Oil Depletion - Updated Through 2001

Every year, I try to update the assessment of the world oil resource base and its depletion. Some of the earlier versions have been reported in this website, attracting attention from those concerned about the Carrying Capacity of the Planet. The subject is a difficult and sensitive one, and there are many vested interests in industry and government, doing their best to confuse it. Although there are no particular technical challenges in measuring the reserves of an oilfield or in assessing the potential for new discovery, public data are notoriously unreliable and inconsistent, permitting in turn the full spectrum of unsubstantiated opinion.

The following describes the latest attempt to provide a fair evaluation of the position.

Some members of the flat-earth fraternity have made a career from pointing out how earlier estimates needed revision and correction. They will not be disappointed with this assessment that differs yet again from earlier ones. Whereas a scientist would describe this evolution as progress based on a growing knowledge of Nature, the flat-earth fraternity will claim it as evidence that a resource-based approach to forecasting production is fundamentally flawed, reciting the immortal words of M.A.Adelman, who stated "Minerals are inexhaustible and will never be depleted. A stream of investment creates additions to proved reserves from a very large in-ground inventory. The reserves are constantly being renewed as they are extracted...... How much was in the ground at the start and how much will be left at the end are unknown and irrelevant."

Others do accept that there are natural limits to the framework within which the economy has to function. There does indeed seem to be a growing awareness of the issue, with the establishment in Europe of the Oil Depletion Analysis Centre ("ODAC") and an expanding network of universities and government institutions forming The Association for the Study of Peak Oil ("ASPO").

While resource constraints remain as the over-riding control on production, in this assessment we do attach importance to economic factors, particularly the recession which has cut the demand for oil and lowered its price.

The Essence of the Model

In summary, the assessment involves the following steps.

What to measure

There are many different categories of oil and gas, each with its own endowment, characteristics and costs. Some are easy, cheap and fast to produce; others are the precise opposite. Most oil, produced to-date, comes from so-called Conventional sources, which will continue to dominate all supply for a long time to come. Since there is no standard definition, it is necessary to explain that in this study the following are treated as Non-Conventional This definition has been changed from that use previously in one important respect. Natural gas liquid (Condensate) that condenses naturally from the gas-caps of oilfields is now treated together with Conventional oil.

While it is desirable to define what we aim to measure, it is recognised that in practice the data base is not sufficiently detailed to do so in many cases.

Country Classification

For modelling purposes, it is convenient to divide the producing countries of the World into three groups.:
  1. The Post-Midpoint countries are those that have produced more than half of their assessed endowment (termed Ultimate). It is assumed that their future production will decline at the current Depletion Rate (Annual Production as a percentage of the previous year's Yet-to-Produce, namely Reserves + Yet-to-Find).
  2. The Pre-Midpoint countries are those that have not yet reached midpoint and whose production can increase to that point before declining.
  3. The Swing Countries are Abu Dhabi, Iran, Iraq, Kuwait, the Neutral Zone, and Saudi Arabia, which make up the difference between world demand under various scenarios and what the other countries produce.

It is also convenient to divide the World into the following regions: