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An extensive new scientific analysis published in Wiley Interdisciplinary Reviews: Energy & Environment says that proved conventional oil reserves as detailed in industry sources are likely “overstated” by half.
According to standard sources like the Oil & Gas Journal, BP’s Annual Statistical Review of World Energy, and the US Energy Information Administration, the world contains 1.7 trillion barrels of proved conventional reserves.
However, according to the new study by Professor Michael Jefferson of the ESCP Europe Business School, a former chief economist at oil major Royal Dutch/Shell Group, this official figure which has helped justify massive investments in new exploration and development, is almost double the real size of world reserves.
Wiley Interdisciplinary Reviews (WIRES) is a series of high-quality peer-reviewed publications which runs authoritative reviews of the literature across relevant academic disciplines.
According to Professor Michael Jefferson, who spent nearly 20 years at Shell in various senior roles from head of planning in Europe to director of oil supply and trading, “the five major Middle East oil exporters altered the basis of their definition of ‘proved’ conventional oil reserves from a 90 percent probability down to a 50 percent probability from 1984. The result has been an apparent (but not real) increase in their ‘proved’ conventional oil reserves of some 435 billion barrels.”
Global reserves have been further inflated, he wrote in his study, by adding reserve figures from Venezuelan heavy oil and Canadian tar sands – despite the fact that they are “more difficult and costly to extract” and generally of “poorer quality” than conventional oil. This has brought up global reserve estimates by a further 440 billion barrels.
Jefferson’s conclusion is stark: “Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June, 2014, after that of July, 2008, the ‘peak oil’ issue remains with us.”
The study referred to here is: Overview A global energy assessment,
Against the background of IIASA’s massive (their word) ‘global energy assessment’ (GEA), this paper takes a closer look at the challenges posed by population growth, energy poverty, the fossil fuels and carbon storage, renewable energy, energy efficiency, natural catastrophes, and potential climatic change to offer a somber, although arguably more realistic, overview of what the future may hold than the GEA achieved. © 2015 John Wiley & Sons, Ltd
I thought the above article worth a post of its own. After all it is a vindication of what many of us have been saying for years now. And I especially call your attention to the line: “the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels.”
That puts conventional reserves at about 825 billion barrels. That is OPEC + Non-OPEC, that is everything, well, everything conventional. That is almost exactly the amount of reserves I have been claiming for years. I have been thrashing this straw for over a decade and it feels good to get some vindication.
Related: Can Oil Continue To Rally Like This?
Here are a couple of other peak oil articles in the news this week:
On March 29th, the Government Accountability Office (GAO), also referred to as the ‘congressional watchdog’, released a much-anticipated report called Crude Oil: Uncertainty about future oil supply makes it important to develop a strategy for addressing a peak and decline in oil production.
This report was initiated by a request, just over a year ago, from Congressman Roscoe Bartlet, a very vocal proponent of the peak oil theory in the U.S. Congress.
The significance of this report cannot be under-stated. For the first time in North America, an independent and nonpartisan agency that works for Congress and the American people has gone on record stating that peak oil is a real and pressing concern that the government should be preparing for.
Strange new economic phenomena will kick in the moment oil production peaks, turning normal national finance ministry policies on their heads
The reason there is such heated debate over when exactly peak oil is due to arrive is because, at the point of the peak, the fundamental laws of economics governing oil production, consumption, and prices, will flip over to a whole new paradigm. And because oil is very much the key commodity at the root of all economic activity in the modern industrial world, the flip-over of economic laws governing oil will deeply affect, and even potentially flip over, the fundamental economic laws governing all of the world’s industrial activity.
And… I thought I would just add a couple of charts taken from the EIA’s latest Short-Term Energy Outlook.
(Click to enlarge)
The EIA expects shale oil and the rest of the lower 48 states to continue to decline but slow the decline next year and plateau in the last quarter of 2017 at 5.7 million barrels per day.
Related: China Stockpiling Oil At Highest Rate In Over A Decade
(Click to enlarge)
The saving grace, the EIA believes, will come from the Gulf of Mexico. They have GOM production reaching 1.93 million barrels per day in December of 2017. The spikes downward in August, September and October of 2017 and 2017 are obviously the EIA trying to anticipate the hurricane season. I think they are being overly cautious here. It is unlikely that disruptions of this magnitude will occur.
(Click to enlarge)
And, after you combine the two above charts then add in Alaska you get the above production numbers and projection.
Jean Laherrere posted me all the below: It is good to see that he is also in agreement with the above article.
Jefferson in this 2016 paper writes:
put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels.”
Since my graph of political current proved and 2P backdated remaining reserves in 1998 Scientific American (with 1700 missing fields) I have updated often in many papers this very important graph (the most important in my opinion) because it explains the huge discrepancy between the economists relying on official data and the technicians relying on confidential data.
Related: Saudi Arabia Releases Ambitious Plan To Diversify Economy
You can see in my graph the conventional oil remaining reserves is, at end 2015, about 1700 Gb for IEA and OGJ (EIA) but at about 800 Gb for the backdated confidential technical sources, in line with Michael Jefferson
I am glad to see IIASA (which designed the very optimistic energy scenarios for the IPCC reports, in particular with the crazy CRP 8.5) showing more realistic assessments.
(Click to enlarge)
By Ron Patterson via Peakoilbarrel.com
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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…