Long Term World Oil Supply

(A Resource Base/Production Path Analysis)

Executive Summary
- These pages summarize a recent EIA presentation on when world
conventional oil production will peak and the effect of different
estimates of the world conventional oil resource base.
- A larger resource base generally leads to a later production peak.
World oil resource base estimates have trended upward over the
years, from 600 billion barrels estimated in the early 1940s to as
high as 3,900 billion barrels estimated this year by the U.S.
Geological Survey (USGS).
- To illustrate the important factors affecting estimates of the peak
production year, EIA postulated 12 scenarios based on three
current USGS world conventional oil resource base estimates
(2,248, 3,003 and 3,896 billion barrels - corresponding to high,
mean and low probabilities of occurrence) and four world oil
production annual growth rates (0, 1, 2 and 3 percent.)

Executive Summary (Continued)

- Using a relatively simple algorithm, peak production years were
estimated. The peak production year estimates ranged from 2021
to 2112 across the 12 scenarios. For example, using the USGS
mean (expected) resource base estimate (3,003 billion barrels) and
an annual production growth rate of 2 percent (similar to the current
rate), the estimated peak production year is 2037.
- EIAs estimates for production peaks occur later than those
generated by other analysts, some of whom predicted the
production peak will occur as early as 2004. EIAs analysis
indicates instead that world conventional oil production may
increase two decades or more before it begins to decline.

Executive Summary (Continued)

- EIAs relative optimism is based on:
(1) use of the current USGS world conventional oil resource
estimates, which are both larger and more technically sound than
past resource estimates used by others, and
(2) use of a methodology for estimating the post-peak production
path that is based on the reserve to production (R/P) ratio observed
in the United States since oil production peaked in 1970.
- Other factors, e.g., choice of different production curve
hypotheses, market dynamics, technological advances, and
economic policies, could change the results, perhaps substantially.

Overview

Oil Resources (Estimates)

Year of Peak Oil Production (Scenarios)

U.S.
World

What Might Change the Estimated Time of Peak Production?

Conclusions

The Year of Peak Production

When will worldwide conventional oil production
peak?

Lower 48 Crude Oil Reserves & Production, 1945-2000

Crude Oil Reserves, Billion Barrels

35

Peak
Reserves
1959

4.0

Peak
Production
1970

3.5

30

3.0

25

2.5

20

2.0

15

1.5

10

Lower 48
Reserves

1.0

Lower 48
Production

0.5

0
1945

1950

1955

1960

1965

1970

1975

1980

1985

1990

1995

0.0
2000

Crude Oil Annual Production, Billion Barrels

40

Texas Oil and Condensate Production, and

Texas First Purchase Price (FPP), 1980-1999
100

Thousand Barrels Per Day

1986 Production
Decline 13%

Average old well declines

15% each year.

2,500

80

2,000
1986
Price
Decline
51%

1,500

1,000

500

90

1998
1997
Production
Production Decline
Increase
14%
1%

70
60
50

1998
Price
Decline
44%

40
30
20

Production
TX FPP 1999$

0
Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98

10
0

TX First Purchase Oil Price, 1999$

3,000

Published Estimates of World Oil Ultimate Recovery

USGS 5% 2000
USGS Mean 2000
USGS 95% 2000
Campbell 1995
Masters 1994
Campbell 1992
Bookout 1989
Masters 1987
Martin 1984
Nehring 1982
Halbouty 1981
Meyerhoff 1979
Nehring 1978
Nelson 1977
Folinsbee 1976
Adams & Kirby 1975
Linden 1973
Moody 1972
Moody 1970
Shell 1968
Weeks 1959
MacNaughton 1953
Weeks 1948
Pratt 1942

0.5

Source: USGS and Colin Campbell

1.5

2.5

Trillions of Barrels

3.5

Different Interpretations of a Hypothetical 6,000 Billion Barrel

World Original Oil-in-Place Resource Base
6,000

5,000

4,200
Billion
Unrecovered

3,000
Billion
Unrecovered

Unrecoverable
Reserves
Growth
Undiscovered

4,000

3,000
Reserves Growth
Adds 10%
2,000

50%
Recovery
Factor with
Reserves
Growth
40%
Recovery
Factor
Without
Reserves
Growth

1,000

Proved
Reserves
Cumulative
Production

30%
Recovery
Factor

0
USGS Approach

1995 Campbell/Laherrere Approach

Campbell-Laherrre World Oil Production Estimates, 1930-2050

Production Peak

2004

Campbell

Laherreres Oil Production Forecast, 1930-2150

Production Peak

2010

Laherrere

EIA World Oil Production Projections, 1990-2020

60

High Economic Growth Case

Reference Case

Low Economic Growth Case

Billion Barrels Per Year

50

High Oil Price Case ($28.04 per barrel in 2020)

Low Oil Price Case ($14.90 per barrel in 2020)

40

Reference Case ($22.04 per barrel in 2020)

30

20

10

0
1990

1995

2000

Source: International Energy Outlook 2000

2005

2010

2015

2020

Annual Production with 2 Percent Annual Growth & Decline

40

Billion Barrels per Year

35
30

USGS Estimates of Ultimate Recovery

2016

Ultimate Recovery
Probability
BBls
---------------------------Low (95 %)
2,248
Mean (expected value)
3,003
High (5 %)
3,896

2% Growth
& Decline

25
High Prices Can
Affect Demand
4.1% Decline
1979-1983

20
15
10

History

7.8% Growth
1963-1973

Mean

5
0
1900

1925

1950

1975

2000

2025

2050

Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

2075

2100

2125

Annual Production Scenarios with 2 Percent Growth Rates and

Different Decline Methods
60

USGS Estimates of Ultimate Recovery

History

2037

Billion Barrels per Year

50

40

Ultimate Recovery
Probability
BBls
---------------------------Low (95 %)
2,248
Mean (expected value)
3,003
High (5 %)
3,896

Mean w/ 2% Growth and

2% Decline
Mean w/ 2% Growth and
10 R/P Ratio Decline

2016

2% Growth
& 10 R/P Ratio Decline

30

2% Growth
& 2% Decline

20

10

0
1900

1925

1950

1975

2000

2025

2050

Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

2075

2100

2125

Annual Production Scenarios with 2 Percent Growth Rates and

Different Resource Levels (Decline R/P = 10)
70
USGS Estimates of Ultimate Recovery

Billion Barrels per Year

60
50
40

2047

Ultimate Recovery
Probability
BBls
---------------------------Low (95 %)
2,248
Mean (expected value)
3,003
High (5 %)
3,896

2%
Growth

2037

2026
Decline
R/P = 10

30
20
10
0
1900

History
Mean
Low (95 %)
High (5 %)

1925

1950

1975

2000

2025

2050

2075

Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

2100

2125

Annual Production Scenarios for the Mean Resource Estimate

and Different Growth Rates (Decline R/P = 10)
70

USGS Estimates of Ultimate Recovery

2030 @ 3% Growth

Billion Barrels per Year

60

50

Ultimate Recovery
Probability
BBls
---------------------------Low (95 %)
2,248
Mean (expected value)
3,003
High (5 %)
3,896

2037 @ 2% Growth

2050 @ 1% Growth

40

30

Decline
R/P = 10

20

History
10

0
1900

Mean

1925

1950

1975

2000

2025

2050

2075

Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

2100

2125

Annual Production Scenarios for the Mean Resource Estimate

Showing Sharp and Rounded Peaks
60

Billion Barrels per Year

50

40

USGS Estimates of Ultimate Recovery

Peak in 2037
Decline @ R/P = 10

Ultimate Recovery
Probability
BBls
---------------------------Low (95 %)
2,248
Mean (expected value)
3,003
High (5 %)
3,896

30

Peak in 2030
Decline @ 5 %

2%
Growth

20
History
10

0
1900

Mean

1925

1950

1975

2000

2025

2050

Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

2075

2100

2125

12 EIA World Conventional Oil Production Scenarios

90

Peak Range 46 yrs or 91 yrs

USGS Estimates of Ultimate Recovery

80

Billion Barrels per Year

70
60

2067

2021

Ultimate Recovery
Probability
BBls
---------------------------Low (95 %)
2,248
Mean (expected value) 3,003
High (5 %)
3,896

2112

3%
Growth

2%
Growth

50

900 Billion Bbls

Moves Peak 10
Years
From 2037 - 2047

40
1%
Growth

Decline
R/P = 10

30
20
10
0
1900

History
Mean
Low (95 %)
High (5 %)

1925

1950

0%
Growth

1975

2000

2025

2050

Note: U.S. volumes were added to the USGS foreign volumes to obtain world totals.

2075

2100

2125

WORLD OIL PRODUCTION SCENARIOS

Estimated Peak
Production Rate
Ultimate
Annual
Probability of Recovery Production
(Million
(Million
Estimated
Ultimate ReGrowth Rate
barrels per
barrels per
(Billion
Peak
Year
covery
year)
day)
barrels)
(Percent)
95 Percent

2,248
2,248
2,248
2,248

0.0
1.0
2.0
3.0

2045
2033
2026
2021

24,580
34,820
42,794
48,511

67
95
117
133

Mean
(expected
value)

3,003
3,003
3,003
3,003

0.0
1.0
2.0
3.0

2075
2050
2037
2030

24,580
41,238
53,209
63,296

67
113
146
173

5 Percent

3,896
3,896
3,896
3,896

0.0
1.0
2.0
3.0

2112
2067
2047
2037

24,580
48,838
64,862
77,846

67
134
178
213