Satellite images may scuttle theories that the world's biggest oil field in Saudi Arabia is in decline, Bernstein Research said.

A jump in drilling activity in recent years at the giant Ghawar oil field has raised concerns Saudi Arabia is struggling to maintain oil output and has fueled 'peak oil' theories that global production is poised for a collapse.

But satellite images show that much of the rise in drilling activity has centred on two major expansion developments by state oil firm Saudi Aramco, instead of on keeping older parts of the field producing with enhanced recovery techniques,
Bernstein said in a research note.

'The majority of the increased activity in the Ghawar field can be explained by the Haradh-III, and the Hawiyah natural gas liquids recovery mega-projects which were not designed as a quick fix to Ghawar's supposed rapid decline,' the note said.

Bernstein said the report was an initial analysis of satellite data from 2004-2007, with a final conclusion expected in the coming months.

Theories that Ghawar will soon fall into decline may be based on little or incomplete data from the Opec nation on the state of its oil sector, the report said.

'Without accurate and detailed data on what Saudi Aramco is undertaking, or with a poor understanding of current Ghawar decline rates, many conspiracy theories have arisen, which argue that we are on the cusp of global peak oil production,' the research note said.
  
The report comes in the midst of a drive by the kingdom to expand oil output capacity -- including production from the neutral zone -- to 12.5 million barrels per day (bpd) in 2009 from 11.3 million bpd now.

Experts backing peak oil theories, such as Matthew Simmons of Simmons and Co, have warned that sharp global declines could happen at any time, and that under best case scenarios, Saudi Arabia will be able to keep production flat for several years but not increase output to keep up with growing demand.

Bernstein acknowledge heightened drilling in older sections of Ghawar may point to some efforts to halt some declines, but adds this did not point to a sudden field output drop.

'(Data shows) the mature areas of the north of the Ghawar field, Shedgum and 'Uthmaniyah, have undergone intensive drilling as well, likely indicating Enhanced Oil Recovery techniques being employed to slow declines,' the report said.

'The conclusion is that there is life in this old field yet, as its demise has been overly anticipated.' Reuters