Guest Post by Willis Eschenbach
In oil, as in other extractive industries, you have what is called the “R/P ratio”. In the R/P ratio, “R” is reserves of whatever it is you are extracting, and “P” is the production rate, the rate at which you are extracting and using up your reserves.
Figure 1. World annual oil production in billions of barrels (blue line), and years left at that production rate (R/P ratio, red line). Right scale shows the proven oil reserves for each year, in billions of barrels (dotted green line). DATA SOURCE: BP Statistical Review of World Energy 2011, a most fascinating Excel spreadsheet. PHOTO Spindletop Hill Gusher, 1901
When you divide the amount you have in reserves by the rate at which you are extracting the resource, you get the number of years the reserves will last at that rate of extraction. Accordingly, I include the R/P ratio in Figure 1 as “Years Left”
A couple of things to point out. First, the “Years Left”, the R/P ratio, is currently more than forty years … and has been for about a quarter century. Thirty years ago, we only had 30 years of proven oil reserves left. Estimates then said we would be running out of oil about now.
Twenty-five years ago, we had about forty years left. Ten years ago we had over forty years left. Now we have over forty-five years left. I’m sure you see the pattern here.
Second, this is only what are termed “proven reserves” (Wiki). It does not include “unproven reserves”, much of which is in the form of unconventional oils such as shale oil and oil sands. Even discounting the unproven reserves, while the rate of production has increased, the proven reserves have also increased at about the same rate. So the R/P ratio, the years left at the current rate of production, has stayed over forty years for almost a quarter century..
Now, at some point this party has to slow down, nothing goes on forever … but the data shows we certainly don’t need to hurry to replace oil with solar energy or rainbow energy or wind energy in the next few decades. We have plenty of time for the market to indicate the replacement.
Don’t get me wrong. I’d love to find a better energy source than oil. In fact, the huge new sources of shale gas will substitute in many areas for things like heating oil, and will burn cleaner in the bargain. And I do think we’ll find new sources of energy, humans are endlessly inventive.
I’m just registering my protest against the meme of “OMG we’re running out of oil we must change energy sources right now tomorrow!!”. It is simply not true. We have plenty of time. We have decades. We don’t have to blow billions of dollars of our money subsidizing solar and wind and biofuels. The world has enough oil to last for a long while, plenty long enough for the market to determine whatever the next energy source might be.
w.
NOTE: Oil figures, particularly reserves, are estimates. Oil companies are notoriously close-mouthed about their finds and the extent of their holdings. The advantage of the BP figures is that they are a single coherent time series. Other data gives somewhat different results. As far as I know the increase in proven reserves despite increasing production is common to all estimates.
That’s kind of like saying if there’s an ice age, we’re all going to be cold.
Alberta Slim says:
December 14, 2011 at 1:52 pm
jrwakefield says:
“Not one oil field can be shown to be of abiotic. EVERY oil field has a biological source rock.”
Correct me if I’m wrong, but the people that think that there is abiotic oil, do not disagree that the source rock is biological. They claim that the OIL is abiotic, and the oil was trapped in the biological source rock while migrating.
http://www.viewzone.com/abioticoilx.html
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Let’s look at Tupi as an example. The host rock is just above the biological source rock, which is just above the basaltic oceanic crustal rock. So their view is somehow this oil made in the asthenosphere migrated through the solid basalt layer, and completely co-incidentally moved through a biological horizon to the current host capped by salt. And ONLY at that location which happened to have a biological layer, and NO WHERE ELSE! Rather interesting co-incidence that EVERY oil field happend to go through a biological horizon, and not one oil field missed a biological horizon.
Where is the physical discriminatory evidence that oil comes from non-biological sources?
Ajones is quite correct. I [w]as a victim of the oil price crash in 82. I had to go back to college and re invent myself. Some one may have mentioned it, but I may have missed it, is the fact that most of the oil is still left in the reservoir after we stop exploiting it. With better extraction techniques the proven oil reserves go up significantly.
Jrwakefield,
I get the economics of higher energy prices, the markets adapt, people adapt. Gasoline is in the low $3.00/ gallon range, I remember only 8 years ago it was hovering close to $2.00/ gallon and everyone predicted the collapse of society if gas reached $3.00/ gallon.
While we have seen the recession created in part due to higher gasoline prices, we are also seeing a recovery albeit abysmal for other reasons thanks to this administration, but people have by and large adapted to higher fuel prices.
Spending is up this holiday season, which indicates people must have more disposable income or at least the confidence that their income will be sufficient to cover their charges. Either way, the higher prices haven’t been a destructive force.
Admittedly the costs of switching over to natural gas are in the thousands, the price will decrease as more and more people decide to switch over their existing cars and will really become economical once the car companies start manufacturing vehicles as flex fuels.
The cost of gas is cheap relative to gasoline and the convenience of being able to fill up at home over night will begin to appeal to more and more people futrthering the expansion.
Natural gas reserves are extremely plentiful, and not just shale gas.
You tipped your hand however in your reply to Smokey when you talked about us transitioning to the 1800’s? If you really believe that then I apologize for wasting your time talking about the future. You are hopelessly stuck in the past.
Cheers,
Matthew
JRWakefield’s misinformation again requires correction. It matters not there have been no giant fields discovered. Present proved reserves will not be exhausted ’til 2049. Each year last decade, the sector added 50-Gb to proves reserves and consumed only 32.
It is utterly false that “price spikes are due to depletion”. Most are due to geopolitical events and/or temporary refining capacity mismatches.
The only petroleum price induced economic recessions in the last three decades occurred when several G-20 nations fell victim in 2008Q2. This excludes the USA whose economy is too diverse and per capita income too high to make it vulnerable. Steven Kopits (douglas-westwood) & economist James Hamilton are stalwart in perpetuating the myth with shoddy white papers. Their presentation to Congress this Spring warned of mass global recessions should oil exceed $85. Within several months oil reached $113 and there was no gnashing of teeth. My own studies reveal G-20 petroleum induced recessions cannot occur ’til contract crude surpasses $121/barrel ($105 today).
With full respect to Skrebowski, his worst case scenario (bottom-up) methodology has inherent flaws and thus he is second only to Colin Campbell in the category of documented repeated upward revisions to Peak Rate and Peak Year.
http://www.trendlines.ca/free/peakoil
The price of oil increased five-fold in the last 10 years. Nuff said.
It is easy to print dollars and raise the debt-ceiling.
It is very difficult to get oil out of the oceanfloor or from underneath the polar ice.
Peakoil is real 🙂
Willis writes “If we can extract it more cheaply (in an energy sense) the ERoEI goes up, so we can sidestep it with technology …”
But that “more efficient” technology doesn’t exist. You dont want to push ahead with renewable technologies because they’re expensive and you dont want to invest in the R&D now but instead you want to push ahead with fossil fuels even though we dont have the technology yet to keep them lower than renewable cost, let alone know how much it will cost to R&D or how long it will take to get the required infrastructure in place?
those deposits flow sufficiently fast enough to supply all those markets? No.
Doug says:
December 14, 2011 at 1:40 pm
jrwakefield says:
December 14, 2011 at 10:35 am
US oil production:
http://www.energybulletin.net/image/uploads/27804/us-production.jpeg
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Good of you to truncate your data where convenient. You have a future in climate science. US crude output has gone up 18% since 2008.
http://online.wsj.com/article/SB10001424052970204449804577068932026951376.html?mod=googlenews_wsj
And do you really believe all those companies are drilling all those shale gas wells and losing money? We in the oil business are pretty good at turning a profit. A few wells could be some small company stock hype, but tens of thousands of wells, producing 34% of out total production show that your claims are delusional. Gas prices have dropped from $13 to $3, and we are still drilling.
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Why are you shooting the messenger? Its not my study, I just posted a link to a study that shows this to be the case and how they are getting away with it.
US oil production is still far below 1970’s. Currently 9.688 million bbl/day. Far below the 20mb/day it consumes.
MAtthew Epp says:
December 14, 2011 at 2:35 pm
Jrwakefield,
I get the economics of higher energy prices, the markets adapt, people adapt. Gasoline is in the low $3.00/ gallon range, I remember only 8 years ago it was hovering close to $2.00/ gallon and everyone predicted the collapse of society if gas reached $3.00/ gallon.
———-
That adaption is lost business lost jobs.
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Spending is up this holiday season, which indicates people must have more disposable income or at least the confidence that their income will be sufficient to cover their charges. Either way, the higher prices haven’t been a destructive force.
——
Spending via more debt.
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Natural gas reserves are extremely plentiful, and not just shale gas.
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No, convensional gas deposits in NA have been on a terminal decline since 1995. Google it.
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You tipped your hand however in your reply to Smokey when you talked about us transitioning to the 1800′s? If you really believe that then I apologize for wasting your time talking about the future. You are hopelessly stuck in the past.
Cheers,
Matthew
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Not a tip. Logic. Without plentiful energy we will lose our cars, return to local food production, spend more time producing food, transport by horse. In a fuel constrained world fuel will be rationed for only those priorities such as food production. People will move back to horse transport. Star trek will never happen. That’s assuming there is no world war over resources.
Freddy Hutter, TrendLines Research says:
December 14, 2011 at 2:39 pm
JRWakefield’s misinformation again requires correction. It matters not there have been no giant fields discovered. Present proved reserves will not be exhausted ’til 2049. Each year last decade, the sector added 50-Gb to proves reserves and consumed only 32.
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Same mistake over and over. Assume that 50gb is correct. It will not flow as fast as the 32 it replaced. You are still looking at what’s in the ground and ignoring what peak oil is about — production decline, flow rate loss.
Ralph says:
December 14, 2011 at 2:05 pm
>>More Soylent Green! says: December 14, 2011 at 1:28 pm
>>I find a debate over the definition of peak oil useless. What does
>>it mean? You say we have experienced Peak Oil? So what?
We are rather presuming that everyone understands the calamity of the 1970s oil shock (a politically produced Peak Oil.)
—-
No it was the year US production started its terminal decline and the Saudis refused to make up the difference. The ultimate cause was US peaking production.
The story of forgetting or getting rid of Fossil Based Fuels (FBF) is Ferry Tale for the near futures.
The only way is enhancing technology to have effective fuel consumption until the FBF is no longer needed.
Fortunately! we enough carbon dioxide and the CO2 sources from the ecosystem is 10 times more than man made CO2. We don’t forget that before the OIL ERA, the system was working properly, so we know that however the time will come and the balance between new energies would be changed from oil to new ones, cheaper and more reliable.
How much fossil fuel (coal and hydrocarbons) is there on the planet?
This ‘back of an envelope’ calculation was triggered by the following paragraph in Prof. David Bellamy’s paper presented at our St Ives Climate Conference in March this year (2011):
FOSSIL FUELS
Fossil fuels are predominantly carbon. This carbon all came from the atmosphere and became locked away in the earth during the carboniferous period. Pre the carboniferous period, there was over 4,000 ppm. This has been down as low as 270 ppm and is now about 385 ppm. These figures would indicate there is still very large deposits of carbon based energy product to be found.” (full text available on request).
My first thoughts on this statement were that much CO2 has been sequestered into carbonates such as limestone and dolomite which, though technically a reservoir of carbon, was not available as fuel (being a product of oxidation of carbon anyway), so how could one estimate how much ‘free combustible carbon’ remained?
Then I had a lateral thought. It doesn’t matter about these deposits because the key measure of ‘free carbon’ is given by how much ‘free oxygen’ is around. This free oxygen came from CO2 in the first place, leaving ‘free carbon’ behind.
A preliminary calculation
We will assume that all the carbon on the early earth existed as CO2.
All CO2 that is sequestered in limestone, dolomite etc (CaCO3 and MgCO3) is not available as fossil fuel as it is already carbon in its oxidised state (as is CO2 in the atmosphere). This therefore need not concern our calculation.
The amount of carbon still existing as coal, oil or gas is the approximate amount of fossil fuel available on the planet – not all may be accessible.
Reduction of carbon dioxide to carbon (and hydrocarbons) is essentially what photosynthesis achieves. Sunlight, plus CO2, plus water produce sugars (CnH2nOn), which are basically carbon plus water, and release free oxygen.
As well as free oxygen we must add in the amount of iron oxide created some 3000 million years ago, when the free oxygen generated by photosynthesis (stromatolyte activity) reacted with free iron on the planet to form iron ore.
Therefore the amount of free oxygen plus that in iron ore is an indirect measure of the amount of free carbon and hydrocarbons still in or on the earth’s crust.
Mass of iron in the earth’s crust (5% of crust 1.365 × 10^23 kg) » 7 × 10^21 kg
Mass of oxygen in the iron ore is 0.43 × 7 × 10^21 kg » 3 × 10^21 kg
Mass of free carbon therefore is 0.375 × 3 × 10^21 kg » 1 × 10^21 kg
This must still exist as free carbon (such as coal) or further reduced hydrocarbons.
This means that the available fossil fuel is of the order of 10^21 kg or 10^18 tonne or 10^9 gigatonne, that is one billion gigatonne.
Current known oil reserves are around 100 gigatonne. So actual resources of fossil fuels is at around ten million times current reserves.
This is no more than an order of magnitude calculation. Even if the estimates are out by two or three orders of magnitude the overall picture is pretty encouraging… no likelihood of fossil fuels running out for the next few million years! Of course this calculation doesn’t indicate where these fossil fuels are to be found but does reassure us that they are there to be found.
They’ll see me out, that’s for sure!
Email: philip.foster17@ntlworld.com
sorry…correction:
….Fortunately! We have enough carbon dioxide and the CO2 sources from the ecosystem that is 10 times more than man made CO2…..
It is more difficult to get the oil reserves into production… i.e. the proven reserves are not equally accessible. You need to stratify in terms of how much it costs to get the oil out.
E.g., How much of the proven reserve is extractable at $100 a barrel? How many years of $30, $50, $100 oil is proven?
World, U.S. Oil Production Rises In 2010
http://www.dailymarkets.com/stock/2011/06/08/world-u-s-oil-production-rises-in-2010/
Worldwide Production Trends
Production in the North Sea is in terminal and rapid decline. Norway’s production fell by 9.4% in 2010 relative to 2009, and is down 13.1% from 2008 levels. Since 2000, Norwegian production has plunged by 36.1%.
In the U.K. production was 7.7% lower than in 2009 and 12.3% lower than in 2008 and is off 49.8% since 2000. The North Sea is especially important in that it is production that comes from a politically stable part of the world.
Mexico is not quite as politically stable as Norway, but at least it has the virtue of being close to home. It too has been facing long-term production challenges, although the decline slowed significantly in 2010, dropping just 0.8%, but it is still 6.6% below 2008 levels and down 14,3% from 2000.
jrwakefield says:
December 14, 2011 at 10:52 am
Robmax says:
December 14, 2011 at 10:37 am
With the amount of oil that is released every year through natural oil seeps around the world, it’s got to be coming from somewhere. Just in the gulf of Mexico alone, the equivalent of two EXXON Valdez sized spills are released every year by natural seeps.
An introduction to the modern petroleum science, and to the Russian-Ukrainian theory of deep, abiotic petroleum origins.
http://www.gasresources.net/Introduction.htm
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Not sure why this has to be stated over and over, but I will again. NOT ONE oil field can be shown to be abiotic. EVERY oil field found so far have biological source rocks.
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The presence of a material where you would expect to find it is not proof of cause or source. Would the absence of oil in source rock not then be proof of abiotic oil such as in a dry hole.
… and you got your numbers from BP? Well, they wouldn’t lie to us about something that important would they? Please don’t come knocking at my door should you run out of stuff.
JRWakefield, nobody disputes peak oil. It is inevitable whether it be by Demand Peak or Geologic Peak. It is the 23-yr campaign of annual declarations stating “last year was the peak” which causes the proponents of “imminent” peak oil to be dismissed by the media, governments, co-workers, families, neighbours & ex-friends.
The Hubbert Curve was designed to predict and give guidance for the peak of regular conventional oil (light sweet crude). It was never deemed to be applicable to All Liquids where each of the eleven streams has a unique production profile. In that regards, URR does not matter. It is probable Peak A/L will occur at 24%. And the suggestion by McPeaksters peak flow occurs 20 years after peak discoveries is just more pure silliness when discussing A/L..
When oil costs $250 a barrel, we will “need” a lot less of it.
Trust me. I’ve seen it before.
jrwakerfield says”What alternative is there that has the same energy density, in liquid form, as oil? We keep hearing about this mythical alternative, but we never see anything close to oil. It’s going to take decades to switch over, we need to start now if some alternative exists.”
No we don’t need to start anything. This is typical left wing communist thinking. The kind of perverse belief that everything needs central planning by the “wiseguys” like jrwakefield because everybody else is too stupid to see the “end-of-the-world” just around the corner.
People like jrwakefield are just like climate scientists with their chicken little stories. They want interventionist policies to spend taxpayer money finding solutions to problems that DON’T EXIST!
There is NO CATASTROPHE. There is shortage of oil that will lead to a “peak”. There is plenty of Oil & Gas for at least several generations and ultimately as prices rise then substitutes will become more economic and eventually we will migrate to those alternatives. The PEAK of OIL will of course come but NEVER because we actually run out of the stuff but simply because alternatives (and conservation) will eventually become more and more attractive.
Jeez…this thread, courtesy of jrwakefield, looks like a chicken little CAGW thread from the eco-doomsayers or from the malthusian world overpopulation scare-mongers! This hyperbole does not belong on a science website.
A few words:
OPEC and the Oil monopoly
We have about like 40 years worth of good growth left. Don’t get me wrong I’m not some lefty who advocates the change to useless crap. I have confidence that the market will find a better source before we even have to worry about a depression.
New oil strike in the Falklands. Field larger than earlier thought. Argentina’s pissed.
http://www.thesun.co.uk/sol/homepage/news/money/3996957/Falklands-oil-strike-to-infuriate-Argentina.html
Hans Verbeek says: December 14, 2011 at 2:39 pm
[The price of oil increased five-fold in the last 10 years. Nuff said]
“Price” as in paper currency (dollars) per barrel, or “price” as in other real thing per barrel.
Check ounces or gold per barrel, tones of copper per barrel, ingots of aluminum barrel, etc.
Now, using what you have learned, and with an understanding of what ‘inflation adjusted’ and ’19xx dollar terms’ mean; please clarify ‘The price of oil increased five-fold in the last 10 years”; or Did you mean that oil has gotten less expensive when compared to other commodities in the last 10 years?
Do you know what the phrase ‘5 fold’, means?
Take a piece of paper (thickness of 1), fold it five times, you have a thickness of 32, ‘five fold’ is a 32 times increase. Oil today at about 150/bbl would have has to have been $4.68/bbl in 2001. It was not.
You have no idea what you are writing about.
Hans Verbeek says: December 14, 2011 at 2:39 pm
[The price of oil increased five-fold in the last 10 years. Nuff said.]
“Price” as in paper currency (dollars) per barrel, or “price” as in other real thing per barrel.
Check ounces or gold per barrel, tones of copper per barrel, ingots of aluminum barrel, etc.
Now, using what you have learned, and with an understanding of what ‘inflation adjusted’ and ’19xx dollar terms’ mean; please clarify ‘The price of oil increased five-fold in the last 10 years’, or did you mean that it has gotten less expensive when compared to other commodities in the last 10 years?
Do you know what the phrase ‘5 fold’, means?
Take a piece of paper (thickness of 1), fold it five times, you have a thickness of 32, ‘five fold’ is a 32 times increase. Oil today at about $150/bbl would have has to have been $4.68/bbl in December 2001. It was not, you are have no facts, you are wrong, you do not understand math, economics or business. Say in school.
You have no idea what you are writing about. Nuff said.