Estimates of Oil Reserves

The western world lives in a culture of belief in growth and everyone hopes to see their children
having better lives than they had, but for the first time we are not sure. Everyone would like to see the growth continue and hates to speak about decline.

Politicians promise that growth will solve the present problems on welfare, retirement and they
would dearly love to see the reserves of oil, which fuels the economy, grow.
As the French writer Antoine de Saint Exupery wrote: “we do no inherit from our parents, we
borrow from our children”

There are two schools on reserves but also much the confusion between reserves and resources. The views of so-called “Pessimists” (mainly retired geologists or retired CEO (Bernabe 1998, Bowlin 1999) are compared with those of so-called ”Optimists” (mainly economists Aldeman, Lynch, or governmental agencies DOE, IEA, EU). The Pessimists have access to technical data when the Optimists have access to political or financial data.

Reporting data on oil production or oil reserves is a political act. The SEC, to satisfy bankers and shareholders, obliges the oil companies listed on the US stock market to report only Proved Reserves and to omit Probable Reserves that are reported in the rest of the world. This poor practice of reporting only Proved Reserves led to a strong reserve growth, as 90% of the annual reserves oil addition come from revisions of old fields, showing that the assessment of the fields was poorly reported. This reserve growth of conventional oil reserves is wrongly attributed to technological progress. Technical data, on which development decisions are taken, exist but they are confidential.

There are database companies (or “scout” data as a scout is someone sent to get information without revealing his source), selling technical data, but these databases are very expensive. Reporting of reserves is poor, but reporting on production is not much better as the 10$/b of early 1999 seems to be mainly due to the « missing barrels » of IEA overestimating the supply and underestimating the demand (end of Asiatic crisis), giving a false impression of oil abundance (Simmons 2000). Recovery factor is assumed to depend mainly upon oil price, when it depends mainly on the geology and physics of the reservoir.

The Optimists believe that technology (as Santa Claus) will solve all the problems, but they do not
want to listen to technicians who say that technology has limits.

Published in: Paper presented at the EMF/IEA/IEW meeting IIASA, Laxenburg, Austria - June 19, 2001
Plenary Session I: Resources
Available from: IIASA