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Oil Price

The Disconnect between Oil Reserves and Production

Chris Skrebowski, editor of Petroleum Review, always reminds us that what really matters are annual oil flows, that is how reserves can be turned into physical oil production, year by year.  So let us see which oil flows come from which reserves:

bookedreservesandannualoilflows2006

From top to bottom:

(a) The recently added Canadian tar sand reserves produce only 1 Mb/d, negligible in comparison to the total global oil production.

(b) OPEC’s overstated reserves from the so-called quota wars, which have to be re-classified as resources, produce no oil.

(c) 3 countries, Libya, Nigeria and Venezuela, with around 160 Gb reserves deplete at a low 1.7% pa and contribute 9% of global production. Venezuela’s low depletion rate results from reserves containing heavy oil.

(d) 130 Gb from countries of the former Soviet Union deplete at 3.3% which is average, to contribute 15% of global oil flows.

(e) 6 Middle East countries (Iran, Iraq, Kuwait, Qatar, Saudi Arabia, United Arab Emirates) produce only a very low 2.2% pa of their reserves of around 400 Gb. It represents 30% of the total global production.

(f) Another 70 Gb from Algeria, Brazil, Angola, Sudan, India, Ecuador and Vietnam have been growing but could just offset decline in the (g) group. Reserves deplete at 5.3 %

(g) Around 120 Gb of reserves from countries like the US, Canada (conventional), China, Mexico, Norway, Oman, Indonesia, Malaysia, Australia, UK and others are in decline, despite reserve growth in fields, and deplete at a whopping rate of 8.2%, almost 4 times the OPEC rate.

In summary: Almost half of the current global oil production (45%) comes from a very narrow reserve base of just 190 Gb or around 1/5th of the total booked reserves. It is depleting rapidly at a rate of around 7 % pa., with annual production declining consistently since 2002.

More details can be found in Gail’s post in the oildrum: http://www.theoildrum.com/node/3664

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