World Oil Reserves Are Being Depleted
The World's Oil Reserves Are Being Depleted
"Proven Reserves" are the estimated quantities of crude oil which geological and engineering data demonstrate with a reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Unfortunately, the estimation of reserves is far from being an exact science. Estimation of "World's proven reserves" involves two major items:
- Determining the total volume of oil in place for every oil reservoir in the World
- Determining what percentage of oil can be recovered from each oil reservoir.
Unfortunately, the volume of oil in place is never precisely known. Determining what amount
can be ultimately recovered depends upon many assumptions to include the methods/techniques used to recover the oil and the levels of success for the methods/techniques used. Estimates of reserves could easily be off by 20% of the 1.3 trillion barrels estimated for 2006 which calculates to 260 billion barrels of oil. If the proven World Oil Reserves were over-estimated by 260 billion barrels of oil, it would be catastrophic for the world. Estimates of the World's proven oil reserves from 2001-2006 increased for every year they were estimated except for 2004.
Estimates for World's Proven Oil Reserves
- 2001: 1.03 trillion barrels
- 2003: 1.21 trillion barrels
- 2004: 1.19 trillion barrels
- 2006: 1.29 trillion barrels
C.J. Campbell's previous chart showed net decreases in reserves from 1985-1999 totaling approximately 139 billion. But instead of decreases for the World's oil reserves, the list above shows increases in the World's reserves. The World's new discoveries for the past 21 years have been insufficient to replace the oil that has been consumed during the years 1985-2005. World crude oil drilling activity peaked clear back in 1982. World discoveries of new oil fields after 1970 have been substantially smaller in size than the World giant oil field discoveries made between 1890-1960.
90% of Saudi Arabia's oil production comes from five super giant fields discovered between 1940 and 1965. The most significant of these oil fields in Saudi Arabia comes from Ghawar which was discovered in 1948 and which currently produces 5 million barrels/day. Ghawar accounts for over 50% of Saudi Arabia's current production of crude oil.
Matthew R. Simmons, president of Simmons and Company International, analyzed over 200 technical papers on Saudi Arabia oil reserves and production from giant oil fields. The facts have shown that the water-cut is over 30% for most of these giant oil fields and that state-of-the-art technology has been used to maintain high production rates from each of these major oil fields by employment of a careful and rigorous program of water injection into the peripheral areas of these fields to keep reservoir pressures high. Simmons concludes that several of these major oil fields in Saudi Arabia are close to depletion due to maintaining high production rates for many years from these fields and an average life expectancy of 45-50 years for these fields. Secondary recovery of oil from several of these oil fields is almost over and any additional output from these oil fields will be at substantially reduced production rates and at higher cost using tertiary recovery techniques(steam injection, in-situ burning,etc). Simmons also expressed concern about the World's heavy reliance upon Saudi Arabia's huge oil fields that are near depletion and that new discoveries of new oil fields in Saudi Arabia have been insignificant. Saudi Aramco(Saudi Arabia's state run oil company) has used state of the art geophysical tools to find new oil sources. The only real commercial success was Hawtah Trend(200,000 barrels/day).
Secrecy has surrounded Saudi Arabia's oil production and reserves for decades. Many OPEC countries have artificially increased their proven reserves because in the past OPEC production quotas were based upon proven reserves. If an OPEC nation, wanted to produce more oil and still be within their OPEC mandated quota, they would artificially raise their proven reserves. Saudi Arabia's proven reserves saw two big jumps in proven reserves that were not accounted for by any new substantial discoveries of oil. In 1979 Saudi Arabia's proven reserves jumped from 108 to 169 billion barrels and in 1988 jumped from 170 to 255 billion barrels of oil.
Both the International Energy Agency and and the Department of Energy-Energy Information Administration assume Saudi Arabia output of crude oil will double over the next 15-20 years and this will provide most of the increased supply needed by the World for future through the year 2025. With the industrialization of China, India, and the Far East, the demand for crude oil is expected to increase approximately 2%/yr on the average for the next 20 years. To meet the
global demand for oil, Saudi Arabia will need to produce 13.6 million barrels per day by 2010 and 19.5 million barrels per day by 2020. Saudi Arabia in 2005 only produced 9.6 million barrels a day. Even Saudi Arabia oil officials privately caution that production beyond 12 million barrels per day would damage the oil fields.
A dramatic decrease in production results as aging oil fields that are well past their peak production continue to operate along with an increased use of stripper wells that produce less than 10 barrels per day of crude oil. California oil production peaked in 1985 at 424 million barrels with 50,525 oil wells in production. In 2004, production dropped to 268 million barrels with 47,881 oil wells in production. If all oil wells in California were equivalent, production in 2004 (based on total oil wells in production) should have been 94.8% of the production for 1985 or 402 million barrels. What are some of the reasons that production dropped clear to 268 million barrels for 2004?
- Out of the 25 largest oil fields in California: 5 were discovered prior to 1900, 10 were discovered from 1900-1920, and 7 were discovered from 1921-1940. Output from these large fields is down due to oil depletion and some of these oil fields are completely depleted.
- Most all of California's current production of oil, including from oil fields discovered before 1941, comes from oil wells built after 1969.
- Most of the oil fields discovered after 1940 have much smaller amounts of recoverable oil compared to the oil fields discovered prior to 1941.
- In 2004, 53.5% of the total producing oil wells were stripper oil wells producing less than 10 barrels/day.
References:
http://www.hudson.org/index.cfm?fuseaction=research_publications_list&resType=MdEas
Matthew R. Simmons, "The Implications of Saudi Oil Declining", Hudson Institute(Sep 9,2004)
http://www.iags.org/n0331043.htm
"New Study Raises Doubts About Saudi Oil Reserves", Institute for the Analysis of Global Security( March 21,2004)
"Summary of Operations 1915-1973", "Annual Reports 1974-2004", California-Department of Conservation-Division of Oil,Gas, and Geothermal Resources, http://www.consrv.ca.gov/dog/pubs_stats/annual_reports/annual_reports.htm
