Wednesday, October 21, 2009

How Much Oil Underneath?

A friend asked me a few days ago why the Karnataka government were giving two different estimates for iron ore potential in the state. One file says that the iron ore reserves are about 3,447 million tonnes, while another department file says that the state has about 9,000 million tonnes of iron ore resources.

I replied that assuming the Karnataka government is using the words as they are commonly used in industry, reserves are the fraction of resources that can be economically exploited at any given time. Neither is a static quantity. Both will change given new finds, technological breakthroughs that enable recovery of previously out of bound deposits and the economic and political climate.

Coincidentally Scientific American has an article in their recent issue on the current reserves of oil and how that quantity is changing with new finds and new technology. They give one example:

When Kern River Oil Field was discovered in 1899, analysts thought that only 10 percent of its unusually viscous crude could be recovered. In 1942, after more than four decades of modest production, the field was estimated to still hold 54 million barrels of recoverable oil, a fraction of the 278 million barrels already recovered. “In the next 44 years, it produced not 54 [million barrels] but 736 million barrels, and it had another 970 million barrels remaining,” energy guru Morris Adelman noted in 1995. But even this estimate proved wrong. In November 2007 U.S. oil giant Chevron, by then the field’s operator, announced that cumulative production had reached two billion barrels. Today Kern River still puts out nearly 80,000 barrels per day, and the state of California estimates its remaining reserves to be about 627 million barrels.

This story will apply to a wide range of mineral/oil deposits all over the world.  Famously the United States has produced a cumulative 200 billion barrels of oil from reserves that never at any one time exceeded 40 billion barrels.

In the many responses to the Scientific American article I thought this one from JR Wakefield stood out as it explains what peak oil means from different perspectives:

Its not about how much oil is in the ground, it's how fast you can get it out and at what net energy.  This thus article is highly misleading.   Here are the Five Horsemen of Peak Oil:

1) Geological Peak. That is the point where we have consumed half the oil in the ground. So far we have consumed a trillion barrels. Estimates of remaining oil range, but the number appears to be 3 trillion barrels remaining in the ground. So we are not at geological peak. Hence skeptics of peak oil use this for their arguments, like this SA article does.

2) Flow Rate Peak. That's the point at which you cannot extract the oil fast enough to meet demand. This is especially so with old fields in decline (which is a fact) and new fields which have difficult geology (like this one).  The flow rate from them does not keep up with decline, nor keep up with growing demand. The article failed to mention that North Sea is all in terminal decline and the UK has to now import oil. Indonesia peaked years ago and has to import oil forcing them out of OPEC.  The Cantarell field in Mexico, the third largest in the world, and the US's 3rd import source, was producing 2.3mb/day at it's height.  Today it's 560kb/day with a 41% drop from last year.  WE ARE AT FLOW RATE PEAK NOW.

3) Geopolitical Peak. That's when exporting countries, due to their own growing demand, decide not to sell their oil abroad any longer but decide to keep what's in the ground for their own future domestic needs. So far only the US does this, but expect other countries to soon follow that.

4) ERoEI peak. This is the point at which it takes as many joules to extract the oil than you get from the oil extracted. That is, one barrel in to get 1 barrel out. Conventional wells in the 1960s were 100:1. That has dropped to about 25:1 today. Aging fields and new unconventional fields have very low ERoEI. The tar sands in Alberta for example is less than 6:1. Our entire society is based on the NET energy, not what's extractable. Calculations show that we will reach over all break even in oil extraction between 2020 and 2030. Once that is reached it basically means we have completely run out of oil.

5) economic peak.  This is the point where the economy cannot tollerate high oil prices and plunges the world into a recession, like this one which was caused by $140.barrel oil.

The challenge before us in terms of combating global warming is to ensure a transition from hydrocarbon energy to low emissions renewable energy much much before we start running out of the stuff not just in geological terms - which is not going to occur anytime soon - but by the other measures like Flow Rate and ERoEI as well. Likely even the Flow Rate Peak and the ERoEI peak are not constant but will keep shifting as more efficient ways of extracting oil and other hydrocarbon resources are discovered.


  1. Hi Suvrat, Nice article..

    In 2003 I was speaking to a scientist at Chevron and asked him if it is true that the world will run out of oil reserves in 50 odd years as was being popularly speculated.

    His response was that we have enough oil down there to last us for another 150-200 years but the challenge is to get it out in a cost effective way.

    With focus on climate change today, the world might as well focus on greener options than to try and get more oil.

  2. Rahul- yeah and that will require a lot of political will and courage to move away from entrenched interests ...who is it that said... the stone age did not end because we ran out of stones..