It’s hard to say that three years makes a trend. But one of the world’s major energy consulting firms has lowered its estimate of world oil reserves for three years in a row now.
Rystad Energy provides a publicly available analysis of world oil reserves each year. In 2020 Rystad wrote that “the world’s recoverable oil [dropped] by around 282 billion barrels.” That represented a 12.9 percent decline in just one year. In 2021 the firm stated its analysis showed that recoverable resources declined by another 178 billion barrels or about 9.4 percent. Rystad said the decline was due in part to new modelling based on resources “at well level rather than field level.” The closer Rystad looked, the less oil there seemed to be.
In 2022 Rystad noted yet another decline of almost 9 percent in its press release headline. Recoverable oil resources dropped another 152 billion barrels. (For all estimates Rystad uses figures for crude oil and lease condensate which is the accepted definition of oil.)
With estimated recoverable resources standing at 1.572 trillion barrels, there is no seeming immediate threat to oil supplies. But the trend, should it continue, would be troublesome. There is a lot to look at “under the hood” of these estimates. Rystad reduces its broad 2022 estimate to an amount it believes could be produced profitably if oil is around $50, namely 1.2 trillion barrels. Price always matters when talking about recoverable resources. Higher prices, of course, make harder-to-get resources more likely to be profitable.
Rystad notes the lowering of investment in oil exploration as one of the culprits. This drop has been driven by the uncertainties surrounding the pandemic and a world about to be ever more stringent regarding fossil fuel emissions.
Companies and countries holding oil under their soil have long been known to exaggerate. Lack of independent audits among the world’s government-owned oil companies should give us pause. Saudi Arabia, Iraq, Iran, United Arab Emirates and Kuwait all have national oil companies that control oil development within those countries. For a more comprehensive list, see here.
Because of the lack of transparency into much of the world’s oil resources, we are left taking the word of governments, many of whom are part of OPEC—and those OPEC members have an incentive to inflate their reserves in order to increase their OPEC production quotas because those quotas are based in part on the size of members’ reserves. It’s worth noting that OPEC countries claim to have 80 percent of recoverable world oil resources. (For a more detailed analysis of this issue, see my 2012 piece “Has OPEC misled us about the size of its oil reserves? Does it matter?” which is still almost entirely relevant.)
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Those of us who’ve been skeptical about recoverable oil reserve claims are not particularly surprised that estimates of worldwide reserves are falling. Another part of the story is that new discoveries meant to replace reserves produced each year are not nearly as great as consumption for many years running. Worldwide consumption has hovered between 27 and 30 billion barrels per year in the last decade. But new discoveries have been far behind with the highest year showing 12.9 billion barrels (2012) of discovery for data from 2011 through 2018. Rystand notes that discoveries were 12.2 billion barrels in 2019 and 10 billion barrels in 2020. But these numbers include turning natural gas discoveries into what their equivalent would be in terms of oil based on their energy content. Last year the industry discovered the lowest amount of oil and gas combined since 1946.
The optimists tell us that this will soon all be reversed. They have been saying that for a decade. In the meantime the price of oil—which was already rising before the Russian/Ukraine conflict—has vaulted upward. The ultimate effect may be a deep recession. Some 10 out of the last 11 post World War II recessions have been preceded by spikes in the price of oil.
It’s a pattern we’ll likely have to get used to unless the luck of the optimists turns around.
Image: Exxon desert tanker. Satirical image created in Photoshop to illustrate the concept of peak oil. (2007) by azrainman via Wikimedia Commons https://commons.wikimedia.org/wiki/File:Exxon_desert_tanker.jpg
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As peak oil gets back in the news, it’s time to break out the old peak oil image of the oil tanker in the desert.
A report by Jean Laherrère thatt came out this year (not sure what month):
“Finally,
in agreement with others, our forecasts indicate that the IPCC’s
‘high-CO2’ scenarios appear infeasible by assuming unrealistically high
rates of oil production, but also indicate that considerable oil must be
left in the ground if climate change targets are to be met”
“But
in 2008 the ‘shale oil’ revolution began and seemed to give lie to the
idea of peak oil. Now it seems that shale oil did indeed delay the peak,
but only by a decade or so”
https://www.sciencedirect.com/science/article/pii/S2666049022000524?fbclid=IwAR3kGXhjy87_2YP1AeBdwofs5t1dhKGJfciWgEZpshCq-IpsAPeovVxlXSA
Yes. Quite simply it was only going to be obvious with hindsight – as was the Peak of conventional LSC 17 years ago.
Starting from a POV of self-justification is always fraught.
So when experts declare peak oil in the moment, perhaps we should ignore folks so ignorant? Like Colin Campbell in 1990, or Campbell and Jean in 2002? Or Deffeyes in 2005? The IEA declared global peak oil in 2006, but they did it in 2010, so obviously 4 years of waiting isn’t enough. Amusingly, 4 years later, it isn’t even required to be correct. As far as peak sub-types of oils, A) there is no benchmark crude type of “conventional”, it is made up by the organically chemically challenged perhaps, and B) peak is completely relative should I pick and choose…whatever. Peak cable tool oil is like a century ago now. Peak oil produced through primary production has got to be like…forever ago, and all the other sub divisions designed to really do nothing more than demonstrate the orator can’t talk about the one that matters, or already has and been discredited by, you know, MORE oil. Currently peak oil #6 of this century, THE peak oil rather than face saving little nonsense among the congregation members, was in 2018. It was so horrifying, it sort of went unnoticed. Perhaps it wasn’t trumpeted from the roof tops because the first 5 put folks like ASPO out of business because of embarrassment?
You really try hard, don’t you. Never give up.
Why?
To perpetuate the myth of ever-more, the definition has increasingly had to be altered. That’s it. In a nutshell. Deffeyes nailed it, to the month, correctly.
Who pays you?
We shall see!
FWIW, oil depletion is a long, bumpy process.
I’m more interested in the effects of war and sanctions on the price of oil. I think they are hitting before and more intensely the physical depletion.
That’s the one. I would have thought that after making the same kind of claims about OPEC reserve changes in the mid-80’s, and then the world being buried in oil what, 20 years after Colin and Jean said it was supposed to peak, they would have at least tackled the problem as to WHY they keep getting it wrong, rather than rinse and recycling the same old same old.
Exaggeration is only one side of the coin. Someone once claimed the US only had enough oil to peak around 1970. And when Colin Campbell declared global peak oil in 1990, he was exaggerating quite low, the amounts available. I say exaggeration must stop. Regardless of whether or not it is conservative, or pessimistic.
How about this:
https://www.sciencedirect.com/science/article/pii/S2666049022000524
Current Research in Environmental Sustainability
Volume 4, 2022, 100174
How much oil remains for the world to produce? Comparing assessment methods, and separating fact from fiction
Author lJeanLaherrère , RogerBentley
Abstract
This paper assesses how much oil remains to be produced, and whether this poses a significant constraint to global development. We describe the different categories of oil and related liquid fuels, and show that public-domain by-country and global proved (1P) oil reserves data, such as from the EIA or BP Statistical Review, are very misleading and should not be used.
Name a single instance where I perpetuate any “myth of ever-more”, as opposed to what I actually do, which is “false prophets need to learn from their mistakes..and here…let me demonstrate”. I have repeatedly told you that Hubbert’s work on the extraction of non-renewable resources is a mathematical certainty, and has ZERO component of “ever-more”. None. Zippo. Never. Do try and LEARN when information is presented, rather than project your puerile attempts at misrepresentation for your own ends onto others.
Deffeyes claimed peak oil Thanksgiving 2005. Examine any graph of global oil production, and believe it or not, the current high mark is 2018. Now…tell me again about puerile gyrations around an oil type that is so impossible to identify on this planet, that it has no price. Here is the global list….knock yourself out.