Latest Graphs

fig_1d_2010_12 fig_1c_2010_12 fig7_2010_12 fig8_opec_2010_12

Oil Price

BP Statistical Review June 2010: Oil reserves and production don’t match

BP published its annual Statistical Review covering the period up to December 2009

http://www.bp.com/productlanding.do?categoryId=6929&contentId=7044622

Jeremy Legget who participated in this ABC TV documentary

The incredible journey of oil

http://www.abc.net.au/science/crude/

commented on the BP Statistical Review in an article in the Guardian (9/6/2010)

The oil spill and credit crunch were bad. An oil crunch would be worse

Big as BP’s problems are as a result of failed risk assessments, it will very probably soon become worse. Growing numbers of people doubt its annual review of oil reserves, published today. Society builds its oil dependency on key cultural statements of faith about secure supply, such as BP’s annual announcement that there is 40 years of supply or more, and no danger of supply falling short of demand, so ambushing oil-addicted economies.

http://www.guardian.co.uk/commentisfree/cif-green/2010/jun/09/oil-spill-credit-crunch-bp?showallcomments=true#end-of-comments

Jeremy is also member of the UK based Industry Task Force on Peak Oil and Energy Security

http://peakoiltaskforce.net/

He writes on the small print under BP’s oil reserve table:

Let me reword that. “We wouldn’t necessarily get the SEC to sign off on this stuff, and to be honest, we don’t even necessarily believe it ourselves. But go ahead, use it as a bible if you like. We don’t want you to be worried about peak oil. The small print gets us off the hook.”

So let’s have a look at those reserves and how they relate to actual, physical oil flows, year by year.

disconnect_oil_reserves_and_production_1980_2009

The above graph shows on the left hand side the oil reserve history and on the right hand side the production history. Those arrows are the annual oil flows in 2009. We have following groups of countries:

(1) Oil reserves have been declining and oil production is also declining (red)

(2) Oil reserves have not increased,  oil production has peaked in 2008 (green)

(3) Unaudited OPEC reserves, oil production peaked in 2008 (yellow)

(4) Reserves from Venezuela, Libya and Nigeria. Venezuelan oil contains heavy oil (Orinoco) and additional resources have been added in 2008. These are shown separately on top of the tar sands (un-conventioanl oil) , oil production for this group peaked 2005 (blue).

(5) Reserves from the former Soviet Union have been flat since 2003. Production has been growing. 2010 will show whether 2009 was the peak year (dark green)

(6) OPEC’s overstated oil reserves produce nothing

(7) Tar sands: take a magnifying glass to detect that small little arrow representing syncrude from Canada.

When looking at the big picture we see a reserve/production system which is completely out of balance: 45% of annual oil flows come from just 12% of claimed reserves. Something is dead wrong here. And we know what:

In an Oil&Money conference in London at Energy Intelligence in October 2007, ex Saudi Aramco chief Sadad-al-Husseini crossed out a whopping 300 Gb of OPEC reserves (=30 years OPEC oil supplies) and re-classified them as (less usable and more expensive) resources

sadadalhusseini300gbreservesinflated

http://www.energyintel.com/om/program.asp?Year=2007#speakers

I have handed over this graph to Prime Minister Kevin Rudd in the recent Cabinet Community Meeting at Epping Boys High

http://www.dpmc.gov.au/community_cabinet/meetings/epping.cfm

I wonder which action will be taken.

These inflated reserves come from the so-called quota wars in which reserves were artificially increased in the 1980s. The International Energy Agency (IEA) knows about it. They write in the World Energy Outlook 2009:

“According to BP, which compiles published official figures, proven reserves worldwide have almost doubled since 1980. Most of the changes result from increases in official figures from OPEC countries, mainly in the Middle East, as a result of large upward revisions in 1986-1987. They were driven by negotiations at that time over production quotas and have little to do with the discovery of new reserves or physical appraisal work on discovered fields. The official reserves of OPEC countries have hardly changed since then, despite ongoing production.”

http://www.iea.org/weo/2009.asp

opec_paper_barrels_quota_war

More details in this post:

18/10/2009
OPEC reserves revisited
http://www.crudeoilpeak.com/?p=355

My original article:

6/3/2008

The Disconnect between oil reserves and production

http://www.crudeoilpeak.com/?p=715

with a link to an article in the Oildrum on the same topic.

Comments are closed.