Amazing U.S. Oil Production Statistic

While preparing my response to Jeffrey Brown on the exports debate, I read as much as I could on Saudi Arabia, their exports, and their reserves. It is pretty common knowledge that the entire world is at the mercy of Saudi’s reserves, so it is important that we know the size of their reserves. The “official” number (from BP’s Statistical Review of World Energy) is 262 billion barrels remaining. If this was in fact true, then Peak Oil is very distant (although Peak Lite would still be a threat). However, many are skeptical of this number. The case for a much lower reserve number was argued by Matthew R. Simmons in Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy. Khebab and Jeffrey Brown have argued that Saudi reserves may be as low as 70 billion barrels. If true, this would be quite alarming and would in fact mean that Peak Oil is on top of us.

In my opinion, the opacity of Saudi’s reserves is not something the world can afford to live with. It is not that I don’t trust them, nor that I think they are necessarily being deceptive. I just believe we can’t afford to risk that they are being deceptive. We need to have a better handle on their reserves.

I decided to try a different approach to see what I came up with, and I came across an amazing statistic. At first I was sure I had made an error. In 1982, Saudi Arabia stopped allowing their oil and gas data to be scrutinized. Prior to that, outsiders had some access to information on their reserves. When that accessibility was shut down, Saudi proven oil reserves were estimated to be 164.60 billion barrels. I have yet to find a challenge to this number. It seems to be accepted that this number does represent their reserves in 1982. However, in 1990 they mysteriously raised their reserve estimate by 90 billion barrels. Since the data are now hidden from public view, there is obviously a great deal of skepticism regarding this new estimate.

So, I started with the assumption that the 1982 estimate of 164.60 billion barrels was correct, and then I just subtracted Saudi production since then. I calculated their total production since 1982 as 69 billion barrels, leaving 95 billion barrels of reserves. This approach would imply either that their 1982 reserves were overstated, or that the models showing Saudi Arabia at 70 billion barrels remaining are in error. (If anyone can find a challenge to the 1982 number, I would appreciate the reference).

But, we know that reserves sometimes legitimately grow, and new discoveries take place. So, I decided to check this approach against what happened in the U.S. over the same time period. I examined U.S. reserves and production from 1982 to 2006. The following data are all pulled from:

U.S. Crude Oil Proved Reserves, Reserves Changes, and Production

In 1982, U.S. reserves were 27.858 billion barrels. In 2005, U.S. reserves were 21.757 billion barrels. So we drew down our reserves by 6 billion barrels. Imagine my shock to discover our production over that time period. What would you guess? Six billion barrels? Ten? In fact, oil production from these reserves since 1982 totals 56.9 billion barrels! Amazingly, in the past 24 years we have produced 57 billion barrels of oil and pulled our reserves down by only 6 billion barrels. That seems incredible, but it appears that this is what has happened.

So, the conclusion is that production from discovery and development of new fields can greatly distort estimated recoverable oil. The method I tried to apply to Saudi reserves failed the test when I applied it to U.S. reserves. So I still don’t have a clue as to how much oil Saudi Arabia actually has. If their reserves followed similar behavior to U.S. reserves, then they could still be sitting on > 150 billion barrels. But we simply can’t take that risk.

7 thoughts on “Amazing U.S. Oil Production Statistic”

  1. So, in the past 24 years we have produced 57 billion barrels of oil and pulled our reserves down by only 6 billion barrels.

    Can you provide any more specifics on what made this possible? I assume it’s new technology?

  2. Can you provide any more specifics on what made this possible? I assume it’s new technology?

    It’s a combination of things, but primarily better extraction technology, discovery of new fields, and development of existing reserves. I have to admit that I was shocked at the numbers.

  3. Well, I’m looking forward to your response to westexas. I have a lot of respect for the oildrum because they tend to source everything. I was talking about TOD with a few acquaintances and I even mentioned your name. A few people flew off the handle and became rather angry. They insulted my intelligence and called TOD a conspiracy website. They referenced CERA, USGS, IEA, falling oil prices, gas is cheaper than milk, etc. They sayed the peak will be well beyond 2020. And even if gas approaches $6 a gallon they wouldn’t care. I was even offered 10:1 odds on a $25,000 dollar bet saying that your projections would be wrong. One of the people offering the bets is a son of an oil executive you probably know by name. The oil executive grad student wasn’t able to reference anything other than his dad’s opinion.

    In all honesty I have the utmost confidence in you and I think you are an incredibly talented person. But when you make plateau claims that are so out of sync with CERA and the USGS it makes it very difficult to talk to others. Just giving you some more inspiration for your rebuttal of westexas. I’m sure you have answers to all of this.

  4. They insulted my intelligence and called TOD a conspiracy website.

    That group is well-represented there, and I argue against some of the sensationalism that gets posted there. I think some of fringe elements make anyone who voices concerns about peak oil look like a kook.

    I was even offered 10:1 odds on a $25,000 dollar bet saying that your projections would be wrong.

    Well, I am not projecting an imminent peak. It could happen within 3 years, but it is more difficult to see that far out. The more imminent danger is of demand outstripping supply, IMO. This is my Peak Lite scenario.

    But when you make plateau claims that are so out of sync with CERA and the USGS it makes it very difficult to talk to others.

    I am pretty careful about making those claims. I have not committed to a firm date of peak, other than to say I think it is at least 3 years out. In fact, the reason I went after westexas, and lately Ron Patterson (Darwinian) is that I believe they have been making claims that are sensationalistic, and not supported by the data.

    Just giving you some more inspiration for your rebuttal of westexas.

    Oh, it’s done. I finished it yesterday. I will probably post it here on Sunday night, and at TOD on Monday morning. Pay special attention to the first graph. It makes the case I have been arguing since Spring.

  5. It seems to me that it isn’t so much “peak” or most any other measure of reserves but some measure of marginal EROEI trend over time at the point of use for that resource that best captures our energy situation. In terms of global energy use, I’ll bet such a measure peaked some time ago for many crude oil based processes and the trend is worsening. Technological advances can shift this curve for a given resource at levels from the global aggregate, such as all crude oil use, to the specific, such as a specific oil field. Ultimately, it is the projected trends of the aggregate that matters. Although everyone makes decisions on the basis of current and projected prices, unbeknowest to most decision makers these signals are distorted by such things as tax policy and externalities at various steps in the production chain prior to their decision point. Some how, I’d like a better source of signals than price or arguing about when peak will occur or who has how much of what types of reserves.

  6. One idea, although even more difficult to calculate than EROEI for a single fuel:

    Energy production capability (out of current, proven, probable or imagined resources)

    Energy consumption for that production (incl. finding fields, esoteric drilling tech, refining out of non-conventional oils, etc).

    That is, NET energy for the fossil fuel reserves we still have yet, using current technology.

    That would be really helpful, although very complicated to estimate and I’d assume the range would be fairly wide, even possibly to the point of being too wide (hence useless).

  7. Just FYI, the Saudis are now claiming that they’re going to go up to 464bn barrels of reserves.

    http://quote.bloomberg.com/apps/news?pid=10000006&sid=afVg.BEwF2Jw&refer=home

    Having scoured what literature on Saudi production is available, I do think that higher prices and better production technology – maximum reservoir contact wells, gas injection – are increasing the amount of recoverable oil from the OOIP.

    How *much* of an increase is, as you rightly point out, anyone’s guess.

Comments are closed.