Even the world biggest oil producing wells are hitting the peak of their production.

There are not enough new supplies to meet almost any reasonable level of demand growth. The most alarming fact is that the  oil supply is increasingly limited to a few giant fields, with 10% of all production coming from just four fields and 80% from fields discovered before 1970. On top of this comes the fact that there are serious doubts about the future of the oil of Saudi Arabia. Until now considered as the country with the biggest reserves in the world. It has been capable in the recent years to close the gap between production and demand by putting up more spare capacity. But will the Saudi's it continues to be able to do so? It was Matthew Simmons, an adviser to President George Bush and chairman of the Wall Street energy Investment Company, who has cast recently serious doubts about this issue. Especially that the Saudi boosted 22 April this year that they would pump what all the oil consumers wanted up to its current capacity of 11 million barrels a day. And, to make sure that the world would have enough supply in the long term, Saudi Arabia would spend $50 billion over five years to increase oil production capacity to 12.5 million barrels a day by the end of 2009.

The big danger is lurking with the big fields of Saudi Arabia, like Ghawar. Saudi Arabia has over 300 recognized reservoirs but 90% of its oil comes from the five super giant fields discovered between 1940 and 1965. Since the 1970s there haven't been new discoveries of giant fields. The most significant of the oil fields is Ghawar. Found in 1948, the 300-mile-long sliver near the Persian Gulf is the world's largest oil field and accounts for 55%-60% of all Saudi oil produced. Ghawar's current proven reserves is 12% of the world's total. The field produces 5 mbd, which is 6.25% of the world's oil production. According to Simmons, Ghawar's northern regions are almost depleted. Two other giant fields, Abqaiq and Berri, also seem to have peaked in the 1970s. According Simmons the used to much water to accelerate the oil production. Water is pumped into an aging oilfield in order to maintain high pressure inside. This allows the oil to be pumped out at the original constant rate. Eventually, the water reach the well-head, and the field effectively dies." Isn't water flooding (the) Viagra of aging wells?" says Dan Coxe, a banker and oil analyst, probably damaged by this process the structure of the reservoir rocks. The more water you pump into a field, the less oil you can pump out. This is especially true, when water has been pumped in rapidly in an effort to get more oil out fast. They are also starting to use water with horizontal drilling or a country with an allegedly huge marginal surplus of oil production, turning to such extraction techniques is likely to prove an unwise move. With bottle-brush drilling, a shaft is drilled horizontally over long distances with a number of brush-like openings. Water is then forced under pressure into the reservoir, forcing the oil upwards toward the well heads. Extraction is thereby increased. However, when the water table hits the horizontal shaft, often without warning, the whole field may go virtually dead and production will immediately drop off to virtually nothing.

Examples of what has happened in other oil producing countries when "bottle-brush" drilling was employed abound. Syria's oil production is now in terminal decline. Yemen is following, according to Ali Samsam Bakhtiari, Vice President of the National Iranian Oil Company, who has long suggested that Saudi oil production might have peaked in the spring of 2003. Adds analyst William Kennedy, "For the record, Ghawar's ultimate recoverable reserves in 1975 were estimated at 60 billion barrels -- by Exxon, Mobil, Texaco and Chevron. It had produced 55 billion barrels up to the end of 2003 and is still producing at 1.8 billion per annum. That shows you how close it might be to the end. When Ghawar dies, the world is officially in decline."

The entire world assumes Saudi Arabia can carry everyone's energy needs on its back cheaply. Global spare capacity is now totally in the hands of the Saudi's If this turns out to not work, there is no Plan B, and the world will face a giant energy crisis. Analyzing Saudi Arabia's capacity is not an easy task. Saudi Aramco, the state-owned oil company, has not provided production data for more than two decades. OPEC, the IEA and EIA data systems shed little light on what underlies Saudi sand. "Their predictive track record has been awful. In the land of the blind, reliable OPEC data is either untrusted or non-existent ", Simmons calls for a new era of true energy transparency.

The Bank of Montreal's oil analyst Don Coxe dismisses Saudi claims that the country can produce extra capacity to satisfy surging demand. He notes that Saudis promise to increase production last year failed to materialize. Aramco had pledged an extra 500,000 barrels of oil immediately and an extra 5 million- barrel per day by 2012. He says the markets had "assumed this first flow would be a half million barrels daily of the benchmark Saudi Light, the high-end product that any oil refinery can process. Instead the new oil was heavy, sulphurous oil that only a few refineries had the spare capacity to use".

The Saudi's are out of capacity. That's my opinion… They have no infrastructure or extra pipes or gas, oil, and water separators, [very expensive large globes used to separate what comes out of a water injection well]. They have very heavy oil, which through a conventional refinery produces asphalt. We don't need asphalt. We need gasoline. It takes a complex refinery to make gasoline and it only takes 7-10 years to build one, according Matthew Simmons.

Total OPEC production fell from a rate of 24.7 mbd (recorded in 1997) and to 22.1 mbd by the end of 2003. "It appears that depletion is now becoming a much more significant, though largely unrecognized, consideration in the supply-demand equation, and may be contributing to the rise in oil prices," said Chris Skrebowski, editor of Petroleum Review, who prepared the new analysis. Skrebowski noted, "Those producers still with expansion potential are having to work harder and harder just to make up for the accelerating losses of the large number that have clearly peaked and are now in continuous decline."

"We have also seen quite spectacular growth rates from some of the countries that are still expanding their production, but in most cases it seems unlikely that such large increases can be repeated or sustained without massive new investment,” Mr Skrebowski noted: .“With little or no spare production capacity now available around the world, production expansion will depend mainly on new project start-ups. However, at the moment we see that very few of these scheduled to come onstream after 2008,” he said: “Clearly at some point – perhaps sooner than many might expect – the losses and gains will balance out and global oil production will then tip into decline.”