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Ron Patterson

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Ron Patterson is a retired computer engineer. He worked in Saudi Arabia for five years, two years at the Ghazlan Power Plant near Ras Tanura…

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Are Proven Oil Reserves Just A Political Tool?

Bakken

Jean Laherrere has posted the following charts and comments on Bakken and World oil reserves.

EIA proved reserves on Bakken (ND + Montana) plus cumulative production have changed at end:

-2012 3754 Mb

-2013 5701 Mb

-2014 7203 Mb

-2015 6671 Mb

As shown in this graph in red squares, together with HL ultimates, USGS estimates and cumulative production.

(Click to enlarge)

This EIA CP+RR value (which is assumed to trend towards the oil ultimate) has increased sharply from 2012 to 2014 and has decreased in 2015 (this decrease may continue towards which value?).

Proved reserves depend upon the oil price.

Its variation indicates that its reliability is poor:

No one knows how to estimate unconventional reserves as LTO because there is not enough historical series to verify if the method is right.

The EIA only reports Bakken reserves since 2011.

Unconventional oil reserves are in unconventional reservoirs under unconventional trapping (no conventional water oil contact).

There is no world consensus on oil reserves definition with 4 different definitions:

-SEC with audit for IOCs listed on the U.S. stock market forbidden from publishing probable reserves.

-OPEC without audit for OPEC members excluding condensate and NGL.

-ABC1 = Russian definition relying on the maximum recovery.

-SPE-PMRS (Petroleum Reserves Management System) used by IOCs to estimate the Net Present Value before deciding the development of oil project.

Proved reserves are:

-Either financial being audited following SEC rules by IOCs.

-Or political being unaudited for OPEC members.

World proved reserves vary with sources, showing that they are unreliable, in particular BP 2016 is different from BP 2016.

(Click to enlarge)

The most important graph is this remaining oil reserves from political/financial and technical reserves, showing the discrepancy between the published data (proved reserves) and the confidential 2P (proved plus probable) data.

(Click to enlarge)

The aggregation of proved field oil reserves largely underestimates the proved reserves of the country or of the world: it is incorrect to make an arithmetic addition, only aggregation of mean reserves is correct. Related: Outlook For Coal Unlikely To Improve

In the Gulf of Mexico BOEM has decided in 2011 to report GOM oil reserves under 2P, dropping the proved reserves estimates: BOEM is not obliged to follow SEC rules!

Everybody knows that world oil discoveries have been well below oil production for a long time and that remaining reserves should be decreasing.

Proved reserves increased by adding tar sands and extra-heavy reserves (Canada and Venezuela) in the 2000s when they had been in production since 1967 and 1979.

(Click to enlarge)

Annual crude less extra-heavy oil 2P discovery has peaked in the 1960s and annual production is peaking now.

(Click to enlarge)

Proved reserves are a poor practice, and pleasing bankers, shareholders and operators is leading to growth in reserves due to inaccurate methods.

Proved OPEC reserves are plain political shows, without any connection to reality.

During the fight for quotas between OPEC members from 1985 to 1989, 300 Gb of so called proved reserves were added which were described in 2007 in London by Sadad al-Husseini (former VP Aramco) as speculative resources.

By Jean Laherrere via Peakoilbarrel.com

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