Modelling future oil production
by Jean Laherrère
e-mail: jean.laherrere@wanadoo.fr
The word Reserves may mean many things and is widely misunderstood.
It may mean the estimated production from the beginning to the end of the
field life (ultimate reserves) or that of what is left to produce. The
estimates too may refer to what is “proved” so far, hence with a high degree
of certainty (called also reasonable) or to what can be “expected” from
the field over its full production life (called “mean” or “expected” value).
World oil production is also badly defined, equalling 65 Mb/d of “conventional”
crude oil or 75 Mb/d when including all liquids. Obviously, the goal should
be to forecast the future production of all liquids since the demand is
that of these liquids. The starting point is to estimate conventional oil,
later adding NGL, unconventional oil and refinery gains, which together
comprise supply.
In most countries other than the USA and FSU, Conventional
oil depletion can be studied on the basis of estimated “Mean” Reserves
backdated to the year of discovery. We assume that the declared 2P values
(Proved + Probable) are close to the “Mean” values because some 2P values
will grow but some will decrease, as others that correspond to hypothetical
fields, will disappear of the discovery list. The US, following the Securities
and Exchange Commission (SEC) rules, report only Proved Reserves, which
in plain language means Proved So Far, accordingly being subject to strong
reserve growth. In the FSU, The A+B+C1 reserves of their classification
are generally thought to correspond with Proved + Probable Reserves, but
actually also includes Possible Reserves. Both US & FSU reported reserves
need to be corrected to a “mean” value to be useful in forecasting.
Modelling future production is straightforward in countries
not constrained by political policy, a situation that does not exist so
far with OPEC and the FSU. The Creaming Curve, plotting cumulative mean
discoveries versus the cumulative number of new field wildcats, is a powerful
tool. Another method is to plot the percentage of annual to cumulative
production versus cumulative production, and extrapolate the trend. Future
production can also be modelled with one or more bell-shaped curves. The
bell-shaped curve was invented by K. Hubbert in the 50s and successfully
applied to the production of the 48 US lower states, which are bell-shaped
curves similar to a normal curve. In other regions with several E&P
episodes, one has to use several such curves, each one related to its discovery
pattern.
Oil production in the world outside OPEC and the FSU
can be readily modelled with such a bell-shaped curve, despite the recent
surge of deepwater production and suggests a peak of about 32 Mb/d during
this decade. Modelling the FSU has to recognise the over-production of
the late 1980s and the under-production during the 1990s following the
collapse of the Soviet Union. What has been under-produced in the 90s or
under-developed in the Soviet era is now creating a new cycle. The main
contributing regions will be East Siberia and Sakhalin, as well as new
discoveries in the Caspian, together giving a peak of about 10 Mb/d in
2010. Modelling OPEC production is more questionable, but it could peak
in 2020 at between 40 and 45 Mb/d.
Combining the three crude oil models for OPEC, the FSU
and the rest of the world gives a world ultimate recovery of 2200 Gb. with
a peak at about 80 Mb/d between 2010 and 2020. Non-conventional oil and
other liquids, with an ultimate of about 800 Gb, could peak in 2050 at
around 20 Mb/d. The combined model for all liquids gives a peak of 90 Mb/d
around 2015.
Annual world oil production as a percentage of remaining
“mean” reserves has increased from 1% in 1960 to 2.5 % in 2000. If demand
was to rise to 115 Mb/d by 2020 it would require the finding of some 300
Gb of additional reserves, for which there is little evidence. Hence our
conclusion that demand is likely to be constrained by a combination of
high prices, recession, and political action.
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