126 comments on Depletion estimates and the CGES
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126 comments on Depletion estimates and the CGES
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GAIA Host Collective
If URR is the amount economically extractible with today's technology, it seems logical that it should be possible to suck harder on the straw or accept higher water cuts when the price of oil doubles. I suppose this assumes that the industry actually incorporates the doubled price into its plans.
Is it the case, then, that the URR is limited more by today's technology than yesterday's price? Put another way, does the oil pumped diminish so quickly as URR is approached that rising price doesn't provide access to a meaningfully increased amount?
The Lower 48 and the North Sea both peaked at about 50% of Qt, based on the HL method. The Lower 48 peaked in 1970, the North Sea, in 1999--29 years apart. Note that despite better technology, the North Sea peaked at the same stage of depletion as the Lower 48.
Also, in the Lower 48, we have tried primary, secondary and tertiary recovery techniques, combined with horizontal drilling and 3D seismic, etc.
Can we make money, find new fields and increase the recovery from existing fields in the Lower 48? Yes. Will it help? Yes. Will it make any kind of real difference? No.
I understand. As Simmons points out, (and some posters mention below), reserves estimates may turn out to be correct but do not necessarily say anything about the peak in production. Rather, it merely impacts the tail of the production curve.
Still, I'm baffled by the reserve estimates themselves. OPEC is a special case, but even non-OPEC reserve estimates make no sense. Michael Lynch uses this argument a lot, that reserves are constantly being revised upwards. This is correct, the non-OPEC reserve estimates have increased, even in the last 5 years.
But how can this be, given the record non-OPEC production levels (~80 GB over the last 5 years) and falling discovery rate? What kind of justifications are given for the upward revisions? These look like paper barrels to me.
When you look at a production rate versus time graph, if you integrate the area under the curve, you get URR, or Deffeyes' Qt.
The question is, what is the area under the curve, especially when the graph shows primarily rising production with time?
There are a lot of engineering terms--proven, proven undeveloped, probable, possible, etc. The USGS uses some very optimistic methods to get their reserve estimates, and I recall that someone at Saudi Aramco suggested at one time that they were using USGS estimates.
However, I prefer the Hubbert Linearization (HL) method to estimate Qt for large producing regions and for the world.
Using the HL method, if we have a enough production history, we have been able to demonstrate pretty accurate results. I would especially point to the Lower 48 case history, where Khebab took the production data through 1970, to generate a post 1970 predicted production profile. The post-1970 cumulative Lower 48 production was 99% of what the HL model predicted.
We have consumed about 1,000 Gb of crude + condensate, and Deffeyes estimates that the world has about 1,000 Gb of conventional crude + condensate left. IMO, the only areas left that could really change this estimate would be the north and south polar regions.
In any case, as predicted by Deffeyes, world oil production has been falling since December, and as Khebab and I predicted, production by the top oil exporters has been falling faster than world oil production is falling.
I really can't think of a time when Yergin and/or Lynch have been right.
I can point to multiple examples of the HL method being correct, especially for large producing regions.
Take your pick.