This is a sequel to a previous post on Peak Oil Revisited. Its main purpose is to examine the contrary view that the world has plenty of oil, and that the scenario of global upheaval due to rapid decline of oil supply is unwarranted.
World Oil Reserves As of January, 2010
Figure 1- Proven World Reserves of Oil
The opposing view to the assertion that Peak Oil has either occurred or that it would be happening soon holds the singular premise that the world has plenty of oil.
Indeed, the list above shows that, as of latest global “inventory” date (i.e., January, 2010), proven reserves amount to 1,392, 461,050,000 barrels (or 1.4 trillion barrels, rounded to the last tenth).
Based on Year 2010 estimated rate of global consumption (which is 85.7 million barrels per day or 31.3 billion barrels per year) these proven reserves should last us approximately 45 years. Of course the more realistic picture is one where global increase in petroleum consumption is taken into account. And holding the estimated reserves value constant we would have less than 45 years until the earth runs petro-dry.
Granted, for the sake of argument; but even a sizeable reduction of the lifespan for these collective reserves would still redound to a reasonable expectation that the proven reserves level would afford the world enough time for the following positive scenarios:
- substitute sources of energy in significant amounts/values will enter the equation;
- discovery of new and significant reserves; and
- development and effective use of new technologies that will significantly increase global oil production.
Better still, we may paint a most salutary scenario wherein a combination of these factors would come into play and produce optimum results. The outcome would therefore not be as ominous as portrayed in the previous post. We would have, collectively, a breathing and creativity room that will allow us to develop and tap onto alternative energy sources and/or produce more oil, either from new discoveries or maximizing production even from old and maturing reservoirs. All these in the hope of arresting the projected decline or at least slowing it down considerably.
Nature’s Inequitable Distribution of Oil Reserves
The 2010 CIA World Factbook reports that 97 out of the total 195 countries in the world have proven reserves.
Viewed from another perspective, eight out of the 97 countries with proven oil reserves hold 80 percent of such reserves. Conversely, 89 out of the 97 oil reserves countries collectively own the remainder of 20 percent.
This “natural” imbalance in distribution of oil reserves is further bolstered by the fact that of the top eight oil reserves countries only two (Canada and Russia) are non-OPEC countries. This is a relevant factor to consider when evaluating the world’s capability to actually produce from such reserves. We must realize as we witness, for instance, the continuing so-called “Arab Spring”, that political considerations and other “above-ground” situations are a potent factor affecting actual production from proven reserves.
That is, other than technological and economic viability or market considerations.
Reserves vs. Resources
This brings me to a most basic question the answer to which enables an observer to employ metrics in determining whether in fact we have plenty of oil or not. It’s a question of definition: what is “proved reserves”?
“Proved reserves of crude oil are the estimated quantities that geological and engineering data indicate can be recovered in future years from known reservoirs, assuming existing technology and current economic and operating conditions.”
Please mentally underline the following key elements of the definition:
a) future recoverability;
b) known or defined reservoir;
c) technological capability;
d) economic or market viability; and
e) operating conditions (including, of course, political conditions and the obtaining legal/regulatory framework).
A related but entirely different notion is that of “Oil Resource” or “Oil Resource Base”. Let me quote liberally this excerpt from an outstanding site I have visited in the course of researching materials for this post:
“Whereas proved reserves include only those estimated quantities of crude oil from known reservoirs, they are only a subset of the entire potential oil resource base. Resource base estimates include estimated quantities of both discovered and undiscovered liquids that have the potential to be classified as reserves at some time in the future. The resource base may include oil that currently is not technically recoverable, but could become recoverable in the future as technologies advance.”[Boldfaced type mine]
Aha! Could those who espouse the view we have plenty of oil and don’t have to worry about Peak Oil be actually referring to “oil resource base” rather than “proved oil reserves”? This would be a critical point of clarification.
A case in point is the vast Athabasca oil sands of Canada: some analysts estimate that the oil sands hold 1.7 trillion barrels of oil. I would grant that is a “resource base estimate”. If that figure can graduate to the “proved reserves” category then I agree: the oil sands alone can guarantee the world oil supply for the next 40 – something years. Something to think about, eh?
But before we jump into any premature conclusions, let’s pause and ask ourselves: considering the five key elements, above, which I asked you to mentally underline — which one is the key element as far as Canada and its oil sands are concerned? And what’s your take or sense as to the prospect of satisfying that key element?
That will be the gist of our discussion at next post on the continuing theme of “ Peak Oil Revisited”.