" />
Building a world of
resilient communities.



Commentary: The difference between oil reserves and supply

(Note: Commentaries do not necessarily represent the ASPO-USA position.)

In his recent column in The New York Times, Michael C. Lynch shows that he does not grasp the crucial difference between crude oil reserves and supply (“Drilling for an Oil Crisis," Feb. 24, 2011). Demand and the rising cost of getting oil out of the ground are apparently not important in his “don’t worry, be happy” message that the plentiful oil of the past will continue into the indefinite future.

For him, reserves are all that matter. The fact that reserves usually take years of drilling and complex negotiations before they become supply escapes him. Of all the oil discovered in the last decade, less than 3 percent has been produced so far (M.K. Horn and Associates, Giant Fields Database, 2010). I suppose Mr. Lynch thinks that this is good news for the future, but it does nothing to address today’s soaring demand.

Consumption has tripled over the last four decades but supply has stalled over the past seven years, and the rate of reserve replacement has not kept pace with demand since the 1970s.

We are not running out of oil yet. We have, however, reached an apparent limit to the amount of oil that we can produce every day. That is because newly discovered fields are, at best, replacing supply from older declining and depleted fields.

Michael Lynch wants us to feel good about “consensus estimates” that recoverable oil in the world has doubled in recent decades. Really? Consensus by whom? What will these newly created reserves cost to produce and when will they be available to use?

The article mentions recent Wikileaks cables that question Saudi Arabia’s capacity to meet global oil demand. Lynch criticizes peak oil proponents for using these comments to confirm their view that the world is running out of oil. The peak-oil community that I work with deals in facts and not opinions, and has made nothing of the Wikileaks which, as he points out, are not new. On this, at least, we agree.

He takes comfort in the fact that Saudi Arabia’s reserves may triple. Again, according to whom and based on what facts? How long might this take and how much will it cost? These are the questions that distinguish reserves from supply.

Finally, Mr. Lynch claims that recovery rates have grown from 10 percent a century ago to 35 percent today. That is about as useful as pointing out that the number of automobiles in the world have increased since 1910. During my 33 years in the oil business, the average recovery rate has been 30–35 percent. Nature made some fields that yield higher recoveries but this does not mean that all fields can be made to provide that much.

Peak oil is not a theory, as Lynch claims. It is a body of empirical observations based on the history of oil production decline in major producing areas of the world. These studies show that most of the world’s giant oil fields are declining at increasing rates. New reserves are located in ever deeper, more expensive and harsher drilling environments. Much of what is being found and produced is poor-quality oil, and that means higher cost and more time to become available as supply.

We all want to believe things that sound too good to be true and “Drilling for an Oil Crisis” fulfills that human need. While the peak-oil message is not as cheerful as Lynch’s, fact-based concerns about the future reflect another human need called responsible behavior.

Arthur Berman is a consulting petroleum geologist, a director of ASPO-USA, a member of The Oil Drum editorial board, and an associate editor of the American Association of Petroleum Geologists Bulletin.

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Find out more about Community Resilience. See our COMMUNITIES page
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.


This is a community site and the discussion is moderated. The rules in brief: no personal abuse and no climate denial. Complete Guidelines.

Peak Oil Review - Mar 30

A weejly review including Oil and the Global Economy, The Middle East & …

Why This Tea Party Leader Is Seeing Green on Solar Energy

As a founder of the Tea Party movement, Debbie Dooley may be an unlikely …

2014 biggest year ever for solar, but oil price threat looms

Will only time tell whether it will be enough to keep solar panels cheap …

Rethink the Grid: Personal Power Stations

Rethinking the grid is quickly emerging as one of the hottest topics.

Goldilocks Is Dead

For oil, the Goldilocks zone has ceased to exist. This will have staggering …

US enters undulating crude oil production plateau in 2015

Feel-good-outlooks make the TV audience happy, but sleepy.

Global Shale Fail: Oil Majors Leaving Fracking Fields Across Europe, Asia

As Post Carbon Institute has pointed out in two major reports, estimated …