Are We Running Out of Oil?
Scaremongers are fond of reminding us that the total amount of oil in the Earth is finite and cannot be replaced during the span of human life. This is true; yet estimates of the world’s total oil endowment have grown faster than humanity can pump petroleum out of the ground.
The Growing Endowment of Oil.
* In May 1920, the U.S. Geological Survey announced that the world’s total endowment of oil amounted to 60 billion barrels.
* In 1950, geologists estimated the world’s total oil endowment at around 600 billion barrels.
* From 1970 through 1990, their estimates increased to between 1,500 and 2,000 billion barrels.
* In 1994, the U.S. Geological Survey raised the estimate to 2,400 billion barrels, and their most recent estimate (2000) was of a 3,000-billion-barrel endowment.
By the year 2000, a total of 900 billion barrels of oil had been produced. Total world oil production in 2000 was 25 billion barrels. If world oil consumption continues to increase at an average rate of 1.4 percent a year, and no further resources are discovered, the world’s oil supply will not be exhausted until the year 2056.
"Oil shales may hold another 14,000 billion barrels -- a 500 year supply."
Additional Petroleum Resources.
The estimates above do not include unconventional oil resources. Conventional oil refers to oil that is pumped out of the ground with minimal processing; unconventional oil resources consist largely of tar sands and oil shales that require processing to extract liquid petroleum. Unconventional oil resources are very large. In the future, new technologies that allow extraction of these unconventional resources likely will increase the world’s reserves.
* Oil production from tar sands in Canada and South America would add about 600 billion barrels to the world’s supply.
* Rocks found in the three western states of Colorado, Utah and Wyoming alone contain 1,500 billion barrels of oil.
* Worldwide, the oil-shale resource base could easily be as large as 14,000 billion barrels — more than 500 years of oil supply at year 2000 production rates.
Unconventional oil resources are more expensive to extract and produce, but we can expect production costs to drop with time as improved technologies increase efficiency.
The Role of Technology
With every passing year it becomes possible to exploit oil resources that could not have been recovered with old technologies. The first American oil well drilled in 1859 by Colonel Edwin Drake in Titusville, Pa. — which was actually drilled by a local blacksmith known as Uncle Billy Smith — reached a total depth of 69 feet (21 meters).
* Today’s drilling technology allows the completion of wells up to 30,000 feet (9,144 meters) deep.
* The vast petroleum resources of the world’s submerged continental margins are accessible from offshore platforms that allow drilling in water depths to 9,000 feet (2,743 meters).
* The amount of oil recoverable from a single well has greatly increased because new technologies allow the boring of multiple horizontal shafts from a single vertical shaft.
* Four-dimensional seismic imaging enables engineers and geologists to see a subsurface petroleum reservoir drain over months to years, allowing them to increase the efficiency of its recovery.
New techniques and new technology have increased the efficiency of oil exploration. The success rate for exploratory petroleum wells has increased 50 percent over the past decade, according to energy economist Michael C. Lynch.
Hubbert’s Prediction of Declining Production
Despite these facts, some environmentalists claim that declining oil production is inevitable, based on the so-called Hubbert model of energy production. They ignore the inaccuracy of Hubbert’s projections.
Problems with Hubbert’s Model.
In March 1956, M. King Hubbert, a research scientist for Shell Oil, predicted that oil production from the 48 contiguous United States would peak between 1965 and 1970. Hubbert’s prediction was initially called “utterly ridiculous.” But when U.S. oil production peaked in 1970, he became an instant celebrity and living legend.
"Environmentalists now tie their predictions of declining energy supplies to M. King Hubbert's model of energy production -- which has been consistently inaccurate."
Hubbert based his estimate on a mathematical model that assumes the production of a resource follows a bell-shaped curve — one that rises rapidly to a peak and declines just as quickly. In the case of petroleum, the model requires an accurate estimate of the size of the total oil endowment. His best estimate of the size of petroleum resources in the lower 48 states was 150 billion barrels. His high estimate, which he considered an exaggeration, was 200 billion barrels.
Based on these numbers, Hubbert produced two curves showing a “best” estimate of U.S. oil production and a “high” estimate. The claimed accuracy of Hubbert’s predictions are largely based on the upper curve — his absolute upper limit.
* Hubbert set the absolute upper limit for peak U.S. oil production at roughly 3 billion barrels a year, and his best or lower estimate of peak future U.S. crude oil production was closer to 2.5 billion barrels.
* As early as 1970, actual U.S. crude oil production exceeded Hubbert’s upper limit by 13 percent.
* By the year 2000, actual U.S. oil production from the lower 48 states was 2.5 times higher than Hubbert’s 1956 “best” prediction.
Production in the 48 contiguous states peaked, but at much higher levels than Hubbert predicted. From about 1975 through 1995, Hubbert’s upper curve was a fairly good match to actual U.S. production data. But in recent years, U.S. crude oil production has been consistently higher than Hubbert considered possible.
"U.S. oil production has been higher than Hubbert thought possile."
Hubbert’s 1980 prediction of U.S. oil production, his last, was substantially less accurate than his 1956 “high” estimate. In the year 2000, actual U.S. oil production from the lower 48 states was 1.7 times higher than his 1980 revised prediction.
In light of this, it is strange that Hubbert’s predictions have been characterized as remarkably successful. While production in the United States is declining, as Hubbert predicted, it is doing so at a much slower rate. Furthermore, lower production does not necessarily indicate the looming exhaustion of U.S. oil resources. It shows instead that at current prices and with current technology, less of the remaining petroleum is economically recoverable.
Hubbert’s Prediction for Natural Gas.
In 1998, Peter McCabe of the U.S. Geological Survey showed that energy resources do not necessarily follow Hubbert-type curves, and even if they do a decline in production may not be due to exhaustion of the resource.
For example, Hubbert also predicted future U.S. natural gas production. This prediction turned out to be grossly wrong. As of 2000, U.S. natural gas production was 2.4 times higher than Hubbert had predicted in 1956.