How Much Oil is Left in the World?
- Jun 22, 2012 7:00 pm GMTJul 7, 2018 12:31 am GMT
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Over the next two to three weeks, I am going to post a series of short articles utilizing graphics I created from the recently released 2012 BP Statistical Review of World Energy. Because I am working on the roll-out of a new product which will be geared specifically toward those with a financial interest in the world of energy (more on that in the coming days), I will take a break from my video blogs during this time, and catch up on accumulated questions after I finish this series.
World Oil Reserves Facts and Figures
The topic of this first article in the series is oil reserves. Just to review, an oil resource refers to the total amount of oil in place, most of which can’t be recovered. The proved oil reserve refers to the amount of oil that can be recovered economically with existing technology. More details can be found in Setting the Record Straight on U.S. Oil Reserves.
The first graph shows that despite the growth in oil production over the years, reserves continue to grow.
Over the past 30 years, 90% of the reserves additions have come from OPEC countries. However, many feel that OPEC reserves are overstated. The following excerpt is from my book Power Plays, which explains the controversy over OPEC reserves growth in the early 1980′s:
In 1982, OPEC introduced a system of production quotas based partly on the oil reserves in each country. Shortly after, a number of OPEC countries raised their reserves estimates sharply, as a larger reserve would increase their production quota. In 1983, Kuwait increased its reserves by nearly 40%, from 67 billion barrels to 93 billion barrels, and Iran added 34 billion barrels to its reserves. In 1984, Venezuela increased its reserves by nearly 100%, from 28 billion barrels to 55 billion barrels. In 1985, the UAE nearly tripled its reserves from 33 billion barrels to 97 billion barrels. In 1988, Saudi Arabia raised its reported reserve number by 85 million barrels over the previous year.
Over the decade of the 1980s, OPEC’s stated reserves increased from 425 billion barrels of oil in 1980 to 763 billion barrels by 1990—an increase twice the size of Saudi Arabia’s entire estimated oil reserves in 1982 . By 2010, OPEC’s stated reserves had further grown to 1.1 trillion barrels of oil and accounted for 90% of the global oil reserve additions of the previous 30 years.
So reserves growth in the early 1980′s was primarily due to OPEC countries restating reserves, which many believe to have been motivated by OPEC’s quota system. The sharp uptick in 1999 was a result of a large block of Canada’s oil sands being moved from the resource category into the reserve category.
Finally, reserves growth over the past five years has been primarily a result of Venezuela moving some of their heavy oil sands into the reserve category. Venezuela increased their stated reserves from 99 billion barrels in 2007 to nearly 300 billion barrels in 2011, and this accounts for 80% of global reserves growth during that period of time. Some, including me, would question whether those resources should have been placed in the reserves category, as there are significant questions about Venezuela’s ability to develop them.
Mystery of the Self-Replenishing Reserves
The next graphic shows the history of proved reserves in the U.S. over the past 31 years, and it tells an interesting tale:
In 1980, U.S. proved reserves were 36.5 billion barrels. In 2011, U.S. proved reserves were 30.9 billion barrels. Over the course of 31 years, the U.S. produced 103 billion barrels of oil, but U.S. reserves only fell by 5.7 billion barrels. This is a result of continued improvements in oil extraction technology (e.g., hydraulic fracturing) as well as from new discoveries (especially offshore). But it also demonstrates that one must allow for reserves growth when looking at a country’s proved reserves. I think it’s a safe bet that even though U.S. proved reserves are 30.9 billion barrels, a lot more oil than that will ultimately be produced in the U.S.
U.S. Reserves Just a Blip on the Radar
The final graphic, however, puts U.S. reserves in perspective. Relative to global reserves, U.S. reserves are minuscule (the tiny red line at the bottom which you may have missed), and declining as a percentage of global reserves. To the extent that global reserves growth is real — again predominantly in OPEC countries — this forewarns of a shifting of economic and political power from those who are dependent on oil to those who control it.
In the next article, I will discuss global oil production trends.
Image Credit: Norebbo/Shutterstock