According to BP’s Statistical Review of World Energy (pdf), released on wednesday, we still have 1,333 billion barrels out there to pump, enough for 40 years at current usage. Great – nothing to worry about right now… if you believe BP. According to Jeremy Leggett, BP’s chief economist literally laughed off a question about peak oil at the launch press conference.
So do we breathe a sigh of relief, or do we join Britain’s former chief scientist in saying ‘pull the other one’?
Even a cursory browse might put you in the latter camp. Consider for example, that Saudi Arabia single handedly accounts for almost 20% of the world’s oil reserves. The details of how much is in each field is a state secret, but it claims to have 264 thousand million barrels. This is a little strange, since it reported that it had 262 thousand million barrels ten years ago, and 260 in 1989. Saudi Arabia has pumped around 8 million barrels of oil a day for twenty years, but its proven oil reserves have gone up rather than down.
Since Saudi Arabia hasn’t announced any major discoveries in that time, its stated reserves are scarcely credible. When Colin Campbell attempted to work out an honest figure in 2006, he concluded that the real figure was probably closer to 159.
Kuwait claims 101 thousand million barrels, 4 more than it said it had in 1989. So where on earth have its 2 million barrels a day been coming from? The United Arab Emirates’ estimate is unchanged in a decade, still at 97.8 after ten highly productive years. Essentially, there is either something magical happening under the sands of the gulf, or somebody is telling lies.
The answers lie with OPEC, which seeks to control the global oil price by agreeing limits to oil exports. It sets quotas according to stated reserves – the more you have in the ground, the more you’re allowed to sell each year. As Matthew Simmons says in his book Twilight in the Desert, this gives member countries every incentive to overstate their reserves. They would be punished, economically, if they told the truth.
Take a look at the graph of stated oil reserves below, and see if you can tell which year OPEC switched to a quota system.
OPEC switched to quotas in 1985, and the following year its members had miraculously discovered billions more barrels that they didn’t know they had. Those figures have never been clarified or revised. The fact that Kuwait’s figures are decided by a closed session of the Kuwaiti parliament, rather than an oil company or an independent auditor, tells you everything you need to know. But there’s no need to pick on Saudi Arabia or Kuwait – looking through this year’s BP statistical review, it’s notable that not a single OPEC country has reported a fall in its reserves in the last 10 years.
In short, global oil reserve estimates are fictional. We have no idea how much we have, because it doesn’t pay to tell the truth when it comes to oil. It doesn’t serve OPEC, and it doesn’t serve politics either, which is why no government questions the figures.
- International Energy Agency: peak oil happened in 2006
- Government report suggests fuel rationing by 2020.
- Iraq plays the reserves game.
…
The real non-sense is Latin America, and especially Venezuela. Venezuelan oil reserves are effectively limitless; they just have trouble certifying some of it. Whatever amount of oil is in the Middle East, we won’t run out of oil. We will destroy the planet first.
Between them, the Canadian and Venezuelan deposits contain about 3.6 trillion barrels (570×10^9 m3) of recoverable oil, compared to 1.75 trillion barrels (280×10^9 m3) of conventional oil worldwide, most of it in Saudi Arabia and other Middle-Eastern countries.
So that’s a total of 5.35 Trillion barrels of known reserves. Then there is natural gas, shale gas and gas hydrates.
There have been quantum leaps in discovery and recovery technology sine the 50′s.
The questions raised about mideast reserves have some merit. No one really knows if they are reporting accurate figures for their reserves. Most likely not when they can control prices with a turn of a valve.
“40 years at current usage”? Surely that’s very bad news?
I thought the point about Peak Oil is that the world is unlikely to be able to extract much faster than at present, yet demand threatens to go thruough the roof as the BRIC economies, tigers, Middle Eaast etc develop rapidly.
If I recall my economics classes correctly, stable or declining supply of an essential good meeting rapidly rising demand equals massive price rise. In the case of buying energy it’s surely likely to mean the west sending vast amounts of its wealth the way of the the suppliers.
Add to the mix reductions in the use of dirty coal (EU? China?) and the impact that will have on demand for the remaining supply of other cheap energy sources.
I’m surprised BP’s chief economist was able to laugh it off. Hysterical laughter?
You’d think 40 years is still pretty bad news, wouldn’t you? I guess these things are relative, if the alternative view is that the crisis is pretty much already here.
Or maybe he’s laughing because if there is a crisis and the price goes through the roof, the only people who really benefit are the oil companies. The less prepared we all are, the bigger BP’s profits are likely to be as we all panic buy oil futures.
Any discussion about oil prices over the next decade must include an attempt to quantify emerging economy demand as an important driver at the margin. Here is a simple thought experiment using Chinese demand to give some idea of the magnitude of the supply issues we face:
- China moves from 3 bbls/person/year to the South Korean per capita consumption level of 17 bbls/person/year
- Transition takes 30 years
- No peak in global production
In next 10 years we must find 44 million BOPD. If you superimpose peak production on top of this demand profile using the following parameters oil prices would increase approximately 250% in real terms over next 10 years:
- Oil demand elasticity of -0.3
- Current production 84 million BOPD, current price US$ 80
- Peak production 100 million BOPD
- Post peak decline rate of 3-4%
If you want to try the model for yourself using your own assumptions it can be found at: http://www.petrocapita.com/index.php?option=com_content&view=article&id=128&Itemid=86
suuuuup 40 years seems like a long time to me but thts cos ims till in schoool.chips!!!!!!!!!!!!
Unless the reserve increase in the 80s can be explained by a dramatic new extraction technology or improved assessment methodology it is nothing but a lie. Pure fantasy. An increase in capital stock to become more credit worthy. A mere book keeping trick.
Another issue is this: extraction of oil becomes ever more energy intensive as the fields are more and more depleted and the fraction of “unconventional oil” rises. What the world is looking for is not “barrels of oil” but “units of energy”. The net energy per barrel of oil will continuously decrease over time adding to peak oil stress. The expected oil production plateau of 40 years will have to be paid for with energy, pollution and large scale destruction of nature (e.g. in the case of tar sands).
I’m not a geophysicist but I’ve read loads of reports about oil wells that replenish themselves to some extent. Bearing in mind that the deepest wells are only a couple of miles down and the Earths crust is many 100′s of miles thick, oil deposits seep up from lower levels. So the amount of extractable oil goes up slightly and new technology and more efficient tools and processes also allow more oil to be recovered. In fact I’ve heard of wells that were closed as being exhausted in the 60′s and 70′s that have been reopened and produced more oil than they did originally
@libertarian: Interesting and certainly worth looking into. Could you perhaps be so kind and reveal to us the peer reviewed academic paper(s) or other reliable sources from which you have obtained these facts, so we are able to evaluate these statements?
Thanks!
I’d be interested to hear more about this. Can you name some of those reports or post some links?
poop
Hey Libertarian, I have heard the same. The Russians believe the theory of peak oil is bunk. Here you go Stephan.
. http://freeenergynews.com/Directory/Theory/SustainableOil/
No, that’s not a page of peer-reviewed science, it’s a round-up of Google links, most of which trace back to the work of astrophysicist Thomas Gold.
The theory of abiotic oil was common in the Soviet Union in the 1950s, not today. It was abandoned because it hasn’t led to any new oil discoveries, whereas the conventional theory that oil is fossil-derived does.
Here’s a historical review of the theory: http://static.scribd.com/docs/j79lhbgbjbqrb.pdf
The Abiotic Oil Theory had some traction years ago in Alberta. In the 90′s Larry Ryckman, pro sports team and entrepreneur spent a lot of money on trying to prove abiotic oil. He would have been better off not spending those millions, as he went bankrupt in 1996.
Aabbax International Financial Corp., a company that claimed to have found a method for extracting crude oil from under Alberta’s tar sands. In 1993, it reached a high of $1.73 as it reported a deal to drill a deep well in Northern Alberta.
When Aabbax finally drilled the “historic” well in November, 1994, it produced at a pressure of about 5,500 kilopascals. Unfortunately for investors, the product was salt water. They ran out of money at 1.5 miles into a 2.5 mile deep test to drill through Pre-Cambrian Granite.
Reports varied about whether oil was found or not at the time. Larry Ryckman has a somewhat storied past in regards to stock market trades.
Looks like the only thing usefull to come from the test well is the data for depth and temperature for possible Geo Thermal uses.
Abiotic oil “might” exist but not there.
Oil is not a crisis, and will never be. It’s the best way we know how to make more money, our country only produces so much oil so unless we go to war with some country that no one likes and steal their oil then we will pay an obscene amount in the near future, what would you rather have happen?
Ok, good luck with that Will.
With all the discussion on oil reserves shouldn’t we really be looking towards other forms of energy? Maybe there isn’t as much money involved but really we should be thinking of the plant and how we are going to leave it for future generations. I vote for wind and solar!!!
Absolutely, that’s what’s frustrating about the oil situation. It’s clearly a problem, but until the government and big business are convinced of it, the focus remains on securing future oil reserves rather than working to replace them.
Well – I vote for solar as well – which is the reason why I work for a solar energy company (not the big money I don’t make there). But I think the situation is worse: as oil gets more scarce while demand rises, the prices will go through the ceiling. And who will profit most from that situation? The world sinks into disaster, and oil prices will rise to 200, 300, 500 US$ per barrel. What interest should the Oil companies have in a transition until the very last drop of oil will be pumped out of the ground and the very last square Kilometre of Canadian tar sand area was annihilated? As a see it, the interests of society at large and the energy giants are entirely at odds.
We might be facing Peak Litium long before Peak Oil. All these Alternatives require exotic metals and composites which create toxic wastes, the long term effects of production and disposal still to come.
@Amirlach: you wrote “We might be facing Peak Litium long before Peak Oil”.
This is potentially true. However, there is more than one type of battery, and new developments – such as the Sodium-Ion battery – are on their way. A main goal must be, indeed, to get rid of scarce materials. Unfortunately, though, the economic incentives encourage the opposite. Controlling scarce resources is one of the foundations of political power and financial speculation.
Regarding the disposal of renewable energy system components: An example is the PV cycle take-back system for used photovoltaik panels. They contain toxic but also very valuable raw material, so it would be nonsense to deposit them in a landfill. So far a dozen large distributors have joined the club. See: http://www.pvcycle.org. Lead metals and other metals also are recycled, so there is no reason to assume that Lithium batteries and new forms of batteries will not be recycled as well. The Lithium situation differs from the oil situation in so far that the material is not lost, i.e. it is not burned.
Oil is such a precious and versatile resource whose cost of extraction will keep going up. Oil is and will be indispensable for the production of so many goods and we keep wasting it by burning it in 19th century technology. Up front by those who claim to be the most progressive thinkers in the world. Oil has more past than future as an energy source.
The statement in the first paragraph of this web page should read 1,333 billion barrels and not 1,333 million barrels.
1,333 million barrels would last less than 5 years at the current rate of consumption.
Quite right, thank you Sanjiv. I’ve put that straight.
it says 1,333 billion barrels in the first paragraph, all u have to do is read
America, this is your fault. Keep turning a blind eye.
I think localization with a globalized safety net should be implemented. Also I don’t think any one green energy solution is the answer, rather all of them could be utilized in conjunction with one another. They all have their pros and cons. All new homes could be geothermal with wind and solar energy as well. A combination of all 3 could create suffice power with the ability to put back into the grid. As oil is a finite resource we do need to start moving away from our dependance on the substance as our entire world is dominated by it. Oil is finite, our existence does not have to be.
This is a good article. There are many things that don’t add up about the entire oil business and it’s tough to believe that there is still a bunch of oil in the ground after all we have used. Here’s a good complimentary article http://oil-tothelastdrop.blogspot.com/2011/07/oil-to-last-drop.html that talks about different aspects of the oil game.
has everyone forgotten about plastic? Think about how many of our everyday things are made of the stuff. I’m no scientist so if i’m wrong please correct me, but doesn’t that mean all types of plastic are going to be like gold dust in 40 years or so? Without oil you can’t make plastic. like i say i’m no scientist so if there is aother way please enlighten me.
At the moment about 4% of oil production is used in manufacturing, so it’s a small percentage. We’ll have oil supplies for a long time to come, and I expect plastics and the chemical industry will continue to use oil long after we’ve all stopped using it for transport. The price will rise however, so expect less packaging and more paper bags, and plant-based plastics.
The reality is consumption will increase as world population increases.
Why don’t we….
take all the oil from mars…
And bring it here? :3
Unfortunately there probably isn’t any oil in mars. Oil is a type of fossil that is created from living organisms after decomposition. If Mars had life before, there’s a chance it has oil but there’s no proof of life so I there probably isn’t any oil either.
Do you know how much oil there is left in the state of Wyoming?
Sure, the Petroleum Association of Wyoming estimates that it has reserves of just under 600 million barrels. That’s enough oil to keep the world running for about a week, at current global consumption rates.
Wow, you obviously do not check your facts, the Bakken Oil field in North Dakota, Saskatchewan, and Montana is reported with yields of 3.4-4 billion barrels of uptapped recoverable oil, but there could be 24-25 billion barrels if we could find ways to recover oil in shale deposits. (incredibly hard to get and not very cost effective for shale that is), also I live where the oil boom is happening in my little northeast corner of rural montana and I have seen a huge increase in population, infrastructure, and city sizes. Our area has the best economy in America right now and we have so many job openings its crazy. So no, north america should not be ranked 2nd to last, we should be ranked behind the middle east or even higher, if we could attain and recover the oil through the shale deposits. So please get your facts straight before you post nonsense information like this.
My figures, as I say in the first sentence, are from BP. Where are yours from?
To put things into perspective: The proven Bakken reserves would fuel the US for half a year. If we include the unproven/as yet unrecoverable reserves we arrive at a highly theoretical 3 years. That doesn’t save the oil world – and it would be a hellishly dirty affair in any case. None of such arguments can prove the principle of peak oil wrong. The only argument that could would be abiotic oil. But there doesn’t seem to be serious evidence in that direction.
Don’t worry, oil will run out, but it was only a storage of energy, not a source. Oil is basically just a stored energy of a sun, without warmth of a sun those reactions wouldn’t occur. In fact i would dare say that all energy known to us had originated from sun at some point, except nuclear, that happened much earlier. Oil is like a chemical battery with anaerobic bacteria being the charger unit. No matter what happens to oil supplies we still got the sun, that’s a practically eternal energy source and it can be used to synthesize any fuel we want. Our civilization is using oil reserves incorrectly, they should be used as a bonus, as a time allowance to establish synthesizing facilities, which can be very resource intensive, since the only way to effectively gather solar energy in quantities sufficient to sustain fuel demands of entire god damn planet is to build solar arrays right in space. This will be enormously expensive and may even deplete the little we have left. The government should start taking initiative with this before it’s too late or recovery will be very slow(but still possible).
A good point not made often enough – the sun’s energy is the only external input into the earth’s systems. All life is solar-powered, through photosynthesis or eating the results thereof. If our industry and civilisation are to last, they need to eventually be solar powered too, the more directly the better.
rearging the sun as only external energy source: Almost right. There also is geothermal and tidal energy, which both are gravity driven. But of course the problem with the oil and coal “batteries” is that they were “charged over eons and used up within just a few centuries. When it comes to solar energy “energy density” is the key word. And technologically energy storage is a key problem (we are working on it…).
But I totally agree: oil is an enormous gift. It should have been used with care.
In any case energy – be it fossil, solar or otherwise – and perpetual exponential growth are obviously at odds. There simply is now way to talk this point away, and whether peak oil arleady occurred or is 50 years ahead doesn’t change a yota about its reality.
of course, easy to forget that there are external gravitational forces as well as the earth’s own. I’m looking forward to the day our government and energy sector remembers we’re an island, and starts funding some serious research into tidal power. Lots of prototypes out there awaiting a proper trial.
I was in Finistére, Brittany for three weeks in August, and the tidal range is really dramatic there – an enormous energy potential. On the other hand: it would be such a shame to clutter that beautiful wild coast with powerplants. The most intellient energy is the energy we don’t use. Passive houses, LED lighting, public transportation instead of gas guzzlers, local food – the usual stuff. All pretty straight forward. But all really bad for GROWTH.
i have to do a essay about the anwr oil problem and i need to know how much oil did we have in 1996 and how much we have now im so tired of going to website to website trying to find what im looking for can some 1 answer my question and fast
You could try looking up the International Energy Agency’s report for 1996, and the one for this year, which is on their website.
1996: http://iea.org/weo/docs/weo1996.pdf
Or Google BP statistical review of world energy, and you’ll get an industry figure – although that will tell you that we have more oil now than we did in 1996.
lets make energy out of our own waste…
Yes, there are limited possibilities for that. But nothing that can possibly replace oil.
OK the thought of today, how do you write “262 thousand million:” as a number? I did not get to that part of my math class. I love your site but, you have to explain how you get this number.
Sure, that’s 262 billion barrels, 262,000,000,000. BP’s statistical review uses ‘thousand millions’ to avoid the confusion around the word ‘billion’, which means different things in different parts of the world.
In science nobody uses the words. 2.62 E11 is a way to put it. Or 2.62*10^11. Words can be so… fuzzy.
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It strikes me that global leaders cannot be trusted, they are after all politicians! We are led to believe there is much less oil left, which has to be true also we are led to believe oil these days has to be pumped as mostly it no longer gushes, I have to ask myself why then do certain countries completely ignore this, China to name but one. I mean if energy was such a problem then why don’t governments give away free solar panels to all houses and businesses or give massive concessions on hybrid cars. No I’m afraid I have no confidence in the so called people in power!