Recommended Paper – Oil and Gas Depletion

I’ve been reading a lot of material recently on resource depletion, and specifically on the oil and gas industries.  You’ve no doubt heard some people saying “we’re fast running out of oil”, others saying “we had 30 years oil left in 1970, and we still do today” and such seemingly contradictory statements.

What’s the truth of the matter?  It’s an extremely complex area.  So a paper that gives a summary of the situation is very welcome.  The best I’ve found so far is this paper by R.W. Bentley of the Oil Depletion Analysis Centre, London, UK, entitled “Global oil & gas depletion: an overview” (2002).

Mr Bentley first covers some definitions because there’s lots of difficulties with definitions, units, categories etc in this field.  What is oil?  How do we classify heavy oils, oil shales, natural-gas-to-liquid technology and so on, what is a P50 forecast, etc…

He then covers the available data, why it’s hard to get and why there’s no single ‘definitive’ database of oil wells, discoveries etc. In particular, we know that OPEC’s data, the most important because it covers the most oil, is also probably the least trusted, because of some very suspicious changes to oil reserves in the 1980’s (for some technical and political reasons, most OPEC countries doubled their stated oil reserves ‘overnight’ during the 1980’s).  Now nobody knows what is really true.

Bentley then looks at the various alternatives to ‘conventional oil’.  He covers various  estimates of how much is available, both remaining undiscovered, in existing known reserves, and already consumed (the so called URR or ultimately recoverable resource).  He then looks at various depletion models (what happens to production over time, especially what happens as resources dwindle) and likely shapes of the production curve.  This is one of the key issues.  He covers the people making the major forecasts and their background, including a section on the legendary ‘Hubbert’ predictions.  Finally he draws his own forecast, placing ‘peak oil’ at around the current day (2010).  Bear in mind this prediction was made in 2002, but the paper is barely dated.

In summary, R.W. Bentley’s paper is a great introduction to a very complex topic.

Reference:

Bentley, R. W. 2002. Global oil & gas depletion: an overview. Energy Policy 30, no. 3 (February): 189-205. doi:10.1016/S0301-4215(01)00144-6.

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