Unfortunately, most estimates totally ignore this, but Masters at the USGS in his last study (1996), had the following figures:
cumulative production 699 billion
proved reserves 1103 billion
subeconomic discovered 3498 billion
undiscovered economic 582 billion
undiscovered subeconomic 1130

This comes to about 7 trillion, Exxon recently said 6-8 (if I'm reading the graph right).
The USGS tends to come in on the conservative side, so I presume there will be about 8 trillion or more.

The Saudi known oil appears to be 350-400 billion, and the Saudis claim that is conservative. Given that the country is hardly drilled and still high on the creaming curve, they should be able to double that easily.
Mike Lynch

You are primarily paying more now because of a speculative bubble, in my opinion (and I'm hardly alone). The same idiots who created the high-tech bubble (more or less) are pouring money into oil. The arguments for oil being worth $60 are more or less silly. That's why I think the price should go down sometime soon. (????)
Campbell has publicly refused to appear with me, as he admitted in the WSJ article last year, claiming that he is a scientist and I'm a faith healer. I gave the reporters a list of Campbell's errors/revisions, but Campbell did not respond.
That the estimates are constantly being revised is not too surprising, given the data uncertainty. That Hubbert modelers think they can estimate URR with a high degree of certainty shows their ignorance of petroleum geology, supply and statistical methods.

My 1995 article (before I heard of Campbell) argued that Hubbert models would always fail because they use URR as a static estimate, when it is dynamic and grows over time. Hubbert modelers responded that there is a consenus estimate of 2 trillion (which isn't true) and that the use of Petroconsultants/IHS Energy data allows precise URR estimates.

However, they have not only increased their URR estimates repeatedly (with one downward revision receontly, I think), but if you compare the country by country estimates in 1997 and 2002, you will see that over half of the country's have discovered more oil than the 1997 URR estimates. And that's according to their own work!!
Mike Lynch

Thanks for your useful reply. I will have to study this some more.



If I can back up a step and paraphrase in a general way what you are saying in the conversation above: Correct me if I am wrong on this:

Conceptually, oil is a finite resource, and it will "peak" at some point, but this point is probably far into the future, and the "right side of the curve", as it were, may be a gradual decline rather than a cliff.

So, the "argument" is a matter of opinion about the size of the reserves, the extent to which the remaining oil in the ground is extractable economically (that's the 3498 billion "subeconomic") and our ability to find the remaining 582 billion that is undiscovered, which will also be driven by pricing incentives. Then there is this abundant supply of oil sands, that is around that will be extractable also at some price.

So you bring your geologists, and I bring my geologists, and everybody else brings their geologists, and we all have slightly different ideas about what the future will look like, but we are not necessarily facing armageddon, at least according to your geologists (like Masters, above).

By the way, I agree with you completely on this area of data tranparency. It's irresponsible for people to be making these arguments on the basis of concealed, "proprietary" or other data. A little daylight on all of this would be really helpful.

Great Thread folks...

Spike

What do you think of the accuracy of SEC reporting on oil reserves in terms of accuracy?

Same question for OPEC and other suppliers.

Do you believe that incentives exist, (in whatever form), to distort these estimated reserves numbers?

Many believe that today's reserves reporting amounts to a glorified press release. In light of Shell's admissions of over-stating reserve estimates, how would these inaccuracies affect URR, and more importantly, future production estimates?

Spike,

We all understand this is the internet and very informal and that the answers you give will not be as supported as what you might provide in a technical paper or your upcoming book.

If the world has about 8 trillion in total resources (URR):

1. How much of this 8 trillion will fall in the category of "unconventional" meaning tar sands, shale etc?
2. Is there enough natural gas to exploit these unconventional resources?
3. Even if the rest of the world has the natural gas to exploit these unconventional resources, will a declining natural gas resource base in North America limit Canada's and the U.S.'s ability to exploit these unconventional resources like tar sands and shale?
4. Is there enough fresh water to exploit the tar sands, shale etc?

Also, what do you think, or what's your opinion on building coal liquefication plants? Does this aspect of using coal form a part of your 8 trillion in total resources?

The best paper I've read on PO is definitely the Hirsch et al report.
Clear, comprehensive, integrating past with future projections.

What is clear from the report and from others is that PO is horrendously
complex and plagued with poor data. In this regard, the best we can do
perhaps is to look at the range of PO estimates from 2007-2025 or
Lynch who has identified no peak date.

But what is UTTERLY alarming in the Hirsch paper is the failure of the experts to predict the decline of gas in Nth America. This really means that
no-one knows what the F!! they're talking about.

Lynch I believe simply takes the betting odds of extrapolating historical
trends. This will always be correct until the trend diverges. Campbell
takes the non betting odds of divergence from the trend and therefore
has a history of poor prediction. In other words, if you're guessing
(and with THESE data, they are ALL guessing), you're safer following
the trend than predicting when the trend stops. A bit like predicting
someone's height using the population mean rather than saying they're
definitely a midget.

The only certainties i can see are that PO is a physical reality at some
point, but predicting the cusp or turning point is impossible. The first to
know will be the people at the well heads. After that, there will be a
ripple of rumour and real consequences.

We should all be planning for a less oil dependent future anyway within
the scope of what's manageable. I'll develop my plan and stick to it
but it's impossible in my view to time this thing.

I agree on this point. ASPO likes to show this graph and claim there has always been a consensus of 2 trillion bbl, and the USGS estimate is out of whack:



They seem to be ommiting a lot of the higher ones (bit of statistical cherry picking). Lynch has a graph in this presentation at the OTEC 2004 conference, pg. 6, in which there are plenty of higher estimates and Campbell's appear to be too low. William Fisher shows more in his presentation at same conference (link).

I also have a question for Mr Lynch: do you know of any data on how the depletion rate (of existing capacity) has changed over the last couple of decades or so? ExxonMobil and IEA reckon its around 5-6%/year, do you know if this is much steeper than in past? I often see things along the line of 'depletion rate is 6% per year, demand growth is 2% and we need x number of north seas/ghawars/saudis to meet demand in 2015, clearly impossible' but this ignores the fact that depletion is nothing new. I think you had a slide in one of your presentations showing non-OPEC depletion? The data from OPEC is probably poor to non-existant. My suspicion is that global decline rate would change pretty gradually. It would be really usefull to know if the gross production addition needed from say now to 2015 is much greater than what was added from 1995 to today.

Thanks for your time on the forum!

Ouch!! is right

Looks like a circle jerk to me!!!

doufus:
I understand how complex and difficult it must have been for you to compile such an insightful post yet please do not use it as a cookie cutter regardless of how much $ spike has forwrded to your paypal account

SA fact-turd: In 2004 SA reported reserves were 261 billion barrels yet suddenly at a meeting with the worlds eco-chiefs in attendence, SA stated that they had 1.2 billion barrels !!!

Mike/spike and class:

I learned a few things in college as well.

1. Within 1 Year most students lose 85-90% of what they have learned from the previous years studies.

2. Within 2 years most students lose 90-95% of what they have learned from the previous years studies.

Please join me and millions of other non-thinking solar powered shitting machines as we request a minimum of 90% of our college costs/tuitions to be reimbursed now!!!!

oops Lets not forget lessons #3., #4., and #5.
3. Buy a house
and
4. do not buy a new car

5. College counselors - Consider this person your enemy
They have a quota and only want to see you leave their office as fast as you came in.

and

6. Bursars are usually the ones who go to prison for embezzlement

7. people like Mike lynch sound extremely intelligent standing and speaking next to jock types at kegger parties

On A more serious note.

I salute each and every one of those brave enough to come close to the po beast.
PO is already considered TABOO in many circles.
Energy for the most part is boring and complicated.
Add in a little doomer spice - few like the flavor.

Timing PO? - SOON ENOUGH
Data Transparency or lack thereof? - SUFFICIENT DATA FOR ME TO MAKE A DECISION.

It does not matter.
If we can be more efficient and less dependent or even entirely independent then this is surely the way.

What are you waiting for?
What are we waiting for collectively?

perhaps Oil from the moon so we can become even more dependent on something evermore out of reach?

Remember the mad man flying the plane to its firey end laughing all the way down - on the dark side of the moon album? yeah ....me too

IMHO - The whole PO thing makes perfect sense wether proponent A got fact Z slightly incorrect is irrelevant.
The trends are easily spotted by even novice observation.

Thanks Mike - without this post I would have absolutely nothing PO related to say today!!!

Try putting yourself up without putting someone else down next time and maybe then you will have a best seller on your hands!!!!

I have no book agenda so posts like these will have to suffice my ego's desire for control and attention

Take the most opimistic scenario out there and you still have an argument to mobilize NOW our government and modern society toward a sustainable energy model. If we take Lynch's most optimistic scenario of peak being delayed say 30-40 years, aren't we still up against the wall with 6.5billion growing global population with an ever increasing hunger for energy as China and India so clearly illustrate. Not to mention clear signs of accelerated environmental degredation a la global warming. I find optmistic supply side arguments hollower every day. They only provide a glimmer of hope that if we mobilize today we can make a transition without collapse. But they do not serve to mobilize our society, they only reinforce the status quo and thus do a great disservice.

Just to illustrate your arguments:



The middle range estimate is 2300 Gb and the cumulative production is now around 1050 Gb. So we have 1250 Gb left to extract which includes tar sand, deep water, etc.. Between now and 2020 we are suppose to consume another 600 Gb (at 2% demand growth).

And what about depletion! the North sea, Norway, Mexico and maybe Iran have seen recently their production declining. Can we still extract that much oil at a growing extraction rate with unconventional sources such as tar sand (which is expected to produce at best 5mbpd in 2015) and compensate at the same time for depletion in aging fields. Is it not only a question of URR but also a question of maximum extraction rate from a growing number of unconventional sources.

Neopo,

I was going to respond to your posts, but I just forgot 90% of what you said, maybe b/c 90% was not worth reading.

First, its good to have opposing opinions on this forum like Lynch's and anyone that agrees with him. I could care less about people that agree with me, we might all be wrong.

Second, what Lynch does show is the inherent problems with trying to predict the future. Since world URR is unknown, the future of oil production and "peak" is thus very difficult to predict. Thus, the continual problems with revisions to graphs. To illustrate this problem further, go to the "depletion" forum and see how difficult it is to model anything and how many variables there are. I personally am not capable of modelling, but I can read them and appreciate the difficulty of predicting anything. To borrow from The Book of Revelations, no one knows the day.

However, the point you make which I do agree with is the observable. We can all observe that oil prices and thus, the price of gas has risen (doubled) since 2000. So, the question is why? Well, the pessimist say its oil depletion, Lynch says its economics. What I do think everyone agrees with, including Lynch, is that current demand is outstripping the current infrastructure to produce and meet that demand. This is a problem, politically and economically, and won't be resolved for several years. So, even if the problem isn't caused by world peak, we have a serious problem on our hands over the next couple of years.

However, there are statements that simply don't jive with Lynch's position. Those are from reputable sources. I don't have the links as we speak, but will get you close. Those statements are the following:

(1) OPEC recently stated they wouldn't be able to meet IEA projections for demand on OPECs part after the next 10-15 years; this seriously undermines the "optimist" position that we have at least until 2030;

(2) retired Saudi Arabian minister, in Oil and Gas Journal article (2004, I believe July), stated that SA may be able to produce 15mpb for a short period of time, but not for any length of time without serious damage to their wells;

(3) Again, in Oil and Gas Journal, in an article about Canadian tar sands, the Canadians interviewed said that Canadian unconventional oil production would not be the answer to depletion and meeting future demand (2004 article also); this is a serious problem for optimist, who are relying heavily on unconventional oils when they say the world has 8 trillion URR; the fact that unconventional oil will not make up for increased demand and depletion is also confirmed or supported by the Hirsh report to the DOE (Feb 2005);

(4) North American natural gas is in decline, admitted by Lynch on this board. This is a serious problem, bc that gas is needed for unconventional oil development and also production of electricity. Soon, there may not be enough for both. So, if natural gas is declining, this will restrict the amount of unconventional oil that can be produced in Canada and thus, would seriously affect the optimist predictions; unless we build a lot of liquid natural gas terminals and fast (to import the gas), North America will not be able to overcome this problem;

(5) 2005, article in Oil and Gas Journal opining that NonOpec oil would probable peak in 2009, again, seems to be supported by numerous others writing on the subject, including Skrebowski with ODAC; this is a serious divergence of opinion with the Lynch camp;

(6) Although Lynch says only UK and U.S. in decline, there are many others he left off the list, for example, Indonesia and probably Mexico.

So, we are left to say that no one can predict the future, but based on what we know now, we have a problem, especially in the U.S. which is in decline both in oil and gas. Politically and economically, this is not good for the U.S., when you need the rest of the world to send the oil and gas needed.

I would have to suspend incredible disbelief that you actually went to Oxford and don't know what MIT is. It's simply the top science/math/engineering school in the US.

http://en.wikipedia.org/wiki/MIT

"MIT is a world leader in science and technology, as well as in many other fields, including management, economics, linguistics, political science, and philosophy. Among its most prominent departments and schools are the Lincoln Laboratory, the Computer Science and Artificial Intelligence Laboratory, the Media Lab, the Whitehead Institute and the Sloan School of Management.

MIT alumni and faculty include many prominent politicians, corporate executives, writers, astronauts, scientists and inventors. Fifty-nine current or former members of the MIT community have won the Nobel Prize."


You might find fault with Mr. Lynch's analysis but it's difficult to find fault with his educational background. I for one really appreciate someone of his stature participating on this site. Too bad the same can't be said for Simmons, Campbell, et al.

Alright, back to lurking...

Well at least seahorse has the ability to engage a topic and reason it
through. Well done. Neopo's rant was essentially worthless as seahorse
has noted.

The issue I have is that most of our discussions are amateur analyses
of a complex area plagued by biased, patchy, nocomparable, distorted,
incomplete and plain wrong data.

Consider this: even if the best experts had the best possible data-
engineering quality with strictly defined variables, transparent
reporting, cross checked and audited, it would STILL be very difficult
to calculate a PO date without an error of 5-10 years.

In the face of what we have, it's impossible for experts and totally
ludicrous for the rest.

Much of the "evidence" we have is "factoids", comments and interpretations of markets, companies and their behaviour. This is
just finding shapes in the clouds.

Yes, PO will happen and we must move to a sustainable, less oil
dependent civilisation, but we can really drive ourselves to distraction
by overinterpreting signs and "evidence" or running a few calculations on cr*p data supplied by who knows who with who knows what motivation.

Lynch makes a useful contribution in the sense that he does illustrate
how complex the area is and what variables and processes are involved
and confound each other. That doesn't mean he's right about PO but he's
right about our inability to predict it based on badly deficient data.

Logically PO must happen and we must take appropriate action, but i
often wonder whether we do our cause much good by making
predictions that pass without a whimper.

The main difference comes from the inclusion of tar sands, 1.8 trillion barrels in the Venezuelan Orinoco tar sands deposit, 1.7 trillion barrels in Canada's Athabasca Tar Sands deposit. The ASPO doesn't include tar sands in their calculations so they assume an OIP value that is at least 3.5 Tb lower and an URR that is about 700 Gb lower.

Agreed. PO prediction based on curve fitting techniques is an ill-posed problem. You can conclude whatever you want based on different curve model/parameters/fitting techniques, see for instance the excellent article of Marcel Schoppers (Uncertainty in Peak Oil Timing). His conclusions are:

What is bothering me the most is that the ASPO et al. don't give a confidence interval on their estimate.

Well, if it's just economics, the problem is solved the market should be able to self-regulate itself. Oil companies are now sitting on a huge pile of cash, will they invest in new exploration and R&D?

Ramping up the oil production from tar sands will be very costly and is supposed to reach only 5mbdp in 10 years. However, it will be a stable and reliable source for the US for decades to come.