Energy Exploration & Exploitation

This paper assesses the risk of near-term oil shortages due to resource limits.

Part I reviews the basics of the problem, including: •

definitions,

Part II examines the adequacy of the data available for estimating the total quantity of conventional oil, discussing separately: •

the oil in reserves,

A contrast is made between the data used by the oil industry, and that available in the public domain.

Part III outlines approaches taken by a variety of groups to model the future supply of oil. These groups include Campbell/Laherrère, the IEA, USGS, the EU, and some oil economists.

Part IV presents oil production forecasts from a number of these groups for some specific countries; for the “Rest-of-the World”, and for the world as a whole.

In Part V, the scope for non-conventional oil, and also gas, to offset a decline in conventional oil is examined.

Finally, in Part VI, some wider implications of the situation are presented.

The general arguments of the paper are: •

It is useful to define conventional oil by recovery method.

The conclusions of the paper therefore are: •

Non-OPEC oil production is currently close to its resource-limited peak.

After seven years of dramatic decentralization and dynamic privatization of Russia's oil industry from, which transformed the wholly state-run oil distribution system into the mostly privatized quasi-market “petropreneurship”, the pendulum of oil control has started to move back. However, despite the obvious need for a better regulated industry and the rising state-centric tendencies, the liberalization of the Russian oil market seems to have passed the point of no return, and the controversial issue of creating a national oil company (NOC) needs to be addressed not only from the political angle but also with regard of economic possibilities and the present market realities.

RWE, the Germany energy company, has recently provided its view of world energy supply and demand to the year 2050. Of particular interest are the forecasts associated with Europe's supply and demand of anthracite, bitumenous coal, woody lignite and soft lignite.

Exxon Mobil's total capex on exploration and production in 1999 in real terms was lower than Exxon's capex in the years 1975 to 1985. Total oil reserves in 1999 at 12 billion barrels compared with 7 billion barrels for Exxon in 1998 which was near the average for Exxon over the period 1975 to 1998.

In 1975 capex of $8 billion related to a reserve base of 7 billion barrels. In 1999 capex of $7 billion related to a reserve base of 12 billion barrels.

Non-OPEC oil reserves worldwide have an R/P ratio of 15. In the USA, the ratio is near 10; a figure stated for much of the last century.

The US DOE/EIA world oil production forecasts given in Table 1 ignore the published forecasts of oil reserves. The naive statement of the position for the USA is that the presently known oil reserves will have been used by 2010. In 2010, US production is forecast to be a little less than 9 million b/d and in 2020 is forecast to be a little over 9 million b/d.

The US DOE/EIA is clearly confident that there will be oil reserves available to support world oil production of 87.7 million b/d in 2005; 96.6 million b/d in 2021; 105.6 million b/d in 2015 and 15.4 million b/d in 2020. Hence real at economic world oil reserves are forecast to increase steadily through the next two decades.