Issues in the
“Peaking of Global Oil Production”
Debate
David L. Greene
Oak Ridge National Laboratory
Workshop on Trends in Oil Supply and Demand and Potential for Peaking of Conventional Oil Production
National Academies
Washington, DC
October 20-21, 2005
The glass is half full.
The glass is half empty.
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Pessimism: “an inclination to emphasize adverse
aspects, conditions, and possibilities or to expect the
worst possible outcome”
Optimism: “an inclination to put the most favorable
construction upon actions and events or to anticipate
the best possible outcome”
Science: “the state of knowing: knowledge as
distinguished from ignorance or misunderstanding”
Webster’s Ninth New Collegiate Dictionary.
“Running out of” or “running into” oil?
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“Pessimists”
Geology rules
Discoveries lag production
Peaking, not running out matters
Expect peak between now and 2010
“Optimists”
Markets & technology rule
Rate of technological progress > rate of depletion
Market system and technology expand & redefine
resources
Stone age did not end for lack of stones; oil age will
not end for lack of oil.
The debate about oil peaking hinges on
several key questions.
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Hubbert curve v. technology curve: Which dominates?
What is oil?
What is a resource?
How much is there?
Will OPEC provide?
What other energy resources are available?
What about the demand for oil?
What about the environment?
Rate of production proportional to cumulative
production x remaining resource → Hubbert Curve.
Figure 8. Curves of discoveries and production during a
complete production cycle of a finite resource.
(Yongquist, 1997; After Hubbert, 1956)
U.S. petroleum supply peaked in 1970 and has
generally declined since then.
United States' Petroleum Supply: 1950-2004
Million Barrels per Day
25
20
15
10
IMPORTS
5
0
1950
DOMESTIC
1960
1970
1980
U.S. DOE/EIA, Annual Energy Review 2004, table 5.1.
1990
2000
If the peak of discovery occurred before 1970,
the peak in production should be about now.
ASPO Newsletter No. 58, October 2005.
Integrating Hubbert curves of the world’s conventional
oil fields plus heavy, deepwater, and polar oil and
NGLs, the ASPO sees a sharp peak at about 2010.
ASPO, 2004
The optimists: the market system and technological
change will make oil peaking a non-issue.
Ø Resource scarcity is a myth
Ø Mineral prices have declined despite depletion
Ø Because of technological change
More oil can be extracted from depleted fields
Things that are not oil can “become oil”
More can be done with less oil
Ø The global economy will “decarbonize”
What is oil?
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Conventional Oil
Liquid hydrocarbons of light and medium gravity and
viscosity, in porous and permeable reservoirs.
Plus enhanced recovery and NGLs
Unconventional Oil
Deposits of density > water (heavy oil)
Viscosities > 10,000 cP (oil sands)
Tight formations (shale oil = kerogen).
But liquid hydrocarbon fuels can also be made from
coal, natural gas, or biomass.
Discovered Petroleum-Initially-in-Place
SUBCOMMERCIAL
COMMERCIAL
Undiscovered
Petroleum-Initiallyin-Place
PETROLEUM-INITIALLY-IN-PLACE
What is a resource?
Technology + Economics + Uncertainty
PRODUCTION
RESERVES
Proved (1P)
Proved +
Probable (2P)
Proved +
Probable +
Possible (3P)
Producing
Being developed
Development planned
Technology proved
CONTINGENT
RESOURCES
Technology not proved
Best
Low Estimate
HIgh Estimate
Non commercial
Estimate
Unrecoverable
PROSPECTIVE
RESOURCES
Best
Low Estimate
HIgh Estimate
Estimate
Unrecoverable
http://www.world-petroleum.org/
Not to scale
PROSPECT
LEAD
PLAY
SPE/WPC/AAPG
joint definitions
Do we know how much oil there is?
Ahlbrandt et al., 2005
USGS and Campbell resource estimates differ:
1. Reserve growth 2. Uncertainty 3. 10 years’ production
Estimated Conventional Oil + NGL Resources
to 2030: USGS 2000
Estimated Petroleum Production to 2100:
Colin Campbell 26/09/2005
5000
4500
5000
Gas Liquid
4500
Reserve Grow th
Deepw ater + Polar
4000
4000
R.O. Future New
Billions of Barrels
Billions of Barrels
3500
Regular Oil Past
3000
2500
2000
3000
2500
2000
1500
1500
1000
1000
500
500
Cum. Production & Reserves as of 2004
0
Proved Reserves
Cumulative
R.O. Future Know n
3500
Undiscovered
Cum. Production & Reserves as of 1995
0
95%
ASPO Newsletter No. 58, October 2005.
50%
Ahlbrandt et al., 2005 Probability Level
5%
Pessimists dispute the USGS estimates with
the following arguments:
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OPEC members overstate proved reserves
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Reserve growth methodology biased because it is based
on US experience governed by SEC rules
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Range of uncertainty exaggerated
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Also, unconventional resources much smaller than some
believe
If non-OPEC production peaks or plateaus
around 2010-2015, will OPEC provide?
ExxonMobil, 2005. http://www.exxonmobil.com/Corporate/Citizenship/Corp_citizenship_energy_outlook.asp
Or will OPEC make more money by
leaving more oil in the ground?
Cumlative Production and Revenues, 2003-2025:
Middle East OPEC Members
$7.1
$6.7
$6.6
$7.0
Billions of Barrels
250
200
$8.0
$6.0
235.4
$5.0
189.8
171.9
150
$3.0
Production
100
$2.0
Revenues
50
$4.0
$1.0
$0.0
0
Reference Case
High A Oil Price
High B Oil Price
2005 Annual Energy Outlook Case
U.S. DOE/EIA, Annual Energy Outlook 2005.
Trillions of 2003 Dollars
300
Most of the world’s hydrocarbons are unconventional
or require technological progress to be usable.
Estimated World Fossil Energy Resources
(IPCC, 2000, Emissions Scenarios)
Billion Barrels of Oil Equiv.
25000
20000
Tech-Progress
Undiscovered
15000
Reserves
Consumed
10000
5000
0
Oil Conv.
Oil
Unconv.
Gas Conv.
Gas
Unconv.
Coal
DECARBONIZATION or RE-CARBONIZATION?
Ausubel, 2003.
Conventional fuels from unconventional fossil
resources are likely to increase CO2 emissions.
Well-to-Pump GHG Emissions of Gasoline from Oil Sands
WTP GHGs Emissions, g/mmBtu
60,000
Surface Mining
In-Situ Production
50,000
40,000
30,000
20,000
10,000
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One can construct scenarios in which oil use peaks as
a result of declining demand, but are we on that path?
Oil Consumption by Region
IIASA/WEC C1 Scenario, IEO Low Growth,
Champagne GYOW Scenario
6
5
GTOE
4
Rest of World
FSU
3
Other OECD
Canada
2
United States
1
0
2000
2010
Greene, Hopson & Li, 2003.
2020
2030
2040
2050
IF the world continues on its present path and IF
OPEC expands output at <2%/yr., massive quantities
of unconventional liquid fuels will be required.
World Oil Production from Conventional and
Unconventional Resources: Reference/USGS
10
9
8
7
Change vs. Scenario
GTOE
6
Shale Oil
5
Heavy+Bitumen
Conventional MEA
4
Conventional ROW
3
2
1
0
2000
2010
Greene, Hopson & Li, 2003.
2020
2030
2040
2050
How quickly and smoothly can environmentally
sensitive unconventional production expand?
World Oil Production from Heavy Oil and Oil Sands:
Reference/USGS
3.0
2.5
GTOE
2.0
Former USSR
1.5
South America
Canada
1.0
0.5
0.0
2000
2010
Greene, Hopson & Li, 2003.
2020
2030
2040
2050
The oil well is half…
A. Full
B. Empty
C. None of the above
We look forward to your
contributions to understanding this
important issue.
Thank you.
What is a resource?
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Total petroleum initially in place: “…that quantity of petroleum
which is estimated to exist originally in naturally occurring
accumulations.”
Proved Reserves (SPE/WPC 2005): “…quantities of petroleum which, by
analysis of geological and engineering data, can be estimated with reasonable
certainty to be commercially recoverable, from a given date forward, from
known reservoirs and under current economic conditions, operating methods,
and government regulations.”
Ø Unproved Reserves (SPE/WPC 2005): “Unproved reserves are based on
geologic and/or engineering data similar to that used in estimates of proved
reserves; but technical, contractual, economic, or regulatory uncertainties
preclude such reserves being classified as proved.”
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– Probable: “…at least a 50% probability…”
– Possible: “…at least a 10% probability…”
World Petroleum Council, http://www.world-petroleum.org/
What is a resource?
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Contingent Resources: “…those quantities of petroleum which
are estimated, on a given date, to be potentially recoverable from
known accumulations, but which are not currently considered to
be commercially recoverable.”
Prospective Resources: “…those quantities of petroleum which
are estimated, on a given date, to be potentially recoverable from
undiscovered accumulations.”
Estimated Ultimate Recovery: “…is not a resource category as
such, but a term which may be applied to an individual
accumulation of any status/maturity (discovered or
undiscovered)…defined as those quantities of petroleum which
are estimated, on a given date, to be potentially recoverable from
an accumulation, plus those quantities already produced
therefrom.”
World Petroleum Council, http://www.world-petroleum.org/
Others use somewhat different
definitions: USGS 2000
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Reserve (Field) Growth: “The increases in known
petroleum volume that commonly occur as oil and gas
fields are developed.”
Undiscovered Resources: “Resources postulated from
geologic information and theory to exist outside of
known oil and gas fields.”
Potential to be added in 30 years.
Total Petroleum Systems, Assessment Units, Fields,
and Pools.
USGS DDS 60, Ch. GL, 2000.