Prospecting the academic grounds on global energies patterns

When will oil resources be depleted?

It is a rather controversial subject to assess if and when oil resources should be depleted.

Some authors forecasts an imminent peak and subsequent terminal decline in the global production of conventional oil. For them the non-conventional and alternative could not compensate on the timescale required. Others more optimistic believe that the rising prices of oil should stimulate new discoveries, the enhance recovery of conventional oil and the development of non-conventional resources such as oil sands (Adelman 2003, CERA 2005). This development is acknowledged by the recent massive investments toward unconventional oil production in the US, or the development of sand oils in Alberta (Canada) on which Paul M Wihbey insists in his book “the rise of the new oil order”.

The first team of pessimists already point the graph of stagnant worldwide production (even under rising prices) while the optimists point to the long history of failed predictions of the ‘end of oil’ (Lynch, 1998).

Some websites are entirely dedicated to this matter, here are a few (pessimistics): APSO being the most reknown; Manicore (a French website) dedicates also some analysis on this subject, the blog  The Oil Man starts also from the hypothesis of a soon-to-come oil depletion.

This contentious debate has drawn the attention of the UK Energy Research Center which published a thorough analysis in 2009. The report is available at this link.

Actual reserves and resources

Actual reserves and resources

There is no point in repeating what they have successfully analyzed in this 200 pages report, but we may highlight a few of their conclusions:

  • The remaining resources are frequently more expensive to locate, extract, transport which implies that the era of cheap oil has come to an end. The energy costs of oil production have increased over time as a consequence of accessing smaller fields in more difficult locations. The energy return on investment (EROI) felt from 100:1 in 1930 to 20:1 in mid-90s in US (Cleveland, 1992, 2005). Gagnon et al (2009) estimate that the EROI for oil and gas felt from 26:1 in 1992 to 18:1 in 2006.
  • Estimates of the recoverable resources of individual fields are commonly observed to grow over time as a result of improved geological knowledge, better technology, changes in economic conditions and revisions to initially conservative estimates of recoverable reserves. This process appears to have added more to global reserves over the past decade than the discovery of new fields and it seems likely to continue to do so in the future. While the contribution of different factors varies widely between different fields and regions,‘reserve growth’ does not appear to be primarily the result of conservative reporting.
    Reserve growth tends to be greater for larger, older and onshore fields, so as global production shifts towards newer, smaller and offshore fields the rate of reserve growth may decrease in both percentage and absolute terms. At the same time, higher oil prices may stimulate the more widespread use of enhanced oil recovery techniques. The suitability of these techniques for different sizes and types of field and the rate at which they may be applied remain key areas of uncertainty.
    • The oil industry must continually invest to replace the decline in production from existing fields. The average rate of decline from fields that are past their peak of production is at least 6.5%/year globally, while the correspondingrate of decline from all currentlyproducingfields is at least 4%/year.This implies that approximately 3mb/d of new capacity must be added each year, simply to maintain production at current levels – equivalent to a new Saudi Arabia coming on stream every three years.
    Decline rates are on an upward trend as more giant fields enter decline, as production shifts towards smaller, younger and offshore fields and a changing production methods lead to
    more rapid post-peak decline. As a result, more than two thirds of current crude oil production capacity may need to be replaced by 2030, simply to prevent production from falling. At best, this is likely to prove extremely challenging.
  • Contemporary estimates [of world-wide conventional oil available reserves] now fall within the range 2,000-4,300 billion barrels (Gb), compared to cumulative production through to 2007 of 1,128 Gb. This wide range leads to a corresponding uncertainty in global supply forecasts.
  • The timing of the global peak for conventional oil production is relatively insensitive to assumptions about the size of the global resource. For a wide range of assumptions about the global URR of conventional oil and the shape of the future production cycle, the date of peak production can be estimated to lie between 2009 and 2031.
  • The risks presented by global oil depletion deserve much more serious attention by the research and policy communities. On the basis of current evidence we suggest that a peak of conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020. Given the lead times required to both develop substitute fuels and improve energy efficiency, this risk needs to be given serious consideration.

IAE forecasts in 2008



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