There is no sign that reserve growth is dropping, reserve additions are replacing production

The world had 1,188.6 billion barrels of oil reserves at the end of 2004, compared to 1,188.3 billion at the end of 2003, BP, the world’s second largest oil firm by market capitalisation, said.

The 0.02 percent growth rate was the lowest since 1990 and compares with a 10-year average above 1.5 percent per annum.

The world had 1,188.6 billion barrels of oil reserves

How is reserve defined here? I.e. the URR or the ones that remain to be pumped out of the sand?

While supplies are gradually running out…

We believe that the market has failed to recognize the decreasing quality of oil reserve replacement as reported by the oil companies. Instead of replacing reserves with new discoveries, reserve replacement has instead come from counting, today, exploration barrels discovered decades ago. In addition to the historic exploration component, the technology element is also important, as we have been able to recover more barrels from these existing fields. This, also, has in turn led to increasing reserves – reserve additions that will not be sustained, as recovery expectations for new fields are already higher. We consider both the Exploration and the Technology elements in what follows.

Exploration
Consider. Oil companies have not replaced production with exploration-related barrels since the early 1980s . In fact, the peak performance in discovering new fields was in the early 1960s . Of the world’s top 20 fields, only one, the Kashagan Field in Kazakhstan, was discovered in the last ten years.

The oil industry has always tended to find the largest fields first, simply because these structures are more visible on seismic surveys. Oil companies found more than they could produce from the 1950s to the early 1980s. The oil companies sat on these exploration finds, only moving them forward to development when they were needed. In between, they waited for extraction technologies to improve and for the oil consumption demand to develop.

The reserve booking process only allows exploration finds to be recognized when a field is deemed commercial (usually when the decision is taken to develop that field), so oil companies have been able to live off their inventories of past exploration successes. Unfortunately, much of the remaining inventory of exploration finds is composed of heavier or sour crudes, a lower quality feedstock that the industry cannot adequately process without complex refining capacity, which is already fully utilized.

The fact that the industry has found the majority of the large, higher quality fields means that, even with technology increasing the find rates, the volumes of useable oil found per well and in total each year are decreasing, just as demand is increasing. As such, and unlike some have suggested, increasing investment in exploration will not result in appreciable new supplies.

I think he has captured much of the desperation I hear in my colleagues voices when they talk about the paucity of good exploration opportunities, the ever increasing F & D costs in places like North America and UK North Sea, West Africa etc. The movement of P3 reserves to P2 can only keep us afloat for so long....I can't help thinking that in a lot of the big fields around the world we are getting to the limit of technology when it comes to increasing recovery economically....even at 60/bbl.

I think he has captured much of the desperation I hear in my colleagues voices when they talk about the paucity of good exploration opportunities, the ever increasing F & D costs in places like North America and UK North Sea, West Africa etc. The movement of P3 reserves to P2 can only keep us afloat for so long...

Welcome! It's good to have you on board!




src: BP says global oil reserves growth stalled in 2004

Doesn't it say at least one point?
Guarantees at least ONE maximum, maybe more but totally rules out a plateau as some of the economists think. It is due to the finite nature of oil. Builds up and declines.

Problem is that the BP stat. review data is pretty useless - they just re-gurgitate the official figures complete with the countries with reserves unchanged from year to year. Ditto for the Oil & Gas Journal figures. I'll wait untill IHS Energy releases their report later in the year (usually in november i think?). According to IHS reserves growth is still quite strong (over 400Gb over the past 10 years, ie significantly outpacing production). IMHO this is why Campbell et al. have been wrong in the past, and may well be wrong again. We aren't seeing reserves running down yet, and non-OPEC supply is still increasing. If oil was 60 bucks a barrel and supply was flat or declining, then it would probably signal peak oil, but I don't see how high price signals peak considering that supply rising quite strongly. Its interesting how many people here decry economics, but then point to the price as evidence of imminent peak, despite the fact that supply is still increasing rapidly. (btw not aimed at you khebab)

To my knowledge there is *no* economist *anywhere* who thinks, or has ever said, that oil production can remain on a permanent plateau (implying infinite reserves).

Your comments only apply to private Western oil companies. It's true, you are running out of oil and opportunities. That is not a geological problem per se. Fact is, you are being shut out of oil and opportunities by the National Oil Companies (NOCs), who control most of the world's reserves and promising areas. What we are seeing is the gradual Yukos-ification of the global oil industry. The West and the U.S. in particular are using too much oil, and they need to be brought under control. The NOCs are the right vehicles to achieve this. Oil is a weapon, but you don't want to wield it too overtly. Passive-aggressive slow-down tactics are probably the best approach.
The West: Hey NOCs, where's that oil increase you promised?
NOCs: Sorry, we couldn't get that on-line. We've been having technical difficulties, issues with back taxes... all these problems! (snicker, snicker)

Rockdock since you are in the field either in academia or industry.
Is there an estimate of the % of the earth that has been mapped with 3D surveys? Is the 98% (meaning 5 contintents+sea under 3km) usually quoted accurate?
It would seam to me, that if this number is correct, then no more exploration is possible. Hope it does not sound too naive