Assessing Oil and Gas Future Production, and the End of Cheap Oil?

Abstract

Reserve volumes are estimated and are therefore uncertain until the last day of production. In calculating reserves, different estimates will be obtained from the deterministic and probability methods of reserve estimation. Also, there is often confusion between defining reserves (expected production) and resources (potential in the ground). Furthermore, there is no consensus on reserve definitions. Globally, reserve definitions vary between organizations, companies and even petroleum publications. For example, reserve booking practices are different for companies listed on the US stock market compared to companies operating in the North Sea. The US companies must follow SEC rules and to report proved reserves with reasonable certainty. In contrast, companies operating in the North Sea report reserves as proved + probable with a 50% probability. Sometimes, publication of reserves is a political act and depends on the desired image.

In addition to difficulties in calculating and actually defining reserve volumes, booked reserves are also dynamic through time. As exploration and production proceeds, more knowledge of a field will be gained and the reserve estimate will change. Consequently, field growth (i.e., appreciation of reserves since discovery) is significant. For example, in the US, a large amount of revisions occur. Since discovery, reserves are multiplied by 4 for the MMS to 9 for the USGS so as to give the reserve volume 50 years after discovery. In contrast, elsewhere in the world, the revision is usually much smaller due to the differences in reserve booking.

Future production is estimated either from ultimate reserve assessments or by extrapolating past production with a model. The models most often used include hyperbolic (creaming curves), normal (Gauss), lognormal, logistic, derivative logistic (Hubbert), linear fractal (Mandelbrot or power law), shifted linear fractal, parabolic fractal, and stretched exponential. Modeling is just an approximation and a model should be simple and convenient, many models can fit the data but some give unrealistic extrapolation. The best model is the one most often found in natural activities. Our assessment of ultimate reserves selects a Petroleum System that combines the extrapolation of the parabolic fractal with creaming curves. But, the quality of the assessment depends largely on the quality of the data.

The world oil future production up to 2100 is modeled for conventional oil, gas liquids and unconventional oil. Each peaks at a different time. Cheap (conventional) oil should peak before 2010. A 1 Gb discovery delays the peak by only 14 days! The world's population can also be similarly modeled. This forecast has cycles for the industrial and developing nations. The population of the industrial nations will peak before 2020 but the World population will peak around 2050 at less than 9 billion people. Oil and gas consumption per capita has peaked in 1979 and will peak again shortly, . Official forecasts on oil demand are optimistic compared to the supply of oil. This will cause the oil price to rise thus marking the end of cheap oil. The world will manage the rise in oil price through many different types of energy savings.

Some analyses for Canada using reserve data from the AEUB, BC and Saskatchewan Provincial Governments will also be discussed.

Questions sent to j.h.Iaherrere@infonie.fr will be answered. My web site may be visited at http://www.oilcrisis.com/laherrere. (The site is not updated.)