Long Term World Oil Supply (A Resource Base/Production Path Analysis)

Long Term World Oil Supply(A Resource Base/Production Path Analysis)

Executive Summary

- These pages summarize a recent EIA presentation on when world conventional oil production will peak and the effect of different estimates of the world conventional oil resource base.

- A larger resource base generally leads to a later production peak. World oil resource base estimates have trended upward over the years, from 600 billion barrels estimated in the early 1940’s to as high as 3,900 billion barrels estimated this year by the U.S. Geological Survey (USGS).

- To illustrate the important factors affecting estimates of the peak production year, EIA postulated 12 scenarios based on three current USGS world conventional oil resource base estimates (2,248, 3,003 and 3,896 billion barrels - corresponding to high, mean and low probabilities of occurrence) and four world oil production annual growth rates (0, 1, 2 and 3 percent.)

- Using a relatively simple algorithm, peak production years were estimated. The peak production year estimates ranged from 2021 to 2112 across the 12 scenarios. For example, using the USGS mean (expected) resource base estimate (3,003 billion barrels) and an annual production growth rate of 2 percent (similar to the current rate), the estimated peak production year is 2037.

- EIA’s estimates for production peaks occur later than those generated by other analysts, some of whom predicted the production peak will occur as early as 2004. EIA’s analysis indicates instead that world conventional oil production may increase two decades or more before it begins to decline.

Executive Summary (Continued)

Executive Summary (Continued)

- EIA’s relative optimism is based on:

(1) use of the current USGS world conventional oil resource estimates, which are both larger and more technically sound than past resource estimates used by others, and

(2) use of a methodology for estimating the post-peak production path that is based on the reserve to production (R/P) ratio observed in the United States since oil production peaked in 1970.

- Other factors, e.g., choice of different production curve hypotheses, market dynamics, technological advances, and economic policies, could change the results, perhaps substantially.

Overview

• Oil Resources (Estimates)

• Year of Peak Oil Production (Scenarios)– U.S.– World

• What Might Change the Estimated Time of Peak Production?

• Conclusions

The Year of Peak Production

When will worldwide conventional oil production peak?

Lower 48 Crude Oil Reserves & Production, 1945-2000

0

5

10

15

20

25

30

35

40

1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000

Cru

de

Oil

Re

se

rve

s,

Bil

lio

n B

arr

els

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Cru

de

Oil

An

nu

al

Pro

du

cti

on

, B

illi

on

Ba

rre

ls

Lower 48Reserves

Lower 48Production

PeakProduction1970

PeakReserves1959

0

500

1,000

1,500

2,000

2,500

3,000

Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98

Th

ou

sa

nd

Ba

rre

ls P

er

Da

y

0

10

20

30

40

50

60

70

80

90

100

TX

Fir

st

Pu

rch

as

e O

il P

ric

e,

19

99

$

Production

TX FPP 1999$

1986 Production Decline 13%

1986PriceDecline 51%

1998ProductionDecline14%

1998PriceDecline 44%

1997ProductionIncrease1%

Average old well declines 15% each year.

Texas Oil and Condensate Production, and Texas First Purchase Price (FPP), 1980-1999

Published Estimates of World Oil Ultimate Recovery

0 0.5 1 1.5 2 2.5 3 3.5 4

Trillions of Barrels

USGS 5% 2000USGS Mean 2000USGS 95% 2000Campbell 1995Masters 1994Campbell 1992Bookout 1989Masters 1987Martin 1984Nehring 1982Halbouty 1981Meyerhoff 1979Nehring 1978Nelson 1977Folinsbee 1976Adams & Kirby 1975Linden 1973Moody 1972Moody 1970Shell 1968Weeks 1959MacNaughton 1953Weeks 1948Pratt 1942

Source: USGS and Colin Campbell

Different Interpretations of a Hypothetical 6,000 Billion Barrel World Original Oil-in-Place Resource Base

0

1,000

2,000

3,000

4,000

5,000

6,000

USGS Approach 1995 Campbell/Laherrere Approach

Unrecoverable

ReservesGrowth

Undiscovered

ProvedReserves

CumulativeProduction

3,000Billion

Unrecovered

4,200Billion

Unrecovered

50%RecoveryFactor withReservesGrowth

30%RecoveryFactor

40%RecoveryFactorWithoutReservesGrowth

Reserves Growth Adds 10%

Bill

ion

Bar

rels

Campbell-Laherrère World Oil Production Estimates, 1930-2050

Campbell

Production Peak

2004

Laherrere’s Oil Production Forecast, 1930-2150

Laherrere

Production Peak

2010

EIA World Oil Production Projections, 1990-2020

0

10

20

30

40

50

60

1990 1995 2000 2005 2010 2015 2020

Bil

lio

n B

arre

ls P

er Y

ear

High Economic Growth Case

Low Economic Growth Case

High Oil Price Case ($28.04 per barrel in 2020)

Low Oil Price Case ($14.90 per barrel in 2020)

Reference Case ($22.04 per barrel in 2020)

Reference Case

Source: International Energy Outlook 2000

0

5

10

15

20

25

30

35

40

1900 1925 1950 1975 2000 2025 2050 2075 2100 2125

Bil

lio

n B

arr

els

pe

r Y

ea

r

History

Mean

USGS Estimates of Ultimate Recovery Ultimate Recovery Probability BBls-------------------- ---------Low (95 %) 2,248Mean (expected value) 3,003High (5 %) 3,896

Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

7.8% Growth1963-1973

2% Growth& Decline

High Prices CanAffect Demand4.1% Decline

1979-1983

2016

Annual Production with 2 Percent Annual Growth & Decline

0

10

20

30

40

50

60

1900 1925 1950 1975 2000 2025 2050 2075 2100 2125

Bil

lio

n B

arre

ls p

er Y

ear

History

Mean w/ 2% Growth and2% Decline

Mean w/ 2% Growth and10 R/P Ratio Decline



2016

Annual Production Scenarios with 2 Percent Growth Rates and Different Decline Methods

2% Growth& 2% Decline

2037

2% Growth& 10 R/P Ratio Decline

0

10

20

30

40

50

60

70

1900 1925 1950 1975 2000 2025 2050 2075 2100 2125

Bil

lio

n B

arr

els

pe

r Y

ea

r

History

Mean

Low (95 %)

High (5 %)


2 %Growth

DeclineR/P = 10


2047

2037

2026

Annual Production Scenarios with 2 Percent Growth Rates and Different Resource Levels (Decline R/P = 10)

Annual Production Scenarios for the Mean Resource Estimate and Different Growth Rates (Decline R/P = 10)

0

10

20

30

40

50

60

70

1900 1925 1950 1975 2000 2025 2050 2075 2100 2125

Bil

lio

n B

arr

els

pe

r Y

ea

r

History

Mean


DeclineR/P = 10


2050 @ 1% Growth

2037 @ 2% Growth

2030 @ 3% Growth

0

10

20

30

40

50

60

1900 1925 1950 1975 2000 2025 2050 2075 2100 2125

Bil

lio

n B

arr

els

pe

r Y

ea

r

History

Mean



Peak in 2037Decline @ R/P = 10

Peak in 2030Decline @ 5 %

2 %Growth

Annual Production Scenarios for the Mean Resource Estimate Showing Sharp and Rounded Peaks

12 EIA World Conventional Oil Production Scenarios

0

10

20

30

40

50

60

70

80

90

1900 1925 1950 1975 2000 2025 2050 2075 2100 2125

Bil

lio

n B

arr

els

pe

r Y

ea

r

HistoryMeanLow (95 %)High (5 %)

3 %Growth

1 %Growth

Peak Range 46 yrs or 91 yrs

2021 2067


2 %Growth

0 %Growth

DeclineR/P = 10

2112


900 Billion BblsMoves Peak 10

YearsFrom 2037 - 2047

Probability ofUltimate Re-covery

UltimateRecovery(Billion barrels)

Annual Production Growth Rate

(Percent)

Estimated Peak Year

Estimated Peak Production Rate

(Million barrels per

year)

(Million barrels per

day)

95 Percent 2,248 0.0 2045 24,580 672,248 1.0 2033 34,820 952,248 2.0 2026 42,794 1172,248 3.0 2021 48,511 133

Mean 3,003 0.0 2075 24,580 67(expected 3,003 1.0 2050 41,238 113value) 3,003 2.0 2037 53,209 146

3,003 3.0 2030 63,296 173

5 Percent 3,896 0.0 2112 24,580 673,896 1.0 2067 48,838 1343,896 2.0 2047 64,862 1783,896 3.0 2037 77,846 213

WORLD OIL PRODUCTION SCENARIOS

Long Term World Oil Supply (A Resource Base/Production Path Analysis)

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