WORLD PETROLEUM RESERVES

Prof. Dr. H.Z. Harraz Presentation
WORLD PETROLEUM RESERVES
Hassan Z. Harraz
hharraz2006@yahoo.com
2015- 2016
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Lectures # 7 & 8
WORLD PETROLEUM
RESERVES
© Hassan Harraz 2016

Outline of Lecture
1) CONVENTIONAL CRUDE OIL RESERVOIRS (i.e., CONVENTIONAL OIL)
1.1) Giant Oil Field
Discovery of Giant Fields
1.2) Arctic (or Polar) Oil Prospective Resources
Challenges for activity in the Arctic
1.3) Deepwater Oil Prospective Resources
Future challenges and technology trends:
2) UNCONVENTIONAL CRUDE OIL RESERVOIRS (i.e., UNCONVENTIONAL OIL)
3) NATURAL GAS
3.1) Natural gas cost structure
4) WORLD PETROLEUM RESERVES
4.1) World Crude Oil Reserves
4.2) Estimated Reserves by Country
4.2.1) Reserves
4.2.2) World Proven Crude Oil Reserves
5) THE DEBATE OVER RESERVES: PESSIMISTS AND OPTIMISTS
6) “FLAT EARTHER’S” PRODUCTION CURVE
Summary: Optimists and Pessimists
7) THE UNPRECENTED UPSURGE OF OIL PRODUCTION CAPACITY AND WHAT MEANS FOR THE WORLD
7.1) Underestimation of Supply
7.2) There’s Plenty of Oil Underground
7.3) Price and Technology are the most critical factors in Determining Reserve and Production Growth
7.3.1) Technology
7.3.2) Price - Cost
7.4) U.S. SHALE-TIGHT OIL: The case of Bakken Shale
OVERESTIMATION OF DEMAND ?

In nature, petroleum deposits are occurring in two different modes, namely:
i) Conventional oil reservoirs
Figure shows Crude oil reservoirs; Hydrocarbon trap; traditional oil well methods.
ii) Unconventional oil reservoirs.
Oil that has escaped to the surface and extracted by
mining techniques. Unconventional deposits, such as:-
• Marsh gas ,
• Coal-bed methane,
• Tar sands, and
• Oil shales….etc
Occurrence of Petroleum
Room and pillar oil shale mine in Estonia
© Hassan Harraz 2016 4

Types of reservoirs

1) CONVENTIONAL CRUDE OIL RESERVOIRS
 From an historical perspective, we know where the major ‘Big Oil’ provinces are.
 The data on the map shows that the Americas and Western Europe are well past the half way point in terms of oil production
maturity.
 Significantly, only Russia and the Middle East lie below the half way mark.
 There are still some significant opportunities in these areas – however even adding 10s of billions of barrels of oil cannot
change the overall production maturity of these areas.
 Remaining reserves in the Middle East and FSU tend to dwarf the Rest of the World and these areas will continue to dominate world oil
production over the next 50 years.
 In addition there is still potential for very significant multi billion barrel oil reserve additions.
 Africa also has the potential for multi billion barrel oil reserve additions in both new basins and extensions: – however I don’t believe
that this area can deliver enough to alter the balance of oil reserve distributions.
 Access to new oil resources in politically stable parts of the world such as North America and Western Europe will become increasingly
difficult and global exploration attention over the next 10 years will focus more towards the Deepwater (Gulf of Mexico & South
Atlantic), the Russian Arctic and the Middle East.
 Conventional oil is generally easy to obtain, transport, and process.
 Conventional oil reserves are extracted using their inherent pressure, pumps, flooding or injection of water or gas.
 ~95% of all oil production comes from conventional oil reserves.
 Conventional oil is either light or heavy:
 Heavy refers to oil with a thick consistency that does not flow easily.
 Light oil can flow naturally to the surface or is extracted from the ground using pump jacks.
 Pump jacks are also used to remove heavy oil from the ground. Conventional oil is produced on land and offshore.
 We consider the worlds conventional oil fields, regardless of location include:
 Arctic oil (or Polar oil)
 Deepwater oil
 Fractured source rock
 Heavy crude oil
 Conventional oil fields refer to reservoirs that dominantly allow oil to be recovered as a free-flowing dark to light-coloured
liquid (Speight, 2007). Consequently, heavier crude oils that require special production methods are excluded.

1.1) Giant Oil Fields
 Giant oil fields are the world’s largest.
 Giant Oil Field:
An oilfield with estimated ultimate recoverable oil of more than 500 million barrels (>500
Million BBLS or >0.5 Gb)
 There are two ways to define a giant oil field:
 One is based on ultimately recoverable resources (URR), and
 the second is based on maximum oil production level.
 The URR definition considers giants to have more than 0.5 Gb of ultimately recoverable
resources. The production definition assumes a production of more than 100,000 barrels
per day (b/d) for more than one year (Simmons, 2002).
 Giant oil fields, we find that roughly 500 (~1% of the total number of world oil fields) are classified
as giants. Their contribution to world oil production was over 60 % in 2005, with the 20 largest
fields alone responsible for nearly 25%. Giant fields represent roughly 65 % of the global
ultimate recoverable conventional oil resources (Robelius, 2007).
 Many studies have pointed out the importance of giant oil fields. Individual oilfields can be
operated in various ways. For specific fields, much is dependent on specific reservoir
characteristics, investments, production strategies, and technology use, as a function of time.
The overall production from giant fields is declining, because a majority of the largest giant fields
are over 50 years old, and fewer and fewer new giants have been discovered since the decade
of the 1960s. The average contribution from an individual giant oilfield to world production is less
than 1%. Thus, with few exceptions, e.g., Ghawar, the contribution from a single field is generally
small compared to the total.
The Important Parameter –Giant Fields
Giant fields compared to other fields with respect to:
 Number of fields
 Ultimate Recoverable Reserves (URR):
Cumulative production plus the estimated
remaining reserves
 Daily Production
Källa: AAPG, OGJ, Simmons & Company International

1860 1880 1900 1920 1940 1960 1980 2000 2020 2040 2060
0
50
100
150
200
250
N
WORLD GIANT OIL FIELDS
 Histogram Contains (n=876 Fields Worldwide)
 Rate of Discovery Clearly in Decline
 Discovery Peaked in 1966
Fit 1: Normal
Number of data
points used = 876
Average X = 1966.26
Standard Deviation =
21.5462
Giant Oil Fields of the World

Largest Oil Fields
Worldwide
Serial
No
Country Field Name
Discovery
Year
Production
(b/d)
Range of URR
(GB)
1 Saudia Arabia Ghawar 1948 5000000 66 - 100
2 Kuwait Burgan Greater 1938 1200000 32 - 60
3 Azerbaijan Azeri-Chirag-Guneshli 850000
4 Mexica Ku-Maloob-Zaap 800000
5 Abu Dhabi Zakum 1964 750000 17 - 21
6 Russia Samotlor 1961 750000 6 - 14
7 Russia Priobskoye 650000
8 Mexica Cantarell Complex 1976 660000 11 - 20
9 Iran Ahwaz (Bangestan) 1958 600000 13 - 15
10 Saudia Arabia Shaybah 500000
11 Abu Dhabi Bu Hasa 500000
12 Qatar Al Shaheen 480000
13 Kazakhstan Tengiz 450000
14 Russia Fedorovo-Surgutskoye 400000
15 Algeria Hassi Messaoud 380000
16 Saudia Arabia Abqaiq 1941 375000 10 - 15
17 Venezuela El Furrial 370000
18 Barzil Marlim 350000
19 Venezuela Junin 320000
20 Abu Dhabi Bab 320000
21 Saudia Arabia Safaniya 1951 21 -36
22 Venezuela Bolivar Coastal 1917 14 - 16
23 Saudia Arabia Berri 1964 10 - 25
24 Iraq Rumalia N & S 1953 22
25 Saudia Arabia Manifa 1957 17
26 Iraq Kirkuk 1927 16
27 Iran Gashsaran 1928 12 - 15
28 Iran Marun 1963 12 - 14
29 Iran Agha Jari 1937 6 - 14
30 Saudia Arabia Zuluf 1965 12 - 14
31 Alska Prundhoe Bay 1969 13
Source: AAPG, OGJ, EIA

World,s Largest Undeveloped Oil Fields
10

Discovery of Giant Fields
 The largest fields discovered during the last decade where 35 giant oil fields discovered.
 None of the fields will have a production capability >1,000,000 b/d
 20 years ago, 15 fields had the capacity to produce more than 1,000,000 b/d.
 Today only four field can produce that much:
 Ghawar (Saudi Arabia), 1948
 Kirkuk (Iraq), 1938
 Burgan Greater (Kuwait), 1927
 Cantarell (Mexico), 1976
 The sharp increase in discovery in 1955 is likely to be due to modern seismic and
opening of new areas

Where are the giant fields?

1.2) Arctic (or Polar) Oil Prospective Resources
 Arctic (or Polar) Oil:
 refers to the oil reserves along the polar circle.
 It is extracted mainly in Alaska and Siberia and also requires complicated
techniques.
 A 2008 USGS estimates that areas north of the Arctic Circle have 90 billion barrels
(1.4×1010 m3) of undiscovered, technically recoverable oil and 44 billion barrels
(7.0×109 m3) of natural gas liquids in 25 geologically defined areas thought to have
potential for petroleum.
 This represented 13% of the expected undiscovered oil in the
world.
 Of the estimated totals, more than half of the undiscovered oil resources were estimated
to occur in just three geologic provinces: Arctic Alaska, the Amerasia Basin, and the
East Greenland Rift Basins.
 More than 70% of the mean undiscovered oil resources was estimated to occur in five
provinces: Arctic Alaska, Amerasia Basin, East Greenland Rift Basins, East Barents
Basins, and West Greenland–East Canada.
 It was further estimated that approximately 84% of the oil and gas would occur offshore.
 The USGS did not consider economic factors such as the effects of
permanent sea ice or oceanic water depth in its assessment of
undiscovered oil and gas resources. This assessment was lower than a
2000 survey, which had included lands south of the Arctic Circle.

Arctic yet-to-find
Source: United States Geological Survey, 2008
Arctic: unexplored rock volumes of the ice-bound offshore…..?

 Countries contending for Arctic
Ocean Drilling & Shipping Rights:
• Canada
• Denmark
• Russia
• Finland
• USA
Russia staking its claim:
 Russia petitioned UN to extend continental shelf - seeking exclusive
exploration rights.
 2007, Russia planted a flag on the extreme edge of its continental shelf,
under the North Pole.

A Iced Rig Petroleum

Challenges for activity in the Arctic
 Considerations for sustained industry activity:
 Commercial
 Technological
 Operational safety
 Regulatory
 Ecological
 Cultural/socio-economical
 Reputational
 Security
Image courtesy of Per Frejvall, Arctic Marine Solutions
Lomonosov Ridge, 2004
 Risks presented by future industry activity:
 Ice management;
 Spill response;
 Communities;
 Reputation; and
 Environmental impact.

1.3) Deepwater Oil Prospective Resources
Deepwater oil:
• Refers to underwater oil reserves from a water depth of 500 m.
• Pressures in excess of 20k psi (Thousand pounds per square inch).
• Deeper reservoirs in existing provinces.
• The outer margins (‘medial and distal fans’) of deltas
• Its recovery is technically very complex and expensive.
Future challenges and technology trends:
 Striving for the perfect seismic image
 Management of pressures in excess of 20k psi (Thousand pounds per
square inch).
 Transformation of flow rates from conventionals.

Exploration Deepwater Basins: Success and Failure
Failure
Uneconomic Success
Economic Success
Lwr. Congo
Niger Delta
Campos
GoM
Ca. 1500 Exploration wells
Ca. 120 basins tested
Ca. 30 with discoveries
Ca. 20 w. economic disc.
Deepwater = >500mData based on those of IHS Energy

 Unconventional oil resources are technically more difficult to extract and more expensive to recover. The term
unconventional refers not only to the geological formation and characteristics of the deposits but also to the
technical realization of ecologically acceptable and economical usage.
 Unconventional oil resources are greater than conventional ones.
 Unconventional sources are not counted as part of oil reserves.
 Unconventional Oil sources include:
 Bitumen
 Oil sand
 Oil shale
 Gas shale
 Coal liquefaction or Gas to liquids
 Heavy oil and bitumen are the most important in resource terms and are dominated by Venezuela and Canada,
respectively.
 As conventional oil becomes less available, it can be replaced with production of liquids from heavy crude oil, oil
shale, oil sands, ultra-heavy oils, gas-to-liquids (GTL) technologies, coal-to-liquids (CTL) technologies, and
biofuel technologies.
 The resource base is very large and it will become an important part of future supply.
BUT
 There are large monetary and environmental costs involved and the rate of growth relative to the demand is
limited.
 A final classification is unconventional resources. It also was introduced in 2007 by the SPE. This classification
includes petroleum accumulations that require specialized technology to extract, as opposed to wells, in addition
to significant processing and investment prior to sales.
 This includes resources such as extra heavy oil and shale. The total amount of unconventional resources is
thought to be substantially greater than conventional, but they are harder to recover and more expensive to
develop.
2) UNCONVENTIONAL CRUDE OIL RESERVOIRS

 These unconventional sources are more labour and resource intensive to produce, however, requiring extra energy to
refine, resulting in higher production costs and up to three times more greenhouse gas emissions per barrel (or barrel
equivalent) on a "well to tank" basis or 10 to 45% more on a "well to wheels" basis, which includes the carbon emitted
from combustion of the final product.
 The three major unconventional oil sources being considered for large-scale production are the:
i) Extra heavy oil (Tar sands) in the Orinoco Belt of Venezuela,
Ii) Athabasca Oil Sands in the Western Canadian Sedimentary Basin, and
iii) Oil shales of the Green River Formation in Colorado, Utah, and Wyoming in the United States.
 Energy companies such as Syncrude and Suncor have been extracting bitumen for decades but production has
increased greatly in recent years with the development of Steam Assisted Gravity Drainage and other extraction
technologies.
 These resource occurrences, in the Western Hemisphere, are approximately equal to the Identified Reserves of
conventional crude oil accredited to the Middle East.
 "Authorities familiar with the resources” believe that the world's ultimate reserves of unconventional oil are several
times as large as those of conventional oil and will be highly profitable for companies as a result of higher
prices in the 21st century.
 The major unconventional oil sources being considered for large-scale production are the Athabasca Oil Sands in the
Western Canadian Sedimentary Basin. The Athabasca Deposit in Alberta- Canada’s contains 1.75 trillion barrels, or
about half of the world’s proven oil reserves…!
 In October 2009, the USGS updated the Orinoco tar sands (Venezuela) recoverable "mean value" to 513 billion barrels
(8.16×1010 m3), with a 90% chance of being within the range of 380-652 billion barrels (103.7×109 m3), making this area
"one of the world's largest recoverable oil accumulations".
 Despite the large quantities of oil available in unconventional sources, Limitations on production prevent them from
becoming an effective substitute for conventional crude oil.
 Another study claims that even under highly optimistic assumptions, "Canada's oil sands will not prevent peak oil,"
although production could reach 5,000,000 bbl/d (790,000 m3/d) by 2030 in a "crash program" development effort.
 Moreover, oil extracted from these sources typically contains contaminants such as sulfur and heavy metals that are
energy-intensive to extract and can leave tailings, ponds containing hydrocarbon sludge, in some cases.
 The same applies to much of the Middle East's undeveloped conventional oil reserves, much of which is heavy,
viscous, and contaminated with sulfur and metals to the point of being unusable.
 A study by Wood Mackenzie suggests that within 15 years all the world’s extra oil supply is likely to come from
unconventional sources.
2) UNCONVENTIONAL OIL …..(cont.)

 Oil shale is an inorganic sedimentary rock such as shale or marl, that contains a solid organic compound known as
kerogen, a waxy oil precursor that has not yet been transformed into crude oil by the high pressures and temperatures
caused by deep burial.
 Oil shale is a misnomer because kerogen isn't crude oil, and the rock holding the kerogen often isn't even shale.
 Since it is close to the surface rather than buried deep in the earth, the shale or marl is typically mined, crushed, and
retorted, producing synthetic oil from the kerogen.
 Its net energy yield is much lower than conventional oil, so much so that estimates of the net energy yield of shale
discoveries are considered extremely unreliable.
 Oil sands are unconsolidated and stone deposits containing large amounts of neither very viscous crude bitumen nor
extra-heavy crude oil that can be recovered by surface mining or by in-situ oil wells using steam injection or other
techniques. It can be liquefied by upgrading, blending with diluent, or by heating; and then processed by a conventional
oil refinery. The recovery process requires advanced technology but is more efficient than that of oil shale.
 Heavy crude oil is oil denser than 17.5ºAPI gravity but less dense than 10º API (that of water), while extra-heavy crude
oil is denser than water. Hence the distinction between heavy oil and extra-heavy oil (or bitumen) is that in general the
former fluid floats on water and the latter sinks. Its production rate is limited by technical factors rather than by the
quantity available of the resource.
Bitumen is another type of crude oil
Properties fall on a continuum
Less light components
More residual and carbon

TAR SANDS: The unconventional oil sources being considered for large-scale
production are the Extra heavy oil (Tar sands) in the Orinoco Belt of Venezuela.
 In October 2009, the USGS updated the Orinoco tar sands (Venezuela)
recoverable "mean value" to 513 billion barrels (8.16×1010 m3), with a 90%
chance of being within the range of 380-652 billion barrels (103.7×109 m3),
making this area "one of the world's largest recoverable oil accumulations".
 Higher oil prices and new technology mean unconventional oil deposits are
now economically viable (e.g. Tar Sands)
i.treehugger.com/files/canada-tar-sands-01.jpg
NASA

Figure Resource Type and Distribution
7 trillion bbl Oil-in-Place

Coal Liquefaction (or Gas to liquids; or Synthetic sources; or Synthetic fuel)
 Synthetic sources or Synthetic fuel
 Productions are liquid hydrocarbons that are synthesised from the
conversion of coal or natural gas.
 Currently, two companies SASOL and Shell, have synthetic oil
technology proven to work on a commercial scale:
 Sasol's primary business is based on CTL (coal-to-liquid) and GTL
(natural gas-to-liquid) technology, producing US$4.40 billion in
revenues.
 Shell has used these processes to recycle wasteflare gas (usually
burnt off at oil wells and refineries) into usable synthetic oil.
 Thermal depolymerisation could be used to manufacture oil indefinitely, out of garbage,
sewage, and agricultural waste. The cost of the process was $15 per barrel.
 Hydrogen (possibly produced using hot fluid from nuclear reactors to split water in to
hydrogen and oxygen) in combination with sequestered CO2 could be used to produce
methanol (CH3OH), which could then be converted into gasoline. Capital and operational
costs were uncertain mostly because the costs associated with sequestering CO2 are
unknown. Another problem is that an energy source will be required for both carbon
capture and water splitting processes.

Unconventional Oil: Production Potential
• International Energy Agency (IEA)
projects unconventional production
growing at ~8% p.a. to ~10 mmbpd
by 2030.
• In 2030, 23% of this is expected to
be GTLs (+CTL, Biofuel?)
0
2
4
6
8
10
12
2000 2010 2020 2030
ProductionPotential(mmbpd)
GTLs (+?)
Non-conv Resource
0
20
40
60
80
100
120
140
1980 1990 2000 2010 2020 2030
Nonconv
Conventional
Nonconventional production is
still only a small fraction of
total estimated IEA production
(ca. 5% in 2020)
0
20
40
60
80
100
120
140
1980 1990 2000 2010 2020 2030
Nonconv
Conventional
Nonconventional production is
still only a small fraction of
total estimated IEA production
(ca. 5% in 2020)
Unconventional production still
only a small fraction total
estimated IEA production (~5%
in 2020).

3) NATURAL GAS
 Natural Gas:
 is a mixture of 50-90% methane (CH4) by volume; contains smaller amounts of ethane,
propane, butane and toxic hydrogen sulfide.
 Either Conventional natural gas or Unconventional deposits.
 Gas Hydrates: an ice-like material that occurs in underground deposits (globally).
 Liquefied Petroleum Gas (LPG): propane and butane are liquefied and removed from natural gas
fields. Stored in pressurized tanks.
Types of Natural Gas Plays
Conventional gas Unconventional gas
 Accumulations in medium
to highly porous reservoirs
with sufficient permeability
to allow gas to flow to
producing well.
 lies above most reservoirs
of crude oil
 Pressure regime tends to
moves gas toward
producing well (i.e.,
natural flow).
 Deposits of natural gas found in
relatively impermeable rock
formations-Tight sand and coal
beds.
 Include coal beds, shale rock,
deep deposits of tight sands and
deep zones that contain natural
gas dissolved in hot water.
 To get resources out of the
ground, artificial pathways
(fractures) have to be created.
 Key technologies are horizontal
drilling and hydraulic fracturing
techniques.
 Need much higher number of
extracting well

Natural Gas Resource and Quality Types

Where is the world’s natural gas?
1)Russia and Kazakhstan (40%)
2)Iran (15%)
3)Qatar (5%)
4)United States
5)Saudi Arabia
6)Turkmenistan
7)UAE
8)Venezuela
9)Nigeria
10)China
11)Algeria
Proved Natural Gas Reserves, 2015
When it comes to natural gas proved reserves the Middle East and Europe
& Eurasia region account for 75% of whole world’s reserves.
In fact, 40% of the world’s natural or associated gas reserves currently
identified as remaining to be produced, representing over 2600 tcf, are sour,
with both H2S and CO2 present most of the time.
Among these sour reserves, >350 tcf contain H2S in excess of 10%, and
almost 700 tcf contain over 10% CO2 .

3.1) Natural Gas Cost Structure
For oil the most important cost component is field development. For gas it is transportation.
Natural gas is transported:
In gaseous form by gas pipelines
In liquefied form in LNG carriers
Liquefied Natural Gas (LNG) - natural gas is converted at a very low temperature (-184oC)
Methane liquefies under atmospheric pressure at -161,5 C°. This is Liquefied Natural Gas
(LNG).
Pipeline advantage:
The cost of a pipeline is directly proportional to the distance covered
It is also proportional to the diameter, but volume transported is proportional to the square of
diameter: the larger the pipe, the lower the cost per cubic meter
It is also a function of “terrain”: overland or underwater, difficult terrains etc.
Liquefied natural gas (LNG) advantage:
A significant share of the gas produced is burned to liquefy the rest – independently of
distance.
Distance influences the number of required carriers (ships) – but cost increases less than w.
pipeline.
For long sea passages, LNG is the sole alternative.

Crude Oil Vs. Natural Gas
Advantages
1) Cheaper than Oil.
2) World reserves : >125 years.
3) Easily transported over land (pipeline).
4) High net energy yield.
5) Easier to process than oil.
6) Easily transported by pipeline.
7) Can be used to transport vehicles.
8) Good fuel for fuel cells and gas turbines.
9) Can be used in highly efficient fuel cells.
10) Low cost (with huge subsidies)
11) Moderate environmental impact:
i) Low land use.
ii) Produces less air pollution than other fossil
fuels (i.e., Less air pollution than other fossil
fuels).
iii) Lower CO2 emissions than other fossil fuels
(i.e., Produces less CO2 than coal or oil).
iv) Extracting natural gas damages the
environment much less that either coal or
uranium ore.
Disadvantages
1) Releases CO2 when burned
2) When processed, H2S and SO2 are
released into the atmosphere.
3) Shipped across ocean as highly explosive
LNG.
4) Must be converted to LNG before it can
be shipped (expensive and dangerous).
5) Conversion to LNG reduces net energy
yield by one-fourth.
6) Methane (a greenhouse gas) can leak
from pipelines
7) Can leak into the atmosphere; methane
is a greenhouse gas that is more potent
than CO2.
8) Sometimes burned off and wasted at
wells because of low price

4) WORLD PETROLEUM RESERVES
 Most regions of the world are either at
or past the mid-point of depletion
 Middle East (and FSU and Africa) have
produced <50% of their known resource

4.1) World Crude Oil Reserves
63.7
(6%)
89.5
(9%)
20.6
(2%)
74.9
(7%)
65.4
(6%)
44.0
(4%)
675.7
(66%)
thousand million barrels
Country Proved Oil Reserves %
North America 63.7 6.16
South & Central America 89.5 8.66
Europe 20.6 1.99
Africa 74.9 7.25
Former Soviet Union 65.4 6.33
Asia & Pacific 44.0 4.26
Middle East 675.7 65.36
 Central and S. America is
mostly Venezuela
 Eurasia is mostly Russia
 Africa is mostly Libya and
Nigeria

Significant hydrocarbon resource potential
Oil, Gas and Coal Resources by Region (bnboe)

There are two umbrella terms given to petroleum:
i) Conventional oil and
ii) Unconventional oil.
Total World Oil Reserves
Worldwide Hydrocarbon Resources (BBOE)

Global discovered resource and yet-to-find
Source: IHS, EIA and CAPP (Canadian Association of Petroleum Producers) for onshore North America data

Largest proved reserves holders of crude oil: The U.S. is only the 11th largest holder of
crude oil reserves (33.4 billion barrels) in the world with only 19% of Canada's reserves
and 12% of Saudi ...
Crude Oil Proved Reserves, January 2015
World Oil Reserves January 2015:
Total 1201.332 billion barrels
144
158
266
102
172
296

Summary of Proven Reserve Data as of 2015
— Country
Reserves Annual Production
(109bbl) (109m3) (106bbl/d) (103m3/d)
1 Venezuela 296.5 47.14 2.1 330
2 Saudi Arabia 265.4 42.20 8.9 1,410
3 Canada 175 27.8 2.7 430
4 Iran 151.2 24.04 4.1 650
5 Iraq 143.1 22.75 2.4 380
6 Kuwait 101.5 16.14 2.3 370
7 United Arab Emirates 97.8 15.55 2.4 380
8 Russia 80 13 10 1,600
9 Libya 47 7.5 1.7 270
10 Nigeria 37 5.9 2.5 400
11 Kazakhstan 30 4.8 1.5 240
12 Qatar 25.41 4.040 1.1 170
13 China 25.4 4.04 4.1 650
14 United States 25.4 4.0 7 1,100
15 Angola 13.5 2.15 1.9 300
16 Algeria 13.42 2.134 1.7 270
17 Brazil 13.2 2.10 2.1 330
Total of top seventeen reserves 1541 245.3 58.5 9280

 The estimated world proved reserves of crude petroleum were 1.6 billion barrels (As of January
2016).
 Venezuela with its heavy, sour crude holds the largest share of the world's petroleum reserves at 18%
of the total, as a result of recent reserves identified in this country. Other countries with the biggest
crude oil reserves are Saudi Arabia (16.2%), Canada (10.6%), Iran (9.4%) and Iraq (9.6%).
 “After more than 100 years of exploration in >75% of the potential oil bearing sedimentary areas,
including all of the largest and most accessible ones, we have found only 7 major provinces that
contain more oil than the world used in a single year in the peak consumption years of the 1970’s.”
 The Main Producers: OPEC …. OPEC currently accounts for 81% of total world oil reserves (1206 bbl, 2013).
 Non-OPEC…Non-OPEC currently accounts for 19% of total world oil reserves (284 bbl, 2013).

 The Non-OPEC producers are divided into: the Organization for Economic Co-operation and Development
(OECD), and the Commonwealth of Independent States (CIS):
 OECD produces 24% of the world’s oil supply, or 21 mbl/d. Within OCED, the biggest single
producer is the USA, but other major players include: Mexico, Canada, and the UK.
 CIS supply a further 15% of the global production. On a regional basis, the Middle East
accounts for nearly 65.36% of the world's reserves. Central and South America is second
with 8.66%, following recent reserves identified in Brazil and Venezuela, and North
America is third with 6.16% .
 This trend can be seen by looking at the history of crude oil production, which is now extending
over more than 150 years :
Virtually all the world's largest oil fields were all discovered more than 50 years ago;
Since the 1960s, annual oil discoveries tend to decrease;
Since 1980, annual consumption has exceeded annual new discoveries;
Till this day more than 47,500 oil fields have been found, but the 400 largest Oil fields
(1%) contain more than 75% of all oil ever discovered.

4.2.1)Reserves
By CompanyBy Country
Total > 2.7 Trillion Barrels of Oil Equivalent
Source: BP Statistical Review

4.2.2) World Proven Crude Oil Reserves
 The International Energy Agency (IEA) estimates that 70% of the world’s remaining oil
reserves consist of heavy, high sulfur crude. Moreover, there is a common tendency in
all big discoveries found in the last 30 years. The crude from these new oil fields tends
to be heavy, difficult to extract, with high sulfur content. One of the reasons of crude
oil quality deterioration is depletion of production from conventional, commonly sweet
reservoirs.
 Majority of global reserves are light/medium sour.
 Most quoted benchmark prices are light sweet crudes:
 WTI, Western Hemisphere.
 Brent (North Sea Crude) Europe.
 Historical trend shows global crude supply becoming heavier and more sour.
Quality of Crude Oil Reserves
(Source: Oil & Gas Journal, Company Information)

Figure 5: World Crude Production by Quality
Thousand Barrels/Day

During the 1990’s, the debate over oil reserves generated controversy between
the "Pessimists" and the "Optimists".
5) THE DEBATE OVER RESERVES:
PESSIMISTS AND OPTIMISTS
 Most of the dispute between the so-called pessimists (mainly retired
geologists) and the optimists (mainly economists) is due to their using
different sources of information and different definitions. The pessimists
use technical (confidential) data, whereas the optimists use the political
(published) data. “
 hold a “dynamic” concept of reserves.
 believe that volumes of exploitable oil
and gas are closely correlated to
technological advances, technical costs
and price.
 tend to be economists.
OPTIMISTS
 the world is finite and so are its recoverable oil
resources.
 all of the oil-bearing regions worth exploring have
already been explored.
 the big fields have already been discovered.
 claim that official figures for proven reserves have
been overestimated.
 world oil production is currently at its optimum (peak)
and will decrease steadily.
 Geologists and physicists tend to hold this position.
PESSIMISTS

http://wolf.readinglitho.co.uk/index.html
“… often assumed by economists that
oil production can simply be increased
to keep pace with consumption until the
wells finally and suddenly run dry.”
Other experts, notably economists,
assume that oil production follows this
type of curve.
As demand increases, the oil fields
simply increase production, the two
lines rising and falling together. Those
who admit that oil is finite (and not all
do) expect that the end will come
suddenly as the oil fields simply run
out.
This is often known disparagingly as
'flat-earth economics'
6) “FLAT EARTHER’S” PRODUCTION CURVE

 Discovery reached a peak in 1964,
with spikes representing the huge
Middle East discoveries.
 Production matched the theoretical
bell-curve until the oil shocks of the
1970s, which curbed demand.
 Had production not been constrained
by the shock, the World would have
had a higher peak around 1995,
followed by a steeper decline.
 The demand constraints gave a lower
and later peak, with a shallower
subsequent decline.
 Obviously, the less used to-day leaves
more for tomorrow. It is a lesson to be
taken to heart.
 These limits are imposed by Nature
and the physics of the reservoirs.
Summary: Optimists and Pessimists
Figure shows different scenarios for crude oil
demand and product based on conventional and
unconventional oil.

THE UNPRECENTED UPSURGE OF OIL
PRODUCTION CAPACITY AND WHAT
MEANS FOR THE WORLD

7.1) Underestimation of Supply
“Peak-Oil” production mantra, in spite of ever-growing supply.
Price, Technology, and Oil Industry Behaviour not considered.
Supply still calculated as a function of demand, even if its investment-
cycles are asynchronous with respect to demand .
Few analyses based on bottom-up, field-by-field supply .
General underestimation of huge unconventional oil potential: the
case of U.S. shale/tight oil.
The market is still convinced that oil supply
capacity will remain structurally tight, but it now
admits that short-term weakeness of demand
may provoke a temporary decline of oil prices

World known recoverable oil resources (Trillion barrels)
7.2) There’s Plenty of Oil Underground

Why is it so difficult to assess oil resources ?
Limited Exploration
Only 1/3 of world’s sedimentary
basins has been explored.
65% of world’s exploration wells (new
wildcats) drilled in the U.S. alone in
the last 30 years.
Geology Hard Reality
No great underground oil lakes of caves,
but only solid rocks.
No current technology may ensure an
exact answer to the question “how much oil
lies beneath?”
Drilling is always necessary to assess, and
even drilling may be deceitful.
NO OIL
LAKES OF
CAVES
OIL IS IN
THE ROCKS

7.3) Price and Technology are the most critical factors in Determining
Reserve and Production Growth
Price - Cost
Oil companies make their investment decisions
assuming a conservative (much lower) oil price
in the long term (20 years).
Only 20% of already recoverable resources are
not profitable (double digit IRR) with an oil price
(Brent) lower than $ 35 per barrel (at current
costs).
Technology
On average, less than 35% of
already known oil is extracted
today using current business-as-
usual technologies.
More expensive tech may
dramatically increase oil recovery. 35% of oil it is extracted
today
using BAU tech…
…but expensive tech may
increase dramatically recovery

AN EXPLORATION & DEVELOPMENT BOOM IS UNDERWAY
A huge investment cycle started in 2003, and boomed from 2010 on
The outcome of this boom - e.g. new production - will be asynchronous to demand

A Note on Methodology
Global field-by-field analysis=
Oil investments underway based on proprietary database
Additional unrestricted production =
targeted production of each investment, no risk-factor associated
Additional adjusted production =
actual possible production after cutting targeted production to take risk-
factors into account
Risk-factors =
calculated on the basis of personal experience and assessment,
and disclosed for each country
Depletion and Reserve Growth =
natural decline of already producing oilfields plus possible increase
of their producible reserves, due to the discovery of new satellites
or use of advanced technologies to recover more oil

Where will the new production come from?
A “Mosaic” of new oil production capacity
is growing worldwide, implying an
“Unrestricted” (no risk-adjusted),
additional output of a little less than 50
million barrels per day by 2020
(field-by-field estimates)

Adding New Production to Old One
(preliminary field-by-field estimates)
New oil production will integrate current world’s production capacity.
World’s oilfields Deepletion rates appear to be overestimated, due to
an underestimation of technological advance and Reserve Growth.
To 2020, the biggest oil producers tend to mantain a relatively stable
production from older oilfields.
Only four big producers (Norway, UK, Mexico, and Iran) may face a
net decrease of their current production capacity .
As a result, current world’s oil capacity of about 93 mbd
(end of 2016) will decline more slowly,
probably at a 2 - 3 % rate

World liquids production capacity excluding biofuels (Million b/d)
The biggest
increase since the
1980s
ECONOMIC PREREQUISITE
An oil price (Brent) higher
than
$70 bl to 2020
What could the outcome be?

Country-by-country evolution of oil production capacity to 2020
(Million b/d)

7.4) U.S. SHALE-TIGHT OIL: A NEW PERSIAN GULF OR A HYPE?
The case of Bakken Shale
2006
• First combination of horizontal-drilling and fracking
tested.
• Production: 7,600 bd Bakken, 110,000 bd North
Dakota
2006-2008
• Average weekly drilling rigs: 25-30 (50 including
Montana)
2010
• Production: 264,000 bd
2011
• Production +530,000 boe/d in December, more
than 80 percent light oil. Drilling rigs 183 (200
including Montana)
Preliminary evidence suggests that
Price’s analysis was right
Price (1999) Bakken’s Potential
Assessment
271-503 billion barrels of original oil in place
Mean of 413 billion barrels
206 billion barrels of recoverable oil

Obstacles:
i) the inadequate U.S. oil
transportation system, and the
structure of the refining complex
ii) the fear of Hydraulic Fracturing
But…
The U.S. shale revolution is the
biggest oil revolution since decades.
It will allow the U.S. to produce 65
percent of the oil it consumes (or
about 90 percent considering
Canada’s oil imports).
It will likely represent the single, most
important factor of economic growth
and job creation in the next few years.

OVERESTIMATION OF DEMAND ?
 Hype about China and Emerging Countries’ oil “bulimia”
 Underestimation of “Peak-demand” in OECD countries: it’s not
economy alone.
 Incapacity to assess the impact of ageing population, energy
efficiency spurred by new legislations, technological innovation,
consumers attitude.
 Long-term predictions of Emerging Countries demand
extrapolated from past/present consumption trends.
UNLESS OIL DEMAND WERE TO GROWTH AT A SUSTAINED
YEARLY RATE OF 1.6% TO 2020 (CURRENT RATE= LESS THAN
1%),
A COLLAPSE OF OIL PRICES IS ALWAYS POSSIBLE

MAJOR GEOPOLITICAL IMPLICATIONS
 The Western hemishpere could become virtually independent from the rest of the world, and the major
source of oil production growth over the next decades
 However, the U.S. won’t be insulated from the global oil market, and whatever happens in the Middle
East will always influence the oil market
 Middle East’s oil will be only one pillar - not the Center of Gravity - of the world’s oil market
 Asia to become the key market for Middle Eastern Oil, and China a U.S. political competitor in the
region, as well as in Africa
 China will try to extend its grip on Venezuela and Canada too (fields, pipelines, etc.)
 OPEC strained by Iraqi oil resurgence and global production growth

WORLD’S OIL PRODUCTION CAPACITY TO 2020 (MBD)

Ten countries in the
Middle East account for
only 3.4% of the area but
contain 48% of world’s
known oil reserves and
38% of natural gas
reserves.
Despite decades of
exploration worldwide,
we have not found
‘another Middle East.’

THE CRITICAL IMPORTANCE OF GIANT FIELDS
 Discovered in 1948, Ghawar is the world's biggest oil field, 174 miles in length and
16 miles across and encompasses 1.3 million acres.
 Current estimates, for cumulative oil production are 55 billion barrels.
 Average production for the last 10 years is five million barrels per day.
 Ghawar accounts for more than one-half of all oil production in Saudi Arabia
Saudi Arabia's Ghawar Field
Saudi Arabia has over 300 recognized reservoirs
but
~90% of its oil comes from the five super giant
fields discovered between 1940 and 1965.
Since the 1970s there haven't been new discoveries
of giant fields.

World's largest oil field – the Ghawar oil
field, Saudi Arabia,

Kuwait Oil and Gas Fields
The Great Burgan field in the south-west part of Kuwait has 14
gathering centres for the oil produced from the giant field.

Iraqi-oil-fields
• Iraq has the
world's 3rd
largest proven
petroleum
reserves and
has historically
been the
second largest
oil producing
country in the
world

Here Are The World’s Five Most Important Oil Fields
1) Ghawar (Saudi Arabia)
 The legendary Ghawar field has been churning out oil since the early 1950s, allowing Saudi Arabia to claim the
mantle as the world’s largest oil producer and the only country with sufficient spare capacity to act as a swing
producer. Holding an estimated 70 billion barrels of remaining reserves, Ghawar alone has more oil reserves
than all but seven other countries, according to the Energy Information Administration. Some oil analysts believe
that Ghawar passed its peak perhaps a decade ago, but Saudi Arabia’s infamous lack of transparency keeps
everyone guessing. Nevertheless, it remains the world’s largest oil field, both in terms of reserves and
production. It continues to produce 5 million barrels per day (bpd).
2) Burgan (Kuwait)
 Just behind Ghawar is another massive oil field located in the Middle East. The Burgan field was originally
discovered in 1938, but production didn’t begin until a decade later. The field holds an estimated 66 to 72 billion
barrels of reserves, which accounts for more than half of Kuwait’s total, and it produces between 1.1 and 1.3
million bpd.
3) Safaniya (Saudi Arabia/Kuwait)
 The Safaniya field is the world’s largest offshore oil field. Located in the Persian Gulf, the Safaniya field is
thought to hold more than 50 billion barrels of oil. It is Saudi Arabia’s second largest producing field behind
Ghawar, churning out 1.5 million bpd. Like Saudi Arabia’s other fields, Safaniya is very mature as it has been
producing for nearly 60 years, but Saudi Aramco is working hard to extend its operating life.
4) Rumaila (Iraq)
 Iraq’s largest oil field is the Rumaila, which holds an estimated 17.8 billion barrels of oil. Located in southern Iraq,
Rumaila was highly sought after when the Iraqi government put blocks up for bid in 2009. BP and the China
National Petroleum Corporation (CNPC) are working together to develop the giant field along with Iraq’s state-
owned South Oil Company. The field now produces around 1.5 million bpd, but its operators have plans to boost
that production to 2.85 million bpd over the next couple of years.
5) West Qurna-2 (Iraq)
 Also located in southern Iraq, the West Qurna-2 field is Iraq’s second largest, holding nearly 13 billion barrels of
oil reserves. The West Qurna field was divided in two and auctioned off to international oil companies. Russia’s
Lukoil took control of West Qurna-2 and successfully began production earlier this year at an initial 120,000 bpd.
Lukoil plans on lifting production to 1.2 million bpd by the end of 2017. The neighboring West Qurna-1 field –
operated by a partnership of ExxonMobil, BP, Eni SpA, and PetroChina – holds 8.6 billion barrels of oil reserves.
They hope to increase production from 300,000 bpd to more than 2.3 million bpd over the next half-decade.
 It’s clear that the Middle East is still the center of the universe when it comes to oil. Despite their age, these
supergiants remain the oil fields of tomorrow. And as the tight oil revolution in the U.S. plays out, these fields will
remain, and the world will continue to depend heavily on the fortunes of a few countries in the Middle East
77

Kurdistan’s vast reserves draw oil majors
The Kurdistan Regional Government
(KRG) sees production from the region,
now ~200,000 barrels a day, rising to
1mb/d by 2015 and 2mb/d by 2019.
That has made it Big Oil’s hottest real
estate.
Its largest oilfields – Tawke, Taq Taq and
Shaikan – have become household
names in the industry.
“Kurdistan is the oil exploration
capital of the world,”
says Tony Hayward, the former chief
executive of BP, now chief executive
of Genel Energy, the largest
independent oil producer in the region.
Exxon’s decision to enter the region in
2011 was a turning point,
with Chevron, Total and Gazprom followi
ng in its wake.

Iraq oil resource

Iran's largest oil fields

China's oil fears over South Sudan

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