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Oil Peak – A Geologist’s View

Oil Peak – A Geologist’s View. Francis Harper, BP plc Energy Institute, November 2004. Reserve Adds:. Exploration Reserves Growth Nonconventionals. 1000 bn bbl. 25 bn bbl p.a. How long will current reserves last?. A 40 year supply?.

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Oil Peak – A Geologist’s View

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  1. Oil Peak – A Geologist’s View Francis Harper, BP plc Energy Institute, November 2004

  2. Reserve Adds: • Exploration • Reserves Growth • Nonconventionals 1000 bn bbl 25 bn bbl p.a. How long will current reserves last? A 40 year supply?

  3. ExplorationExploration Potential – Discovery Trend • Decreasing trend in volumes found from the early 60’s (peak) to the early ’90’s. • Slight increasing trend over the last decade. • Production exceeds discoveries for last ca. 20 years • Are these numbers consistent? Data based on those of IHS Energy

  4. ExplorationDeepwater Basins – Success and Failure Ca. 1500 Exploration wells Ca. 120 basins tested Ca. 30 with discoveries Ca. 20 w. economic disc. GoM Niger Delta Lwr. Congo Campos Failure Uneconomic Success Economic Success Deepwater = >500m Data based on those of IHS Energy

  5. ExplorationOil and Gas Fields >= 10 bn bbl oil equiv. Volumes overviewed for field growth potential • Ca. 50 Fields with >10 bnboe ultimate Potential • Kashagan is the only new supergiant oil field found in the last 25 years Data based on those of IHS Energy

  6. ExplorationOil and Gas Basins >= 10 bn bbl oil equiv. Volumes overviewed for growth and YTF • Ca. 50 Basins with >10 bnboe ultimate Potential of which ca.5 discovered pre-1900 • No major new oil province found since the North Sea other than as deepwater extensions of known basins Data based on those of IHS Energy

  7. Success rates from new-field wildcats has increased from ca 1 in 6 to ca 1 in 3 over the last 50 years ExplorationField Sizes and Success Rates Average discovery sizes have tracked total discovery volumes declining to about 50 mmbbl by 1980. Data from IHS Energy

  8. ExplorationExploration Potential Summary • Discovered volumes have been declining since the end of the ’60s • The deepwater theme of the ’90s has helped to reverse this trend but this will not last indefinitely • The number of supergiant oil fields and the number of giant oil provinces have fallen off markedly in recent years • Maximum and average field sizes are declining BUT • Drilling success rates are rising, driven by advances in the technology of imaging

  9. Reserves growthDiscovery estimates grow with time • Ca. 200 billion bbl added to discovery estimates (’50-’96) between ’97 and ‘03 • Growth applies primarily to the bigger, older fields Data from IHS Energy annual reports

  10. Reserves GrowthGrowth in IHS Reserves – World Data from IHS Energy annual reports

  11. Addition (Shallower Pool) Revisions/ Improved Recovery Addition (Satellite) Extension (Structural) Extension (Stratigraphic) Addition (Deeper Pool) Reserves GrowthSources of Field Reserves Growth Fields grow either by increases in Hydrocarbons-In-Place (extensions, additions) or by increases in Recovery actor (revisions, improved recovery)

  12. Plots below based on ca. 9000 fields worldwide with recovery factors - containing ca. 1400 bbo with average RF of 30% Reserves GrowthGrowth by Improved Recovery • The average global oil recovery factor is about 30-35% • Original Discovered Reserves are about 1950-2200 billion bbl • Original Discovered In-place volumes are about 5500-7000 billion bbl • Every 1% increase in average global recovery factor adds about 55-70 billion bbl reserves, almost equivalent to a UK North Sea Data from IHS Energy database

  13. Reserves GrowthReserves Changes in UK Oil Fields Individual field reserves changes may be positive or negative and can easily half or double the size of a field. On average, however, fields tend to grow. Average All fields with >100 mmbbl and >7 years data Data from DTI Brown Book reports

  14. Reserves GrowthReserves Growth Potential Summary • Reserves estimates are uncertain and will change with time – these can go up or down but on average will be positive. • Reserves growth is primarily a function of big, old fields. • Growth occurs both by increasing hydrocarbons in-place and by increasing recovery factor. • Most of discovered oil remains in the ground – this is potentially an enormous prize with a 1% increase in global recovery adding about 55-70 bn bbls. BUT • Increasing recovery is difficult and expensive and most of reserves growth adds may not affect global peak production

  15. Canada 36% Others 9% USA 32% MidEast 1% Africa 3% Venezuela 19% Nonconventional OilResource Type and Distribution 7 trillion bbl Oil-in-Place Data from IEA 2004 (WEO)

  16. Nonconventional OilProduction Potential • IEA projects nonconventional production growing at ca. 8% p.a. to about 10 mmbpd by 2030 • in 2030, 23% of this is expected to be GTLs (+CTL, Biofuel?)

  17. Nonconventional OilSummary of Nonconventional Potential • Nonconventional Oil sources include • Heavy oil • Bitumen • Oil shale • Fractured source rock • Gas-to-liquids • Biofuels • Heavy oil and bitumen are the most important in resource terms and are dominated by Venezuela and Canada respectively • The resource base is very large and it will become an important part of future supply BUT • There are large monetary and environmental costs involved and the rate of growth relative to the demand is limited

  18. Distribution, Maturity of Conventional Oil FSU 330bnbl N.America 360bnbl Europe 80bnbl AsiaPacific 130bnbl Africa 190bnbl MidEast 810bnbl World S.America 200bnbl • Most regions of the world are either at or past the mid-point of depletion • MidEast (and FSU and Africa) have produced <50% of their known resource 2100 bnbl 2

  19. Summary • Existing discovered reserves are unlikely to sustain demand for more than about 15 years • Exploration cannot be expected to replace production and its contribution may continue to decline • Reserves Growth is likely to continue as the dominant form of reserve adds but much of it will only slow post-peak production decline • Nonconventional oil will become increasingly important – there is a very large resource but converting it into reserves has significant financial and environmental costs • Non-OPEC is likely to reach a resource-constrained production peak from conventional oil in the next 10 years – thereafter production capacity will be concentrated in progressively fewer countries

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