said in a New York Times interview: "The big risk in Saudi Arabia is that Ghawar's rate of decline increases to an alarming point. That will set bells ringing all over the world because Ghawar underpins Saudi output and Saudi undergirds worldwide production."
There has been a long-held belief in the West that Saudi Arabia is so saturated with oil it hasn't bothered looking for more fields. That's not true. Saudi Arabia's oil is concentrated in a relatively small portion of its eastern province.
The Saudis have been trying for 30 years to find oil outside of that portion but have found only a few relatively modest fields.
Its second largest field is still Abqaiq, discovered in 1940 and now 73 per cent exhausted.
If you want a real doomsday scenario look at three of the Saudis' other key fields: Safaniyah (the largest offshore field in the world), Zulif and Marjan.
These three fields - together with the giant Bergen complex in Kuwait - sit on a huge aquifer.
If the aquifer depletes - as some hydrologists believe it will - the oil could become inert and have to be pumped out, using highly saline, corrosive water. Up goes the price and down goes production.
Meanwhile, the world's alternative sources of oil are inadequate to fill the gap if the Saudi fields go into decline.
Russia is actually the world's largest oil producer but - unlike Saudi Arabia - uses much of its oil internally.
Russia exports its surplus oil to the Europeans, who could not have been pleased last month to read that its production has been falling.
Energy Security Analysts of Boston reports that Russia reached a post-Soviet peak of 9.49 million barrels a day in September, but has since been falling.
Esai's Russian analyst Yulia Woodruff said the two main factors were President Vladimir Putin's campaign against Yukos (the country's largest oil company) and the limited availability of easily accessible, commercially recoverable reserves.
Yukos's output fell by 90 per cent in 2004, but there were also declines in growth rates by other Russian companies such as Sibneft, Lukoil and Rosneft.
Woodruff said: "As this decline has taken place in an extremely favourable price environment, the concern is that what we are seeing is not just a bump in the road, but a reversal of the trend."
Looking again at the Aspo chart, the outlook is grim for motorists.
The United States relies heavily on small, subsidised fields that went into overall production decline three decades ago.
The North Sea has now peaked, although there will be further pleasant surprises such as the Rosebank/Lochnager well drilled by ChevronTexaco, which hit a 500 million barrel reservoir in December.
The well is west of Shetland, which really puts it in the Norwegian Sea rather than the North Sea.
While it's a very good find we should remember that 500 million barrels represents just six days of world consumption.
We need to find one of those every week merely to maintain the status quo.
Iraq - which probably has the best prospects of finding big oil - last August invited international companies to evaluate its fields.
The fields were poorly managed under Saddam Hussein and presented an excellent prospect for rehabilitation and exploration.
But of course the Iraqi oil industry is now being extensively sabotaged by terrorists and the country may not be pacified for decades.
Nor has that blighted country's prospects for economic recovery been helped by an audio tape from Osama bin Laden in mid-December urging Muslim extremists to commit further attacks on Iraqi oil installations and the Saudi royal family.
Bad news for the Saud family, but good news for Australian oil explorers, who have grounds for believing that oil prices could stay high for the foreseeable future.
In the past, $US30 a barrel was always regarded as a high price for crude. We have now seen it north of $US40 for six months. Whatever short-term fluctuations occur following the northern winter, we are unlikely to see cheap oil ever again.
Of course, a high commodity price is an invitation to search for substitutes.
But for some uses, oil has no substitute (do you really want to fly in a coal-powered aeroplane?).
Oil is also highly efficient. Four city blocks of Manhattan (where they have very large blocks) would have to be covered with solar panels to produce the equivalent energy provided by a small corner petrol station.
Alternative hydrocarbon sources such as tar sands and shale are environmentally messy to treat, and in some cases the technology isn't there yet.
The largest known deposit of shale is the Green River formation in the western USA, but the president of Exxon, Rex Tillerson, noted in a speech in December that its development relies on emerging technologies. Emerging technologies are those that don't work yet.
It would be nice if renewable energy was able to fill the gap, but it only provides 2.5 per cent of the world's energy - and a large chunk of that is biomass (Africans and Asians burning wood and dung).
In a speech last month in Toronto, the chief executive officer of BP (which has done a lot of research on renewables), Lord Browne, said sources such as hydro, wave action and solar would one day provide a significant proportion of global demand.
"But the evidence is that day is still a long time off," he added. Twenty or 30 years was his best guess.
Alert readers may have noticed that this column has referred to several speeches and articles written within the past few weeks.
That is because the phrase "peak oil" has recently become a critical issue in the northern hemisphere.
If the northern hemisphere has become alarmed, perhaps it's time Australia started taking more notice.
Meanwhile, the high crude price - combined with modern, more accurate seismic technology than in the past - is a great incentive to search for oil.
Doubtless there will be more good discoveries in areas such as the Gulf of Mexico and West Africa.
But despite more than a century of oil exploration, only one Ghawar has ever been found on our lonely planet.
We should learn to live with the presumption the world is not going to find another.
Disclosure: Trevor Sykes has interests in oil companies.