PLENTY OF OIL: 1.4 TRILLION BARRELS, AND COUNTING

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

Source: Wikipedia, using data from CIA World Factbook January 2010
 

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. 

But consider this: Oil and Gas Journal estimates that more than half (56 percent) of global proved oil reserves are situated in Middle Eastern countries.

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”?

Both the IEA and CIA use this definition —

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”.

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About b., peternolasco

Customer Education Specialist with geoLOGIC Systems Ltd.; keen student and practitioner of corporate adult learning and learning communities in the context of organizational change and development.
This entry was posted in geology, Industry Best Practices, mapping, oil and gas, petroleum, Technology and tagged , , , , , , , , , , , . Bookmark the permalink.

12 Responses to PLENTY OF OIL: 1.4 TRILLION BARRELS, AND COUNTING

  1. Olaf says:

    PeakOil is NOT about reserves but about FLOW RATES. And the flow rate is going to decline if we like it or not.
    To keep up with demand we need to have 6 new Saudi Arabia’s on line in the comming years. http://climateprogress.org/2008/11/24/scienceiea-world-oil-crunch-looming-not-if-we-can-find-six-saudi-arabias/

  2. Rick says:

    To the author of this post. Dude, nonsense, you need to read this article: http://kunstler.com/blog/2011/04/blowing-green-smoke.html

    • PeterNolasco says:

      Thanks for your comment and suggestion, Rick. I did read the article and James Kuntler’s other writings. I like the substance of his writings and his basic position on the issue (but his tone and style are a different matter to me – purely a secondary consideration, though). I’ll continue to visit his blog to maintain a balance of views and opinions. But I’ll play Devil’s Advocate in response to his main arguments by saying technological advances plus –and this is a big PLUS — more judicious use of energy by all sectors involved (including oil and gas industries themselves) should dampen the effect of oil decline. I don’t challenge the projected decline globally but I do believe there are ways to soften the impact and avoid a catastrophic socio-economic meltdown. I’m not inclined to believe the whole of humanity will fail to come up with a viable response to the threat of global socio-economic dislocation due to petroleum decline and eventual depletion.

  3. Thank you, Olaf, for making that one very important distinction as to the essence of Peak Oil theory. Also, I love the blog (Climate Progress) that you suggested and I’m a fan from now on. The YouTube clip is likewise very interesting and enlightening in its own entertaining way. Speaking of flow rates — I’ve spoken informally to at least three highly experienced Exploitation/Reservoir engineers who came to my class sometime ago. They appear confident advances in technology will at least soften the impact of the projected decline. What’s your opinion on that?

  4. Loren says:

    Peter even though there is lots of oil in the ground the amount of energy to get it out of the ground and processed has been going up steadily. Once the amount of energy to extract the oil from the ground gets to a certain point it will become uneconomic to extract.
    My opinion on “FLOW RATES” that Olaf talked about is that they have been artificially increased by investment money. That telling people there is so much oil in the ground and we have the technology to extract it keeps the “investment money” flowing. So any disruption to that flow of easy money will show us that peak oil was awhile ago.
    I think extreme conservation would be the only chance we have for a soft impact at this point. Oh, except conservation would weaken the economy so well just continue with business as usual and hope for the best.

  5. Olaf says:

    The lecture of Dr. Albert Bartlett on YouTube:

    http://www.youtube.com/view_play_list?p=6A1FD147A45EF50D

  6. PeterNolasco says:

    Thanks, Loren.
    My search for information on flow rates led me to, among others, the “bath-tub-and-straw” metaphor: picture a bath tub that is still close to being filled with oil and a straw is inserted to siphon it off. That doesn’t produce much of a result if we’re using such a tiny and short straw. Flow rate won’t be high and fast enough to positively affect available supply. The tub is the global proven reserves plus estimated oil and gas resource base. The straw is technology – and I believe tremendous strides have been made and continue to be made in this regard. I am a firm believer in “conservation”, i.e., judicious use that will seek to avoid wasteful consumption of energy by everyone involved. And imperfect though the market mechanism may be it is still the main determinant of decisions to the flow of venture funds and capital. In much the same way that the drive to develop and shift to alternative sources of energy is largely determined by the energy market. An encouraging note though is the growing clout of ethical capital groups that make sustainability a most important consideration in project funding. I mentioned in a previous post that there is a growing sense and conviction among the more enlightened oil and gas companies operating in Western Canada that there is a sound business case for sustainable operations. I hope their tribe shall increase. We simply cannot treat the present and emerging energy situation as a business-as-usual proposition.

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  9. Rburns says:

    Its about the growth of demand and emerging countries from poverty. There’s plenty of oil.
    The reason there is plenty of oil is synthetics,new oil reserves found, old reserves gone over again. In time we will run out, but that’s a distant future that existing technology has already solved but hasn’t been implemented. Also old tech that isn’t being used like gasification of coal.

  10. Earthling says:

    “Nature’s Inequitable Distribution of [known] Oil Reserves”

    That looks better.

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