Kuwaiti Oil and How to Sell a Story

Bloomberg TOP has a story on oil this AM that reminds me of a scene in one of my favorite movies, When Harry Met Sally. It is the scene where Sally is having an emotional breakdown over her breakup with Joe and she agonizes to Harry, "and I'm gonna be 40!" Billy Crystal masterfully expresses Harry's typical masculine puzzlement at this hysteria. "In eight years," he says.

The title of Bloomberg's article is "Kuwaiti Oil Field, World's 2nd Largest, is 'Exhausted' ". Wow, no more oil, pretty scary. Not really. What is really happening is that the Kuwaiti's feel that the optimum rate of production for the final 30 to 40 years of the field's presumed life is 1.7 million barrels per day rather than 2.0 million bpd. Some basic math gets you the insight that there must be something like 18-20 billion more barrels left. Exhausted?

Turns out, as the article goes on, that the Kuwaiti's haven't really been investing too heavily in the field. There could be more oil, they just don't know. They might have to ask the evil foreign oil companies to come in, spend some money and see if there is more oil that they can get at. (There usually is and a technique known as horizontal drilling usually allows us to get at it.)

Got that. 18 billions barrels left, and the prospect of more with proper investment, is "exhausted".