Khalid Al-Falih, Saudi Aramco CEO, sees room for alternative energy and the Saudi national oil company. (image: geobahrain.org)

For a man at the top of the global oil industry, the president and CEO of Saudi Aramco, Khalid Al-Falih is accepting of the rise of renewable energy, reports Aramco ExPats. “Ultimately,” he said in a speech in Korea, alternative sources of energy “will displace petroleum.” He’s not too worried, though, because “there will be attractive uses for our hydrocarbons other than burning.”

Wait, isn’t he supposed to say that renewable energy can’t replace oil? Well, Al-Falih thinks Aramco can have it both ways. Renewable energy will “ultimately” take oil’s place—“over time.” But for now, petroleum is still king, and “an essential commodity to virtually every aspect of modern life.” He’s previously conceded that believers in peak oil have a case, but that oil will last longer than they think.

He makes a good case, and leans on the IEA’s assessment that oil will be the biggest component of the global energy mix in 2030, even as global energy demand rises by 40 percent. When Al-Falih says that “global economic development” and “social advancement” depend on “making the best use of proven sources of energy” (read: oil and gas), he’s speaking in his own self-interest—but he might also be right.

Even in the hazy future when renewables dominate the energy industry, Al-Falih has plans to make sure Aramco still fares well: Petro-Rabigh, Saudi Arabia’s first crude petrochemical refinery, will manufacture plastics, a material that will continue to see use even if alternative fuels power homes and fuel vehicles.

Professor Kjell Aleklett. (image: wikipedia.org and aspo-australia.org.au)

A physicist at Sweden’s Uppsala University is taking issue with last week’s assessment of future oil supplies by the International Energy Agency (IEA), reports the Guardian.

Physics professor Kjell Aleklett at Uppsala University, one of Europe’s leading academic institutions, published a scathing review of the IEA’s annual World Energy Outlook, saying that the organization has drastically downplayed the scale of future oil shortages. He contends that the IEA’s oil supply figures have become “politicitized” and urges European governments to review global oil supplies themselves.

In its World Energy Outlook annual report, the IEA last week predicted lower oil prices due to carbon-reduction efforts. The timing of the IEA report was designed to spur leaders to come to an agreement in Copenhagen next month. Aleklett, the co-author of a new report, “The Peak of the Oil Age,” says oil production will be closer to 75m barrels a day by 2030 than the “unrealistic” 105m the IEA predicted in its report. Aleklett, who also runs a Global Energy group at Uppsala, described the IEA’s report as a “political document,” designed for consuming countries with a vested interest in low prices.

This accusation by Aleklett is the second time in a week that the IEA has come under fire for an unrealistically rosy forecast: last Thursday, a whistleblower at the agency expressed similar doubts about the way energy statistics were being collected, and added that the U.S. has been encouraging the overly-optimistic reporting to avoid a global oil panic and resulting oil grab. Other IEA insiders also suspect U.S. influence and fears of a stock market panic helped to prompt the Paris-based organization’s figures.

When the whistleblower story appeared, Aleklett said that he had similar worries about the IEA. He says that when the Organization of Economic Cooperation and Development, the 28-country council that counts on IEA as their energy advisor, gave him the task of writing a 2007 report, ‘Peak Oil and the Evolving Strategies of Oil Importing and Exporting Countries,’ it was one of a number of reports that were discussed at a round-table meeting held at the IEA. At that time, says Aleklett, he had several private conversations with IEA officials, who reported the revelations that were now being reported in the Guardian, under the promise that he not name them as sources. He said he heard the same allegations earlier from a Norwegian IEA officer, who maintained that the U.S. was pressuring the agency.

According to the Canadian Globe and Mail, Aleklett and the IEA are in agreement on the estimated oil volume in the fields yet to be discovered and developed. They sharply disagree on the productivity of these new fields, with the IEA contending that these fields will more than fill the supply gap, as the old fields are no longer usable. Alekett points to history, which has shown that the new fields, which are generally smaller, are less productive than old ones and points to the dramatic production rates from the North Sea fields, which reached their peak output in 2000, as an example. He cites the slow-to-nonexistent development of these new fields, and says that the not-yet-developed reserves in the IEA report cover 1,874 fields of various sizes that would all have to come into production in the next 20 years.

“That is something like eight fields per month coming on stream,” Alekett’s report reads. “Even if the oil exists, it is questionable whether the necessary investment needed to produce such a rapid pace of development can be achieved in timely fashion.”

A tar sands mine. (image: ran.org)

The paper also focuses particular concern upon future production rates from “unconventional” sources, such as tar sands, saying that there is a lack of information in the 2008 Outlook figures which has been repeated in the 2009 Outlook report, and adding that “we must therefore regard the IEA production figure as somewhat dubious until it is explained more fully.”

For its part, IEA has called the accusation that politics are influencing its predictions “groundless,” and that the Outlook report was reviewed by 200 independent experts. A spokeswoman from the agency said, “We would be happy to see any initiative to improve the data quality on reserves and decline rates. We believe our World Energy Outlook 2008 opened an important door to have more field data and transparency and would very much welcome similar efforts to help improve transparency in the oil sector.”

The IEA was established in 1974 after the oil crisis in an attempt to safeguard energy supplies to the West. The World Energy Outlook is produced annually under the control of the IEA’s chief economist, Fatih Birol, who has defended the projections from other outside attacks. Birol has been facing tough questions about the figures from inside the agency, say IEA sources.

Alekett’s own predictions of the global oil supply are stunning: Production in 2030 will be about 76 million barrels a day, or about one-third less than the IEA’s figure, and some 10 million less than current production. If, as seems likely, Alekett’s report and the IEA whistleblower’s allegations are correct, the coming scenario is not pretty. If oil supplies decline, prices would dramatically rise, which of course, would be passed on to consumers in the form of higher prices for fuel, diesel and heating oil, food, and pretty much everything else.