Oil and Gas Reserves

The Oil & Gas Journal (OGJ) 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.

Discovered (or known) resources can be divided into proved reserves and prospective or unproved (probable and possible) resources. "Proved reserves" are the quantities of oil or gas from known reservoirs and expected to be recoverable with current technology and at current economic conditions. Prospective resources are those that may be recoverable in the future with advanced technologies or under different economic conditions. The application of these distinctions is becoming blurred. For example, in 2003, Canada restated its reserves including its enormous non-conventional oil or tar sands with its conventional 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.

Some experts argue that worldwide conventional oil production will peak within the next few years. This prediction is based on a methodology advanced by M. King Hubbert, which concludes that while the production of oil can increase for some period of time, it eventually reaches a maximum and then declines until the resource is totally depleted. In 1956, Hubbert used this methodology to predict correctly that US oil production would peak in the early 1970s.

However, others argue that, while conventional resources may be limited, the world has enormous resources of unconventional oil which are increasingly competitive with conventional crude. One outstanding example is the case of Canada’s oil sands. Canada’s resources of oil sands or crude bitumen lie almost exclusively within three regions in the province of Alberta known as Athabasca, Cold Lake and Peace River. The Alberta Energy and Utilities Board has estimated the ultimate volume of crude bitumen in place to be 2.5 trillion barrels, although the World Energy Council quotes a slightly lower figure. About 370 billion barrels of this volume are believed to be economically recoverable at current prices and with current technology. Of the economically recoverable reserves, about 15% can be recovered using surface mining where the bitumen deposits are dug from the earth, while the remaining 85% require the use of in situ production processes, in which a well is drilled and the bitumen is extracted, often using unconventional technologies.