The quantity of available conventional petroleum is greater than often assumed, given the tendency to overlook unassessed areas and future reserve growth. Furthermore, volumes of unconventional resources are even more abundant than conventional resources. As a result, conventional and unconventional resources combined are likely to last far longer than many now expect.
Some energy analysts are concerned that the world will soon face a global crisis due to dwindling petroleum resources and a peak in oil production. To shed light on the subject, we have assessed the threat that depletion poses to the availability of petroleum resources by estimating cumulative availability curves for conventional petroleum (oil, gas, and natural gas liquids) and for three unconventional sources of liquids (heavy oil, oil sands, and oil shale).
Our analysis extends the important study published in 2000 by the U.S. Geological Survey on this topic by taking account of (1) conventional petroleum resources from provinces not assessed by the Survey or other organizations, (2) future reserve growth, (3) unconventional sources of liquids, and (4) production costs.
The figure below shows the cumulative availability curve for conventional petroleum,
heavy oil, oil sands, and oil shale. The curve has three relatively wide blocks, each representing an unconventional source of liquid. The combined future volumes of conventional petroleum, heavy oil, oil sands and oil shale total 29.9 trillion BOE.
The life expectancies for any particular energy resource depends on three factors—its future volumes, its current production, and the growth over time of its production. In the case of conventional petroleum, for example, we calculated that with production growth of 2% a year (which is somewhat above the average annual growth in production over the past several decades) future volumes from assessed provinces, assuming no future reserve growth, would last for 47 years. Adding in future volumes from unassessed provinces increases this figure to 55 years and considering future reserve growth pushes it to 70 years.
The table below shows that the life expectancy of 70 years increases to 87, 104, and 132 years when future volumes from heavy oil, then oil sands, and finally oil shale are taken into account. If we consider all three unconventional resources, but a future growth rate of 0%, the life expectancy of 132 years increases to 651 years. Alternatively, the table shows that assuming 5% future production growth reduces the life expectancy to 70 years.
In conclusion, even if conventional petroleum peaks, as some predict will happen soon, this does not necessarily mean a ‘hard landing’ with sharply increasing prices and declining consumption. Rather society may rely increasingly on unconventional resources, including heavy oil, oil sands, and oil shale as well as non-fossil sources of energy. Should non-fossil fuels become more important, some of the higher cost fossil fuels including conventional petroleum resources may never need to be exploited. These implications suggest that expectations of a sharp rise in real oil prices over the next decade or two may be misplaced. Indeed, a case can be made that the high prices observed over the past several years for conventional oil are not sustainable given the available conventional and unconventional energy resources that can be exploited at costs below current market prices and substantially below mid-2008 prices.
Roberto F. Aguilera (IIASA), Roderick G. Eggert (Colorado School of Mines), Gustavo Lagos C.C. (Catholic University of Chile), and John E. Tilton (Colorado School of Mines and Catholic University of Chile)
P.S. More on this research is available from our forthcoming paper, “Depletion and the Future Availability of Petroleum Resources” (The Energy Journal, Vol 30, No. 1, 2009).