This paper assesses the risk of near-term oil shortages due to resource limits.
Part I reviews the basics of the problem, including:
definitions,
broad quantities of oil available,
a simple model of how production develops from a group of fields,
actual production profiles of countries past peak.
Part II examines the adequacy of the data available for estimating the total quantity of conventional oil, discussing separately:
the oil in reserves,
oil expected from reserves growth, and
oil yet-to-find.
A contrast is made between the data used by the oil industry, and that available in the public domain.
Part III outlines approaches taken by a variety of groups to model the future supply of oil. These groups include Campbell/Laherrère, the IEA, USGS, the EU, and some oil economists.
Part IV presents oil production forecasts from a number of these groups for some specific countries; for the “Rest-of-the World”, and for the world as a whole.
In Part V, the scope for non-conventional oil, and also gas, to offset a decline in conventional oil is examined.
Finally, in Part VI, some wider implications of the situation are presented.
The general arguments of the paper are:
It is useful to define conventional oil by recovery method.
Oil production in a region goes over peak when flow from new sources cannot compensate for the declining flow from existing sources.
Public domain reserves data hold only proved reserves, and contain serious errors.
Industry data are more reliable, and hold (proved + probable) reserves.
Much of ‘reserves growth’ is simply the increase from proved to (proved + probable).
The world's conventional oil ultimate is probably between 2,000 and 2,700 Gb.
But find rates are low, so peaking dates are not affected by high ultimates.
The conclusions of the paper therefore are:
Non-OPEC oil production is currently close to its resource-limited peak.
The world's all-oil resource-limited peak is likely within about a decade.
These resource limits are likely to have serious economic and political repercussions.
References
1.
DaviesP.. BP Statistical Review of World Energy 1996 – Energy Trends. Paper issued by BP Ltd., London, June 1996. And in the BP ‘house magazine’, BP Today, Sept./Oct. 1997, under an article headed: ‘World oil supplies safe for decades, says economist’, Davies is reported as saying: “For the past 10 years the discovery rate has escalated to two new barrels for every one used.”
2.
McCabeP.J.. Energy Resources – Cornucopia or Empty Barrel?AAPG Bulletin, vol. 82, no. 11, pp 2110–2134, Nov. 1998.
3.
The European Commission.European Energy to 2020. ISBN 92 8275 2267, 1996.
4.
The European Commission. Green paper on: Energy Policy.
5.
The International Energy AgencyWorld Energy Outlook; published Nov. 1998; ISBN 92-64-16185-6, summarised at http://www.iea.org. (See also the IEA Report to the G8 Energy Ministers' Meeting, Moscow, March 1998.)
6.
See interview: Cheap Oil: Enjoy it While it Lasts, in Forbes Global Business and Finance, June 15 1998, pp 22–24.
7.
IvanhoeL.F.. Updated Hubbert Curves Analyze World Oil Supply. World Oil, November, 1996, pp 91–94.
8.
CampbellC.J. and LaherrèreJ.H.. The World's Supply of Oil, 1930 – 2050. Report: Petroconsultants S.A., Geneva, 1995. [This report was reviewed by R. Mabro in: The World's Oil Supply 1930–2050 – A Review Article. Journal of Energy Literature. II. No. 1, 1996, pp 25–34. (For updated versions of this the numbers from the report, see the following two references.)
9.
CampbellC.J.. The Coming Oil Crisis. Multi-Science Publishing Company Ltd. (inassociation with Petroconsultants S.A.) ISBN 0 906522 11 0, 1997.
10.
CampbellC.J.. Oil Reserves and Depletion. PESGB (Petroleum Exploration Society of Great Britain)Newsletter, March 1999, pp 87–90.
11.
The IEA's World Energy Outlook (Ref. [5], above) differs somewhat in its categories of oil from this paper. For the IEA, unconventional oil includes: shales, tar sands, and coal-, biomass- and gas-based liquids; whereas here, by implication, unconventional oil includes EOR plus a somewhat wider group of heavy oils (up to 170 API). The IEA defines oil reserves as ‘that portion of resources that is believed to be recoverable with current or prospective technology and oil prices.’ (Our italics). But clearly the IEA do not mean ‘prospective’ to include any future EOR (which in theory, if not in practice, can drive recovery factors to 100%), and only mean some reasonable near-term EOR; probably bounded also by their price forecasts. [Note: A draft version of the present paper used different definitions.]
12.
Probably between 35% – 40%; for large-field recovery factors see Ref. [5], page 107.
13.
Campbell, private communication, supplies data probably from Ref. [8], that in 1996, excluding tar sands, shales (and NGLs), 75% of oil was produced by primary recovery (natural flow, and pump or gas lift); 23% by secondary recovery (waterflood, and water or gas-injection pressure maintenance), and the remaining 2% from all other methods (including: steam soak and drive, miscible gas, CO2, N2, polymer, foam etc.). The IEA (Ref. [5]) has production of unconventional (under its definition, see page 84, and Table 7.16) in 1996 as 1.2 Mb/d; and processing gains at 1.5 Mb/d and NGL's at 6.7 Mb/d, out of a total all-oil (including NGL's) of 72 Mb/d. So IEA's ‘conventional’ probably includes a little of what is termed ‘heavy’ in this paper, to the extent of perhaps 1% of annual oil production.
14.
F. Harper of BP Amoco. Letter to Energy World, Institute of Energy, May, 1997.
15.
Cumulative oil production, end-1998, excluding NGL's. (Composite of BP Stat. Review & Campbell data.)
16.
Note that the curve (d) may well be representative of a ‘Hubbert curve’ for gas fields, where these stay on plateau for much of their life, and die away quickly. If this is the case, this figure both supports the IEA's use of 60% of ultimate as the peaking date for gas fields, and serves as a drastic warning of how quickly gas will go down after peak, compared to the gentler nursery slopes that oil so kindly provides us short-sighted mortals.
17.
HubbertM.K., Project Interdependence: U.S. and World Energy Outlook Through 1990. Congressional Research Service, Washington1977, p 624; quoted in: The Global 2000 Report to the President, Penguin, 1982, p 353.
18.
McCabeP.J., Ref. [2] (above), p 2121 (Hubbert citing Illinois).
19.
BP plc. BP 1997: Statistical Review of World Energy. June 1998, p 14.
20.
IvanhoeL.F.. Petroleum Position in the United States. Hubbert Centre Newsletter #98/1-1. (‘Maximum effort’ quote on p 2; US production by all liquid fuel types, Figure 1, p 4).
21.
DeGoyler & MacNaughton, 1997. See, e.g., the figure on exploratory wells, and ‘strict’ new-field-wildcats, drilled in the US, 1945 – 1996. (On page 29 and opposite.)
22.
For the UK: • O&GJ (end-'97) has proved reserves as: 5.0 Gb. • UK ‘Brown book’ (end-'97) proven: 5.0; (proven + prob.): 10.2; (p+p+p): 14.8 Gb.
23.
For Norway: • O&GJ (end-'97) has proved reserves as: 10.4 Gb. • The Norwegian Petroleum Directorate's Petroleum Resource Management Newsletter News, Feb. 98 No. 12 has end-'97 data: Fields (Classes 1–2, ‘in production’, or ‘approved development plan’): 10.9 Gb; Fields + Discoveries (Classes 1–4, as above plus ‘late & early planning’): 14.8 Gb; Fields + Discoveries (Classes 1–7, as above plus: ‘may be developed in the long term’, & ‘development not very likely’, & ‘evaluation not complete’): 15.9 Gb. (Excluded is Class 8 ‘possible future measures to increase the recovery factor’, of 4 Gb, as this is treated as EOR in this paper.)
24.
For the US: • O&GJ (end-'97) has proved reserves as: 22.0 Gb. • The 2P figure is that from Campbell for end-'96, (page 195 of Ref. [9]). Though Campbell makes adjustments to the data, many of his reserves figures are reasonably close to the 2P data available to industry. (Campbell's end-'98 figure of 16.9 Gb is not comparable, as it is for the lower-48 states only, and excludes Alaska and deep offshore.) • Not explicitly 3P data, but included here to show a credible upper-range reserves figure is that from Masters (Ref. [30]) of end-'92 US reserves of 51.1 Gb.
25.
Petroconsultants are now Petroconsultants-MAI / IHS Energy.
26.
See, e.g., the publications of Masters et al., Ivanhoe, Leckie, Laherrère, and Campbell. (SeeReferences elsewhere in this list). Also, e.g., a Washington paper (Nov. 22 '97), reported the Petroconsultants' then most recent 10-year find total of 95 Gb, i.e. an average of 9.5 Gb/yr.; (where the latest year data had fallen to 5.25 Gb).
27.
Oil and Gas Journal. Private communication, Feb., 1999.
28.
World Oil. Private communication, March, 1999.
29.
Oil and Gas Journal, Dec. 28, 1998.
30.
MastersC.D.World Petroleum Assessment and Analysis. Proc. 14th World Petroleum Congress, 1994. J. Wiley & Sons., pp 529–541.
31.
BarkeshliF.. Oil Prospects in the Middle East and the Future of the Oil Market, Oxford Energy Forum, Oxford Institute of Energy Studies, August 1996. pp 10–11.
TakinM., Centre for Global Energy Studies. Comments at the University of Reading's Workshop on ‘The Future of Oil’; June 1997.
34.
Petroconsultants. Private communication, 1997.
35.
We tried to bring the problems of the reserves data in the BP-Amoco Statistical Review of World Energy to the company's attention, writing to Sir John Browne in May of 1999, and concluding: “In our view it is a pity, therefore, that on this crucial issue of reserves data, which drives so many people's understanding of the future of oil, that the public domain data are so misleading. We realise that BP cannot change this, but wonder whether BP would consider including caveats … in the Review as a warning to the unwary.” Our suggested caveats were: • “The reported proved reserves are conservative estimates of recoverable oil, and can therefore be expected to grow with time without significant additional oil being found or accessed. • Survey data are subject to variations in reliability. • The majority of the reserves increases indicated for the late 1980's report oil found earlier. • Other data suggest that likely total reserves have been falling since 1980.” Peter Davies replied, in part: “I do not believe that any further caveats are required. The suggestions that you make are all subjective judgements. … However, I believe it is important to remember that no physical shortage has emerged in the oil market. On the contrary, the oil industry has been coping with substantial excess capacity. I believe that the world's energy policy makers have correctly taken due note of this.” A probable explanation for Peter Davies' comments is encapsulated in his Overview to the 1998 World Energy Council's Survey of Energy Resources. Commenting on the oil chapter by Joseph Riva, Davies says: “Riva's analysis reflects a school of thought that continues to receive publicity and, in some areas, credence but which has been singularly unsuccessful and inaccurate over long periods of time in predicting future oil supplies and resources.”
36.
This is not strictly true; as oil field sizes are distributed log-normally, where, apparently, ‘most likely’ is P65, mean is P40. But the real data may be too uncertain for such subtleties.
37.
Oil company. Private communication, 1997.
38.
E.g.: LaherrèreJ.H.. Erratic reserve reporting. Petroleum Review (The Institute of Petroleum), Feb. 1999, pp 24–26. See also Refs. [41, 42].
39.
LaherrèreJ.H.. Private communication, 1999.
40.
MastersC.D.World resource statistics geared for electronic access. Oil and Gas Journal, Oct. 13, 1997. (And see their website.) The dispute over reserves growth is so vexed that it is probably valuable here to give the relevant quote in full: “For example, should we expect, around the world, the same levels of field growth we have encountered in the U.S. We think not, because oil development, elsewhere, has not matched the U.S. experience. Rather, careful field development has preceded initial Reserves announcements resulting in minimal later growth in the Middle East, former Soviet Union, China, and in many offshore or remote producing localities. These areas overwhelmingly dominate remaining world oil estimates. Hence, though growth is a reality to be considered in many areas, it will not significantly affect overall Reserves quantities as presently calculated.”
41.
LaherrèreJ.H.. Reserve growth: Technological progress, or bad reporting and bad arithmetic? Geopolitics of Energy, 22/4 April, 1999, pp 7–16. (see http://dieoff.com/page176.htm)
42.
LaherrèreJ.H.. The evolution of the world's hydrocarbon reserves. Paper delivered to the SPE, France, June 1998.
43.
DromgooleP. and SpeersR.. Geoscore: A Method for Quantifying Uncertainty in Field Reserve Estimates. Petroleum Geoscience, Vol. 3, 1997, pp 1–12.
44.
AdelmanM.A. and LynchM.C.. Fixed View of Resource Limits Creates Undue Pessimism. Oil and Gas Journal, April 7, 1997, pp 56–60.
45.
An ironical footnote is that the same issue of O&GJ that contained the Adelman/Lynch article reported, p 37, that Osebeg was due to come off plateau around the year 2000. As of the date of writing (Feb., 2000) this field is well into its decline.
46.
Oral discussion at either a PESGB, or Inst. Petroleum, meeting, London, 1998.
47.
See, for example: SmithN.J. and RobinsonG.H.. Technology Pushes Reserves ‘Crunch’ Date Back In Time. O&GJ; Apr. 7, 1997, pp 43–50. These are some of the authors that explicitly refer, page 44, to the BP Stat. Review definition of reserves, and though they raise questions, conclude: “There clearly are objective realities somewhere.”
48.
OdellP. R.. World Oil Resources, Reserves and Production. The Energy Journal (IAEE), Vol. 15, Special Issue, 1994, pp 89–113. Odell's full ‘gross additions to reserves’ series is listed in his presentation to the IEA Oil Reserves Conference, Paris, 11/Nov./97, page 3.
49.
OdellP.R.. Fossil Fuel resources in the 21st Century. Report prepared for the IAEA, Vienna, June 8, 1998. See also: OdellP.R.. Plentiful energy supplies for the 21st century. Petroleum Review, Institute of Petroleum, March 1999, pp 35–37.
50.
For example: • 1972. The Ecologist. A Blueprint for Survival. Penguin, 1972. This quotes a recoverable resource estimate for conventional oil of 2,100 Gb (an ESSO figure, p 18); and includes the projection of oil becoming “increasingly scarce … from about the year 2000.” (p 130). • 1973. ColeH.S.D., Eds. Thinking about the Future: A critique of ‘The Limits to Growth’, Science Policy Research Unit, Sussex University; Chatto & Windus. This quotes a variety of estimates of ultimately recoverable oil reserves made between 1950 and those of Hubbert in 1969 and Warman in 1971 (p 95); and based on these concludes (p 100): “From our review of long-term oil prospects it is reasonable to expect that the real price of oil and natural gas will rise substantially over the next two decades”. (The report is optimistic, however, about the use of the non-conventional hydrocarbons to avoid subsequent shortages, missing any discussion of the rate these might be brought on-stream, or of the impact to the world economy of the price rises they refer to above.) See also Ref. [104]. • 1976. MarshallW.. Energy research and development in the United Kingdom. Energy paper No. 11, [UK] Department of Energy. This has: “World oil production is expected to reach a peak about the year 2000 …” (p 12). • 1977. The [UK] Energy Commission. Energy Commission Paper, No. 1. “Perhaps the most likely outcome is that world oil supplies will begin to level off in the late 1980s, reach a peak in the early 1990s and decline thereafter.” (p 9). Like the Hubbert reference below, this forecast did not factor in the demand impacts of the OPEC price rises. • 1977. M. King Hubbert, Project Interdependence: U.S. and World Energy Outlook Through 1990, see Section 4.2, above, and Ref. [17]. • 1981. The World Bank. Global Energy Prospects: World Bank Staff Working Paper No. 489. This has (p 37): “The bulk of the world's reserves, principally in the Middle East, was built up in most part during the 1960s. Despite increased incentives to explore for oil provided by higher prices, conventional oil production is projected to reach a plateau around the turn of the century.” Elsewhere (p 46) it quotes ultimate recoverable oil reserves as being 1,900 Gb, and says: “According to some estimates, the world's ultimate recoverable gas reserves are at least equal to [those of oil].”
51.
Indeed, these thoughts on how others do their modelling have, in some cases, not been checked with the modellers themselves, so there will surely be some errors in our understanding. Where this has occurred, we apologise; and would like to receive corrections of our views.
52.
For example, BP Stat. Review figures include these components, and currently run about 2Gb/yr. higher than the CampbelL/Laherrère data.
53.
LaherrèreJ.H.. Distributions de Type “Fractal Parabolique” dans la Nature. C. R. Acad. Sci., Paris, 1996, 322 IIa, pp 535–541.
54.
CampbellC.J.. Proving the Unprovable. Petroleum Economist, May 1995, pp 27–30.
55.
LaherrèreJ.H.. World Oil Reserves – Which Number to Believe? OPEC Bulletin, Feb. 1995, pp 9–13.
56.
CampbellC.J.. Better Understanding Urged for Rapidly Depleting Reserves. O&GJ, April 7 1997, pp 51–54.
57.
CampbellC.J.. The Status of World Oil Depletion at the end of 1995. Energy Exploration and Exploitation, vol. 14, No. 1, 1996, pp 63–81.
58.
LaherrèreJ.H.PerrodonA.CampbellC.J.. The World's Gas Potential. Petroconsultants S.A., Geneva. Aug. 1996.
59.
PerrodonA.LaherrèreJ.H.CampbellC.J.. The World's Non-Conventional Oil and Gas. The Petroleum Economist Ltd., London. March 1998.
USGS private communications: Masters to Campbell, and more recently Charpentier to Bentley.
62.
KlettT. R.AhlbrandtT. S.SchmokerJ. W., and DoltonG. L.. Ranking of the World's Oil and Gas Provinces by Known Petroleum Volumes. USGS Open-File Report 97–463, available from the web. (And supported by private communication.) See also the excellent maps (but of end-'92 data) in USGS Open-File Report 98–468.
63.
For example, the EU when asked about their views quote: MitchellJ.V.. The New Geopolitics of Energy. The Royal Institute of International Affairs. 1996, ISBN 1 8996 58 12 2. [J. Mitchell was a co-author of the BP Policy Review Unit Briefing Paper: Oil crisis… again?, Sept. 1979; so it is not surprising he is somewhat cautious about predictions. Incidentally, much of that publication was quite correct: E.g.: ‘For a decade or more there have been signs that the world's oil resources were being depleted at a rate that could not be sustained’. Indeed, it has been suggested that that report's resource model was essentially correct, but this needs checking.]
64.
ChewK.. Major Companies' Production and Reserves Replacement Performance in 1997 and Goals for Production Growth. Petroleum Exploration Society of Great Britain (PESGB) Newsletter, March 1999, pp 76–82. A more recent article by Chew, unpublished, also points up this movement of oil inventory from ‘probable’ to ‘proved’. When a current-year reported ‘proved’ discovery (as opposed to revision) can be identified to be a specific field, it often relates to a find actually made a number of, and sometimes many, years earlier. There is, of course, nothing wrong with the general principle of moving inventory up the certainty classifications, except that the false impression is left on many, including senior people within the companies themselves, that reserves really are being replaced.
65.
The City of London oil analyst who reported this admitted it was known that the oil companies were “playing a game” with the City on reserves; but seemed resistant to the idea that analysts might seek independent information, outside of company reports and the City's rumour mill.
66.
LynchM.C.. The Failure of Long-Term Oil Market Forecasting. Advances in the Economics of Energy and Resources, JAI Press, Vol. 8, 1994, pp 53–87.
67.
LynchM.C.. The Analysis and Forecasting of Petroleum Supply: Sources of Error and Bias. Energy Watchers VII; Ed.: El MallakhD.H.. The Intl. Rsch. Center for Energy and Economic Development. Boulder Colorado, 1996.
68.
LynchM.C.. E Pur Si Muove! Presentation to IEA Oil Reserves Conference, Paris, Nov., 1997.
69.
OdellP.R. and RosingK.E.. The Future of Oil – A Simulation Study of the Interrelationships of Resources, Reserves and Use, 1980–2080. Kogan Page, London, 1980. [Here Odell models an oil recoverable resource of up to 12,000 Gb; and says the recoverable resource may be larger, but is not then worth modelling in detail. More recently (OdellP.. Oil Shock: A Rejoinder. Energy World, Institute of Energy, London, March, 1997, pp 11–14) he assumes a recoverable resource base of 3,000 Gb of conventional plus 3,000 Gb of non-conventional. For a critique of this paper see: BentleyR.W., Oil shock ‘imminent’ if heavies are slow or expensive to produce. Energy World, June '97, pp 20–22. Odell uses the same recoverable resource base numbers in Ref. [49]. In terms of understanding Odell's thinking, the original Canadian ‘reserve growth’ data are probably key: Odell's error was not in identifying these data, but in failing to ask what mechanism could produce such large growth factors: Real technological change or reporting regime?]
70.
OdellP.R.. Oil reserves: Much more than meets the eye. Petroleum Economist, Nov. 1997.
71.
For a paper that pays attention to cost, but makes no reference to rate for these other oils see: DusseaultM.B.. Flawed Reasoning about Oil and Gas. Nature, vol. 386, 6 March 97. A paper that does not share the ‘pure’ economist view, but which is but which is fairly bullish on oil from technology and EOR is: BarnesP.. The Oil Supply Mountain: Is the Summit in Sight? Report: Oxford Institute of Energy Studies, 1993, ISBN 0 948061 78 2.
72.
LynchM.C.. Private communication, 1997.
73.
IvanhoeL.F. and LeckieG.G.. Global oil, gas fields, sizes tallied, analysed. Oil and Gas Journal, Feb. 15 1993, pp 87–91.
74.
Note that, like many other items of data in the oil debate, Lynch's graph (Figure 28) can beread in two ways: If one has no other data, and a paradigm of field growth driven by economics, then one might indeed look at the predictions and find proof of how flawed is the whole oil prediction business. If, however, one has even the simplest notion of when the oil was actually discovered, for example Figure 31, then the curves turn into sensible attempts to predict the coming decline, with the total areas (i.e. production volumes) under the two later curves being roughly correct, and with the shapes of these curves being only slightly wrong on the timing.
75.
One can examine the production of forecasts that ‘cry wolf’ a little more explicitly: If a forecast is based on reserves only, it will almost certainly predict peaking date too early, at least in the early to mid development of a group of fields, as it will not include the yet-to-find. (Late in the development, the yet-to-find is so small, and late to come in, that the group of fields will be near, or past, peak, and excluding the yet-to-find is not significant.) If the forecast is based on 1P reserves, and estimates of yet-to-find themselves based on 1P reserves, a pessimistic forecast is again likely. It is only if the forecast is based on realistic 2P reserves, plus a realistic estimate of yet-to-find based on extrapolating out the experience of the 2P find rate, that a useful forecast that does not ‘cry wolf’ is likely to result.
76.
Shell Petroleum. Shell Briefing Service: Energy in Profile, No. 2, 1995.
77.
From: KrylovN.A.Exploration Concepts for the Next Century. Proc. 15th World Petroleum Congress, Beijing, 1997, 10pp; where the data are plotted in Fig. 3. of OdellP. R.. Fossil Fuel resources in the 21st Century, Ref. [49].
78.
Shell Petroleum. Shell paper: Energy for Development. Nov. 1994.
79.
From: IEA/OECD. Global Offshore Oil Prospects to 2000. Paris, 1996. Quoted in Ref [5], page 188.
80.
Interview in the OPEC Bulletin, January 1996.
81.
MacKenzieJ.J.. Oil as a Finite Resource: When is Global Production Likely to Peak ?World Resources Institute, March, 1996.
Wang Tao (Senior Advisor, and former President, China National Petroleum Corporation). Shortened version of his speech at the 15th World Petroleum Congress, Beijing, 1997; in Petroleum Review, Dec. 1997, pp 552–554.
86.
F. Harper of BP Amoco cautions that both Mexico and China may not peak quite as indicated here; “for both countries CGES and CERA forecasts show no decline before 2005 and IEA … shows continuous increase to 2010 (but DOE has decline from 2000).”
87.
Ref. [5], page 293.
88.
We have been told by USGS not to take this graph too seriously.
89.
Dr. K. Wigley, then Head, Economic Analysis Division, IEA, private communication, 8/Dec./97; and see also as reported in the 1998 WEO, Ref. [5].
90.
European oil major: Company ‘A’, private communication, 1997.
91.
European oil major: Company ‘B’, private communication, 1997.
92.
Science, Vol. 281, pp 1128–1131, 21 Aug. 1998.
93.
Ref. [5], page 120.
94.
Private communications.
95.
FlemingD.. The Spectre of OPEC. The Sunday Telegraph, March 21, 1999; (from Prospect, April, 1999).
96.
The OPEC Bulletin, October 1997, p 3, summarises OPEC's viewpoint: “… the important message which OPEC always seeks to convey: The realisation that oil is a precious once-for-all gift of nature, and not a renewable resource. We should value it accordingly. … Unfortunately, what we continue to see are producer prices that are unable to send the right signals because they are too low in real terms …” “OPEC has consistently argued that fair and stable prices for oil would provide a reasonable return on investment, compensate producers for loss of an irreplaceable asset, and guarantee a secure and economic oil supply. This simple economic mechanism would not only reduce the amount of waste, but would leave greater reserves of this irreplaceable commodity for future generations to enjoy”.
97.
It was pointed out to one of the authors that the Middle East Five have no history of making large investments in their oil production capacity.
98.
From one of the authors (Sellwood), based on data from a recent conference.
99.
Tables 7.16 and 7.12 of Ref. [5].
100.
IEA conversation with David Fleming, see Ref. [95].
An interesting example of this line of thinking were the several oil company economists who told us in all seriousness that oil could not possibly be in threat of short supply because the City had not yet marked up the price. Why the oil economists expected the City to know more than they did eluded us.
104.
E.g.: A Blueprint for Survival, Ref. [50]. This report may have confused reserves data with the recoverable resource for some of the minerals discussed, but for oil, as mentioned above, it correctly uses a recoverable resource estimate of 2,100 Gb. There is little doubt that the ambiguous use in the past of the terms ‘resources’ and ‘reserves’ has contributed to the present confusion in the resource depletion debate, (see, e.g., various issues of the UK Brown Book). Because of its prominence, the resource estimates in The Limits to Growth (MeadowsD.H.MeadowsD.L.RandersJ.BehrensW.W.IIIIslandEarth, 1972) deserve special mention. The authors give a table (p 58) listing the then current reserves of various minerals, including oil at 455 Gb, but in fact make no direct use of these numbers in the modelling. Instead they assume, in their ‘standard run’, all non-renewable resources, lumped together, have a resource base in 1970 of 250 years' supply at 1970 rates. (p 126). The standard run then shows that society collapses in less than a hundred years due to resource depletion, itself driven by a combination of: • population growth, • compounded by an increasing per capita use of non-renewable resources, • and further compounded by the assumption that the material capital to extract the resources increases as the resources themselves are depleted. Finally a point is reached where too little capital is left for future growth, as investment cannot keep up with depreciation (p 125), and the industrial base collapses, taking food and service production with it. If the authors double the resource base (p 127) society still collapses, now primarily due to pollution limits, but also to severe restraints on resource availability. Unfortunately, this is not the place to argue the merits or otherwise of the assumptions behind this model. Interestingly, in the sequel: Beyond the Limits (MeadowsD.H.MeadowsD.L.RandersJ.; Earthscan, 1992), estimates are given for oil's ultimately recoverable reserves, a range of 1,800 – 2,500 Gb (Table 3–2, p 71); but the authors appear unaware of the ‘peaking from the mid-point’ argument.
105.
E.g. BartonA. (BP Amoco Senior Economist); private communication, 1997.
106.
It is important to understand this analysis. Campbell's aim is to predict peaking dates. He needs, therefore, to break out major categories of oil that will contribute at different dates to total oil production. His view is that because of discovery and extraction difficulties, the bulk of both polar oil and very deepwater oil cannot soon be brought on-stream. So his data for production, reserves and ultimate all exclude: unconventional oil, heavies, polar and deepwater (>500m), to yield predictions for the peaking dates of ‘narrow conventional’ oil. When modelling ‘all hydrocarbons’, however, he does include these categories of oil.
107.
For the impact of oil prices on the economy, a factor that is frequently ignored, see OswaldA., Low real oil prices not a new paradigm. Oct. 1999, in: www.oilcrisis.com
