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Review Response: Depletion and the Future Availability of Energy Sources
Posted by Rembrandt on May 2, 2009 - 10:15am in The Oil Drum: Europe
Two weeks ago I posted a review of an article with an optimistic view on the future availability of oil. Written by R. Aguilera, R. Eggert, C. Gustavo Lagos and J. Tilton and published in the Energy Journal of the International Association of Energy Economists. After a short correspondence Dr. Aguilera and his team have been kind enough to respond to the five points of disagreement I raised in my review. Their response is shown below. I hope our readers can react respectfully as to create a meaningful discussion.
Abstract of Aguilera et al. (2009)
"This study assesses the threat that depletion poses to the availability of petroleum resources. It does so by estimating cumulative availability curves for conventional petroleum (oil, gas, and natural gas liquids) and for three unconventional sources of liquids (heavy oil, oil sands, and oil shale). The analysis extends the important study conducted by the U.S. Geological Survey (2000) on this topic by taking account of (1) conventional petroleum resources from provinces not assessed by the Survey or other organizations, (2) future reserve growth, (3) unconventional sources of liquids, and (4) production costs. The results indicate that large quantities of conventional and unconventional petroleum resources are available and can be produced at costs substantially below current market prices of around US$120 per barrel. These findings suggest that petroleum resources are likely to last far longer than many are now predicting and that depletion need not drive market prices above the relatively high levels prevailing over the past several years.(Aguilera et al. 2009, page 141)"
Response by R. Aguilera, R. Eggert, C. Gustavo Lagos and J. Tilton
Thank you for the opportunity to comment on your review of our article. I have organized my response around your five concluding statements. At the end of my comment, I also make several additional points.
1) The data from USGS (2000) of the yet to be found estimate in 102 geological provinces has been used to estimate the future potential in 835 geological provinces which were not assessed in USGS (2000), resulting in an additional 539 billion barrels of expected discoveries by Aguilera et al. (2009) in addition to the 939 billion barrels estimated by the USGS (2000). The original USGS (2000) is too optimistic as it implies that the declining discovery curve which has been declining since the 1960s will turn around. This methodology produces an estimate of 539 billion barrels, which is also too optimistic.
Extrapolating discovery data can provide useful information, but does not consider reserves that are created through reserve growth. The latter is much less costly and less risky than exploration. The USGS has found that, about 10 years into the study, their estimates for new discoveries are behind schedule. On the other hand, actual reserve growth has been much larger than they anticipated (even growth of 2P reserves; see Charpentier, 2005). This means that investors have chosen to invest in development of previously discovered fields, instead of exploration. Therefore, the fact that the USGS undiscovered estimates are not being realized as fast as expected does not necessarily mean that their estimates are overly optimistic (see Klett et al., 2005 for an evaluation of the study). The Hubbert curve pattern of expected discoveries, shown by the blue line in Figure 2 of the article review, was never predicted or even implied in the USGS study.
2) Aguilera et al. (2009) have double counted reserve growth because they made the incorrect assumption that the USGS (2000) did not apply a reserve growth function for the estimate of yet to be discovered fields.
We are aware that the USGS only applies reserve growth to known volumes and that their undiscovered volumes are already ‘grown’. However, it is important that reserve growth be applied to both known and undiscovered volumes, since undiscovered volumes may experience future growth in the same way known volumes are growing at present. For example, recovery factors of oil are likely to continue to increase, so that will apply to known volumes as well as presently undiscovered volumes.
3) A large number of factors that limit production have not been incorporated, including the availability of water and natural gas which play a large role in the production of unconventional crude oil.
We recognize that those are very important factors, along with other serious environmental impacts of unconventional oil production. The role of advancing technology will be crucial in reducing the need for inputs such as water and gas, while mitigating environmental damage. However, our paper did not aim to address these challenges in detail. We simply wanted to estimate how much could be available at average costs of production.
Still, our paper does mention the caveat:
“..despite the considerable efforts by governments around the world to internalize over the past several decades the external costs associated with energy production, such as environmental pollution and global warming, there is still considerable disagreement over just how large the remaining external costs are. For this reason, we have not attempted to include external costs in our cost estimates. As a result, the full social costs of fossil fuels production are higher than the reported production costs.”The paper also mentions some of the points raised by your readers:
“..there are challenges associated with unconventional resource production. First, the ‘energy returned on energy invested’ ratios (EROEI) are much lower than for conventional petroleum. Second, unconventional sources are usually more expensive and so less economical, mainly because they are harder to extract and refine. Third, the environmental problems are more serious. Heavy oil, oil sands, and oil shale production cause much higher amounts of greenhouse gas emissions than conventional petroleum.”
4) A direct comparison between the production of conventional and unconventional oil has been made while production mechanisms for these types of oil differ significantly, leading to a comparison between apples and pears.
It is typical for supply curves to include different sources of liquids in one curve (e.g. conventional oil, heavy oil, oil sands, oil shale, deepwater, CTL, GTL, etc). See, for example, the IEA (2008) curve to which you refer. This consolidation is appropriate, first of all, because the different production mechanisms are reflected in the reported production costs. More fundamentally, we and others include both conventional and unconventional hydrocarbons on the same availability curve because conventional and unconventional resources substitute for one another in actual fuel use.
5) It is incorrect to take historic production costs from a single to a set of years in a given oil province and extrapolate them into the future to obtain future costs. Costs are likely to change permanently in the future as cost decreases due to technological innovation have largely played out, and cost increases are expected to play a bigger role. These changes are expected because of declining quality of the remaining oil, more remote and politically difficult locations of extraction, and smaller and smaller fields in these locations.
In the paper, we describe the uncertainty over how production costs change over time as a race between the cost increasing effects of depletion and the cost-reducing effects of technological advancement and substitution among energy sources. Given this uncertainty, we only made an attempt to estimate static availability curves. We mention this caveat, stating that rising costs over time would shift our curves upward and falling costs would shift them downward. On this point, we are far from certain that “cost decreases due to technological innovation have largely played out.”
Since we’re reporting 2006 production costs, they’re going to be lower than those of the latest IEA (2008) supply curve. If you compare our costs to their IEA (2005) version, they’re similar. Recent estimates by others also compare to ours (e.g. Deutsche Bank, 2009; Farrell, 2008).
"Going beyond your five concluding points, we have some additional comments:
First, the first sentence in your article review does not accurately summarize the conclusions of our study. We did not conclude that the “recent high oil price spike was an aberration”; rather we concluded that depletion need not drive prices above the relatively high levels of the recent past. There are a number of other (political, environmental, and social) reasons prices could rise but geologic depletion is not one of them.
Second, rather than take the USGS (2000) estimates at face value, we critically reviewed the study and determined that it’s based on geological and statistical procedures recognized as being valid throughout the world. For this reason, we decided to use their estimates as a starting point.
References:
Aguilera, R. F., Eggert, R.G., Gustavo Lagos, C.C., Tilton, J.E., 2009, Depletion and the Future Availability of Petroleum Resources, The Energy Journal, Vol. 30, No.1, pp. 141 -174.
Charpentier, R.R., 2005, Estimating undiscovered resources and reserve growth: contrasting approaches, in Dore, A.G., and Vining, B.A. (eds) ,Petroleum Geology: North-West Europe and Global Perspectives—Proceedings of the 6th Petroleum Geology Conference, pp. 3 - 9.
Deutsche Bank, 2009, The Cost of Producing Oil. London: Deustche Bank AG, Global Markets Research.
Farrell, A., 2008, Energy Notes: News from the University of California Energy Institute, Vol. 6, No. 2, p. 3.
International Energy Agency (IEA), 2005, Resources to Reserves - Oil and Gas Technologies for the Energy Markets of the Future, Paris: IEA Publications.
International Energy Agency (IEA), 2008, World Energy Outlook, Paris: IEA Publications.
Klett, T. R. et al., 2005, “An Evaluation of the U.S. Geological Survey World Petroleum
Assessment 2000.” AAPG Bulletin. Vol. 89, No. 8, pp. 1033 - 1042.
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The main problem of the discussion is the level of uncertainty with respect to 1) OPEC reserves, 2)Reserve growth and 3) expected Discoveries. Both sides ('optimists' and 'pessimists')usually claim a level of certainty over these topics which is not existent. We do not know the size of reserves in fields in most OPEC countries as the data is not available. Although we can perceive that current middle-east reserve numbers are likely to be too optimistic if we look at the little data that is there. The issue hence boils down to whether we can assign probabilities to the different outcomes ('pessimists' and 'optimistic' views) and agree upon those probabilities.
The topic of discoveries is quite straightforward as there is quite a bit of good data on where discoveries have taken place and where they have not available. And also on the reasons why this has not occurred (technological, political, economical). The uncertainty hence lies in disagreement over the geological assessment of the oil that lies in these areas, and to what extent these resources can be developed.
The issue of reserve growth is much more difficult as it is not possible to attribute the causes of reserve growth in a proper manner to the change in the extractable oil estimate of a reservoir. Is it due to technological change, due to errors in the estimate, new adjacent discoveries that get counted in the same field and so forth. Although with good documentation it might be possible to distinguish between these factors, the secrecy of the oil business and the lack of available data at even large database firms such as IHS Energy on this make it impossible to make an attribution. This is important as the notion that recovery factors of oil will likely continue to increase and the rate at which it happens is mostly based on a perception of technological change. We know that reserve growth in the past occurred at a large scale, but it could mainly have been due to errors in the estimates. One would expect that over time the methodology of estimates has improved, and also the databases (IHS Energy, WoodMackenzie) that tabulates these estimates. If past reserve growth is mainly due to errors than it is not logical to assert that reserve growth will continue in the future as it did in the past.
I am more inclined to believe that most reserve growth is due to errors in estimates for recoverable oil (be it political, financial or technical). This because of the shape of the reserve growth curve which usually shows the biggest part of reserve growth occurring at the first years of production after which the rate quite rapidly declines.
Rembrandt, expanding on your comments above, I find it astonishing that the USGS, or anyone else for that matter, would take the OPEC reserve estimates at face value. They are clearly political and have shown little or no change since the mid 80s. If we used OPEC's reserve figures and accepted their reported decline rate for the last 25 years as the norm, then OPEC's current production would last forever.
Reserve growth is another matter. As you say above, all reserve growth is due to errors in the original estimate of reserves. There is no guarantee that future reserves will continue to be underestimated as they have in the past. In fact, the exact opposite may be the case. We have already seen many instances of this, the most notorious was Shell's overestimate of Oman reserves. Shell overestimated its proven oil reserves in Oman by as much as 40 percent. And more recently we find dramatic overestimates of reserves in Australia. Woodside May Downgrade Oil Reserves at Neptune, JPMorgan Says Production from the Neptune field dropped almost 60 percent from the third quarter of last year.
Also, it must be admitted that the EIA's production estimates, based largely on the USGS's 2000 reserve estimates, have proven to be much higher than actual production levels in the last eight years. Not only that but new discoveries have not lived up to the USGS's estimate.
Bottom line, all estimates of production and reserves should be based on the very latest factual data, not wild guesses from almost a decade ago or political estimates of reserves made a quarter century ago that have remained unchanged despite continued production during the ensuing years.
Ron Patterson
I largely agree with the "reserve growth due to errors/uncertainty" arguments. The typical reserve growth curve has what Laherrere calls a "hyperbolic" profile. Like Rembrandt says, most of the reserve growth occurs early on and then it reaches an asymptotic limit over time. In most of the cases one can fit the profile arguably well to a 1/(1+k/time) curve. This characteristic time dependence comes about when one probes an unknown depth with random guesses as to where the oil lies, aka as in dispersive reserve growth. http://mobjectivist.blogspot.com/2008/07/role-of-dispersive-discovery-in...
What keeps people intrigued by the notion of reserve growth is that although the initial reserve growth is fast, the long tails of the hyperbolic extend beyond the much faster exponential dampening that everyone expects to see. They therefore think there is something mysterious beyond this easily understandable effect of a conservative statistical estimator. In other words, reporting as a reserve whatever you have found with certainty guarantees future reserve growth. It is essentially the nature of conservative estimators to behave this way. It is quite possible that if people used the dispersive reserve growth estimator right away, we would not have such "under"-estimates to begin with. And this means that anomalous reserve growth would not even occur and the mystery would disappear. This might in fact happen in regions that are smart about estimating potential reserves.
That is not to say all reserve growth occurs in this way, just the portions that show the smooth asymptotic growth with time. Any discontinuous jumps in growth are likely due to technological advances. Also difficult to disentangle is the aggregation of reserves that Rembrandt refers to, as close proximity fields get combined at some later date, and the reserve growth jumps.
I agree with Ron that the data reporting is horrible and we are left to come up with more-than-educated-guesses to figure out what's happening. I bet if we had access to good data, we would have this figured out long ago.
Following is the section on reserve growth from my USGS petition of 2002 requesting that the report be withdrawn because it did not meet reporting standards:
4.10 Reserve Growth (Chapter RG) General Failings
4.10.1 Reserve Growth Causes
The un-stated assumptions of the RG projection are that RG is purely a function of geology and is uniformly time dependent. Neither assumption is valid. What are the real conditions?
- Reporting practices A)
In the USA, regulations require companies to report proven reserves. Proven reserves are defined as 90% probability10. If a company is quite capable of making an accurate 50% probability (most likely) initial estimate, but is constrained to report only the 90% probability estimate, (certainly the case in the USA for the last 30 years), their reported reserves will grow over time as more drilling is done and more reserves are proven, converging finally on the original 50% estimate. (Reserve growth being growth of “proved” reserves is clearly recognized on page RG-2).
In the rest of the world the tendency is to report proven plus probable – defined as 50% probability10. If the uncertainty of such estimates is similar over a large number of fields there will be a rough balance with shrinkage of some fields balancing growth of others, and near zero net growth as a result of development. Laherrere has illustrated such an actuality.11
- Reporting practices B)
Historically, especially in the years of corporate ownership and booming discovery, it was in the interest of the petroleum corporations to under-report reserves, even when not constrained to by regulations. Low discovery years could then be compensated by reporting some of the pocketed reserves, thus keeping shareholders happy. In the late 1960s under-reported reserves were probably very large. Subsequent nationalization and declining discovery rates, in all probability, have largely emptied the corporate reserve pockets. They can’t be emptied twice.
- Technology
Before about 1930 oil discovery was largely random and estimating reserves was a matter of guess work. Technology has progressed through gravimetrics, seismology, digital analysis, 2D and 3D imaging, data base development, computer correlation of well logs and seismology, enhanced well-logging and widespread computerization with PCs and supercomputers and sophisticated imaging software. Estimating reserves was associated with pretty high confidence levels by the 1970s and had become something approaching an exact science by the early 1990s.
In the early days it was logical to estimate conservatively and err on the side of caution.21 Technology has allowed updating of prior conservative estimates, providing reserve growth that will not be repeated.
Since 1980 or earlier, initial P50 non-USA reserve estimates would have been sufficiently accurate to allow for relatively little growth due to technology.
- Politics/Quotas
OPEC quotas are decided, to no small degree, relative to reserves. OPEC members who want to increase their quota are motivated to announce higher reserves. Whether OPEC reserve growth, which was very high in the 1980s, was a case of emptying pockets of unstated reserves left over from nationalization, of applying new technology to old estimates or to quota wars is unclear. However, there is real risk that present reported reserves are overstated, especially as they have grown moderately for a decade regardless of production. Future shrinkage is more likely than future growth.
Flash – The O&GJ just lowered their Middle-east reserves growth base estimate by 180 Gb.22
4.10.2 General Conclusions
- Reserve growth is much more an artifact of reporting than a function of geology.
-Due to technological progress and changing reporting motivation, reserve growth is not uniformly time dependent.21
-USA reserve growth history cannot be used to estimate reserve growth for the rest of the world.
-30 year reserve growth history (eg 1940-1970) of a group of fields discovered long ago (eg 1935-1940)cannot be applied to a group of fields discovered recently, (1980-1985). (If reserve growth really was valid, this factor alone causes the USGS to overestimate the growth by 200-300 Gb for all discoveries since 1980!)
-Most historic non-USA reserve growth will not be repeated.
These conclusions completely invalidate Chapter RG and the bulk of the 670 Gb of estimated reserve growth.
4.11.3 Robustness/Reproducibility
It would be appropriate to test the applicability of the growth factors. Consider that large fields discovered long ago, under conditions of high uncertainty and high motivation to understate, show substantially higher growth than small fields discovered recently under conditions of initial estimation accuracy, motivation to overstate and requiring few wells to be proven.21 A good test would be to divide the total population of oil fields into large field, medium and small field groups. The large field group will have most of the oil, and the small field group most of the fields. Now divide each group into young, middle-aged and old subgroups. In the young group include fields less than 30 years old but for which known growth is now zero.
Without having done this exercise, but inferring from Morehouse21, one can confidently predict that the zeroth year large-old growth factor will be not less than 6x the corresponding small-young growth factor. If the resulting 9 growth factors are then applied to the subject population by size and age the USGS results will not be reproduced. Using a single growth for all fields overstates potential growth substantially.
Example: Prudhoe Bay had “proven” P90 reserves of 9 Gb and P50 reserves of 12.5 Gb in 197712. Production peaked in 1988 and by 1997 “known” oil could be confidently projected as 12- 12.5 Gb. Secondary recovery (infill drilling and re-pressurization) had been extensively applied13 so expected growth was already zero. If 1977 is taken as the zeroth year the USGS factor would have estimated growth of 45 Gb vs an actual of less than 3.5 Gb or more than 12 times too high. (If the initial P50 reserves estimate had been used, real growth would probably be slightly negative). Prudhoe Bay is a large young field. Imagine the error multiple on a small young field outside the USA reporting an initial P50 estimate.
The reserve growth estimation fails the test of robust reproducibility.
4.11.5 Historic growth
Chapter RV notes that world reserves grew by 379 Gb from 1981 to 1993, “despite declining exploration” (a tacit acknowledgment of declining NFWs – see 4.4.2 above) and 254 Gb of production. (Total additions to reserves of 633 Gb in 12 years). The interpretation is that “future reserve growth of discovered fields has been under assessed”.
The USGS completely fails to note that 329 Gb of this growth took place in OPEC15 in 1983 through 1990, and that OPEC reported reserves then remained unchanged through 1993 despite production. Nearly 400 Gb of the 633 Gb noted was quota motivated, (see 4.10.1 above) and is no indication at all of future reserve growth.22 Most of the rest was discovery, not reserve growth.
Similarly, upward revisions of past reserve estimates as a result of applying new assessment technology, (common in the 1980s), is no indication of future reserve growth.
The interpretation stated is both naïve and misleading.
The chapter goes on to state that estimates of the total resources limits in general have regularly increased, with reference to Adelman and Lynch. This statement is clearly false. Forty plus estimates done from 1959 to 1999 show no trend for forty years and they include prior USGS estimates16. Adelman and Lynch are not hydrocarbon experts, and as noted cornucopians are not appropriate references, unless there is an intent to mislead.
4.11.6 Reserve Growth Assumptions
“Reserve growth is the major component of remaining US oil resources. Projections of reserve growth of known fields have therefore become necessary elements of US petroleum resource assessments.” (Page RG-1)
This assumption fails to recognize:
- The inapplicability of large-old growth factors to small young fields.
- Small young fields are proven relatively quickly with relatively few wells and therefore will hit zero growth long before 30 years.
- Seismic 3D, enhanced well logging and improved computer analysis move the initial P90 estimate much closer to P50 and reduce growth potential. (See Prudhoe Bay example above)
-
“Patterns of past reserve growth are assumed to form a rationale for modelling patterns of future reserve growth”. (Page RG-2)
This assumption would only be valid for USA P90 to P50 growth with a valid pattern. Other causes of reserve growth (see 4.10 above) do not form such a rationale. Even for the USA, the pattern used, not adjusting for field size and age, is invalid.
“Age of fields is assumed as a surrogate for enhanced recovery practices”.
This assumption is not clear, is not explained, and therefore is not useful to the user.
“Age of fields since discovery is a predictive variable”.
A factor derived from early growth of large-old fields is not predictive of early growth of small-new fields. (See 4.11.3 above).
“The O&GJ in 1996 noted 1990s’ additions of large volume through other than new field exploration” (Page RG-4), assumed by the USGS to be reserve growth.
Most of such growth was simply no changes in numbers reported from year to year by many countries, but especially by OPEC. These additions are much more an artifact of reporting practices than proven growth and should be treated as very suspect.22 The failure of the USGS to do so is, at best, unhelpful.
“The same reserve growth function was applied to all fields”. (Page RG-4). “Reserve growth function intended to represent world potential to be added to the remaining reserves of known fields”. (Page RG-5).
This in spite of the fact that there was an earlier observation that all fields do not exhibit similar growth. Note - no mention is made of fields that show negative growth11.
“Applying USA reserve growth to world reserves would give smaller error than not considering reserve growth”. “USA reserve growth experience ……… giving insight for rest of world potential”.
These assumptions are both unsupported and unsupportable, and are misleading for the user. The error is vastly larger than a no growth assumption, and is conducive to potentially hazardous complacency. USA experience provides no useful world insight.
Curious, did you receive any reply from the USGS? You certainly made your points with enough clarity to warrant one.
Hi Murray,
Thank you.
Like Luke, I'm wondering what happened.
I'm also curious - to whom did you send your petition? Were you joined by any others?
Also, when you mention "reporting standards", what are you referring to?
Thanks for the positive comment. I first sent the petition directly to the USGS, with no response. I then asked my Senator to send it for me, which he did, and received an immediate acknowledgment and deadline for a response. I got the response only after following up after the deadline, and basically I was blown off with a non responsive response. Lacking resources to hire lawyers and sue, and having nothing like TOD, I let it drop.
The reporting standards are:
"This petition is submitted under the provisions of Public Law 106-554; H.R. 5658 Section 515 and consistent with the guidelines issued by the Office of Management and Budget as required by that law and section; entitled “Guidelines for Ensuring and Maximizing the Quality, Objectivity, Utility and Integrity of Information Disseminated by Federal Agencies, and the guidelines issued by the USGS entitled “Guidelines for Ensuring the Quality of Information Disseminated to the Public”.
The petition concerns the USGS report entitled “US Geological Survey World Petroleum Assessment 2000 – Description and Results” and found at http://greenwood.cr.usgs.gov/energy/WorldEnergy/DDS-60/. This report fails to meet the guidelines referenced above in its entirety, with major issues to be addressed primarily in Chapter ES, IN, AM, OP, RG and AR."
I wanted the report formally withdrawn, removed from the Internet, and copies sent to Congress recalled. Silly, no? Murray
Since I'm posting a message, on another subject, the referenced paper notes that reserve growth has exceeded USGS projection so far. This is clearly a misunderstanding on the part of the authors. There have been only 2 sources of significant "growth":
1)the fact that OPEC reserves don't decline with production, which is probably interpreted as reserve replacement or growth.
2)Canada upped their declared reserves a couple of years ago, by classifying oil sands as petroleum reserves.
The first is phony, and the second is outside the scope of the USGS projection. Maybe Rembrandt could call this issue to the attention of the authors. Murray
Thanks for the come back Murray, and for your efforts in the first place. Sadly you received the exact reply from the USGS I expected. Doubly sad since government tax policy could be one of the few ways to redirect our energy production/energy use system into a more promising path. Chances of an orderly turnabout do seem slim.
http://graphoilogy.blogspot.com/2007/06/in-defense-of-hubbert-linearizat...
In Defense of the Hubbert Linearization Method
(June, 2007)
In the captioned article, we looked at two producing regions with wildly different production profiles--the US Lower 48 and Russia. Khebab used Lower 48 production data through 1970 and Russian production data through 1984 to predict post-1970 Lower 48 cumulative production and post-1984 Russian cumulative production (using the HL method). The Lower 48 model was quite accurate in predicting post-1970 cumulative production, and the Russian model was quite accurate in predicting post-1984 cumulative production, and one inference that we drew from the Russian plot was that Russia would in all likelihood resume its production decline in the near term, which is a point we first made in early 2006.
IMO, the HL method gives us a plausible estimate of cumulative production for a given region, even areas like Saudi Arabia. And I think that the tool is invaluable since it allows us to derive a plausible estimate, without depending on dubious reserve estimates. The weakness of the HL method is that it really only gives us an estimate for URR from mature basins, but in mature regions the question arises as to how material frontier basins will be. For example, Alaska helped, but it was certainly not a game changer for the US. I suspect that the frontier basins in Russia are to Russia as Alaska is to the US.
And BTW, as I have repeatedly noted, Peaks Happen--even in areas like Texas & the North Sea, two regions developed by private companies, using the best available technology, with virtually no restrictions on drilling:
Note that the initial declines in both regions corresponded to rising oil prices.
And as I have repeatedly noted, when we plug in Net Export Math (Export Land Model, or ELM), our expectation is for a long term accelerating rate of decline in worldwide net oil exports, with Mexico serving as the latest example of plunging net oil exports.
accelerating rate of decline in worldwide net oil exports
Your "accelerating rate of decline" is a scam.
Consider these export figures from hypothetical country A:
2000: 1000kbd
2001: 900kbd
2002: 800kbd
2003: 700kbd
2004: 600kbd
2005: 500kbd
2006: 400kbd
2007: 300kbd
2008: 200kbd
2009: 100kbd
2010: 0kbd
Most people would call this a steady, linear decline at a constant rate. You, however, translate this into year-on-year decline rates:
2001: 10%
2002: 11%
2003: 13%
2004: 14%
2005: 17%
2006: 20%
2007: 25%
2008: 33%
2009: 50%
2010: 100%
Isn't that amazing? The magic of statistical chicanery transforms a totally boring linear decline into "accelerating decline rates"!
JD, it is your hypothetical country that is the scam. A linear rate of decline would be 10% per year or 6% per year, or the same percentage rate of decline every year. What you are showing is truly an accelerating rate of decline. That is, the percentage of decline increases every year, even though the total amount in barrels per day stays the same.
If the percent of decline increases every year then that is truly an accelerating rate of decline. After all it is the rate of decline we are talking about here, not actual barrels.
All that being said, your post was not only wrong it was also rude and unnecessary.
Ron P.
Edit: Please note that WebHubbleTelescope's post below is referring to JD's post, not mine.
Ron, the example is simple and self-explanatory, and readers can take what they want from it. The bottom line is that Westexas uses the term "accelerating decline" to describe quantities which decline by a constant, unchanging amount year after year.
No, he did not say that at all. He said:
He said absolutely nothing about a constant, unchanging amount year after year. An accelerating rate means an accelerating percentage of decline each year.
Whenever the words rate of decline or increase are used, then percentage is automatically assumed, not actual numbers.
Ron P.
It looks as if John Denver stumbled and fumbled over some fairly relatively innocuous math.
I wonder once he understands the mistake he made that he might change his outlook toward a more pessimistic outlook? .... I kind of doubt it, he has made up his mind.
Yes, and whether it's accelerating or not, peak economy still means we have trillions of dollars of debt to "unwind." Or, said another way, the bankruptcies and other debt defaults are just in their early days.
Collapse has begun.
http://www.energychallenge.tv/index.php/archives/226
What I find particularly silly about JD's misunderstanding is that in some cases ELM does predict accelerating export decline in absolute terms, for periods of time, and not just acceleration in year to year percentage decline. So he's accusing westexas of using exaggerated language when in fact westexas may be understating the direness of ELM predictions.
With some exceptions, such as Matt Simmons, and some prior work that Nate turned up, almost everyone in Peak Oil circles had been assuming that a simple low digit exponential decline rate was the worst case. For example, it would take about 36 years for production to fall by 50%, assuming a -2%/year production decline rate.
What we have been endeavoring to show is that a far greater threat is the net export decline resulting from the difference between production falling an exponential rate and consumption increasing at a generally exponential rate. To help me understand what happens, I proposed the simplistic Export Land Model (ELM), which stipulates a country consuming half of its production at final peak, with a -5%/year production decline rate and a +2.5%/year rate of increase in consumption. Here are the initial and final annual net export decline rates for the ELM (final year is last year of net oil exports):
Year One: -14%/year
Year Eight: -61%/year
At their final production peaks, the UK and Indonesia were consuming about half of their production. Here are the initial and final annual net export decline rates for the UK and Indonesia (EIA data):
UK;
2000: -38%/year
2005: -237%/year
Indonesia:
1997: -16%/year
2003: -73%/year
And of course, if consumption increases fast enough, a former net exporter can become a net oil importer, even as their production increases, e.g., the US and China. Here are annual net export decline rates for China, from their start of their net export decline to their final year of net oil exports:
1986: -5%/year
1992: -57%year
All of this is of course pretty elementary, but it is an elementary fact that massively overlooked worldwide. Regarding terminology, I am simply describing the rate of change in net oil exports the same way that the rate of change in production and the rate of change in consumption are calculated.
Note that the production decline rate and rate of increase in consumption were constant for the ELM (-5%/year and +2.5%/year respectively), for both Year One and for Year Eight, but the net export decline rate went from -14%year to -61%/year:
Year One:
Production: -5%/year
Consumption: +2.5%year
Net Exports: -14%/year
Year Eight:
Production: -5%/year
Consumption: +2.5%year
Net Exports: -61%/year
No, you are wrong. People (and governments and corporations) plan their future around the status quo and want to anticipate any change that comes about. This translates into usually wanting to know how much something changes in percentage terms from the previous year. So we automatically infer without knowing the exact price of an item that a 5% sales discount is nothing to worry about. But if this gap keeps increasing, then we have to worry.
If the gauge is exponential decline, then what WT says is right and it is indeed accelerating faster than exponential decline.
A double pox on your own chicanery.
If hypothetical country B's sole source of oil is imports from A, then it's very significant indeed to speak of an "accelerating rate of decline".
Of course that's unlikely, but so is your scenario's hypothetical country A.
People use statistics in all sorts of dodgy ways. For example, "with recent wind turbines built, we are now 20% renewable." People will take this to mean that emissions have dropped, but... if a state begins with 1,000MW of coal-sourced power, and then,
in each of those scenarios, the country has become 20% renewable. In the first, emissions dropped; in the second, they stayed the same; in the last, emissions rose. But when people hear "we're 20% renewable!" they get all excited and imagine emissions have dropped.
This is why I say we should beware graphs. Because while certain graphs or percentages or other figures may be the truth, they're not always the whole truth.
The whole truth of country A isn't complete without knowing about country A's balance of trade - maybe their country has a civil conflict or is mostly rural, so their oil exports are their only source of income. Or knowing about country B's imports. Or whether country B has gone all renewable and electric. Or whether A's exports could rise again if they conserved their domestic consumption a bit. Or maybe they have heavy sour crude, too. And so on.
While percentages can be misleading, so can raw figures, graphs, and all sorts of blanket statements based on just a few simple facts.
When you look into things in more detail, what you usually find is that everyone expressing some extreme position like doomerism or cornucopianism is talking bollocks; things are more complicated than that.
JD,does it really matter HOW we describe the numbers or WHAT the resulting consequences of these numbers are?
Methinks thou art in denial.Mayhaps the barber wilt bleed thee,until thy veins are spent, and verily no more blood will issue forth,and then all thy troubles will be but as a passing cloud.
No doubt the all ills of the citizens of your hypothetical country will be likewise cured when thier oil wells run dry.
Your comment is childish at best.If you are working undercover for some BAU outfit,I expect they are looking for your replacement.
I wanted to point out a post I wrote a little over a year ago, talking about the differences in reserves of different countries, and calculating ratios of oil production to reserves, over historical periods.
The pattern of reserve increases forecast by the USGS is based on a review of history which is heavily biased toward countries using the US Securities and Exchange Commission rules for reporting reserves, and these reserves were very conservative. Assuming that the same pattern would apply to reserves set on other bases (some fairly obviously political) seems like a big leap of faith.
Gail,
I would have thought the debate has moved on from "what are the ultimate reserves" to how quickly oil production will decline as oil is valued much above it's energy content.Clearly the large OPEC "reserves" didn't allow more oil to be produced at >$100/barrel. This will impact on low EROEI reserves such as the tar sands, where non FF electricity/or nuclear heat will replace NG or using diesel or some of the resource to generate heat.
I have never been able to understand why OPEC doesn't halve its reserves across the board, or even reduce further based on historical production or what was produced in June 2008, to increase the price.
Did I miss China and India?
And that other country that used to run on smoke and mirrors; does it expect to get it's historical percentage?
The picture looks a bit grainy as you zoom in on it.
IMO the publication from Aguilera is to much theoretical humbug and Rembrandt's reaction takes into account what's going on in practice.
Most of the easy oil is gone, reserve growth or not. A lot of reserve growth was not back-dated as it should have been. Discoveries from the past 20 years and in the future are mostly (relative)small fields. Many small fields to develop means the oilindustry needs a lot of new rigs, infrastructure and qualified labourers that won't be all there in time. More heavy oil with less energy content, decreasing EROEI. Geopolitics playing an increasingly important role. Besides all this, a URR that is one third higher, seems to shift peak oil only 5 years.
Given that assumptions made by Aguilera et al. concerning reserve growth and new discoveries are correct, the overriding challenge for the authors could be their own ‘caveats’.
These reserves and new discoveries will at some point be limited by EROEI, not only in the form of production but also by geopolitical constraints. When countries are no longer willing to export their oil, the energy required to go and take that oil will be more than the energy returned.
I read that the USGS has reduced the estimated potential of East Greenland. Have any wells been drilled in this area?
http://www.hubbertpeak.com/LaHerrere/shell2001/
I don't think anything has been drilled in the area. Not even any surveys in the area to my knowledge. They think oil is in the area because it was adjacent to the area that is now the North Sea oil field before it was split apart by continental drift several million of years ago.
Following is also from my 2002 petition. In spite of global warming and Arctic ice shrinking, no drilling has been done. Now with Arctic ice rapidly recovering, no drilling is likely to be done.
4.8 Discovery Greenland
From the table AR-2a we find about 130 Gb of estimated (hypothetical) discovery in fields that have no known oil to now. Northeast Greenland is the biggest “potential” at 47 Gb, larger than all but 6 of nearly 300 Assessment Units for presently known oil. An extensive search of the literature gives no reason for such optimism, revealing only that for East Greenland an Arco led group examined a large body of seismic data post-1984, and relinquished their license in 1990 without drilling a well. In the west, 31 wells have been drilled on the Labrador shelf with some gas prone indications but no oil. Five dry holes were drilled in Southwest Greenland in the 1970s. After extensive seismic analysis Stat-Oil drilled one exploratory well, considered by them to be high risk, in 2000 in Southwest Greenland, and again came up dry, with the interpreted gas-liquid boundary being only a change in sedimentary layers.
In Explorer Sept 20009 the AAPG notes that there is some reason to expect oil in East Greenland, but does not expect drilling before 15 to 20 years, not leaving enough time to prove 47 Gb by 2025. GEUS, in response to a request, notes for Northeast Greenland “there are limited data available, seismic is largely confidential, there has been no drilling and ice conditions limit seismic acquisition and make drilling impossible with present technology. The assessment is done by analog with North Sea data and quotes a CASP study that dissatisfies GEUS for lack of proper documentation.” Given the North Sea decline, if there were real “potential” of even 5 Gb, oil companies would be drilling wells now. With such poor prospects, and the remote and hostile environment, a credible estimate of potential to 2025 would be zero.
One wonders how much of the rest of the “hypothetical” oil is similarly unlikely.
That 'hypothetical' oil won't produce many BTUs if arctic offshore holes keep coming up dry that is for sure. Though I must take a little issue in your prognosis that arctic ice is rapidly recovering.
'sea ice extent averaged over the month of March 2009 was 15.16 million square kilometers (5.85 million square miles). This was 730,000 square kilometers (282,000 square miles) above the record low of 2006, but 590,000 square kilometers (228,000 square miles) below the 1979 to 2000 average' according to the National Snow and Ice Data Center.http://nsidc.org/arcticseaicenews
But they report that substantial ice is first year and even though a little more ice survived last summer than in recent years, ice older than two years old is at record lows and at about 1/3 of the 1981-2000 average. We will have to wait a few years to declare the arctic ice to be rapidly recovering it seems. Old ice is still at a premium.
For what its worth we just had a week with record temperatures here in interior Alaska, comparable to some of the same warm weeks we had in the mid 1990s. Not the Arctic Ocean, but darned near to the arctic.
Luke, this isn't really the subject of discussion, but I would like to point out that the winter of 2006/7 is when 3 year old ice was formed, and the summer of 2007 was when we got the big ice loss, due mainly to unusual wind patterns and high insolation. A lot of that new ice was lost. That is the 3 year old ice at a premium. We have now had winters 2007/8 and 2008/9. Next year 3 year old ice will be recovering nicely. Early May ice extent was just a tad short of the 1979-2000 average for that time of year, and May may yet touch said average. One week of record temperatures in one fairly small part of the Arctic do not a warming make. SSTs have been dropping since 2003, high latitude eruptions are followed by cool summers and cold winters in mid to high latitudes, and we have a very inactive sun. My bet is on further ice growth, more rapidly than it was lost. Murray
As discussion on the original post has flagged I carry this one step further. I'm hoping your prediction on the rapid ice growth is correct, Murray. The inactive sun is of course very obvious to those who live in these parts. From what I have recently read, the new solar cycle has finally been declared to have begun--several months late--we will see if that holds.
I'm less optimistic about rapid ice growth because the now seasonally recurring large area of arctic open water has opened a whole new can of weather worms on which we have little good predictive data. Thus anomalies like 2007 wind pattern might not be as anomalous as they first appear.
Old GW did teach us a good lesson on conclusions drawn to early with his 'mission accomplished' speech. That of course cuts both ways in the warming debate. The conclusion that Peak Oil is now (give or take a few years) seems to be on much firmer ground.
I realized some time ago that I did not have the expertise to follow or comment on these type of technical aspects of the peak oil debate, nor the time or motivation to develop such expertise. So I won't comment on the details here (except to say that their response in item number 2 seems specious on its face). However, let me offer the following observations as an ordinary person...
About 7 years ago, when I first became aware of peak oil issues and the debates over future of oil production, I read a very critical review of the USGS survey. I can't remember the author or much specifics, but I remember that the USGS survey was being used by "optimists" at the time to argue that global oil production could be expected to continue to increase until around 2030 or beyond. And back then, oil was trading in the range of $30 a barrel.
Look where we are today: The "optimists" in this debate, thought they still rely on the USGS survey, are disavowing any belief that the recent oil price spike was an "abberation", and they use the phrase "costs substantially below ... $120" as the benchmark of their optimism that depletion need not drive prices higher in coming years. Well, I guess that $80 or $100 counts as substantially below $120. And, not only that, but the overall tenor of the responses to Rembrant's criticisms seems to be: "We admit that many of your concerns could be real, but they are outside the scope of our study."
In short, the parameters of this debate, regardless of who turns out to be correct, seem to represent a vindication for the outlook of "peak oilers."
I was unable to find their article through the links. Does anyone know how far into the future they are predicting that "depletion need not drive market prices above the relatively high levels prevailing over the past several years"?
I was disappointed by the authors' response to Rembrandt's points. The authors do not seem too engaged and are doing the equivalent of moving the chess pieces around the board. I can't even tell if they are defending their positions or reconciling their views with a more pessimistic outlook.
Hi WebHubble,
Thank you for bringing up your overall take on the reply.
re: "I can't even tell..."
Are there any specific questions you might ask that might help resolve this?
It seems to me to be a good idea, given the impacts of post-peak decline rates on the lives of real people.
And not the way a chessgrandmaster would do.
Thank you to Rembrandt, and to Aguilera, et al for talking here.
re: Aguilera, et al say:
"The Hubbert curve pattern of expected discoveries, shown by the blue line in Figure 2 of the article review, was never predicted or even implied in the USGS study."
I thought we covered this in the first discussion, wherein Rembrandt modified his description of the representation depicted in the figure. He called it
"...discovery pattern based on potential discoveries as expected by USGS."
My question to Aguilera, et al, is the following:
Is it the meaning of this depiction or something about the depiction itself that you say was not "predicted or implied" in the USGS study?
In other words, were there any numerical estimates in the USGS study that could be fairly and reasonably translated into a graphical representation?
If so, 1) What were they? 2) What do you see as a fair and reasonable way to represent them in graphical terms?
Again, thanks for your participation.
re: Aguilera, et al, say:
"This means that investors have chosen to invest in development of previously discovered fields, instead of exploration."
I'm curious about the following: Has anyone analyzed this in some kind of quantitative fashion?
For example, by comparing investment dollars in exploration activities on a year-by-year basis; or, perhaps I should call it "costs of exploration" compared over time?
So, it's the case that exploration costs have declined, indicating dollars invested in some other category?
It's a good question, I don't see good any reasons why development should be preferred over exploration especially at the price levels we experienced between 2005 and 2008. The USGS believes that reserve growth is replacing discovery. However, they rely on the IHS database for their estimates especially for OPEC where reserve growth as been staggering, for the top 186 oil fields the reserve growth is the following: +191 Gb between 1981 and 2003 (+51 Gb for Non-OPEC).
One sure thing about reserve growth is that it does not happen overnight, it's a slow process. However, the USGS does not seem to question the published numbers especially in light of overnight proven reserve jumps (about 200 Gb):
My main criticism of these papers is that they take numbers at their face value, they should at least give a lower forecast correcting for spurious reserve increase.
Thank you.
I'm also curious about this statement:
"For example, recovery factors of oil are likely to continue to increase, so that will apply to known volumes as well as presently undiscovered volumes."
Has someone done an analysis of the patterns of increase in "recovery factors"?
In other words, of what do these factors consist?
How does their increase show up and in what manner?
What is the rate of increase in "recovery factors"?
Are there theoretical reasons why one might expect there to be a practical ceiling on the increase in "recovery factors"?
A complex answer Aniya. Above all else, RF is mostly determined by the rock properties and the reservoir drive mechanisms. Two extremes: heavy oil in a low permeable sandstone reservoir with poor water drive might recover only 20% of the oil in place...or less. A light oil in a high permeable limestone reservoir with a strong water drive might recover 60% or more. All based upon the same technology at that point in time. So accurately predicting future recovery factors means accurately predicting the type of rock, oil and reservoir drives. You'll not find anyone attempting such a prediction. So the simple answer is no.
A more complex answer has to take into account technology improvements. The biggest gain in the last 15 years has been horizontal drilling technology. More efficient and thus typically a better RF. Improved seismic imaging has also been a big aid in reservoir management. There have been other improvements but those two have been the most significant IMO.
But the answer gets even more complex when you add the time factor in. I'll skip the details but there are certain reservoirs in S Texas that will probably recover as much as 70% of the oil in place. But it might take as long as 60 to 80 years to get the last half of that oil out. It's a gravity drainage situation so it's cheap to operate: the oil just flows (very slowly) to the well bores without any artificial assist. So when you hear folks talk about two fields having the same RF (say 50%) it might take one field 8 years to reach that level but 30 years to reach it in the other field. And, as we all know, the key factor these days is much more leveraged towards flow rates then total production.
Externalities.
What effect will other peaking elements have on oil supply/demand?
For instance if we need more fuel to mine lower grade phosporus, will that divert supplies from less vital uses?
And if oil is inelastic will this diversion not force price upwards?
Other peaking elements,
Copper,
......
Good point,Arthur.I don't expect that our soiiety ,collectively speaking,will get it's act together and make the hard decisions necessary to achieve a soft landing-which apparently is about as much as can be realistically expected under the most optimistic scenarios presented here.
On the other hand, governments do actually do something once in a while,even if the solution is worse than the problem.Witness the corn ethanol boondoogle.It got off the ground because several converging factors(rising oil imports,clamor from the enviromental lobby for renewables,fear of global warming,desire on part of politicians to beseen as doing something,etc)together created an opportunity for big biz and big ag to collude with midwestern congressmem /senators who did the usual scratch my back thing with the rest of the establishment, and big ethanol was born.
When things get really bad,we will see numerous policies enacted that will in in effect work like sledge hammers whereas a screw driver used earlier on would have gotten the job done.You will see phosphorus mined right up to the final collapse, if things go that route.Mining phosphorus is one of those things that simply must be done,if we are going to eat for the next couple of decades.No matter how high the price of oil goes,oil will be made available by whatever sledgehammer methods are required(so long as we have a functioning government) to the police, the military, the electric utilities-for maintainence,not power generation,the water departments or utilities etc.
Common sense dictates that this should be so.It is my hope that when the going gets rough enough that maybe such enforced rationing of oil and any other motor fuels available will forcibly focus the attention of the general public on peak oil to the extent that collapse can be staved off.
Of course by then it might be too late.
Incidentally I am not opposed to bio fuels in principle, but speaking as a farmer who reads too much history,I am afraid that if we become really good at growing crops and converting them into fuel on the grand scale,the cure will be as bad as the disease.It would be better for everyboby to put the effort into solar,wind,nuclear,tidal,goethermal etc in the long run.I foresee the need for a viable biofuel industry as a partial hedge against peak oil,and I recognize the fact that eventually biofuels might be produced in factories from sewage,etc,which might be an environmentally sound solution.
Converting so called marginal land to biofuel production is a pipe dream from an agricultural point of view.If anyone is interested in why this is so,I will respond.
Does anyone know what the situation is for natural gas reserves?
Is there anything like a 'natural gas megaprojects' database?
Here's Ahlbrandt's assessment of non-US gas.
http://www.searchanddiscovery.net/documents/ahlbrandt/images/fig03.htm
The world uses 17.5 Gboe of natural gas.
Remaining reserves are probably ~600 Gboe (2009).
We need to definite what part of undiscovered conventional might include tight gas, gas sands. IMO, that kind of gas looks a lot like conventional gas as opposed to CBM.
Some of the reserve growth could be Siberian Yamal or Shtokman undersea gas which probably won't get developed.
Clearly we are using up gas faster than we are developing it.
The 2000 USGS assessment of non-USA conventional-only oil needs better explanation.
The report says that in 2000 there was 859 Gb of remaining conventional oil reserves plus 612 Gb of reserve growth plus 649 Gb of undiscovered oil, all totaling 2120 Gb. This seems like a lot of oil but the rate of extraction is a different matter. The estimate doesn't include ANY tar sands, bitumen, extra-heavy oil or oil shale as I read it.
We are using oil up at the rate of 30 Gb/yr.
Reserve growth is really EOR IMO, which worldwide is less than 1 Gb per year. It is hard to see that EOR can increase very much as the Hirsch report estimates US EOR increasing by .3 mbpd per year( from a base of 1.2 mpbd) under his crash mitigation program.
Very few new discoveries are being found, possible 4 Gb/yr
We are drawing down 859 Gb at the rate of 30 Gb/yr while adding the 4Gb/yr of new discoveries and EOR adding 1 Gb per year.
If consumption is maintained and EOR and discovery continue at their current levels we will have completely exhausted the 'remaining reserves' in 2033 while having 1100 Gb 'on the books' as future, never to be used, undiscovered and reserve growth(EOR).
If world consumption were cut by .5 Gb each year( so world demand would be 13 Gb in 2043!--obviously the end of purely oil based transport) and a super-crash program of EOR was instituted( 30% annual increase in EOR) the world would still have 390 Gb of EOR potenial with an annual EOR production rate of 11.2 Gb/yr, 473 Gb/yr of undiscovered oil left and 235 Gb of remaing reserves left for a total of 1097 Gb of petroleum potential.
It's very much a case of running out of gasoline on the road before you reach the gas station.
If we continue to use oil at our PRESENT rate the 859 Gb will be exhausted (in 2030) before reserve growth or discoveries can come to the rescue of our 'lifestsyle'. No oil, no lifestyle we will 'evolve' away from oil completely leaving 900 Gb of potential in the ground without a market. The will slowly be used at the rate of maybe 10 Gb/yr over the next 90 years.
If we crash mitigate and conserve at .5Gb/year we will stabilize with about 10 Gb/yr of the oil we use now which effectively ends the age of oil based transport and leaving 1000 Gb in the ground to be slowly consumed at the rate of 10 Gb/ yr over the next 100 years.
Better option is an worldwide immediate mandatory oil production freeze at 15 Gb/yr. This would allow oil reserves(reserve growth and remaining reserves) to last to 2100 at that rate.
Looking at it this way, the Aguilera report is at best incomplete and at worse misleading( hey, there's plenty of gas at the gas station!).
marjorian,
"If we continue to use oil at our PRESENT rate the 859 Gb will be exhausted (in 2030) before...."
You should know that it will be impossible to use oil that the PRESENT rate!, therefore the 859Gb will NOT be exhausted by 2030, (but much less available per year:hey, you can continue to buy gas for the next 30? years but only one gallon per week, and for another 30 years at one pint/week).
Until be go to gasoline rationing the real big changes in replacing oil will not occur.
Probably.
The IEA says that production in existing fields are declining at 4.35% per year but existing fields only are a portion of 'remaining reserves' so with sufficient determination we could stay even if additional production equals depletion. But that hasn't happened.
Perhaps TPTB have realized that the world needs less oil production to give the industry time to catch up?( as in logistical demand curve)
If you use the USGS assessments as fact(why not?) you have a huge number (2120 Gb outside the US) of which only 40%, 859 Gb, represents reserves rather than potential/imaginary resources of EOR and new discoveries. If you assume that these huge potentials/imaginaries actually do exist then the (slow)rate that they can be developed will determine how much oil they will represent at a future date and how much we should use now to continue using oil until all the USGS conventional oil supplies are exhausted, rather than see the oil industry collapse from a lack of product.
The reason this is important is that oil is a very wonderful product/fuel and it makes sense to use it all up rather than leave it in the ground.
Personally, I don't consider a 50% reduction to be at all onerous. I could live quite well on 50% of the oil I use. Unfortunately the market/reward based energy system will seek maintain production with the paradoxical effect of leaving 1000 Gb in the ground by collapsing demand for oil before new production kicks in.
More than 90% of existing oilreserves are considered to be in about 1500 fields. That's one of the reasons why it is very hard to compensate for the decline in (super)giants.
EOR producing 1 Gb/year must be from tertiary recovery. Secondary EOR
will produce much more. It depletes a field faster and the danger is that past peak the decline is steeper.
But the economy not. It depends on growth and availability of cheap energy.
.
I would like to see that tabulation (where 859 Gb of 'remaining reserves' add up to 90%(or whatever) of operating (and therefore mainly declining oil fields).
I also don't think that secondary recovery is much different economically than primary oil recovery and so would be counted in remaining reserves to start with but tertiary is a whole different animal.
Are you sure? If you were told you could have more oil in the long run assuming you cut back consumption, would'nt you cut back? I think even the oil companies would.
Look at Wikipedia's list of big oil fields. That site claims this.
I have no reason to doubt it. If you see how much oil there should be only in the fields bigger than 0,5 Gb.
Some secondary oilwinning projects must be very expensive. Take f.i. Khurais in KSA and look how many years of work and how much infrastructure it must have taken before it can come on stream. Remaining reserves says a lot but not enough about flow rates, and that's what it's all about. That's why TOD exist.
If you cut back, the economy shrinks. With diminishing globalisation the economy in many countries can still grow (as tranport uses about 60% of the oil), but this takes a lot of time for the industries worldwide to adapt.