There’s a growing concern among Saudi Arabian businessmen that the oil-rich nation could be losing some of its luster. Fracking by the United States and Canada is beginning to cut into Saudi profits.
Billionaire Prince Alwaleed bin Talal warned that the Gulf Arab kingdom needs to reduce its reliance on crude oil and diversify its revenues, as global demand for Saudi oil is decreasing, according to Sky News.
Bin Talal sent an open letter to the Saudi oil minister, Ali al Naimi, and other government heads Sunday via his Twitter account, Sky News reported. The prince said demand for oil from the OPEC members was “in continuous decline.”
One threat to Saudi oil dominance is the Baakan Oil Formation, the Examiner reported:
The Baakan Oil Formation in the west, mostly North Dakota, has caused a flurry of economic activity. The demand for workers is so high, the starting wage for Burger King is between $16 and $17 dollars an hour. Companies are even building their own apartment houses to encourage workers to remain with them.
The current output of Saudi oil is 12.5 million barrels per day. At this time, they had planned to raise capacity to 15 million barrels per day, but slacking demand has put that plan on hold. OPEC has dropped their prediction of oil production by 250,000 barrels per day.
The scary part for OPEC is that although the Baakan Oil Formation has much oil within its confines (3.65 Billion barrels of oil) and sister Three Forks contains another 3.73 BBO, the Monterey Oil Formation in California contains 15.4 BBO. And the Green River Oil Formation has as much as 3 trillion barrels of oil, of which half is recoverable with current technology.
Analysts say that over the next decade, demand for Saudi oil may continue to drop, along with oil prices. The Saudi government already has taken steps to diversify its economy beyond oil.
While environmentalists – and some government entities – have done what they can to stop fracking by claiming it is unsafe, it has been in use since 1949, and no credible evidence has proven safety is at risk. In 2011, Lisa Jackson, the former head of the Environmental Protection Agency, testified before Congress that she had been unable to find any evidence after three-and-a-half years of investigations.
Watch Jackson’s testimony here.
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