Oil reserves

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Hubbert Peak Graph showing that oil production has peaked in non-OPEC and non-FSU countries

Oil reserves are the estimated quantities of crude oil that are claimed to be recoverable under existing economic and operating conditions.[1]

The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies only a fraction of this oil can be brought to the surface, and it is only this producible fraction that is considered to be reserves. The ratio of producible oil reserves to total oil in place for a given field is often referred to as the recovery factor. Recovery factors vary greatly from oil field to oil field. The recovery factor of any particular field may change over time based on operating history and in response to changes in technology and economics. The recovery factor may also rise over time if additional investment is made in enhanced oil recovery techniques such as gas injection or water-flooding.[2]

Because the geology of the subsurface cannot be examined directly, indirect techniques must be used to estimate the size and recoverability of the resource. While new technologies have increased the accuracy of these techniques, significant uncertainties still remain. In general, most early estimates of the reserves of an oil field are conservative and tend to grow with time. This phenomenon is called reserves growth.[3]

Many oil producing nations do not reveal their reservoir engineering field data, and instead provide unaudited claims for their oil reserves. The numbers disclosed by national governments are also sometimes manipulated for political reasons.[4]


[edit] Classifications

Schematic graph illustrating petroleum volumes and probabilities. Curves represent categories of oil in assessment. There is a 95% chance (i.e., probability, F95) of at least volume V1 of economically recoverable oil, and there is a 5% chance (F05) of at least volume V2 of economically recoverable oil.[5]

Reserves are those quantities of petroleum claimed to be commercially recoverable by application of development projects to known accumulations under defined conditions.[6] Reserves must satisfy four criteria: They must be:

  • discovered through one or more exploratory wells[6]
  • recoverable using existing technology[6]
  • commercially viable[6]
  • remaining in the ground[6]

All reserve estimates involve uncertainty, depending on the amount of reliable geologic and engineering data available and the interpretation of those data. The relative degree of uncertainty can be expressed by dividing reserves into two principal classifications - proved and unproved.[6] Unproved reserves can further be divided into two subcategories - probable and possible to indicate the relative degree of uncertainty about their existence.[6] The most commonly accepted definitions of these are based on those approved by the Society of Petroleum Engineers (SPE) and the World Petroleum Council (WPC) in 1997.[7]

[edit] Proved reserves

Proved reserves are those reserves claimed to have a reasonable certainty (normally at least 90% confidence) of being recoverable under existing economic and political conditions, and using existing technology. Industry specialists refer to this as P90 (i.e. having a 90% certainty of being produced). Proved reserves are also known in the industry as 1P.[8]

Proved reserves are further subdivided into Proved Developed (PD) and Proved Undeveloped (PUD). PD reserves are reserves that can be produced with existing wells and perforations, or from additional reservoirs where minimal additional investment (operating expense) is required. PUD reserves require additional capital investment (drilling new wells, installing gas compression, etc.) to bring the oil and gas to the surface.

Proved reserves are the only type the U.S. Securities and Exchange Commission allows oil companies to report to investors. Companies listed on U.S. stock exchanges must substantiate their claims, but many governments and national oil companies do not disclose verifying data to support their claims.

[edit] Unproved reserves

An oil well in Canada, which has the world's second largest oil reserves.

Probable reserves are based on median estimates, and claim a 50% confidence level of recovery. Industry specialists refer to this as P50 (i.e. having a 50% certainty of being produced). Referred to in the industry as 2P (proved plus probable).[8]

Possible reserves have a less likely chance of being recovered than probable reserves. This term is often used for reserves which are claimed to have at least a 10% certainty of being produced (P10). Reasons for classifying reserves as possible include varying interpretations of geology, reserves not producible at commercial rates, uncertainty due to reserve infill (seepage from adjacent areas), projected reserves based on future recovery methods. Referred to in the industry as 3P (proved plus probable plus possible).[8]

Unproved reserves are used internally by oil companies and government agencies for future planning purposes.

[edit] Strategic petroleum reserves

Many countries maintain government-controlled oil reserves for both economic and national security reasons. According to the United States Energy Information Administration, approximately 4.1 billion barrels (650,000,000 m3) of oil are held in strategic reserves, of which 1.4 billion is government-controlled. These reserves are generally not counted when computing a nations oil reserves.

[edit] Resources

A more sophisticated system of evaluating petroleum accumulations was adopted in 2007 by the Society of Petroleum Engineers (SPE), World Petroleum Council (WPC), American Association of Petroleum Geologists (AAPG), and Society of Petroleum Evaluation Engineers (SPEE). It incorporates the 1997 definitions for reserves, but adds categories for contingent resources and prospective resources.[6]

Contingent resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations, but the applied project(s) are not yet considered mature enough for commercial development due to one or more contingencies. Contingent resources may include, for example, projects for which there are currently no viable markets, or where commercial recovery is dependent on technology under development, or where evaluation of the accumulation is insufficient to clearly assess commerciality.

Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development.

Unconventional oil resources are greater than conventional ones.[9]

The United States Geological Survey uses the terms technically and economically recoverable resources when making its petroleum resource assessments. Technically recoverable resources represent that proportion of assessed in-place petroleum that may be recoverable using current recovery technology, without regard to cost. Economically recoverable resources are technically recoverable petroleum for which the costs of discovery, development, production, and transport, including a return to capital, can be recovered at a given market price.

Unconventional resources exist in petroleum accumulations that are pervasive throughout a large area. Examples include extra heavy oil, natural bitumen, and oil shale deposits. Unlike Conventional resources, in which the petroleum is recovered through wellbores and typically requires minimal processing prior to sale, unconventional resources require specialized extraction technology to produce. For example, steam and/or solvents are used to mobilize bitumen for in-situ recovery. Moreover, the extracted petroleum may require significant processing prior to sale (e.g. bitumen upgraders).[6] The total amount of unconventional oil resources in the world considerably exceeds the amount of conventional oil reserves, but are much more difficult and expensive to develop.

[edit] Estimation Techniques

Example of a production decline curve for an individual well

The amount of oil in a subsurface reservoir is called Oil in place (OIP).[10] Only a fraction of this oil can be recovered from a reservoir. This fraction is called the recovery factor. [10] The portion that can be recovered is considered to be a reserve. The portion that is not recoverable is not included unless and until methods are implemented to produce it.

There are a number of different methods of calculating oil reserves. These methods can be grouped into three general categories: volumetric, material balance, and production performance. Each method has its advantages and drawbacks.[10][11]

[edit] Volumetric method

Volumetric methods attempt to determine the amount of oil-in-place by using the size of the reservoir as well as the physical properties of its rocks and fluids. Then a recovery factor is assumed, using assumptions from fields with similar characteristics. OIP is multiplied by the recovery factor to arrive at a reserve number. Current recovery factors for oil fields around the world typically range between 10 and 60 percent; some are over 80 percent. The wide variance is due largely to the diversity of fluid and reservoir characteristics for different deposits.[12] [13][14] The method is most useful early in the life of the reservoir, before significant production has occurred.

[edit] Materials balance method

The materials balance method for an oil field uses an equation that relates the volume of oil, water and gas that has been produced from a reservoir, and the change in reservoir pressure, to calculate the remaining oil. It assumes that as fluids from the reservoir are produced, there will be a change in the reservoir pressure that depends on the remaining volume of oil and gas. The method requires extensive pressure-volume-temperature analysis and an accurate pressure history of the field. It requires some production to occur (typically 5% to 10% of ultimate recovery), unless reliable pressure history can be used from a field with similar rock and fluid characteristics.[11]

[edit] Production decline curve method

The decline curve method uses production data to fit a decline curve and estimate future oil production. The three most common forms of decline curves are exponential, hyperbolic, and harmonic. It is assumed that the production will decline on a reasonably smooth curve, and so allowances must be made for wells shut in and production restrictions. The curve can be expressed mathematically or plotted on a graph to estimate future production. It has the advantage of (implicitly) including all reservoir characteristics. It requires a sufficient history to establish a statistically significant trend, ideally when production is not curtailed by regulatory or other artificial conditions.[11]

[edit] Reserves growth

Experience shows that initial estimates of the size of newly discovered oil fields are usually too low. As years pass, successive estimates of the ultimate recovery of fields tend to increase. The term reserve growth refers to the typical increases in estimated ultimate recovery that occur as oil fields are developed and produced.[3]

[edit] Estimated reserves in order

Countries with largest oil reserves
Most of the world's oil reserves are in the Middle East.[15]
Summary of Reserve Data as of 2008
Country Reserves [16] Production [17] Reserve life 1
109 bbl 109 m3 106 bbl/d 103 m3/d years
Saudi Arabia 267 42.4 10.2 1,620 72
Canada 179 28.5 3.3 520 149
Iran 138 21.9 4.0 640 95
Iraq 115 18.3 2.1 330 150
Kuwait 104 16.5 2.6 410 110
United Arab Emirates 98 15.6 2.9 460 93
Venezuela 87 13.8 2.7 430 88
Russia 60 9.5 9.9 1,570 17
Libya 41 6.5 1.7 270 66
Nigeria 36 5.7 2.4 380 41
Kazakhstan 30 4.8 1.4 220 59
United States 21 3.3 7.5 1,190 8
China 16 2.5 3.9 620 11
Qatar 15 2.4 0.9 140 46
Algeria 12 1.9 2.2 350 15
Brazil 12 1.9 2.3 370 14
Mexico 12 1.9 3.5 560 9
Total of top seventeen reserves 1,243 197.6 63.5 10,100 54
1 Reserve to Production ratio (in years), calculated as reserves / annual production. (from above)

[edit] OPEC countries

There are doubts about the reliability of official OPEC reserves estimates, which are not provided with any form of audit or verification that meet external reporting standards.[18]

Since a system of country production quotas was introduced in the 1980s, partly based on reserves levels, there have been dramatic increases in reported reserves among Opec producers. In 1983, Kuwait increased its proven reserves from 67 Gbbl (10.7×10^9 m3) to 92 Gbbl (14.6×10^9 m3). In 1985-86, the UAE almost tripled its reserves from 33 Gbbl (5.2×10^9 m3) to 97 Gbbl (15.4×10^9 m3). Saudi Arabia raised its reported reserve number in 1988 by 50%. In 2001-02, Iran raised its proven reserves by some 30% to 130 Gbbl (21×10^9 m3), which advanced it to second place in reserves and ahead of Iraq. Iran denied accusations of a political motive behind the readjustment, attributing the increase instead to a combination of new discoveries and improved recovery. No details were offered of how any of the upgrades were arrived at.[19][18]

The following table illustrates these rises.

OPEC countries
oil reserves of OPEC 1980-2005
Declared reserves of major Opec Producers (billion of barrels)
BP Statistical Review - June 2008
Year Iran Iraq Kuwait Saudi Arabia UAE Venezuela Libya Nigeria
1980 58.3 30.0 67.9 168.0 30.4 19.5 20.3 16.7
1981 57.0 32.0 67.7 167.9 32.2 19.9 22.6 16.5
1982 56.1 59.0 67.2 165.5 32.4 24.9 22.2 16.8
1983 55.3 65.0 67.0 168.8 32.3 25.9 21.8 16.6
1984 58.9 65.0 92.7 171.7 32.5 28.0 21.4 16.7
1985 59.0 65.0 92.5 171.5 33.0 54.5 21.3 16.6
1986 92.9 72.0 94.5 169.7 97.2 55.5 22.8 16.1
1987 92.9 100.0 94.5 169.6 98.1 58.1 22.8 16.0
1988 92.9 100.0 94.5 255.0 98.1 58.5 22.8 16.0
1989 92.9 100.0 97.1 260.1 98.1 59.0 22.8 16.0
1990 92.9 100.0 97.0 260.3 98.1 60.1 22.8 17.1
1991 92.9 100.0 96.5 260.9 98.1 62.6 22.8 20.0
1992 92.9 100.0 96.5 261.2 98.1 63.3 22.8 21.0
1993 92.9 100.0 96.5 261.4 98.1 64.4 22.8 21.0
1994 94.3 100.0 96.5 261.4 98.1 64.9 22.8 21.0
1995 93.7 100.0 96.5 261.5 98.1 66.3 29.5 20.8
1996 92.6 112.0 96.5 261.4 97.8 72.7 29.5 20.8
1997 92.6 112.5 96.5 261.5 97.8 74.9 29.5 20.8
1998 93.7 112.5 96.5 261.5 97.8 76.1 29.5 22.5
1999 93.1 112.5 96.5 262.8 97.8 76.8 29.5 29.0
2000 99.5 112.5 96.5 262.8 97.8 76.8 36.0 29.0
2001 99.1 115.0 96.5 262.7 97.8 77.7 36.0 31.5
2002 130.7 115.0 96.5 262.8 97.8 77.3 36.0 34.3
2003 133.3 115.0 99.0 262.7 97.8 77.2 39.1 35.3
2004 132.7 115.0 101.5 264.3 97.8 79.7 39.1 35.9
2005 137.5 115.0 101.5 264.2 97.8 80.0 41.5 36.2
2006 138.4 115.0 101.5 264.3 97.8 87.0 41.5 36.2
2007 138.4 115.0 101.5 264.2 97.8 87.0 41.5 36.2

The sudden revisions in OPEC reserves, totaling nearly 300 bn barrels, have been much debated.[20] Some of it is defended partly by the shift in ownership of reserves away from international oil companies, some of whom were obliged to report reserves under conservative US Securities and Exchange Commission rules.[21][18] The most prominent explanation is the revisions were prompted by OPEC rules which set production quotas (partly) on reserves. In any event, the revisions in official data had little to do with the actual discovery of new reserves.[18] Total reserves in many OPEC countries hardly changed in the 1990s.[18] Official reserves in Kuwait, for example, were unchanged at 96.5 Gbbl (15.34×10^9 m3) (including its share of the Neutral Zone) from 1991 to 2002, even though the country produced more than 8 Gbbl (1.3×10^9 m3) and did not make any important new discoveries during that period.[18] The case of Saudi Arabia is also striking, with proven reserves estimated at between 260 and 264 billion barrels (4.20×1010 m3) in the past 18 years, a variation of less than 2%.[18]

Sadad al-Huseini, former head of exploration and production at Saudi Aramco, estimates 300 Gbbl (48×10^9 m3) of the world’s 1,200 Gbbl (190×10^9 m3) of proved reserves should be recategorized as speculative resources, though he did not specify which countries had inflated their reserves.[22] Dr. Ali Samsam Bakhtiari, a former senior expert of the National Iranian Oil Company, has estimated that Iran, Iraq, Kuwait, Saudi Arabia and the United Arab Emirates have overstated reserves by a combined 320-390bn barrels, and "As for Iran, the usually accepted official 132 billion barrels (2.10×1010 m3) is almost one hundred billion over any realistic assay".[23] Petroleum Intelligence Weekly reported that official confidential Kuwaiti documents estimate reserves of Kuwait were only 48 billion barrels (7.6×10^9 m3), of which half were proven and half were possible. The combined value of proven and possible is half of the official public estimate of proven reserves.[19]

[edit] Prospective resources

[edit] Arctic Prospective Resources

Location of Arctic Basins assessed by the USGS

A 2008 United States Geological Survey estimates that areas north of the Arctic Circle have 90 billion barrels (1.4×1010 m3) of undiscovered, technically recoverable oil (and 44 billion barrels (7.0×109 m3) of natural gas liquids ) in 25 geologically defined areas thought to have potential for petroleum. This represents 13% of the undiscovered oil in the world. Of the estimated totals, more than half of the undiscovered oil resources are estimated to occur in just three geologic provinces - Arctic Alaska, the Amerasia Basin, and the East Greenland Rift Basins. More than 70% of the mean undiscovered oil resources is estimated to occur in five provinces: Arctic Alaska, Amerasia Basin, East Greenland Rift Basins, East Barents Basins, and West Greenland–East Canada. It is further estimated that approximately 84% of the undiscovered oil and gas occurs offshore. The USGS did not consider economic factors such as the effects of permanent sea ice or oceanic water depth in its assessment of undiscovered oil and gas resources. This assessment is lower than a 2000 survey, which had included lands south of the arctic circle.[24][25][26]

[edit] Miscellaneous Prospective Resources

A 2004 joint partnership between a Spanish oil company and Cuba’s state oil company (CUPET) estimated Cuba's off-shore reserves to be able to ultimately produce between 4.6 and 9.3 billion barrels of crude oil.[27] The US Geological Survey (USGS) estimates that Cuba has 9 billion barrels (1.4×109 m3) of oil. In October 2008, the Cuban government announced that it had discovered oil basins which would double its total oil reserves to 20 billion barrels (3.2×109 m3), mostly in off-shore oil. If the estimates are accurate, then Cuba would have one of the top 20 reserves in the world.[28]

[edit] See also

[edit] References

  1. ^ "Glossary". U.S. Energy Information Agency. 2007. http://www.eia.doe.gov/glossary/glossary_r.htm. Retrieved on 2008-04-17. 
  2. ^ "Oil Reserves". BP Global. 2008. http://www.bp.com/sectiongenericarticle.do?categoryId=9017934&contentId=7033489. Retrieved on 2008-04-17. 
  3. ^ a b David F. Morehouse (1997) (PDF). The Intricate Puzzle of Oil and Gas Reserves Growth. U.S. Energy Information Administration. http://tonto.eia.doe.gov/ftproot/features/morhouse.pdf. Retrieved on 2008-04-17. 
  4. ^ "Proven Oil Reserves". moneyterms.co.uk. 2008. http://moneyterms.co.uk/proven-oil-reserves/. Retrieved on 2008-04-17. 
  5. ^ >"Arctic National Wildlife Refuge, 1002 Area, Petroleum Assessment, 1998, Including Economic Analysis". Fact Sheet. USGS. 2005. http://pubs.usgs.gov/fs/fs-0028-01/fs-0028-01.htm. 
  6. ^ a b c d e f g h i "Petroleum Resources Management System". Society of Petroleum Engineers. 2007. http://www.spe.org/spe-app/spe/industry/reserves/prms.htm. Retrieved on 2008-04-20. 
  7. ^ "Petroleum Reserves Definitions" (PDF). Petroleum Resources Management System. Society of Petroleum Engineers. 1997. http://www.spe.org/spe-site/spe/spe/industry/reserves/Petroleum_Reserves_Definitions_1997.pdf. Retrieved on 2008-04-20. 
  8. ^ a b c "Glossary of Terms Used in Petroleum Reserves/Resources" (PDF). Society of Petroleum Engineers. 2005. http://www.spe.org/spe-site/spe/spe/industry/reserves/GlossaryPetroleumReserves-ResourcesDefinitions_2005.pdf. Retrieved on 2008-04-20. 
  9. ^ Alboudwarej et al (Summer 2006) (PDF). Highlighting Heavy Oil. Oilfield Review. http://www.slb.com/media/services/resources/oilfieldreview/ors06/sum06/heavy_oil.pdf. Retrieved on 2008-05-24. 
  10. ^ a b c Hyne, Norman J. (2001). Nontechnical Guide to Petroleum Geology, Exploration, Drilling and Production. PennWell Corporation. pp. 431–449. ISBN 918-0-87814-823-3. 
  11. ^ a b c Lyons, William C. (2005). Standard Handbook Of Petroleum & Natural Gas Engineering. Gulf Professional Publishing. pp. 5–6. ISBN 0750677856, 9780750677851. 
  12. ^ "Defining the Limits of Oil Production". International Energy Outlook 2008. U.S. Department of Energy. June 2008. http://www.eia.doe.gov/oiaf/ieo/oilproduction.html. Retrieved on 2008-11-22. 
  13. ^ E. Tzimas, (2005) (PDF). Enhanced Oil Recovery using Carbon Dioxide in the European Energy System. European Commission Joint Research Center. http://ie.jrc.ec.europa.eu/publications/scientific_publications/2005/EUR21895EN.pdf. Retrieved on 2008-08-23. 
  14. ^ Green, D W (2003). Enhanced Oil Recovery. Society of Petroleum Engineers. ISBN 978-1555630775. 
  15. ^ "World Proved Reserves of Oil and Natural Gas". US Energy Information Administration. 2007. http://www.eia.doe.gov/emeu/international/reserves.html. Retrieved on 2008-08-19. 
  16. ^ PennWell Corporation, Oil & Gas Journal, Vol. 105.48 (December 24, 2007), except United States. Oil includes crude oil and condensate. Data for the United States are from the Energy Information Administration, U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves, 2006 Annual Report, DOE/EIA-0216(2007) (November 2007). Oil & Gas Journal's oil reserve estimate for Canada includes 5.392 billion barrels (857,300,000 m3) of conventional crude oil and condensate reserves and 173.2 billion barrels (2.754×1010 m3) of oil sands reserves. Information collated by EIA
  17. ^ U.S. Energy Information Administration (EIA) - U.S. Government - U.S. Dept. of Energy, October, 2008EIA - Petroleum Data, Reports, Analysis, Surveys
  18. ^ a b c d e f g (PDF)WORLD ENERGY OUTLOOK 2005:Middle East and North Africa Insights. INTERNATIONAL ENERGY AGENCY. 2005. pp. 125–126. http://www.iea.org/textbase/nppdf/free/2005/weo2005.pdf. 
  19. ^ a b "Oil Reserves Accounting: The Case Of Kuwait". Petroleum Intelligence Weekly. January 30, 2006. http://www.energyintel.com/DocumentDetail.asp?document_id=167229. Retrieved on 2008-08-23. 
  20. ^ Adam, Porter (15 July 2005), "How much oil do we really have?", BBC News, http://news.bbc.co.uk/2/hi/business/4681935.stm 
  21. ^ Maugeri, Leonardo (January 23, 2006), "The Saudis May Have Enough Oil", Newsweek, http://www.newsweek.com/id/47484 
  22. ^ "Oil reserves over-inflated by 300bn barrels – al-Huseini". October 30, 2007. http://www.davidstrahan.com/blog/?p=68. Retrieved on 2008-08-23. 
  23. ^ "On Middle Eastern Oil Reserves". ASPO-USA's Peak Oil Review. February 20, 2006. http://www.energybulletin.net/node/13009. Retrieved on 2008-08-20. 
  24. ^ United States Geological Survey, (USGS) (July 27 2008). "90 Billion Barrels of Oil and 1,670 Trillion Cubic Feet of Natural Gas Assessed in the Arctic". USGS. http://www.usgs.gov/newsroom/article.asp?ID=1980. Retrieved on 2008-08-12. 
  25. ^ MOUAWAD, JAD (July 24, 2008). "Oil Survey Says Arctic Has Riches". New York Times. http://www.nytimes.com/2008/07/24/business/24arctic.html. 
  26. ^ Alan Bailey (October 21, 2007). "USGS: 25% Arctic oil, gas estimate a reporter’s mistake". Vol. 12, No. 42. Petroleum News. http://www.petroleumnews.com/pntruncate/347702651.shtml. Retrieved on 2008-07-24. 
  27. ^ Lorca-Susino, Maria. "A Brief Energy Outlook for the XXI Century" (pdf). Munich Personal RePEc Archive. http://mpra.ub.uni-muenchen.de/9557/1/MPRA_paper_9557.pdf. Retrieved on 2008-10-17. 
  28. ^ BBC: claims massive oil reserves

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