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How much oil remains for the world to produce? Comparing assessment methods, and separating fact from fiction

July 30, 2022

Abstract

This paper assesses how much oil remains to be produced, and whether this poses a significant constraint to global development. We describe the different categories of oil and related liquid fuels, and show that public-domain by-country and global proved (1P) oil reserves data, such as from the EIA or BP Statistical Review, are very misleading and should not be used. Better data are oil consultancy proved-plus-probable (2P) reserves. These data are generally backdated, i.e. with later changes in a field’s estimated volume being attributed to the date of field discovery. Even some of these data, we suggest, need reduction by some 300 Gb for probable overstatement of Middle East OPEC reserves, and likewise by 100 Gb for overstatement of FSU reserves. The statistic that best assesses ‘how much oil is left to produce’ is a region’s estimated ultimately recoverable resource (URR) for each of its various categories of oil, from which production to-date needs to be subtracted. We use Hubbert linearization to estimate the global URR for four aggregate classes of oil, and show that these range from 2500 Gb for conventional oil to 5000 Gb for ‘all-liquids’. Subtracting oil produced to-date gives estimates of global reserves of conventional oil at about half the EIA estimate. We then use our estimated URR values, combined with the observation that oil production in a region usually reaches one or more maxima when roughly half its URR has been produced, to forecast the expected dates of global resource-limited production maxima of these classes of oil. These dates range from 2019 (i.e., already past) for conventional oil to around 2040 for ‘all-liquids’. These oil production maxima are likely to have significant economic, political and sustainability consequences…

…click on the above link to read the rest of the article…

Energy consultancy keeps lowering worldwide recoverable oil resources

July 20, 2022

Energy consultancy keeps lowering worldwide recoverable oil resources

It’s hard to say that three years makes a trend. But one of the world’s major energy consulting firms has lowered its estimate of world oil reserves for three years in a row now.

Rystad Energy provides a publicly available analysis of world oil reserves each year. In 2020 Rystad wrote that “the world’s recoverable oil [dropped] by around 282 billion barrels.” That represented a 12.9 percent decline in just one year. In 2021 the firm stated its analysis showed that recoverable resources declined by another 178 billion barrels or about 9.4 percent. Rystad said the decline was due in part to new modelling based on resources “at well level rather than field level.” The closer Rystad looked, the less oil there seemed to be.

In 2022 Rystad noted yet another decline of almost 9 percent in its press release headline. Recoverable oil resources dropped another 152 billion barrels. (For all estimates Rystad uses figures for crude oil and lease condensate which is the accepted definition of oil.)

With estimated recoverable resources standing at 1.572 trillion barrels, there is no seeming immediate threat to oil supplies. But the trend, should it continue, would be troublesome. There is a lot to look at “under the hood” of these estimates. Rystad reduces its broad 2022 estimate to an amount it believes could be produced profitably if oil is around $50, namely 1.2 trillion barrels. Price always matters when talking about recoverable resources. Higher prices, of course, make harder-to-get resources more likely to be profitable.

Rystad notes the lowering of investment in oil exploration as one of the culprits. This drop has been driven by the uncertainties surrounding the pandemic and a world about to be ever more stringent regarding fossil fuel emissions.

…click on the above link to read the rest of the article…

Lev Tolstoy on Afghanistan: “It Happened Because it had to Happen”

August 18, 2021

Lev Tolstoy on Afghanistan: “It Happened Because it had to Happen”

When an apple has ripened and falls, why does it fall? Because of its attraction to the earth, because its stalk withers, because it is dried by the sun, because it grows heavier, because the wind shakes it, or because the boy standing below wants to eat it? Nothing is the cause. All this is only the coincidence of conditions in which all vital organic and elemental events occur. (Lev Tolstoy, “War and Peace”)

Excuse me if I return to the Afghanistan story. I don’t claim to be an expert in international politics, but if what happened is the result of the actions of “experts”, then it is safe to say that it is better to ignore them and look for our own explanations.

So, I proposed an interpretation of the Afghan disaster in a recent post of mine, together with a report on the story of how the oil reserves of the region of the Caspian Sea were enormously overestimated starting with the 1980s. Some people understood my views as meaning that I proposed that crude oil was the cause of the invasion of Afghanistan in 2001. No, I didn’t mean that. Not any more than the story of the “butterfly effect” means that a butterfly can actually cause a hurricane — of course it would make no sense.

What I am saying is a completely different concept: a butterfly (or dreams of immense oil reserves) are just triggers for events that have a certain potential to happen. Take a temperature difference between the water surface and the air and a hurricane can happen: it is a thermodynamic potential. Take a military industry that makes money on war, and a war can take place: it is a financial potential. A hurricane and a military lobby are not so different in terms of being complex adaptive systems.
…click on the above link to read the rest of the article…

Annual Reserve Revisions Part IV: Shale Producers

June 29, 2021

Annual Reserve Revisions Part IV: Shale Producers

EIA Liquids Reserve Estimates

This follows on from Part I, which looked at EIA reserves and revision estimates for US as a whole and the GoM, and concentrates on the on-shore tight oil and (below)gas producing regions.

The EIA issues revision data by whole states or state districts rather than by basin, so some of the reserves and production, but a small proportion, will be from conventional reservoirs. It does give total reserves for each shale basin but not the changes, and I didn’t go to the trouble of pro-rating everything against that. Its data only goes through 2019; the 2020 update will be out in December or January.

The regions for each basins used are Permian – Texas Districts 7C, 8 and 8A and East New Mexico; Bakken – North Dakota and Montana; Eagle Ford – Texas Districts 1, 2, 3 and 4 Onshore; Niobara – Colorado; Marcelus – Pennsylvania and West Virginia; Utica – Ohio; Haynesville – Louisiana South Onshore and Texas District 6; Barnett – Texas Districts 5, 7B and 9; Woodford – Oklahoma ; Fayetteville – Arkansas.

Remaining reserves are for crude, condensate and NGL, which is easier to include here given the way EIA presents its data. Totalled for all the basins these may have peaked in 2019, they were levelling off from 2018 and will certainly fall significantly in 2020.

Production was aggressively increasing in 2019, coming mainly from the Permian, but will fall in 2020, and given shale dynamics, a concurrent peak with reserves is not unlikely.

Cumulative adjustments and revisions turned negative in 2019 and I expect will show a major decline for 2020, which may well not be fully recovered even if prices rise significantly. To me this indicates that estimates for recovery factors were over-estimated originally and are gradually being corrected…

…click on the above link to read the rest of the article…

How Much Oil Can Saudi Arabia Really Produce?

June 24, 2021

How Much Oil Can Saudi Arabia Really Produce?

For decades, the true numbers relating to Saudi Arabia’s level of crude oil reserves and production have been a subject of much debate and confusion, not helped by the obfuscation from the Saudis over precisely what these numbers are. The reason for obfuscation is that Saudi Arabia’s only source of real power in the world begins and ends with its oil reserves and production, so the higher these numbers, the more the power, and the lower the number the less the power. In recent weeks this debate has become even more pronounced in the run-up to Saudi Arabia’s latest bond offering and in the debate oversupply and demand in the oil market over the remainder of this year and beyond. As detailed below, much of what Saudi Arabia has said about its oil reserves, current production, and likely future production is an exaggeration made for the purposes of self-aggrandizement but despite that, the numbers have increased somewhat compared to where they were 10 years ago. To begin with the claimed crude oil reserves numbers: these have been a work of stunning bravado and almost complete fiction since 1990 when the Kingdom suddenly increased the official number from 170 billion barrels to 257 billion barrels, despite absolutely no new oil discoveries or improvements in recovery rates being made, as highlighted in my last book on the oil markets. Shortly thereafter, Saudi Arabia increased its official crude oil reserves numbers again, to 266.4 billion barrels, a level that persisted until a slight increase in 2017, to 268.5 billion barrels. Over the same period – in fact, from 1973 to last month – Saudi Arabia has pumped an average of 8.162 million barrels per day (bpd)…

…click on the above link to read the rest of the article…

Big Oil Is In Desperate Need Of New Discoveries

May 11, 2021

Big Oil Is In Desperate Need Of New Discoveries

The year 2020 was a watershed moment for the fossil fuel sector. Faced with a global pandemic, severe demand shocks and a shift towards renewable energy, experts warned that nearly $900 billion worth of reserves–or about one-third of the value of big oil and gas companies–were at risk of becoming worthless.

Even Big Oil mostly appeared resigned to its fate, with Royal Dutch Shell (NYSE:RDS.A) CEO Ben van Beurden declaring that we had already hit peak oil demand while BP Plc. (NYSE:BP)—a company that doubled down on its aggressive drilling right after the historic 2015 UN Climate Change Agreement--finally gave in saying “..concerns about carbon emissions and climate change mean that it is increasingly unlikely that the world’s reserves of oil will ever be exhausted.” BP went on to announce one of the largest asset writedowns of any oil major after slashing up to $17.5 billion off the value of its assets and conceded that it “expects the pandemic to hasten the shift away from fossil fuels.”

Yet, an ironic twist of fate might mean that rather than huge oil and gas reserves remaining buried deep in the ground, the world could very well run out those commodities in our lifetimes.

Norway-based energy consultancy Rystad Energy has warned that Big Oil could see its proven reserves run out in less than 15 years, thanks to produced volumes not being fully replaced with new discoveries.

According to Rystad, proven oil and gas reserves by the so-called Big Oil companies, namely ExxonMobil (NYSE:XOM), BP Plc., Shell, Chevron (NYSE:CVX), Total ( NYSE:TOT), and Eni S.p.A are falling, as produced volumes are not being fully replaced with new discoveries.

Source: Oil and Gas Journal

…click on the above link to read the rest of the article…

Wikileaks Cables: Saudi Arabia Oil Reserves Overstated

December 8, 2020

Wikileaks Cables: Saudi Arabia Oil Reserves Overstated

UNYOM

The United States fears that Saudi Arabia, the world’s largest crude oil exporter, may not have enough reserves to prevent oil prices escalating, confidential cables from its embassy in Riyadh show.

The cables, released by WikiLeaks, urge Washington to take seriously a warning from a senior Saudi government oil executive that the kingdom’s crude oil reserves may have been overstated by as much as 300 billion barrels — nearly 40%.

The revelation comes as the oil price has soared in recent weeks to more than $100 a barrel on global demand and tensions in the Middle East. Many analysts expect that the Saudis and their OPEC cartel partners would pump more oil if rising prices threatened to choke off demand.

However, Sadad al-Husseini, a geologist and former head of exploration at the Saudi oil monopoly Aramco, met the US consul general in Riyadh in November 2007 and told the US diplomat that Aramco’s 12.5 million barrel-a-day capacity, needed to keep a lid on prices, could not be reached.

Tapping the truth

According to the cables, which date between 2007-09, Husseini said Saudi Arabia might reach an output of 12 million barrels a day in 10 years but before then — possibly as early as 2012 — global oil production would have hit its highest point. This crunch point is known as “peak oil“.

Husseini said that at that point Aramco would not be able to stop the rise of global oil prices because the Saudi energy industry had overstated its recoverable reserves to spur foreign investment. He argued that Aramco had badly underestimated the time needed to bring new oil on tap.

…click on the above link to read the rest of the article…

Brazil Reserves and Production Update, 1H2018

October 18, 2018

Brazil Reserves and Production Update, 1H2018

brazil c&c production

Brazil and Petrobras show something in common with US LTO: even with a lot of debt and desire, and a strong resource base it is difficult to raise production in the face of high decline rates. It may also be a lesson for the world as oil prices rise and activity picks up; it is by far the most active conventional oil region with many major projects at various stages of completion, but facing delays and schedule crowding so oil production has continued a slow decline, contrary to expectations from last year. In July new production again did not quite match overall decline, mostly because of delays in start-ups of FPSOs planned for this year, and at 2575 kbpd was down 14 kbpd or 0.5% m-o-m and 48 kbpd or 1.8% y-o-y (data from ANP).

chart/

Two FPSOs were started in 2017: Lula Extension Sul (P-66) at 150 kbpd nameplate and Pioneiro de Libra, an extended well test project on the Mero field, at 50 kbpd. Both are now about at design throughput. Two other FPSOs completed ramp up in 2017. In 2018 three FPSOs have started up: Atlanta a small early production system at 20 kbpd, Bezios-1 (P-74) in the Santos basin at 150 kbpd and FPSO Cidade de Campos dos Goytacazes on the Tartaruga Verde field in Campos, also at 150 kbpd. There were three other FPSOs due for the Buzios field (P-75, 76 and 77) but at least one is delayed till next year. There are now four planned FPSOs remaining to be started up this year, all in the fourth quarter: P-75 and P-76 plus P-67 (Lula Norte) and P-69 (Lula Extremo Sul) in the Lula field (each 150 kbpd nameplate).

…click on the above link to read the rest of the article…

GoM Reserves and Production Update, 1H2018

September 28, 2018

GoM Reserves and Production Update, 1H2018

crude and condensate reserves

chart/

BOEM remaining C&C reserve estimates for GoM increased by 649 mmbbls for 2016 (i.e. to 31st December 2016). This was 112% reserve replacement and followed a similar growth of 618 mmbbls (111% reserve replacement) for 2015. The BOEM reserve calculation method appears to give highly conservative estimates. The increasing reserves followed several years, from 2006, of less than 100% reserve replacement, and actually negative numbers in 2006 and 2008. Current total original reserves (i.e. ultimate recovery) are a new high beating 2006 values, though deep water numbers are still below that year with the main growth appearing to be coming from: 1) older fields that were downgraded because of changes in SPE rules in 2007 (i.e. that reserves could only be booked if there were clear plans for their development within five years); and 2) newer discoveries, mostly smaller fields that are developed through tie-backs to existing hubs. These newer fields often do not get shown as new discoveries because BOEM records production and reserves against leases and each lease is recorded against a single field, even if there are deposits of different depth, age, geology and significant spacial separation within in it.

Current oil reserves are 3.569 Gb, which is 15% of the estimated original reserve (aka ultimate recovery). BOEM give the reserves as 2P (i.e. proven and probable) but they look very conservative and are actually lower than the EIA numbers, shown below, given for proven only and based on the operators own numbers, although the two are converging. The historical reserve histories look closer to how 1P (proven) numbers often appear, for example with some fields maintaining near constant R/P numbers, some showing large early drops that then come back over time, and some numbers being suspiciously low on fields obviously not near run out production rates (e.g. Mad Dog and Son of Bluto 2).

…click on the above link to read the rest of the article…

Mexico Production and Reserves, 1H2018

August 20, 2018

Mexico Production and Reserves, 1H2018

mexico c&c production

Mexico oil production is in decline though, at the moment, not as steep as it was expected to be (at least by me – IEA predictions are closer).

Data is through June and comes from Pemex and National Hydrocarbons Information Center (CNIH)(both sites are pretty good).

For June C&C was 1870 kbpd, down 25 kbpd from May and 170 kbpd y-o-y. Yearly decline rates for each region are shown in the chart below. Production peaked in 2004/2005 at just over 3500 kbpd, so overall decline is approaching 50%.

chart/

Most of the decline has been in light oil and condensate, with heavy oil holding fairly level.

chart/

ku-maloob-zaap

The largest producer is the Ku-Maloob-Zaap complex (KMZ), which has been kept on a plateau, contrary to predictions of a decline starting about now from a Pemex presentation in 2012. The production has been maintained mainly by increasing flow from the Maloob field, and it looks like this has resulted in increased nitrogen production. Ku and Zaap production has been maintained, but the Ku field is getting close to exhaustion now. Ku is a medium oil at API 22°, while Maloob and Zaap produce heavy oil at API 12°. The two types of oil are processed separately so it’s not clear that decline in Ku can be fully replaced by the heavier oil fields, which I think also require more nitrogen for voidage replacement. Nitrogen injection to maintain production there was started in 2014, which was also when overall production came off a temporary plateau and started the current steady decline period. It would be interesting to know how the total available nitrogen is apportioned to the fields; presumably the total available is fixed and therefore so too is the net voidage replacement capacity and hence the total amount of heavy oil that can be produced.

…click on the above link to read the rest of the article…

Satellite Images Reveal Saudis May Be Lying How Much Oil They Have In Storage

November 8, 2017

Satellite Images Reveal Saudis May Be Lying How Much Oil They Have In Storage

A little over a year ago, specialized satellite imaging company Orbital Insight which uses its proprietary imaging and algorithms to track above-ground oil storage, confirmed something we had alleged earlier in the year: that China was vastly under-representing the amount of oil it had stored in its Strategic Petroleum Reserve (with significant implications for prices). As we said last September “according to Orbital Insight, China had not only misrepresented how much oil it has stored, it has done so at a massive scale, with the real number dwarfing even JPM own estimate: the real amount of Chinese oil in storage, according to Orbital, was a whopping 600 million barrels as of May” an amount nearly 3 times greater than the official, at the time, number of 234 million barrels.

The resultant doubt about China’s true purchasing capacity was one of the several factors that led to the subsequent swoon in oil prices which OPEC was unable to overcome until nearly a year later, when the market became increasingly confident that the OPEC strategy of eliminating excess inventory, was working and pushed the price of WTI and Brent to two year highs, above $57 and $63 respectively.

That confidence may not last, however, and the reason may be the same one as last year: Orbital Insights.

As the FT’s David Sheppard writes, “while the oil market’s attention has been gripped this week by the corruption purge in Saudi Arabia and its tensions with Iran, from miles above the earth’s crust one company is highlighting a different kind of intrigue.” He is, of course, referring to Orbital Insight, whose analysis of Saudi crude inventories in recent months has thrown up an “interesting anomaly.’

…click on the above link to read the rest of the article…

CONFIRMED: North Korea has enough oil to survive embargo

September 10, 2017

CONFIRMED: North Korea has enough oil to survive embargo

While a full scale oil embargo against North Korea is unlikely, the reality is that North Korea would be able to survive such a measure with comparative ease.

The United States has recently suggested a global oil embargo against North Korea, something both China and Russia oppose. The DPRK’s neighbours to the north support UN sanctions against Pyongyang, but have firmly opposed unilateral US sanctions against North Korea.

Russia and China have made a commitment never to support sanctions against Pyongyang which could negatively impact on the civilian population of their neighbour and this would almost certainly include a full-scale oil embargo.

On the contrary, Russia’s plan to de-escalate tensions on the Korean peninsula is to develop trilateral economic initiatives linking South and North Korea to Russia. Given the realities on the peninsula, Russia’s ‘carrot’ is seen as preferable on both sides of the 38th parallel to Washington’s increasingly bellicose ‘stick’.

But even if Donald Trump was somehow able to convince the world to engage in an oil embargo against North Korea, North Korea would appear to have enough domestic oil reserves to make up for the loss of imports.

In addition to large reserves of domestic coal and the increased reliance on green energy in the form of hydroelectric power , North Korea’s domestic oil reserves are likely far greater than previous conservative estimates have indicated.

Even prior to the new threat of sanctions, North Korea has been increasingly self-sufficient in beginning to tap its still largely unused oil reserves.

In 2015, when relations between the DPRK and the rest of the world were somewhat better than they are at present, independent oil exploration expert Michael Rego investigated North Korea’s oil potential.

…click on the above link to read the rest of the article…

Venezuela Is About to Ditch the Dollar in Major Blow to US: Here’s Why It Matters

September 9, 2017

Venezuela Is About to Ditch the Dollar in Major Blow to US: Here’s Why It Matters

(ANTIMEDIA) — Venezuelan President Nicolas Maduro said Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week, Reuters reports. According to the outlet, Maduro will look to use the weakest of two official foreign exchange regimes (essentially the way Venezuela will manage its currency in relation to other currencies and the foreign exchange market), along with a basket of currencies.

According to Reuters, Maduro was referring to Venezuela’s current official exchange rate, known as DICOM, in which the dollar can be exchanged for 3,345 bolivars. At the strongest official rate, one dollar buys only 10 bolivars, which may be one of the reasons why Maduro wants to opt for some of the weaker exchange rates.

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

Venezuela sits on the world’s largest oil reserves but has been undergoing a major crisis, with millions of people going hungry inside the country which has been plagued with rampant, increasing inflation. In that context, the recently established economic blockade by the Trump administration only adds to the suffering of ordinary Venezuelans rather than helping their plight.

According to Reuters, a thousand dollars’ worth of local currency obtained when Maduro came to power in 2013 is now be worth little over one dollar.

…click on the above link to read the rest of the article…

Norway Oil and Gas: Reserves, Production and Future Projection

September 1, 2017

Norway Oil and Gas: Reserves, Production and Future Projection

Norwegian oil production peaked in 2000 to 2001; gas production may be peaking about now. Oil hit a low in 2013 and then recovered towards a new local peak, probably concurrent with the gas.

drilling and development

The most surprising thing I find with their industry is that the drop in oil price made almost no difference the drilling activity shown here (all data here and below taken from the NPD – Norwegian Petroleum Directorate – which provides more data than just about any other such organisation).

chart/

The chart shows numbers of wells drilled, as stacked bars, and number of operating rigs (unstacked) against the left hand axis, other curves are ratios of total against the right axis. There was a high level of drilling activity in 2013 and 2014 which then actually increased in 2015 and was still high in 2016, although exploration well numbers look to be decreasing now. This may be just a consequence of the momentum built up in the high price years, or because of the influence of Norwegian regulatory regime (which has always sought to smooth out development activity, though less so recently with new Conservative governments), or a move to new frontiers in the Norwegian and Barents Seas (the background area chart shows proportion of wells in each sea). The development wells marked N/A (information not available) are probably mostly oil judging by the fields being drilled, the non-production wells are mostly injection with a few for observation and disposal. The number of rigs and proportion of dry wells have remained pretty steady, as has the proportion of subsea wells.

…click on the above link to read the rest of the article…

Australia’s oil stock coverage on record low

July 10, 2017

Australia’s oil stock coverage on record low

In prime time evening news of the Australian public broadcaster ABC TV, on 21 June 2017, the business presenter Alan Kohler tried to explain a fall in oil prices by “record oil inventories around the world”

http://www.abc.net.au/news/business/kohler-report/

Well, let’s go around the world on a map and stay where we are, in Australia. In google, type in the search word “Australian Petroleum Statistics” and you get this website:

http://www.environment.gov.au/energy/petroleum-statistics

Click on the latest issue and then on the download PDF file, in this case April 2017

http://www.environment.gov.au/system/files/resources/8b150335-1e38-48a3-9f66-daed7ddbe4bf/files/australian-petroleum-statistics-april2017.pdf

Search for the word “stocks” and that brings you to tables 6 and 7

Table 7 End of month stocks of petroleum, consumption cover

In the last column “IEA days of net imports coverage it is 89.5 days for 2010/11 and 55.2 days for 2015/17. Go to the bottom of the column and it’s 50.5 days. The year-on-year decline is 3.1%. That doesn’t look like a record now. If anything, it’s a record low. Let’s put that into a graph:

Australia_IEA_days_coverage_2010-Apr2017 Fig 1: Australia’s net imports coverage in days as defined by IEA

Australia is a member of the IEA (International Energy Agency)

Turnbull_Birol_Feb2017 Fig 2: Australian Prime Minster shaking hands with IEA’s Fatih Birol, Feb 2017

We check the coverage on the IEA website and find 48 days for March

IEA_oil_stock_in_days_of_net_imports_Mar2017
Fig 3: Australia in comparison with other countries
https://www.iea.org/netimports/

But this number of 50 days is just a calculated average of all oils and fuels. In terms of consumption cover for crude oil and the most important fuels the numbers are much lower as shown in the following graphs.

…click on the above link to read the rest of the article…

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