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Dude. You know that the accounting practices for oil reserves in the US are completely different than those used in OPEC. You also know that the revisions in OPEC numbers were made by individual countries in one year. How much does Exxon pay you to post nonsense? AEI? Conference Board? Business Roundtable? Hoover Institute? API? Seriously.
Conspiracy theories aside, I feel compelled to point out the obvious.
You are absolutely right...
...about accounting practices for oil reserves being different in the US then they are in OPEC countries. In the US, oil firms routinely UNDERESTIMATE the size of a field, as it allows them to defer taxes from the present into the future. Not only this, but having your reserves 'grow' in the future ensures a certain ammount of shareholder confidence in your firm. Not only that, but fields discovered and exploited from the 50s and 60s used very crude tools to estimate field sizes. As we learn more about a field using 4d seismic data and other advanced techniques the reserves in a given field usually increase, but do sometimes decrease.
Now, in OPEC countries, they HAVE no taxes to worry about deferring into the future. They have no shareholders to soothe, and they produce their oil on a production quota. So imagine for a minute that your an OPEC Oil CEO. You know that your field has a lot more oil in it then the American estimate initially stated. You know that your oil production is limited by a quota system based on reserves. You also have past history on thousands of other fields, big and small, that were discovered around the same time and through that data you have a known expected reserve growth ratio.
What do you do?
You immediately inflate the publicly stated reserves of your oil fields to a reasonable level based on similar fields in other regions.
Now your sitting pretty. You have a much larger share of OPEC proven reserves and as such you can pump more oil, sell more oil, and reap more benefits then your competitors. Unfortunately, every OPEC country jumped on this bandwagon within a years time.
Now you may not know this, but US fields today are STILL showing reserve growth. So is the rest of the world. Every year that goes by, we consume 31+ Gb of oil. If our discoveries only total 15 Gb, but our total reserve estimate grew by 30 Gb, that means we had a net increase of 46 Gb. Essentially, you 'discovered' the oil that you consumed that year, then some more based on new knowledge about a field, and then some more again based on discoveries. Even if oil reserves remain flat year over year, and you discovered 15 Gb, you still 'found' another 16 Gb in your old fields.
So once again, I will ask the question that needs to be asked: would we be in uproar about the OPEC figures if they had spread out their growth over a decade?
I highly doubt it.
Proven reserves in Western countries typically grow at a gentle pace until around the time that production peaks, and then they decline along with production. They represent effectively a kind of inventory - the oil that is close enough to being producible that it can be booked as reserves. Thus they are very roughly proportional to production. There's a bunch of graphs here. Since the OPEC country graphs look completely unnatural, we basically have no idea what is going on. We cannot say for sure how much oil is there or not. The issue is that it goes to the integrity of the reporting process; clearly it doesn't have integrity.
However, in answer to your question, there is no other country that I'm aware of where reserves have grown like that without significant ongoing discovery. So I think it would still look odd, though perhaps less odd, if they had spread it out.
Well it must look 'odd' in the US then, because that is exactly what happened here, but over several decades instead of just one.
The total proved reserves in the US have been declining for decades.
Yes, but not as fast as we have been depleting our reserves on a yearly basis. Its roughly half as much.
Sure, but they have not jumped up by 110gb, or jumped up in any way shape or form. Had they done so, it would seem very odd, as it does in Saudi Arabia.
hothgor, a company can defer reserves ( and taxes) into the future but really probably only for a year or so.
you state that techniques for estimating field size , and reserves, have vastly improved from the 60's. well maybe somewhat, but if that is true then can we count on the same reserve growth in the future ? much of reserve estimation is based on decline curve analysis so that hasn't changed since the 60's (although i dont have first hand knowledge of the 60's since i have only been doing this since the '70's)
The only reason for reserves to NOT increase in size as they have in the past is for us to discount all possible technological innovations. Not only that, but a good junk of the oil we find today is still by these same oil companies who routinely under-estimate the size of a field for the above mentioned reasons.
well, inovations may happen and they may not but you are talking about two different things here, technical innovations and political/tax/investor relations .
i can agree with you that most of the reservoir engineers of the 50's and 60's were crew cut and pocket protector wearing, slide rule wielding conservative who didnt want to ever over estimate reserves. they werent worried about being wrong by being too conservative. and i suppose exxon, chevron and bp are still in that mode to some extent.
arent ceo's today more worried about the value of their stock options and thus aren't their suv driving suburb living windows operating compliant reservoir engineers more likely to over rather than under estimate reserves ?
that and i think you are way too impressed with this whiz bang technology, with the exception of computers we are doing things largly as the crew cut wearing ones did.
Hothgor.
Reserves and Reserve growth:
The proof of a pudding is in the eating.
Explain how you square reserve growths against year on year reductions in Flows from specific, countries, regional basins and component fields.
And anyway where are the reserve growths of which you speak?
The lower 48, Alaska, UKCS and Norway have pretty good data for you to work on.
All, it would seem, are suffering reduced flows.
We are talking about the good stuff here: Cheap, easily extracted, light sweet crude.
You know. The stuff that has powered the planet for 60 years. Forget the sub-oil shales, tar sands and ethanol as important components in the Liquids flow levels. For sure, count the high sulpher heavy oils and other sludges that are still found in conventional geological formations and traps etc but need more energy to extract.
I cannot understand why this is such a big conceptual problem.
Maybe kids spend too much time playing on computers and not enough time playing at the sink with different sizes of cups and buckets and water.
The largest force towards reserve growth in the present day comes from economic incentives. It simply was not attractive to recover hydrocarbons from certain fields at the price level we averaged from the late 80s to the early 90s. Today, with oil most likely going to hover between $50 and $70, that allows a much larger range of hydrocarbon utilization, both conventional and unconventional. At some point in the future, the unconventional sources will be the new conventional.
Mooooo!
US Population 1970 213 million (1980 239 million)
US Population 2006 300 million
UP @48%
imported oil 1976 @30%
imported oil 2006 @60%
UP 100%
(not including manufactured imports, and the oil needed to build)
...and I should be excited by reserve growth?