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59 comments on Do Oil Reserves Tell Us Anything?

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crayz on April 27, 2006 - 1:00pm Permalink | Subthread | Comments top
So is OPEC now considered more-or-less out of the picture, as far as increased production?
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Leanan on April 27, 2006 - 1:28pm Permalink | Subthread | Parent | Comments top
I think we just don't know.  As the second graph shows, the data is suspect.  Even the Kuwait politicians are wondering how much oil they really have.
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PhilRelig on April 27, 2006 - 2:11pm Permalink | Subthread | Parent | Comments top
But what about the datalines BEFORE all the lying began in the mid-80s?  Wouldn't these have to be considered somewhat reliable?  And can one then not extrapolate these to the present with reasonable reliability by subtracting oil produced annually by each country since then?
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JCK on April 27, 2006 - 2:35pm Permalink | Subthread | Parent | Comments top
But what about the datalines BEFORE all the lying began in the mid-80s?

Unfortunately, it doesn't appear to be that simple and that the pre 1980s data isn't reliable either.  See JD's post regarding Ghawar:

http://peakoildebunked.blogspot.com/2006/02/239-ghawar-now-empty.html

If you take the numbers from the 1970s as gospel, then Ghawar is already empty.

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PhilRelig on April 27, 2006 - 2:55pm Permalink | Subthread | Parent | Comments top
Wow, does that mean we are really totally clueless about Iran, Iraq, SA, etc.?  What about Westexas' beloved Hubbert linearizations?  As I recall, this technique seemed to provide somewhat reliable data with regard to Kuwait.  Does it lend itself well to any other of the lying OPEC producers?
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Stuart Staniford on April 27, 2006 - 3:18pm Permalink | Subthread | Parent | Comments top
I think the rough picture is that we are fairly clueless what is really going on with OPEC.  I don't completely agree with JD's math, because it's likely Ghawar's production was partially shut-in during parts of the eighties and nineties.  But nor do I have tremendous confidence in the Hubbert linearizations for those countries because the linear regimes are small and the production was far from unconstrained during a lot of the linear regime.  The linearization may be roughly indicative, but it's very hard to stand on it with cast-iron confidence.  When you do stability analyses on them, the answer you get is very sensitive to your choice of beginning and end years.

I think the production numbers have to be more solid than the reserve numbers because the missing barrels number (oil that can't be accounted for when you subtract the known consumption from the known production and take into account known stock changes) is not usually more than a couple of percent of global production - ie comparable to the discrepancies between the different production series (EIA, IEA, etc.  So whatever lies are being told about production numbers, they can't sum to more than a percent or two of the total.

So I think the only facts about OPEC that I have a lot of confidence is that for the last 12 months or so:


  • rig counts are rising
  • production is not increasing

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Todd on April 27, 2006 - 10:52pm Permalink | Subthread | Parent | Comments top
I didn't post any comments on the TOD editorial thread.  However, regardless of its value, your comments above mention "fairly clueless" about OPEC.  This kind of thing opens the floodgates for attack.

Were I writing an op-ed editorial I'd say, "Well, the editors at TOD have done it again.  They say the sky is falling yet one of their main spokespersons said the following day, and quote, 'They are clueless about OPEC.'  If they are 'clueless' about this what else are they clueless about...."

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Stuart Staniford on April 28, 2006 - 12:09am Permalink | Subthread | Parent | Comments top
The "we" referred to "all the world except insiders at the relevant national oil companies and governments."
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Stuart Staniford on April 28, 2006 - 12:10am Permalink | Subthread | Parent | Comments top
The MSM typically takes the OPEC claims at face value.  We've at least moved beyond that to the point where we recognize that data is worthless and that the situation is unclear.
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Todd on April 28, 2006 - 12:29am Permalink | Subthread | Parent | Comments top
Stuart,

I don't want to belabor this.  I knew what your point was.  However, I believe it instructive how "quotes" can be used to support a position antagonistic to the position of TOD. It is this sort of thing that undercuts rational discourse.

Someone like Mike Lynch would (probably) have no problem writing a good piece obfuscating reality and attacking TOD based upon your words.  It is truly unfortunate the world has come to this but, IMO, that's the way it is.

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SqueakyRat on April 28, 2006 - 1:06pm Permalink | Subthread | Parent | Comments top
Another thing that undermines rational discourse is people refusing to admit what they know and what they don't know.
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Oil CEO on April 30, 2006 - 7:50am Permalink | Subthread | Parent | Comments top
Squeaky is right on the money.

Todd is way off.

Stuart is correct in his analysis.

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PhilRelig on April 27, 2006 - 3:02pm Permalink | Subthread | Parent | Comments top
Plus, wasn't the 1975 figure of 60 GB in reserves for Ghawar based on the excessively conservative P-90 SEC reporting rules-type estimates by US majors, rather than the P-50 estimate that is more reasonable for the kinds of purposes pursued by Stuart?  And as such, isn't JD debunking Simmons based on a red herring in the link you reference?
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peakearl on April 27, 2006 - 3:55pm Permalink | Subthread | Parent | Comments top
When I see Simmons' slide, I see him raising questions about the durability of Ghawar production. I don't think he's claiming that its URR is exactly 60, but I do think he's making the point that it is far from infinite, which is what some seem to have believed until Simmons started challenging common lore about KSA oil. I think he should make this clearer in his presentation, because JD makes a good point. However, what is the point? How much does JD think is really there? Even if there was 90 GB we have a problem. The big problem, as noted by everyone here, is no transparency, no way to validate the numbers whatever they are. I also think there's lots of reason to believe that Ghawar has actually peaked, which is the only important point here.
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JD on April 28, 2006 - 2:14am Permalink | Subthread | Parent | Comments top
However, what is the point? How much does JD think is really there?

How would I know? I don't even really care. The basis of my optimism isn't that there's lots of oil left, although there probably is. The basis of my optimism is that we, humanity, don't need oil.

I also think there's lots of reason to believe that Ghawar has actually peaked, which is the only important point here.

I strongly disagree. You're basically saying "There's lots of reasons to think the poppy fields may be in trouble, which is the only important point here."

The status of the poppy fields may SEEM to be the only important point to the heroin addict, but it's not actually. The only important point is the fact that the person is addicted to heroin. That's the real root of the problem. The poppy fields are just a red herring -- a focus of junky denial which ignores the real problem.

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peakearl on April 28, 2006 - 1:15pm Permalink | Subthread | Parent | Comments top
Fascinating response! I'm interested in your views about being addicted to oil and that we don't need it.

When I said "the only important point," I didn't mean overall, just in terms of the specific discussion of Ghawar reserves. I didn't think the number of 60 vs 90 vs whatever was that important if the field's production was peaking (which I know is under debate - I've just expressed my intepretation of the data I have seen). Its production is what matters, not the number. Certainly it's not the most important issue in the issue of oil dependence.

BTW, I have to agree that circumstances have prevented validation or refutation of the USGS projections. I disagree that their analysis has been substantiated, but agree that we don't know how right or wrong they are about Iraq, Greenland, etc. I do know that as long as the oil remains undiscovered for whatever reason that it won't help against the peak oil concerns.

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Halfin on April 27, 2006 - 9:44pm Permalink | Subthread | Parent | Comments top
And can one then not extrapolate these to the present with reasonable reliability by subtracting oil produced annually by each country since then?

Note that non-OPEC reserves have actually increased over this time period despite producing oil all that time. So there is nothing in itself mysterious in OPEC reserves also increasing. Obviously the specific timeline reflects a political decision about when to upgrade "official" reserves, but that reserves have increased is very plausible.

From Stuart's graphs, non-OPEC reserves increased from about 230 to 300 GB over the time period, an increase of 70 GB or 23%. (And note that non-OPEC produced over 300 GB during this time, substantially more than initially estimated reserves! Yet it had more when it was done than when it began.) In comparison, Saudi Arabia increased from about 170 to 260, an increase of 90 GB or 35%. It's more than non-OPEC but not a vastly bigger increase.

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Stuart Staniford on April 27, 2006 - 10:30pm Permalink | Subthread | Parent | Comments top
I think proven reserves are better thought of as a form of (rather long-term) inventory, rather than an estimate of how much oil is left to produce.  So certainly I agree that it's possible that OPEC reserves have increased some.  OTOH, the true curve might look like Mexico or the UK.   We don't have much clue about the sign or magnitude of the change.  And, perhaps more importantly, we don't have any information about the real trends over time that would give us any clue whether we can expect further production increases or not.  Certainly, for some reason, OPEC production has stopped increasing.
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zeroworker7 on April 28, 2006 - 12:48am Permalink | Subthread | Parent | Comments top
The more I think about this, the more it highlights a few issues:

First and foremost, the total inadequecy (sp ?) of the available data.

Second, while an interesting topic, it might not have too much bearing on the timing of the production peak.  Extra reserves, even if real, might only serve to draw out the tail on the production downslope (not that there is anything wrong with that).

Third, Stuart's data ranges from 1980, when oil prices were near historic highs, to essentially now.  Oil prices are always given as a reason for reserve growth, but shouldn't this have necessitated a reduction in reserves once the price came back down?  

I suppose it gets complicated since discovery of new oil was greater in the '80's, but something about this data seems very fishy to me.  

The lack of transparency, and the clear incentives various actors have to cheat only add to my suspicion.

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JD on April 29, 2006 - 9:11pm Permalink | Subthread | Parent | Comments top
In comparison, Saudi Arabia increased from about 170 to 260, an increase of 90 GB or 35%.

You've got a number glitch. 170 to 260 is a 53% increase, not 35%.

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Halfin on April 30, 2006 - 3:06am Permalink | Subthread | Parent | Comments top
Thanks, JD; you're right, I screwed up the math. And likewise I was wrong about the non-OPEC percentage increase from 230 to 300 GB; that should have been 30%.
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Sterling on April 27, 2006 - 9:01pm Permalink | Subthread | Parent | Comments top
The second graph is also suspect because Simmons says the Saudis bumped their number from 110 to 170 in 1979 or 1980.
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59 comments on Do Oil Reserves Tell Us Anything?

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