Executive Summary
(Chapter 1). The object of this report is to provide a holistic assessment of the global oil and natural gas resource base with the view to evaluate its production capacity over the medium and long term. Oil and gas not only share a common geologic thread and are generally found together, but their production is significantly intertwined—albeit driven by different economics: Oil fields contribute roughly 16% of the global gas produced, while natural gas liquids and condensate account for an additional 12% of petroleum liquids to the crude oil produced. Global conventional oil resources are appraised and further broken down by depth and API gravity, important indicators of their aptness for the variety of enhanced oil recovery (EOR) technologies available. The resource assessment is extended to the top 10 oil producing countries.
The development of unconventionals—shale oil, coalbed methane, shale gas, and tight sands gas—is reviewed, particularly in the US, where major strides have been made over the last 2 decades. The object is to quantify their impact on supply in the medium term.
Another major aspect of the report is an assessment of the production potential of global offshore oil. Offshore has been the main source of growth for world oil production in recent years, as onshore output has been essentially flat during the last 2 decades. Offshore is the new oil and gas frontier.
The final goal is to develop a model to provide a comprehensive medium- and long-term outlook for global oil and gas production potential sustainable by the capacity of the ultimate reserves of the system. This would represent the maximum production rates available, or best-case supply scenario in time. The long-term production potential of the Big Three oil producing countries is also projected.
(Chapter 2). Estimates are given for the world’s oil resource base, including extra-heavy oils from the Canadian and Orinoco oil sands. Light oils, which are the backbone of the industry, account for two-thirds of all global oil resources. A small fraction of the traditional (excluding extra-heavy oils) oil resource base has been produced.
Estimates are given for the global natural gas resource base. Less that one-fifth has been produced so far. The Big Three producers—Russia, Saudi Arabia, and the US—together hold almost one-fourth of the global traditional oil and gas resources.
(Chapter 3). The world is known to have substantial unconventional oil and natural gas resources that were largely overlooked until the last 20 years or so. The unconventionals reviewed are shale oil, coalbed methane, shale gas, and tight sands gas. The objective is to ascertain their medium-term supply potential.
Estimates are given for commercially viable oil shale deposits. Oil shales have yet to be proven economically recoverable on a large scale, and as such still remain a contingent resource without any measurable effect on oil supply in the medium term.
The situation is very different for natural gas unconventionals: tight sands gas, coalbed methane, and shale gas. The US has made significant strides in this area. Modest production from these three gas sources began in the 1980s, and thanks to major technological advances, has grown to almost half of the present US total natural gas output. Estimates are given for tight sands gas, which currently accounts for one-third of US gas production and one-third of US ultimate gas reserves. Tight gas sands are located primarily in the Rocky Mountain region.
Worldwide contingent resources of coalbed methane are estimated. Today, coalbed methane is a full-fledged industry in its own right. Coalbed methane deposits are primarily located in the Rocky Mountain region. Development is now widespread around the globe, with pilot projects in China and Russia.
Globally, shale gas activity is very low, with about two-thirds of this unconventional gas resource located in the US. In fact, the US is the only country with a large-scale shale gas industry. Shale gas was the last of the three natural gas unconventionals to take off, as late as the 1990s. At this time, gas shales have low recovery factors. The challenge is to release the gas locked in these stubborn, almost impermeable rocks. Estimates are provided for the potential ultimate recoverable resources of shale gas distributed around the US. Shale gas plays are continuous and very extensive throughout the US, offering attractive development costs.
(Chapter 4). The types of reserves are defined, and a comprehensive overview of the evolution of their classification systems and of the methodologies for reserves estimation is presented. The US Securities and Exchange Commission’s system of reserves valuation is sketched out, indicating that it has had a notable effect on the quality of reserves disclosures for new oil and gas projects worldwide.
Decline analysis is used to determine the ultimate reserves of several giant oil and gas fields, and of the top 10 oil and gas producing countries. The dilemma of extreme values of “reported” country-level reserves is examined; these values warp the usefulness of oil statistics in detriment of the general public and even for planning by national governments.
The ultimate reserves of traditional oil at the global level are established, and their half-life assessed. Half-life marks the beginning of production decline. The ultimate oil reserves and half-lives of the top 10 producers are established.
Contrary to the case of mature oil reserves, global natural gas is on a strong growth path, having produced barely one-fifth of its ultimate reserves. This precludes decline analysis, so a heuristic approach based on an assumed analogy of the size distributions of giant oil and gas fields was used to assess its reserves. The value is obtained for ultimately recoverable gas resources.
(Chapter 5). Light oils are the cream of the crop and comprise two-thirds of the world’s traditional oil resources—and only a small fraction has been produced so far. The overall expected recovery efficiency estimate is provided. EOR is indispensable to extract this massive volume of oil left in the underground while extending the economic life of the abundant mature oil fields. However, at the present time, only a tiny fraction of the world’s oil production comes from EOR.
Opportunely, EOR is now very competitive, thanks to the new levels of oil prices. What is at stake is that each percentage point increase in the recovery factor would unlock vast amounts of oil reserves from known reservoirs, thus reducing the need to rely so heavily on new discoveries. Estimates for both are provided and compared.
How fast can EOR be implemented on a large scale depends on the availability of high levels of investment, engineering manpower, and many more technical considerations. This chapter outlines a realistic plan of implementing EOR worldwide and provides projected incremental production levels over multiple timeframes. Thereafter, with more experience, the rate of incorporating new EOR oil most likely would quicken.
In order to facilitate a general assessment of the applicability of the variety of EOR techniques available, the global oil resource base was sorted by reservoir depth—deep, intermediate, and shallow—and by API gravity—light, medium, heavy, and extra-heavy crude—categories that reflect as best as possible the upper and lower limits of successful field EOR projects. A long-term tenable recovery goal is also provided.
(Chapter 6). Global offshore oil production is critical for the supply equation. In fact, it has been the main source of growth for world oil production in recent years, as onshore output has been essentially flat during the last 2 decades. The performance of the global offshore production sector has been remarkable.
Offshore oil and gas production together account for almost one-third of the oil-equivalent world production. Estimates of the ultimate recoverable offshore oil and gas reserves are provided and compared with their production capacity potential. A scenario for medium-term offshore oil production is also provided.
(Chapter 7). Our knowledge of the existing hydrocarbon resource base is now at a 90% confidence level, which provides a fairly solid platform from which to build a profile of oil and gas production in the 21st Century. A decline model is developed to predict the future production capacity of the crude oil and natural gas reserves, worldwide and for important oil producing countries. Crude oil accounts for four-fifths of the world’s present petroleum liquids supply mix of 85 million b/d. It should be emphasized that the projections of crude oil and natural gas production correspond to the maximum production capacity that their reserves can sustain at any time. In other words, it represents the best-case output scenario of crude oil and natural gas.
The decline model differs substantially from other models. Some use a “bottom-up” methodology based on building individual profiles of key oil fields—in effect a sample-like analysis valid at best for medium-term supply predictions. Others, like the EIA model, essentially assume an unlimited growth of reserves and consequently of production. The decline model in effect constrains production growth to the capacity of the known proved reserves; its parameters are obtained by previously fitting the model to the entire production history of all producing oil fields. In this report, medium-term projections from the decline model are compared with those of the EIA model.
Potential shortfalls of global oil production capacity in the absence of a comprehensive EOR effort are projected. Natural gas production capacity potential is also estimated.
In addition to global projections, the report also presents long-term projections of the crude production capacity of the US, Russia, and Saudi Arabia, and natural gas projections for the US. In synthesis, the decline model provides a comprehensive global outlook of the medium- and long-term production potential of both crude oil and natural gas.
