Guest Post by Willis Eschenbach
Well, having had such a good time with M. King Hubbert meeting the EIA, I thought I’d toss out another puzzle. This one is inspired by a statement from the King himself that someone quoted in that thread, viz:
“A child born in the middle 30s,” Hubbert told reporters, “will have seen the consumption of 80 percent of all American oil and gas in his lifetime; a child born about 1970 will see most of the world’s [reserves] consumed.”
Since M. King Hubbert was concerned about how most of the world’s reserves were going to be consumed, I thought I’d see how much of the US reserves have been consumed over the last third of a century. It’s an interesting answer …
Figure 1. A comparison of the annual estimates of the US proved oil reserves (red line), and the US cumulative oil production (blue line), for the period 1980-2012. Data from the 2013 BP Statistical Review of World Energy. “Proved reserves” in the dataset are defined as follows: “Proved reserves of oil – Generally taken to be those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions.”
It appears that since 1980 we’re totally out of luck. First we completely used up every drop of the proved reserves.
Then we used them all up again. Then we used them all up for a third time … and the proved reserves are still about where they started. Go figure.
Since the King was also concerned about using up the US and global natural gas reserves, I thought I should look at that as well.
Figure 2. A comparison of the annual estimates of the US proved gas reserves (red line), and the US cumulative gas production (green line), for the period 1980-2012. Data from the 2013 BP Statistical Review of World Energy.
Well, it’s about the same story. We started in 1980 with 6 trillion cubic metres of proved reserves of gas. Since then we produced almost 18 trillion cubic metres, about three times our original reserves. The main difference between the gas and oil is that the proved reserves of gas are about a third larger than they were in 1980 … go figure indeed.
I bring this up for a simple reason—to show that we don’t know enough to answer any questions about how much oil and gas we’ve used, or to determine if the King was correct in his claims. According to all the data, since 1980 we’ve used three times the proved reserves of oil and gas, and despite that, the proved reserves are the same size or larger than they were back in 1980. So how can we decide if Hubbert was right or not?
Now, please don’t bother patiently explaining to me all of the reasons for this curious phenomenon, because I’ve heard them all. I assure you, I understand the difficulties in estimating proved reserves, and the fact that the numbers come from the oil companies, and that technology improves, and that the companies tend to explore until they’ve got maybe twenty years in the bank, and the fact that the reserves numbers are sometimes radically revised, and that economics plays a huge part, and the rest … I know all the reasons for what I showed above.
I’m just pointing out that it is very, very hard to say what will happen to future reserves, or what their total extent is, or how much recoverable energy the world contains.
The underlying problem is that the proved reserves represent the amount of economically recoverable gas and oil … and that, of course, depends entirely on the current price and the current technology. In other words, the amount of “natural resources” in the world is not really a function of the natural world—it is a function of human ingenuity. For example, in the 1930s, the big concern was “peak magnesium”, because the proved reserves of magnesium were dropping fast. Or they were, until a clever chemist realized that you can extract magnesium from seawater … at which point the proved reserves of magnesium became for all purposes infinite.
Now, did the natural world change when the proved reserves of magnesium went from almost none to almost infinite? Like I said, the amount of natural resources depends on human ingenuity, and not much else.
Best regards to all,
w.
PS—Again, if you disagree with something that I or someone else said, please QUOTE THEIR EXACT WORDS and state your objection. That way we can all understand just what you are objecting to, and the nature of your objection.
In the Gulf of Mexico, they are reaching out to deeper & deeper waters…and still finding oil reserves. They have currently reached water depths nearly 10,000 ft deep and area able to drill thousands of feet into the sea floor beyond that! In the South Atlantic off Brazil, they are finding and doing the same. One has to wonder, are there unknown oil/gas deposits that reach out across the Atlantic & Pacific oceans just waiting to be recovered?
That’s fine… but why don’t you talk about the exponentially escalating cost of oil production, http://www.smartplanet.com/blog/the-energy-futurist/the-cost-of-new-oil-supply/
cheap oil ?? it’s gone sorry, maybe the saudi’s have some left, but their demand will soon eat into exports… take away tax payers money that subsidizes exploration costs ect.. and future oil will not be able to compete with renewables sorry that’s the way it is
SideShowBob says,
I appreciate the argument that renewables don’t need subsidy but it is not certian that the rise in oil price that coincides with the increase in demand from China will continue.
http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp
It may be that the new extraction techniques which are working in the US will push down the prices in the rest of the world too (when they are exported).
Or that may not be the case… yet extrapolating the rise in crude oil prices without any limit is still folly. At some point a new technology will be economical and the oil price will settle there. About where coal-to-oil becomes profitable at most. Are renewables cheaper than that? Remember, oil is used in transportation so we have to develop batteries as well to make renewables competitive.
SideShowBob:
Your assertions of renewables replacing fossil fuels is plain daft.
With the exception hydro (which is energy intensive and available on demand), renewables were abandoned when the invention of the steam engine enabled the greater energy intensity of fossil fuels to be available to do work.
This freed humans from the limitations of wind power, tidal power and the muscle power of animals and slaves.
The most efficient use of wind power is sails for powering ships: there are no mechanical losses in converting the wind power to motive force. But normal winds provide little power and only provide it intermittently. So, wind is not used to power ships or any other industrial or commercial activity which requires much and continuous and reliable power.
If your assertions were true then oil tankers would be sailing ships.
Richard
“First we completely used up every drop of the proved reserves. Then we used them all up again. Then we used them all up for a third time … and the proved reserves are still about where they started. Go figure.”
and
“Now, please don’t bother patiently explaining to me all of the reasons for this curious phenomenon, because I’ve heard them all.“, followed by a list of the reasons behind the reserves phenomenon.
w, I don’t think that you have been very smart. Perhaps disingenuous is the right word. You tell people to go figure, like you’ve just exploded a myth, but there isn’t anything to go figure because, as you explain, the reasons are all well known.
For those who still don’t get it, let me help: “known reserves” do not in any shape size or form represent the sum total of available oil on the planet. They used to be just the bits of oil that the oil companies had prepared or were preparing for production, or had examined in some detail – something they tended not to do if they had no near(ish) term plans for its production. Unfortunately, oil data has become increasingly politicised, and thus increasingly opaque, but there’s still some useful data out there. A quick search for some relevant data ….. OK ….. in 2007 BHP had stated proven ‘petroleum reserve’ of 1.35bn boe, but their total resource was 4.95bn boe. ie, they had only bothered to ‘prove’ just over a quarter of their total resource. So starting in 2007, BHP could produce all of their proven reserve three times, and still have nearly that amount left over, without having to find a single new drop.
http://www.bhpbilliton.com/home/investors/reports/Documents/petroleumSaIrPresentation.pdf
That’s the sort of thing you find when you ‘go figure’.
Willis, muddies the water again. For instance the “natural gas” reserves haven’t actually changed. The price structure has, so natural gas will never be as cheap as it was in the past. I doubt this is a good thing. The Marcellus was well known for more than 60 years.
FYI, the first natural gas discovered was on the Delaware river right here in NEPA. I will see if I can find the story… It involves an Indian, a doctor, an outhouse, old pipes and and explosion.
Here is a link to a story in the NY times. http://query.nytimes.com/mem/archive-free/pdf?_r=1&res=9C0DE7D71538E033A25752C2A9679C94659FD7CF&oref=slogin
The USA are not the center of the Universe even for what concerns fossil energies ; OK , they were a bit favoured from a geological point of view ; probably that is why the Colonel Drake was the first to drill for oil ; and also why they are currently the first producer in the world ; but don’t forget that they are also the first importer ; so , if the rest of the world doest not follow the USA in what concerns source rock fracking and production , there will rapidly emerge energy problems , even in the USA ; because, I suppose , nobody refuses the decline of conventionnal oil : since 1980 new discoveries do not counterbalance the production
As you said ,the amount of natural resources depends on human ingenuity and not much else. I would say they depend on human ingenuity a little bit , but mainly on the disponibility of energy; don’t confuse resources and energy, magnesium or cadmium and oil
stanb999:
Your post at January 13, 2014 at 4:54 am claims
NO! Willis has clarified – not muddied – the waters.
If the price structure has changed then BY DEFINITION the reserves will have changed.
In his above article Willis says
So, I will not do that here. Instead I point you to a post I made on the other thread which provides a simple explanation of these matters which you proclaim you do not understand: this is a link to it
http://wattsupwiththat.com/2014/01/11/m-king-meets-the-eia/#comment-1534338
Richard
Willis, any story on oil and gas reserves should begin with an explanation of the two totally different reporting standards employed by the oil industry. 1) the security exchange commission (SEC) standard tends to give gross underestimate of what is technically believed to be recoverable 2) the society of petroleum engineers (SPE) tends to give a more realistic estimate. A country like the USA uses SEC – the reason for perennial underestimation. Middle East OPEC countries use a modified version of SPE – so called flat reserves returns. Countries reported by BP are using both of these standards rendering BP reserves estimates as all but meaningless. You should check out the numbers for Kuwait, Saudi Arabia etc – annual production should be deducted from reserves at the beginning of the year.
Also, Hubbert famously forecast that US oil production would peak around 1970. This turned out to be a good forecast, that still stands, but often forgotten is the fact that the quantity forecast by Hubbert was far exceeded. Hubbert was not a doomer, but simply saw scarce oil being replaced by abundant nuclear power – which given time may also prove to be a good forecast.
Thanks for this Willis.
My commendations too on your courteous and competent responses to those of us who comment.
I know that the intemperate and irrational responses provided at alarmist blogs by (occasionally contributors, and often) commentators drives me away from them, hard though I try to fulfil my obligations as an honest man to examine both sides of the argument.
I have a question I’ve wanted to ask a North American for some time now. I’m addressing it to anyone who knows the answer, not just Willis. My understanding is that President Carter introduced Federal Oil taxes, (under whatever name) in order to reduce demand, in the expectation that world petroleum reserves would be exhausted by the 1980’s.
My question is, “What happened to those taxes?”
Are you still paying them?
Did Reagan or a Bush, or even a Democratic President abolish them?
If you can also refer me to an article on those taxes, I’d appreciate it. I’ve wondered how much he raised, how much consumption declined, etc.
The same “peak fuel” argument has been used about uranium to fuel power plants. Like magnesium, the supply of uranium in seawater is infinite, but today costs , I believe, about three times as much as conventionally mined uranium. BUT fast reactors can extract 35 to 40 times more energy from uranium than current reactors, making seawater uranium extraction more than just economically viable. And there are reasons to believe that more economical means will be
developed to recover seawater uranium. Seawater extraction also means that uranium-rich countries will not be in a position to create monopolistic cartels.
Jkrob says:
“One has to wonder, are there unknown oil/gas deposits that reach out across the Atlantic & Pacific oceans just waiting to be recovered?”
To some extent yes, but mostly no.
Oil only exists where there are reasonably deep sedimentary layers. The deep ocean floor is mostly relatively young basalt with a thin veneer of largely non-organic sediment on top.
There is a lot of oil in the continental shelves, which is relatively easy to extract (except in the Arctic and Antarctic and where it is politically prohibited (like the US east coast)). There is also a lot of oil in the continental slopes, probably rather more than on the shelves, as the slope was often once one side of a Rift Valley, somewhat like the Red Sea today, a good environment for hydrocarbon accumulation. The deep ”sub-salt” oil off Brazil is of this type. There is also a lot of methane clathrates in the slopes.
Existing rift valley seas, and residual more or less cut-off and silted up seas are also of interest. Examples: the Red Sea, the Mediterranean, the Black Sea and the Caspian (the Tarim Basin in China is further example, though it has long been completely dry)
A third type of sea bottom that is good for oil are large sedimentary cones of old, major river systems. The Mississippi and Niger are the best known examples (some of the oil in the Gulf of Mexico and Nigeria comes from this type of deposits), but there are other possible candidates the Ganges cone for example.
Finally there are “microcontinents”, bits and pieces of continental crust now off by themselves out in the ocean and mostly submerged. Examples are the Rockall Plateau in the Atlantic, Madagascar and the Seychelles Plateau in the Indian Ocean, Zealandia in the Pacific and perhaps the Kerguelen plateau in the Southern Ocean. These all have hydrocarbon potential but have as yet been little explored.
But most of the ocean has no oil or other hydrocarbons.
Excellent post, as usual! Thanks.
fritz says:
The USA are not the center of the Universe even for what concerns fossil energies
Not for oil, but possibly for natural gas, and definitely for coal.
nobody refuses the decline of conventionnal oil
And what, pray, is “conventional oil”. Oil extracted by fracking (and other EOR techniques) in vertical holes since the 40’s has always been considered conventional, but oil extracted by slickwater fracking in horizontal holes is “unconventional”. Now in the Permian Basin it seems that slickwater fracking in vertical holes may suffice, because of the thickness of the Wolfcamp Shale. Will that count as “unconventional” or “conventional” oil? Will it be “unconventional” just because it happens NOW?
Reserves & resource definitions are far more complicated than being discussed here. If people want to discuss the concept of “peak oil” , it should be discussed in the context of “total resource”, not reserves, which is a small slice of the total resource pie. The Society of Petroleum Engineers (SPE) has defined these in quite precise terms. If you are interested in learning more & understanding these relationships , I highly recommend the following link:
http://www.spe.org/industry/docs/PRMS_guide_non_tech.pdf
For those that want to dig even deeper, see :
http://www.spe.org/industry/reserves.php#redirected_from=/industry/reserves/
These links should give you a much better idea of how reserves are defined and give you a good idea how “resources” become “reserves” and thus keep the “proven resource” curves from declining with time.
I also recommend re-reading David Middleton’s post above which also has good insight into the “reserve process”.
3. Deposits. How much oil can we ever hope to access. We do not know.
2. Resources. How much oil do we know about. This is limited by exploration spending.
1. Reserves. How much oil can we economically extract. This is based on the price of oil and has no direct bearing on the amount of oil present.
To claim we will run out of reserves is to claim oil will become too expensive to extract, not that we will run out of oil.
Willis, I grew up in geology with the M. King Hubbert theory it has been falsified particularly as we added the technology to identify huge stratigraphic traps. If you look at the North American Petroleum Reserves by region, there is a Political blank up the entire East coast. http://www.britannica.com/blogs/2010/09/opec-at-50-picture-essay-of-the-day/ Here is a report on the Mesozoic basins http://pubs.usgs.gov/fs/2012/3075/fs2012-3075.pdf.
There is a Basin at the north east end of the Georges Bank in Canadian waters that has produced gas. There is a politically induced blank section of the maps. If you don’t allow exploration what do you expect…. SURPRISES?????!!!! Look here…it is an open secret that the East Coast will provide substantial reserves. http://aeinews.org/wp-content/uploads/2012/03/ocs-seismic.jpg Given the proximity to refineries this will be the location of significant reserves and production …….someday.
Steve from Rockwood says:
January 13, 2014 at 5:55 am
To claim we will run out of reserves is to claim oil will become too expensive to extract, not that we will run out of oil.
Ding, ding, ding, we have a winner. The cost of production is the only factor that matters. Of course reserves will climb forever. But so will the cost. Has oil become too expensive that it stifles economic growth? When did oil hit it’s high? When the the “recession” start?
Peak oil isn’t about running out of oil. It’s about running out of cheap oil. We have.
Hubbert could have added 3 words to his predictions, and it would have made them all valid – “Under current technology”. It’s much like the reason Malthus forecast that England was going to run out of food and fuel early in the 19th century – it’s always very difficult for anyone to understand the impacts of technological revolutions that haven’t happened yet, much less to realize that they may have order-of-magnitude level impacts on our resource situation.
Hubble was right, under the technological understanding of his day. But the technology has changed.
Steve from Rockwood:
At January 13, 2014 at 5:55 am you conclude
Yes.
And a substitute for oil would be adopted in the improbable event that oil became “too expensive to extract” prior to the end of a demand for oil.
A consumer does not care whether the crude oil was extracted from the ground or obtained from something else. And since 1994 a technology has existed for making synthetic crude oil (syncrude) from coal at competitive price with crude oil; see
http://wattsupwiththat.com/2014/01/10/natural-gas-switch-from-coal-brings-power-plant-emissions-down/#comment-1532437
So, there cannot be a problem of ‘peak oil’.
In other words, the hypothetical problem you suggest has already been solved by the “ingenuity” which Willis asserts can solve any such problem.
Richard
stanb999 says:
January 13, 2014 at 6:10 am
——————————————
“cheap” is a relative thing. America has not run out of cheap oil otherwise people would not be driving around in pick-up trucks and SUVs. Parts of Africa have run out of cheap oil simply by the fact they can’t afford to buy it.
The cost of production limits overall reserves only by the price people are willing to pay. So far there hasn’t been much resistance.
When your grandchildren are driving around in cars with bio reactors in the trunk that produce fuel and only need to be serviced every couple of years, they’ll look back on articles like this and grin…
stanb999:
At January 13, 2014 at 6:10 am you mistakenly assert
In reality we have not, and we know we will not for at least 300 years, and there is good reason to suppose we never will.
Please read
http://wattsupwiththat.com/2014/01/10/natural-gas-switch-from-coal-brings-power-plant-emissions-down/#comment-1532437
Richard
richardscourtney says:
January 13, 2014 at 6:24 am
stanb999:
At January 13, 2014 at 6:10 am you mistakenly assert
Peak oil isn’t about running out of oil. It’s about running out of cheap oil. We have.
In reality we have not, and we know we will not for at least 300 years, and there is good reason to suppose we never will.
Please read
http://wattsupwiththat.com/2014/01/10/natural-gas-switch-from-coal-brings-power-plant-emissions-down/#comment-1532437
Richard
Richard, the reason nat gas is “cheap” in the article you note has nothing to do with the cost of coal and everything to do with regulation as I’m sure you know.