Hello ACF Mike, would the jimjam in energy flow put your precise figuring out of balance, pulling forward the day of reckoning and hour of doom?
I am figuring that Conclusion: there is plenty of oil, but much is uneconomic to pump at less than $20 per barrel.
We'll get our oil, but at a price....
Reiterating a must read:
simmonsco-intl.com
BTW - Oil was about 20% of the S&P 500 25 years ago. Now it's around 5%. That's been replaced by financial institutions and tech. What goes around comes around?
guardian.co.uk
So, when do we all run out of oil?
Oliver Morgan
Sunday January 18, 2004
The Observer
How much oil do we have left? According to the United States Geological Survey's latest report, published in 2000, the planet had 3 trillion barrels of oil and gas before we started using it up. It calculates we have used some 700 billion, leaving 2.3 trillion barrels underground.
A simple calculation using data from the Centre for Global Energy Studies shows that with 28.8 billion barrels currently being used a year (79 million a day), there is some 80 years of supply left in the ground.
However, the 2.3 trillion barrels left includes 1.4 trillion which, according to USGS analysis of global geology, exist but have yet to be discovered. That leaves roughly 890 billion barrels of oil and gas that have been discovered and are booked as proven reserves - roughly 31 years' supply.
This estimate is lower than the industry's. BP's oil statistics - the industry bible - indicate some 1047 billion barrels of proved reserves - 36 years supply on current usage.
But analysts don't worry about this too much. Derek Butter of consultancy Wood Mackenzie says: 'It is not something we get hung up about. We think in the medium term there is enough oil in reserve.'
The BP statistics show that over the past decade, reserves have been roughly constant - in 1992 there were 1006 billion barrels - indicating that through the 1990s the industry has been effective at finding reserves to replace the resources we use. It has done well - in 1982, the figure was only 676 billion.
Manouchehr Takin of the CGES says: 'Forty years ago, economists and geologists said there were 40 years of oil and gas left. Now they are saying the same.'
He adds: 'The techniques for finding oil and extracting it are advancing rapidly. It shows that at any one time what is left, and the time it will take to use this up is only a snapshot dictated by the current state of knowledge. And, of course, there is the impact of economic development, and the efficiency with which we use energy.'
Efficient energy use, he argues, has offset the growth of formerly non-industrialised countries, such as India and China, which have anyway not grown as rapidly as was expected in the Sixties and Seventies. Similar dynamics are likely to continue.
Nevertheless, demand for oil is likely to increase, as, over time, is the price. Former Environment Minister Michael Meacher recently pointed to a crunch by 2015, when he says demand is likely to total some 60 million barrels a day more than the current 79 million, while supplies will only be some 90 million.
CGES argues that Meacher has overstated the increase in demand. It argues that taking reserves into account, his estimates imply 4 per cent growth a year, whereas, depending on price, CGES forecasts between 1 per cent and 1.3 per cent, while Opec has 1.7 per cent.
At the top end of its range, CGES believes demand will be 87.7 million barrels a day, within its expected production level.
Nevertheless, as Wood Mackenzie points out, nothing can be taken for granted. In a note last week it said: 'There is no escaping the fact that oil and gas are finite resources: the more that has been found, the less that remains to be found.'
The crux is: will exploring and finding new reserves be worth it for companies? Theory suggests that as easy resources are depleted extraction becomes more difficult, but that reduction in supply increases price, underpinning the eventual return for companies.
Wood Mackenzie is sceptical. It points out that between them major western countries need to find reserves equivalent to Angola's every 15 months just to stand still.
It shows that new areas such as Alaska face difficulties because of extreme environmental sensitivities and regulatory concerns. Other areas, such as Nigeria, and newer ones, such as Benin, are uncertain. Companies must take greater risks - such as exploration in ever deeper water, and expensive investment in extraction from shale beds.
And it points out that reserve replacement has often been achieved by shuffling finds into the proved category rather than actually finding more oil (which underlines the importance of Shell's declassification of reserves).
Eventually, it will be down to consumers to decide when the price of oil and gas makes it no longer worthwhile investing in things that are powered by them. It is likely, concedes Takin, to be well before our notional 2.3 trillion barrels are used up ... whenever that may be.
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