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Politics : Formerly About Advanced Micro Devices
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To: TimF who wrote (226344)3/26/2005 5:29:05 PM
From: tejek  Read Replies (2) of 1577179
 
The industry is notorious for overestimating reserves.

Actually reserves were underestimated for a long time. The estimate of how much oil there is to left to find has kept going up not down. Actual known reserves eventually pass older estimates of total reserves.

That is just not true. Its a common knowledge that the oil industry has overestimated reserves. For an example, had oil reserve estimates for Saudi Arabia been accurate, they would have been able to increase production. However, most oil pundits believe SA's production has maxed out. An article from Scientific American:

"The next oil crunch will not be so temporary. Our analysis of the discovery and production of oil fields around the world suggests that within the next decade, the supply of conventional oil will be unable to keep up with demand. This conclusion contradicts the picture one gets from oil industry reports, which boasted of 1,020 billion barrels of oil (Gbo) in "Proved" reserves at the start of 1998. Dividing that figure by the current production rate of about 23.6 Gbo a year might suggest that crude oil could remain plentiful and cheap for 43 more years—probably longer, because official charts show reserves growing.

Unfortunately, this appraisal makes three critical errors. First, it relies on distorted estimates of reserves. A second mistake is to pretend that production will remain constant. Third and most important, conventional wisdom erroneously assumes that the last bucket of oil can be pumped from the ground just as quickly as the barrels of oil gushing from wells today. In fact, the rate at which any well—or any country—can produce oil always rises to a maximum and then, when about half the oil is gone, begins falling gradually back to zero."

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