Is Saudi supply pushing its limit?

Saudi Arabia's epic oil reserves are a global insurance policy: always counted on, in a pinch, to ease almost any energy crisis.

Or so experts used to think. But some energy analysts now warn that the fabled oil bounty no longer may be reliable — a development that, if true, would have sobering implications for the world economy.

"I'm a skeptic about myths, and one of the oil industry's greatest myths is that Saudi Arabia is the gift that just keeps on giving," said Matthew Simmons, chairman of Simmons & Co. International, a Houston investment firm.

"Questioning this myth has earned me plenty of enmity. But that's OK. We need to be having this discussion now."

Simmons, once an unofficial energy adviser to the Bush administration, first visited Saudi Arabia's oil patch in 2003. What he saw unsettled him. The Saudis were injecting large amounts of water into premier fields — a remedial technique usually associated with sagging oil production.

After Saudi officials balked at providing details, Simmons combed through hundreds of obscure technical reports that addressed the nuts-and-bolts problems dogging Saudi fields.

No room to grow?

In a controversial book, "Twilight in the Desert," he describes the increasing amounts of unwanted water — or "water cuts" — now being pumped out of the world's richest oil reservoir, the legendary Ghawar field, and concludes ominously: "Saudi Arabia clearly seems to be nearing or at its peak output and cannot materially grow its oil production."

Saudi authorities have attacked Simmons and his supporters as alarmist and ill-informed.

Ali al-Naimi, the Saudi oil minister, has embarked on an unprecedented public-relations campaign to reassure Western buyers that the kingdom's 267 billion-barrel reserve — 25 percent of the world's crude — is still in good shape.

Moreover, Chevron is testing new ways to pump out the large Saudi reserves with steam injection. Such technology, if feasible, could ratchet up the kingdom's reserves by billions of barrels.

Assertions doubted

Still, some have begun to raise doubts about Saudi claims. Analysts note that Saudi Arabia was unable to ramp up production to meet heightened U.S. oil demand after Hurricane Katrina. (All the Saudis could offer was heavy crude unsuitable for U.S. refineries.)

And the Department of Energy has scaled back its annual estimates of Saudi Arabia's contribution to the world's long-term oil needs.

If the Saudis, in fact, are hitting a wall, the geopolitical fallout is incalculable. No longer will the world rely on a single nation to stabilize shortages resulting from wars, natural disasters or waning production elsewhere. And the United States would have to reconsider its estimated $137 billion annual investment in protecting Middle East oil.

Saudi Arabian oil officials did not reply to repeated requests for interviews or permits to visit Saudi oil fields.

But Sadad al-Husseini, a retired chief of exploration and production for state-run oil company Saudi Aramco, suggested there was indeed reason for concern.

"Can they reach their goal of 12.5 million barrels a day? I think so. Can they go even higher, to 15 million barrels per day? Maybe," al-Husseini said. "But the real question is, even so, how long can you sustain that?"