There is a debate about the extent of the world's remaining oil reserves

The global energy community is currently engaged in debate about the extent of the world’s remaining oil reserves and the rate of their depletion. Traditional orthodoxy is being challenged and the actual definitions of the resource itself and of the term “reserves” are under scrutiny.

In 2006, an increasing number of oil and gas companies devalued their reserves, the crucial asset which contributes most to their balance sheet. This was lead by a shock devaluation of 30% by Shell.

There are two strands to the reassessment of the world’s fossil fuel energy reserves. The definitions are themselves being reassessed. The rigour of most of the valuations is largely dependent on probabilities which are assigned to various factors, such as the likelihood of pipelines being available to a specific field. Discovered (or known) resources can be divided into proved reserves and prospective or unproved (probable and possible) resources. There is discussion about the value of each level of valuation; and, proved reserves, most commonly used, can be increased by moving a lower category up the chain.

A second issue is the inclusion of “non-conventional” oil in reserves, by far the largest of which are the Canadian oil or tar sands, a thick bitumen or heavy crude permeating the sands of Alberta in Western Canada and one of the largest deposits of oil in the world. The second largest deposits are in the Orinoco Belt in Venezuela. These are sometimes called the Fourth Fossil Fuel; after coal, conventional oil and natural gas.

For many years, although these were recognised, they were largely ignored because the technology of extracting them was not developed and the cost of cleaning them environmentally was prohibitive. Immense strides have been made in solving these problems.

The Oil & Gas Journal (OGJ), a leading source for worldwide reserves estimates, estimates that at the beginning of 2004, worldwide reserves were 1.27 trillion barrels of oil and 6,100 trillion cubic feet of natural gas. These estimates are 53 billion barrels of oil and 575 trillion cubic feet of natural gas higher than the prior year; reflecting additional discoveries, improving technology and changing economics. The countries with the largest amounts of remaining oil reserves are: Saudi Arabia, Canada, Iran, Iraq, Kuwait, United Arab Emirates, Venezuela, Russia, Libya, and Nigeria. The largest reserves of natural gas are found in: Russia, Iran, Qatar, Saudi Arabia, United Arab Emirates, United States, Algeria, Nigeria, Venezuela, and Iraq.

The deposits of bitumen and Orimulsion in Canda and Venezuela can hardly be understated. Until recently, the Canadian bitumen had not received the prominence of Venezuelan Orimulsion but it is now exceeding it in volume as marketing momentum grows and the real extent of the asset is realised.

Orimulsion is loosely described as a bitumen-water emulsion (more correctly extra-heavy oil-water emulsion), consisting of 70% bitumen, a naturally occurring heavy petroleum material from the Orinoco region of Venezuela, 30% water and a small amount of surfactant. It was first used commercially in 1991 at two plants in the UK and one in Japan.

Currently, 3,866 MW of plant capacity has been adapted for use with Orimulsion, in UK, Canada, Italy, Japan and Lithuania. A plant is currently being converted in Singapore.

Orimulsion is cheap and competitive with internationally traded coal. It has been proposed as a fuel to replace either coal or heavy fuel oil in utility power plants throughout the world. It is relatively easy to convert coal, HFO or diesel plants for use of Orimulsion. It is easy to ignite and has good combustion characteristics. It is relatively easy and safe to produce, transport, handle and store.

OrimulsionTM is a trade name owned by Bitor, a subsidiary of PDVSA, the state oil company of Venezuela.

In addition to being used in conventional power plants using steam turbines, Orimulsion can be used in diesel engines for power generation, in cement plants, as a feedstock for Integrated Gasification Combined Cycle, and, as a "reburning" fuel, where it is used in a method of reducing NOx by staging combustion in the boiler.

There are two environmental considerations; the pollution resulting from combustion and the threat of a spill during transportation. There have been some objections to Orimulsion from environmental lobbies but in reality the fuel is no more environmentally dangerous than other fossil fuels, and better than some. Emissions of carbon dioxide per unit of electricity generated from burning Orimulsion are similar to those from heavy fuel oil and less than those from coal, although greater than for combined cycle gas plant. Due to Orimulsion’s water content and hence lower calorific value, around 42% more Orimulsion needs to be burned to generate the same amount of electricity. Consequently, without SO2 abatement, more SO2 would be generated per unit of electricity with Orimulsion than with heavy fuel oil. The emission of SO2 may, however, be substantially abated through the fitting of widely used FGD (fuel gas desulphurisation) equipment, which ‘scrubs’ over 90% of the SO2 out of the fuel gases before they are released to the atmosphere. Orimulsion is suitable for use in low NOX burners and with other NOX reduction technologies. Power stations worldwide, which are currently burning Orimulsion, are fitted with electrostatic precipitators in addition to FGD. Their emissions of particulates are within the limits required of new plant in the UK and EU countries.

Orimulsion is transported from Venezuela in double-hulled tankers. Should a spill occur at sea, Orimulsion mixes readily with the body of water because it already contains emulsifying agents. It does not tend to float on the surface like a blanket and does not have the suffocating effect of an oil slick. In terms of its long term fate and degradation, spills of Orimulsion pose similar environmental risks to those of heavy fuel oil.

There was much experimentation with oil sands technology in the first half of the 20th Century but it was not until the 1950s and early 1960s that commercial development became viable. Production depends on the depth of the deposits. Where the bitumen is buried deep enough to prevent severe heat loss, the bitumen may be produced from wells by the use of steam injection. The development of horizontal well drilling has led to a significant advancement in bitumen recovery, the SAGD process, through use of a higher horizontal steam injection well and a lower horizontal well to receive the mobilised oil by gravity drainage. The Government of Alberta’s oil sands development policy was announced in 1962 and the Great Canadian Oil Sands Project (GCOS) was conceived and approved.

Exploitation of the Alberta natural bitumen is well advanced. Taking into account all operations, total output from Canadian oil sands in 1999 was 323,000 b/d of synthetic crude and 244,000 b/d of crude bitumen from the in situ plants; together, these represented 22% of Canada’s total production of crude oil and NGL.