At a time of high anxiety over soaring fuel prices and scarce supplies, oil analysts are resorting to satellite imagery to crack one of the industry's biggest unknowns -- whether Saudi Arabia's massive Ghawar field is slipping into depleted old age.
Saudi Arabia has long contended that its famed Ghawar field, responsible for around 7% of global supply, remains in fine shape and will continue to churn out around five million barrels a day for years.
But Saudi Arabia doesn't publish data to back that up. Skeptical analysts in the West insist the field is in decline, an event they say presages a peak in world oil production.
Analysts at Sanford C. Bernstein Ltd., a New York-based investment research firm, just spent months trying to resolve the debate. Their tools? Cameras fixed to satellites that hover miles above the Saudi desert.
Combing through dozens of high-resolution satellite images of Ghawar going back to 2001, the Bernstein team has concluded in a study sent to clients at the end of April that only part of the vast field "is suffering signs of old age." On the whole, Bernstein says, the field "is being properly managed" and is experiencing only "mild production-decline rates at worst."
Critics of the study, including some who have crunched their own overhead imagery, say the Bernstein study is insufficient and the debate over Ghawar's health is far from over.
"This is junk science," says Houston investment banker Matthew Simmons, who insists that only detailed, on-the-ground records can speak to the field's real condition. Mr. Simmons's 2005 book, "Twilight in the Desert," cited technical papers to argue that Ghawar and Saudi Arabia's other giant fields were showing signs of increasing stress and would soon slip into decline. Mr. Simmons is a well-known proponent of the theory that world-wide oil production may already have hit its all-time peak.
This latest tiff over Ghawar comes as alarm grows on Wall Street and in Washington over whether the world's big crude producers can keep pace with the growing demand for oil in Asia and the Middle East. U.S. benchmark crude closed at a new high of $119.97 a barrel Monday on the New York Mercantile Exchange. The price of crude has risen 25% so far this year and has increased 95% from a year ago.
Many of the world's other mighty fields, including Mexico's Cantarell and Kuwait's Burgan, have lost their vitality recently and need serious help. Russia just recorded its first quarterly output drop in almost a decade, stoking fears that the world's second-largest oil producer after Saudi Arabia may have hit its own peak. The North Sea and Alaska's North Slope are already in steep decline.
All this has sharpened attention on the health of oil supplies in the Middle East, the world's most abundant crude repository.
Put into production in 1951, Ghawar remains the greatest treasure of hydrocarbons ever found. The Saudis say the field, measuring about 20 miles wide and 175 miles long, spits out as much oil every day as all the oil wells in the U.S. combined. Its output accounts for around 60% of total Saudi production.
Yet no one outside of Saudi Arabia has any sound data on production rates at Ghawar, or the kingdom's other huge fields. The Saudi Arabian Oil Co., better known as Aramco, has long been secretive about data on the kingdom's oil holdings, as are most Organization of Petroleum Exporting Countries members whose economies are heavily dependent on oil revenue.
"The problem is that silence leads to speculation," says Neil McMahon, who led the Bernstein study as the firm's senior analyst. The motivation, he says, "was to confront the whole peak-oil thing with some real data."
Bernstein has used satellites to probe other mysteries. It dug through overhead images of urbanization patterns in China last year to predict that demand for steel and other metals would hold strong before ebbing slightly around 2010. In 2005, it studied China's ports for evidence -- which it didn't find -- of whether the country was dramatically expanding its fuel-tank farms to hoard oil.
The Saudi study, Mr. McMahon says, was a lot more daunting. Theories of Ghawar's travails were fueled recently by reports that the number of drilling rigs in the kingdom tripled between 2004 and 2007. The spike led to speculation on peak-oil blogs that Aramco was conducting a wave of new drilling not just to add fresh capacity, but to stem rapid output declines in Ghawar and other fields.
Using images of Ghawar from 2004, Bernstein pinpointed more than 2,000 drilling or production sites, many of them old and abandoned. Satellite shots from 2007 found around 10% more drilling sites, mainly concentrated in areas of the field where Aramco was engaged in multibillion-dollar projects to bring on fresh production.
The satellite work also used overhead radar technology to determine whether the field showed any signs of surface collapse -- called "subsidence" in the industry -- that could indicate heavy depletion rates underground. Some of the world's most heavily produced fields in the North Sea and in Venezuela have shown sharp subsidence rates.
Instead, Mr. McMahon says, the radar found the northernmost part of the field, known as Shedgum, "was actually slightly uplifted." Bernstein attributed this rise to heavy water injection and what it surmised was Aramco's use of enhanced oil-recovery techniques, which boosted underground pressure enough to lift the ground level. Companies often turn to such elaborate extraction methods to nurse along fields in sharp decline.
Bernstein concluded that Shedgum, one of the oldest sections of Ghawar, was the only area facing serious challenges.
Aramco declined to comment. The company's former head of reservoir management, Nansen Saleri, said he agreed with the overall conclusion that Ghawar remains largely healthy. But Mr. Saleri, who left Aramco last fall, disputed that Aramco was doing any enhanced recovery work at Ghawar. He said he was also skeptical that Bernstein "can really tell what is going on at Ghawar from overhead imagery."
One skeptical sleuth doing similar work is a hobbyist in Seattle who keeps a Web site called Satellite O'er The Desert and works under the pseudonym of Joules Burn. Using detailed images from Google Earth, the Web site has chronicled what it calls a "remarkable" uptick in drilling across large swaths of Ghawar.
The Web site's assessment so far is that Aramco is engaged in a massive redrilling of Ghawaras part of a "constant struggle to maintain the field's current production level."
Write to Neil King Jr. at neil.king@wsj.com
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