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Energy Insights:3: Is oil running out?

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3: Is oil running out?


08-10-2005

EnergyInsights.net

If we assume that current daily production of 82 million bbls/day (31 billion bbls in 2005) increases at 2.5% per annum and the current global oil reserves of 1200 billion bbls is not replaced by any additional oil, then oil will be exhausted by 2031. However, this is a gross simplification because:

However, it is also possible the amount of oil reserves is overstated, particularly in the Middle East - this is quite uncertain because many of the countries with the biggest oil reserves do not allow external auditors to verify reserves numbers. Banks are not required to audit these reserves because the countries have self funding state run oil companies - they do not need to justify investments to external funding entities. It is thought by some that reserves might have been increased over the years to allow for higher OPEC quotas when these were more important in the 1990s, though this is speculative - it might also be the case that with the latest oil technologies (water injection, missible gas injection, 4D seismic, multi-lateral wells) - reserves could be understated.

One thing is well known - the easy oil has been extracted and boosting oil production will require massive capital investment. Even the wealthy oil producing nations will be reluctant to invest such sums - most likely prefering instead to expand their social welfare systems and reduce unemployment. Whether oil production growth can keep up with demand growth from the Far East is a key question - in the next decade - China and India's growth in oil demand will likely lead to political and economic tensions - as these tow new large oil importing nations compete globally for depleting oil reserves and production capacity.

The days of $20/bbl are almost certainly behind us - expect a base level of $40/bbl - with potential for prices to rise above $100/bbl if tensions increase or supply is significantly disrupted.

 

  2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Oil demand per year MMM bbls 31 31.8 32.6 33.4 34.2 35.1 36.0 36.8 37.8 38.7 39.7 40.7 41.7 42.7 43.8
Cum oil production MMM bbls 31 63 95 129 163 198 234 271 309 347 387 428 469 512 556
 
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033
Oil demand per year MMM bbls 44.9 46.0 47.2 48.3 49.6 50.8 52.1 53.4 54.7 56.1 57.5 58.9 60.4 61.9
Cum oil production MMM bbls 601 647 694 742 792 843 895 948 1003 1059 1116 1175 1236 1298
Growth 2.5% per annum
Reserves 1200 Billion bbls

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