Key Concept | Peak Oil | Reserves and Resources

Proven Global Oil Reserves. Image: CIA Factbook, 2009

In the previous peak oil article (#4 – Economics, Geology, and Technology) we studied the effects technology had on increasing oil reserves and accelerating oil depletion, as well as the differing views of geological versus economistic outlooks regarding peak oil. In this article we’ll analyse an issue which ties in closely to the previous one, that of oil reserves and oil resources.

Oil reserve definitions are complex and there is no universal definition for classifying reserves, a fact that can cause ambiguity in public data concerning oil supplies. One definition is simply “commercially exploitable oil that is in-situ”. BP defines them as the following:

“…proved reserves are those that have a probability of 90 percent: percentage of the reserve likely to be extracted during its lifetime, given current technological and price conditions. Those are designated as P90. Recoverable reserves that have a ‘better than 50% chance of being technically and economically producible’ are designated as probable, P50 (or ‘indicated’). Finally, possible (or ‘inferred’) reserves (P10, P20) are those that have 10 or 20 percent chance of recoverability under prevailing conditions. Estimates of total world reserves (of conventional oil) change depending on which probability one assumes in the analysis…” [x]

P90 reserves are also known as 1P. P50 are sometimes known as 2P (proven and probable reserves) and P10/P20 as 3P (proven, probable, and possible reserves). According to the Energy Watch Group the lack of a universal definition for reserve reporting  is responsible for the differences in published reserve data.

In comparison a resource tends to be an estimate of the amount of oil in a region which is neither commercially exploitable or technically feasible to extract. The International Energy Agency (IEA) classes a resource as:

“volumes that have yet to be fully characterised, or that present technical difficulties or are costly to extract, for example where technologies that permit their extraction in an environmentally sound and cost-effective manner are still to be developed.” [x]

Such resources include unconventional supplies of oil such as shale oil, tar sands, and Venezuelan “heavy oil” that are difficult to extract and have huge environmental costs.

The issues surrounding reserves are resources are important as ultimately they can affect the timing of peak oil, and confuse people into thinking that the updating of oil reserves equates to more oil being found:

“Since proved reserves (except for the Middle East exceptions) are much smaller than the initially anticipated proved and probable reserves, over time a re-evaluation of proved reserves is taking place because in the course of producing an oilfield probable reserves are converted into proved reserves. This practice creates the illusion of growing reserves despite growing consumption.

The term “reserve growth” is a somewhat misleading metaphor. In reality, of course, each barrel of oil burnt irreversibly reduces the original reserves on earth. Just our knowledge of remaining reserves is subject to change. An upward revision of our knowledge of reserves does not increase the actual amount of reserves.” [x]

In truth reserve growth or the conversion of resources into reserves is unlikely to make a significant impact on the timing of peak oil. As the UK Energy Research Centre (UKERC) calculated, increasing global reserve estimates “by one billion barrels delays the date of peak production by only 4.7 days”, and that “the discovery of resources equivalent to those of the entire United States would delay the global peak by less than four years”.

But what about the impacts of peak oil? Whether oil reserves grow or unconventional sources come online, oil is a finite resource. It will run out. As Thomas Keefer states:

“With global agriculture, transportation, industry and military capabilities heavily dependent on oil, and with no ready alternative as yet available to the fossil fuel energy regime, the implications of peak oil are not merely technical in nature, but profoundly social…” [x]

How will energy-intense societies cope with less available energy for their economies? How substitutable is oil for our economies? Can renewable energy plug-in the gap left by oil? These questions will be answered in the next article.


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