The short answer to the question posed is….a lot. Or at least way
more than many groups and people out there want you to believe. Today,
the world is swimming in oil, and prices have been sliced in half over
the past year. “Peak oil” theory for production is predicated on the
work of legendary geologist M.King Hubbert, who in 1956 employed his now
famous/infamous “Hubbert curve” to predict U.S. petroleum production
would peak in 1970.
For many years he appeared to be correct, but the
“shale revolution” is on the verge of proving him premature. False pessimistic predictions regarding future oil production dates
back to the beginning of the modern oil era in the mid-1850s, and can
quickly ensnare the best experts with the most resources available. To
illustrate, the Joint Operating Environment 2010 report (“the
JOE report”) from the U.S. Joint Forces Command, the leader for the
transformation of U.S. military capabilities from 1999-2011, projected a 10 million b/d global supply shortfall for 2015. Now, just five years later, we have a 2-3 million b/d surplus.
The main reason for “being so wrong” about oil’s future availability
is the over-reliance on analytical techniques that fail to appreciate
petroleum as an economic commodity powered by the constant advance of
technology. Many predictions fall short because they too simplistically
center on reserve years or the proved recoverable reserves divided by
the annual consumption rate. Proved reserves grow over time, however,
and estimates of the recoverable resource change as new information is
acquired through drilling, production, and technological and managerial
development. Another factor that affects perception is that oil
companies adopt short- to mid-term planning horizons. Exploration is
costly, so there is no economic incentive to look for resources that
will not be needed for decades down the road. Globally, crude’s
reserves-to-production ratio has hovered between 40-55 years. The 1P
estimate is an estimate of proven reserves, what is likely to be
extracted from a well, 90% probability. Probable reserves are given 50%
certainty (2P) and possible reserves a 10% certainty (3P).
Not only has the world’s oil supply failed to disappear, but
production has substantially expanded and will continue to do so. Since
1995 alone, the year that Hubbert claimed that global oil production
would peak, production is up 33% to over 93.2 million b/d, and both the
EIA and IEA project that output will increase by about 1 million b/d per
year for years to come. New oil supply has actually been rising faster
than ever. From 2010-2014, global production increased 1.215 million b/d
per year, despite The Great Recession, compared to 889,000 b/d from
2000-2009. And beyond just crude oil, which is about 83% of total
supply, there is a rapidly expanding stockpile of biofuels, natural gas
liquids, synthetic fuels, and other sources that will continue to
broaden the availability of liquid fuels. Additionally, ~66% of the oil
in a reservoir is frequently left behind because it’s too expensive or
difficult to extract. Commercial since the 1970s, CO2-enhanced oil
recovery offers a gigantic global prize of 2-5 trillion barrels and a
safe way to sequester CO2 underground for 1,000 years.
In short, the assertion that oil (and gas) are not compatible with
our goal to implement a more sustainable energy system is becoming
increasingly false. For example, the U.S. National Energy Technology
Laboratory reports that
“next-generation” technologies will make the oil yielded from
CO2-enhanced oil recovery 100% + “carbon free,” up from 75% today. The
reality is that ALL energy systems are evolving, so ALL technologies
must be allowed to compete in our goal to: 1) grow our economy, 2)
increase our energy security, and 3) reduce GHG emissions. If not, we
greatly increase the risk of not deploying the most economical and
cleanest sources of energy.
Global Oil Production and Proven Reserves Continue to Surge
Sources: BP; EIA
Demonstrated by the shale revolution, it’s the emerging North
American unconventional resource base that has the greatest potential.
And with advancing technologies and higher prices, even more will become
available: the “unconventional” evolving into the “conventional.” This
explains why Goldman Sachs’ 1999 declaration
that oil companies constituted a “dying industry,” pointing out that
90% of global conventional oil had already been found, went so awry. The
exact opposite turned true. Just take the global oil and gas mergers
and acquisitions in 2014, valued at $3.2 trillion.
Even at current lowered crude prices of $63 per barrel, the 1.7
trillion proven reserves alone have a value of $107 trillion – versus a global real GDP of $72 trillion.
And as for the assertion that oil reserves and resources will somehow
become “stranded assets” because of anti-carbon laws, nothing will be
further from the truth. This insidious effort to scare off investors
simply will not prevail. Developing petroleum assets will be critical to
meeting rising energy demand around the world, especially since oil is
the world’s most important fuel, the indispensable basis of
globalization, and without significant substitute. In fact, the real
“stranded assets” we must concern ourselves with are the growing 6
billion human beings that live in undeveloped nations TODAY, lacking oil
and other modern forms of energy.
Global Crude Oil: Cumulative Production, Proven Reserves, and Resources
The “Google Trends” show “peak oil” is on the decline. The fall in
oil prices has helped, but even in the recent years of higher prices
peak oil was not a concern. It’s likely the demise of peak oil that shut down The Oil Drum,
a highly informative peak oil blog that, although I didn’t often agree
with the commentary, was a must read for all energy analysts (sadly,
name-calling and labeling in our energy/environment discussion continues
to erase the essential of “listening to those that disagree with you”).
And in the decade since one leading oil expert, the late Matthew
Simmons, predicted in 2005 that Saudi Arabia’s output would imminently peak, ”Saudi Arabia’s March Crude Oil Output at Record High.”
Interest in “Peak Oil” (headlines)
Source: Google Trends
http://www.forbes.com/sites/judeclemente/2015/06/25/how-much-oil-does-the-world-have-left/?ss=energy