After Stuart's monumental research, I really think the burden of proof is on those who claim that Saudi Arabian production can continue to increase. At this point, we need not the conclusions of experts nor the reassurances from Aramco, but hard data to support the claims.
If Saudi production is permanently on the way down, we have just entered a new phase of history.
One in which Alberta's oil sands will likely play a major role.
Until now, strategies for developing the tar sands were drawn up under the hypothesis that the Saudis could choose to drive oil prices down to levels where the tar sands were unprofitable whenever they wanted. To counter this risk, the federal and provincial governments provided investment tax breaks and low royalties for the tar sands. Small wonder that announcements of mega-projects have now become routine:
Total SA took the first step yesterday toward building a multibillion-dollar bitumen upgrader near Edmonton, a construction project that will require 4,000 workers - about what it took to build the iconic Hoover Dam.
Huge oil sands projects have become almost commonplace, but their enormous scale is still impressive. Each effort requires a work force that would populate a small town.
In the 1930s, it took an average of 3,500 workers - and a peak contingent of 5,200 - to build the Hoover Dam near Las Vegas, one of the largest construction projects undertaken to that date.
Relatively speaking, several Hoover Dams are being built in Alberta right now - and Total, a French energy giant, just proposed another one...
Total is the second large international energy company in the past two weeks to announce it is proceeding with a major development. Statoil ASA of Norway in late April paid $2.2-billion to buy an undeveloped property, saying it can overcome the various challenges.
Developing the oil sands will be profitable without preferential treatment; it's time to rethink those incentives.