ARTICLE IN PRESS

Energy Policy 37 (2009) 441–464

Contents lists available at ScienceDirect

Energy Policy
journal homepage: www.elsevier.com/locate/enpol

Resources and future supply of oil

Jan Kjärstad , Filip Johnsson
Department of Energy and Environment, Energy Conversion, Chalmers University of Technology, SE-412 96 Gothenburg, Sweden

a r t i c l e in fo abstract

Article history: This paper examines global oil resources and the future global oil supply/demand balance. The paper
Received 3 January 2008 builds upon several comprehensive databases designed during the work and considerable efforts have
Accepted 11 September 2008 been made to review what must be considered the most reliable data. Global oil resources have been
Available online 11 November 2008
investigated on three levels; country, company and field levels.
Keywords: Although no decisive conclusions or quantitative assessments can be made with respect to the
Oil global oil resource base, remaining resources appear to be sufficient to meet demand up to 2030 as
Resources projected in the 2006 (and 2007) world energy outlook by the IEA. Significant resources have already
Supply been discovered beyond proven reserves, many prospective regions remain to be fully explored and
there are vast volumes of recoverable unconventional oil. However, it is also concluded that global
supply of oil probably will continue to be tight, both in the medium term as well as in the long term
mainly as a consequence of above-ground factors such as investment constraints, geopolitical tensions,
limited access to reserves and mature super-giant fields. Production of unconventional oil and synthetic
fuels is not believed to significantly alter this situation. Although an increasing number of recent reports
have indicated an imminent or ‘‘soon to come’’ peak in global oil supply, it has not been found that any
of these reports have contributed with any new information on oil resources or oil supply ability.
Nevertheless, there is a distinct possibility that global oil production may peak or plateau in a relatively
near future, not caused by limited resources but because too many factors over long time constrain
investments into exploration and production.
The lack of transparency within the oil industry obviously prevents any accurate analysis of future
production and supply ability. Moreover, our ability to analyse the sector will become more difficult in
the future as oil increasingly will have to be sourced from countries with a poor transparency. The world
will become increasingly dependent on a few countries in the Middle East and on Russia not only for the
supply of oil but also for the supply of gas which to a large extent will be utilised for power and heat
generation. A responsible policy should under these circumstances seek to enhance energy security
which should be directed towards promoting energy efficiency measures (reduce demand) in
combination with increased utilisation of indigenous fuel resources such as renewables and fossil
fuels in combination with CO2 capture and storage. Such a policy would both facilitate the transmission
to a more sustainable energy system in the future as well as enhance energy security.
& 2008 Elsevier Ltd. All rights reserved.

1. Introduction
There is an increasing concern that global oil production is
close to peak and that peak will be followed by a rapid decline in
production. On the one hand, the oil industry, supported by for
instance IEA (2006, 2007), EIA (2006, 2007a) and CGES (Centre for
Global Energy Studies, 2006), claim that we do have sufficient oil
resources to meet global demand for decades to come provided
necessary political will and adequate financial resources in a
timely manner are put in place to explore, develop and produce
the oil and gas. On the other hand, organisations like the
 Corresponding author. Tel.: +46 31772 1454; fax: +46 31772 3592.
E-mail address: k.jan@chalmers.se (J. Kjärstad).
Association for the Study of Peak Oil and Gas (ASPO, 2007a), Oil
Depletion Analysis Centre (ODAC, 2006) and Energy Watch Group
(EWG, 2007) and individual debaters such as Simmons (2005)
claim that oil production already may have peaked or will soon
peak due to limited resources. Numerous papers have been
published on global oil resources and the future supply of oil (e.g.
CERA, 2005, 2006; Aleklett and Campbell, 2006; Adelman, 2003;
Bentley, 2002; Laherrere, 2006; Robelius, 2007; EWG, 2007).
However, most of these papers discuss proven reserves as opposed
to the total discovered resource base, or appear to have been
published either in support for or against the notion of an
imminent peak in global oil supply. No papers have been found,
however, that through a detailed look at oil resources on country,
company and field level, attempt to arrive at conclusions with
regard to how much more oil that can be recovered in the future.

0301-4215/$ - see front matter & 2008 Elsevier Ltd. All rights reserved.
doi:10.1016/j.enpol.2008.09.056
 ARTICLE IN PRESS

442 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464

The aim of the present paper is to adopt a neutral position to the Table 1
concept of peak oil and to investigate the global oil resource base Estimated URR and 2P reserves in selected giant fields, bbls
and future global oil production ability by means of surveying a
Country Field name URR AAPG 2P IEA/IHS
broad set of data from as many sources as possible.
Over the last few years the oil price has risen to new record Algeria Hassi Messaoud 3.9 10.5
levels. Between 2000 and 2003 the oil price remained roughly Iraq East Baghdad 2.0 18.1
constant around US$25/bl (Brent) and global demand grew by Iraq Kirkuk 17.0 25.0
Iraq Halfayah 0.8 4.6
around 1% annually apart from in 2003 when demand increased Kuwait Greater Burgan 31.8 60.6
by 1.8%. Also, in 2003, strikes in Venezuela and the invasion of Iraq Qatar Dukhan 2.2 6.3
removed around 1 million barrels/day (mmbls/d) of production Qatar North Field 10.7 26.1
away from the markets but there was still sufficient surplus Saudi Arabia Abqaiq 11.2 18.7
Saudi Arabia Berri 9.2 18.5
capacity to cope with the relatively modest increase in demand
Saudi Arabia Ghawar 80.3 149.1
and hence the oil price was not affected. Then, in 2004, with Iraqi Saudi Arabia Khurais 8.5 17.0
and Venezuelan production back to 2002-levels, global demand Saudi Arabia Manifa 16.8 23.1
increased by more than 4% eliminating the structural surplus of Saudi Arabia Marjan 3.3 10.1
liquids production capacity, which, together with an increasingly Saudi Arabia Safaniyah 21.8 55.6
Saudi Arabia Shaybah 1.6 21.5
tighter refinery capacity, led to a surge in global oil prices. In Saudi Arabia Zuluf 13.6 20.2
August 2005, the hurricanes in the Gulf of Mexico took out
4 mmbls/d of US refinery capacity as well as oil and gas Total 234.7 484.9

production capacity. Additionally, social unrest in Nigeria, a wave

of nationalisations throughout South America and, to some extent
in Russia, together with the nuclear standoff with Iran have all
contributed to maintain oil prices at a high level until present
(mid 2008). Since January 2004 oil prices have more than
quadrupled from around US$31/bl in January 2004 to more than
US$140/bl in July 2008. The high oil prices appear to have affected
global demand for oil which between 2005 and 2007 increased by
more modestly 1.6%, 1.3% and 1.3%, respectively and is projected to
grow by 0.9% in 2008 according to the most recent estimates from
IEA OMR (2008a). Although this may indicate a correlation
between supply and demand, the main question appears to be
whether global oil supply and thus the oil price in the future will
be increasingly affected by geopolitical factors. This paper
attempts to examine whether oil supply will continue to be tight
or whether increased efforts in exploration and production
together with effects on the demand side will restore market
balance leading to lower oil prices.
The paper has been organised as follows: Section 2 describes
the methodology that has been applied to investigate the global
oil resource base and future oil production capacity. Section 3 sets
the scene by discussing briefly recent projections by IEA, EIA and
ExxonMobil on oil demand and production. Section 4 gives a
quantitative discussion of the oil resource base while Section 5
discusses future oil supply and demand, including a review of
synfuels while main conclusions are highlighted in Section 6.
2. Methodology
The aim of this paper has been to disclose how much oil has
already been discovered, how much more oil can we extract from
already discovered fields and how much more oil remains to be
discovered. Therefore, rather than looking at proven oil reserves
the work has concentrated on disclosing the total discovered
resource base on three levels; (i) by country ii) by oil company
and, (iii) by oil field. This has been done since the relevance of
proven reserves has become increasingly inflated over time and
because it is evident that there is a continuous transformation of
resources over time from sub-commercial reserves to commercial
reserves. Additionally, considerable effort has been put into
investigating resource growth in existing fields and to locate
remaining prospective basins for undiscovered oil. The analysis is
to a large extent based on the build-up of three databases; an Oil
Field database (OF db), an Oil Field Project database (OFP db) and
a database containing statistical data from some 30 international
and Russian oil companies (OC db). The databases have been
AAPG’s reserve estimates refers to the highest quotation found in AAPG (2003).
IEA (2005b) reserve estimates are derived from adding 3 tabulated values;
cumulative production up to 2004, year-end 2004 reserves and 2004 production.
compiled for three reasons; (i) no such database exists today that
is publicly available, (ii) to gain knowledge about the oil market
and (iii) to reveal weaknesses and strengths in current estimates
of the global oil resource base and projections on future
production.
The OF db includes around 3000 oil fields worldwide contain-
ing historical and current production and reserve data. For some
oil fields, particularly those located in the Middle East and Russia,
it has been considered vital to also include various reserve
estimates. The database also contains parameters that enable
sorting1 for instance by global region, by specific location such as
onshore, offshore, shallow water, deepwater and ultra-deepwater
and by size, for instance giant field, super-giant field and ordinary
field. Combined remaining recoverable reserves in the oil fields
covered by the database amounted to 740 bbls as of year-end 2004
while 2004 production in the same fields reached 51 mmbls/d.2
The database is done in Windows Access with linkage to Excel and
a Geographical Information System (GIS). During the work with
the OF db it was revealed that one of the main sources on
ultimately recoverable reserves (URR) in giant fields (AAPG, 2003)
apparently used field reserve data provided back in 1998 by
another main source, namely IHS Energy. However, IHS Energy
published updated 2P reserve data3 (see Section 4.1) for giant
fields in Middle East and North Africa (MENA) countries in the
2005 edition of IEA’s WEO (AAPG, 2003; IEA, 2005b; Horn, 20084).
The new reserve data were considerably larger than the 1998 data
raising aggregated liquids reserve levels (crude oil, NGL and
condensate) for some 70 giant fields in Algeria, Iraq, Kuwait, Qatar,
Saudi Arabia and UAE, from around 400 to 720 bbls (see Table 1).
This also demonstrated one of the main difficulties encountered in
1
The database is not yet complete with respect to sorting parameters.
2
In the case of giant fields in the Middle East and North Africa, remaining
recoverable reserves are derived from 2P reserves, in the case of other giant fields
remaining recoverable reserves are derived from URR as quoted by AAPG (2003)
while in all other cases, remaining recoverable reserves are based on 1P reserves
(proven) if these have been found.
3
While IHS Energy refers to 2P reserves, AAPG (2003) refers to ultimate
recovery (see Section 4.1).
4
Myron K. Horn is an independent consultant specialised in the world’s giant
fields. Horn compiles records of the world’s giant fields for AAPG. Horn has also
been an editor of the AAPG bulletin.
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
collecting data to the OF db, namely that various sources quote
different data. However, with regard to reserves it should be
recognised that IHS Energy appears to be the initial source behind
many quotations, in particular those regarding URR in giant oil
fields.5 AAPG, IEA and USGS all use field reserve data from IHS
Energy, who is generally considered to have the world’s most
comprehensive oil field database. It should, however, be noted
that IHS Energy quotes 2P reserves, i.e. proven plus probable (see
Section 4.1) as opposed to proven only or URR.
The OP db contains some 520 announced oil projects world-
wide adding almost 33 mmbls/d gross to global liquids production
capacity, most of which came online in 2007 (around 5 mmbls/d)
or will come online between 2008 and 2012 (around 28 mmbls/d).
The work to collect data to the OP db has experienced much of the
same problems encountered when compiling data to the OF db, in
particular that a large number of various sources quote different
data, both with regard to start-up year as well as to plateau
production levels. Therefore as much information as possible has
been drawn from the source closest to the information, usually
the operator of the project. One issue that has been clearly
demonstrated when compiling the data to the OP db is an
increasing rate of projects being deferred, often due to the fact
that the projects are large scale, complicated, deepwater or Arctic
projects like for instance Thunder Horse in USA, Kashagan in
Kazakhstan and Sakhalin 2 and Snöhvit in Russia and Norway. Like
the OF db, the data in the OP db is collected in Windows Access
with links to Excel and GIS.
As mentioned above, the OC db contains statistical data from
some 30 international and Russian oil companies including
production, reserves, resources, reserve replacement, acreage
(developed, undeveloped, regional location) and wells (explora-
tory, development, production). Although international oil com-
panies (IOCs) as opposed to national oil companies (NOCs) only
own a small share of global reserves they account for an
impressive share of global oil production.6 Information contained
within the OC db have been taken mainly from annual reports,
in particular form 20-F and annual upstream reports and, in the
case of Russian companies, only audited reserve data by
well-known audition companies such as DeGolyer and Mac-
Naughton or Miller & Lentz. The work on the OC db also revealed
that many international and some Russian oil companies
apply the reserve classification methodology developed by the
Society of Petroleum Engineers (SPE) and that several countries
like Norway, Saudi Arabia (read Saudi Aramco), Mexico and
UK appear to apply a similar methodology (see Section 4.2 and
Table 3).
The data have been compiled from a large variety of sources of
which the most prominent are the American Association of
Petroleum Geologists (AAPG) including their series on the world’s
giant fields, the Oil and Gas Journal, in particular their annual
coverage of worldwide field production and IHS Energy including
the International Oil Letter (IOL) and numerous conference
presentations available on their website. Other important sources,
in particular with regard to past field production data, are the
Department of Trade and Industry in the UK (fm DTI, now DBERR),
the Norwegian Petroleum Directorate (NPD), US Minerals Man-
agement Service (MMS) as well as the States of California, Alaska
and Texas, Canada’s National Energy Board (CNEB), the Nigerian
5
According to AAPG (2003), IHS Energy in 1998 provided AAPG with a list of
459 giant fields outside North America, of which 284 fields were fields not already
contained within the giant field database. Today, the AAPG database contains 522
giant oil fields as well as 355 giant gas fields (AAPG, 2003).
6 7
For instance, in 2006 the six major oil companies (ExxonMobil, ChevronTex-
aco, ConocoPhillips, BP, Shell and Total) owned 4% of global reserves and 14% of
global production as reported by BP (2008).
443
National Petroleum Company and Pemex, the Mexican state-
owned oil company. Danish, Dutch and German authorities and
institutions also provided field production and, in the case of
Denmark, reserve data. The 2005 and 2006 edition of IEA’s WEO,
citing IHS Energy, provided reserve data for some of the
world’s largest oil fields in MENA countries and Brazil. Detailed
field information has also been found in annual reports, investor
presentations and websites of numerous IOCs, including the
six majors in USA and Europe (see footnote 6) as well as the
four largest Russian companies (Rosneft, Lukoil, TNK-BP and
Gazprom) and some NOCs like Petrobras and Saudi Aramco.
Valuable information has also been found on the websites of
several industry consulting groups such as Centre for Strategic
and International Strategies (CSIS), CGES, Global Insights and
Cambridge Energy Research Association (CERA). Grace (2005)
provided valuable additional information on Russian oil fields
while Simmons (2005) provided additional perspectives on
Saudi Arabia’s oil fields, especially the Ghawar field. In fact,
Simmons (2005) led to a comprehensive search for data on
Saudi Arabia’s oil fields including information contained in
IEA’s 2005 edition of the WEO and various Saudi Aramco
presentations at CSIS in Washington. Finally, EIA’s Country
Analysis Briefs (CAB) have provided valuable background in-
formation.
With respect to demand and supply projections from IEA’s
World Energy Outlook (WEO) references are throughout this
paper made to WEO 2006 edition. Since, the corresponding
projections in the now available 2007 edition of the WEO (IEA,
2007) only differ marginally from the 2006 edition, it has been
decided to keep the initial references. IEA states that the reference
scenarios in the 2006 and 2007 editions of the WEO are not
sustainable with respect to energy consumption and CO2 emis-
sions. Consequently, energy ministers in IEA countries and the
G8-countries asked IEA to identify and to advise on scenarios for a
clean and competitive energy future. In June 2008, IEA published
‘‘Energy Technology Perspectives’’ aiming to demonstrate how
CO2 emissions could (i) be brought back to current levels by 2050
in the so-called ACT scenarios, and (ii) be reduced by 50% by 2050
in the so-called BLUE scenarios.7 It should be emphasised that
both the ACT and BLUE scenarios, if implemented, will have a
profound impact on global demand for oil. In the ACT Map scenario
(most cited ACT scenario), global demand for oil (not liquids)
reaches just below 95 mmbls/d in 2050 while in the BLUE
Map scenario (most cited BLUE scenario) oil demand (not liquids)
reaches 61 mmbls/d in 2050, i.e. referring to the latter scenario,
about 27% below today’s levels (IEA, 2008). According to
IEA (2008) the BLUE scenarios will require urgent implementation
of unprecedented and far-reaching new policies in the energy sector.
It should therefore be emphasised that the main conclusions
drawn from the present paper are under current market condi-
tions and policies which may be subject to change over time. A
global effort to mitigate climate change may, alone or in
combination with concerns for energy security, have the potential
in the long term to profoundly change the observations made in
this paper.
3. Implications of recent projections on oil demand and supply
In the five reference scenarios presented by IEA (2006, 2007),
EIA (2006, 2007a) and Exxonmobil (2007a) global liquids demand
is expected to increase by 1.3–1.4% in average per annum up to
IEA’s (2008) CO2 emission levels are based on IPCC (2007) stating that global
CO2 emissions will have to be reduced by 50–85% by 2050 (relative to year 2000)
to limit the global temperature increase to 2.0–2.4 1C.
 ARTICLE IN PRESS

444 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464

4000
History IEA WEO 2006 REF

3500
CAGR 2006-2015: 1.35%

3000 CAGR 2016-2030: 0.84%

CAGR 2031-2050: 0.84%

2500

50% of current high-end estimates of URR depleted

bbls

2000 between 2023-2028

1500

1000
Cum Prod/IEA REF Ultimate 3.2 Tbls Ultimate 3.6 Tbls

500

0
1900
1904
1908
1912
1916
1920
1924
1928
1932
1936
1940
1944
1948
1952
1956
1960
1964
1968
1972
1976
1980
1984
1988
1992
1996
2000
2004
2008
2012
2016
2020
2024
2028
2032
2036
2040
2044
2048
Fig. 1. Depletion of conventional global oil reserves assuming 3.3 and 3.7 Tbls ultimately recoverable as of 1 January 2006 and demand according to IEA (2006) up to 2030
with annual growth rate over the last period extrapolated up to 2050. Sources: EIA (2007b), BP (2007a), ExxonMobil (2007a), and CERA (2006).

2030 reaching between 116 and 118 mmbls/d in 2030.8,9 In all five unless the share of renewable energy sources (and others like coal
scenarios growth will be driven foremost by the transport and and nuclear) are significantly increased.
industry sectors in Asia. However, increased focus worldwide on Applying constant growth rates between each decade in IEA’s
energy security, climate change and persistent high oil prices may (2006) estimates on future oil supply (globally and for the
lead to demand being lower than anticipated in the five reference countries given below) reveals some interesting consequences:
scenarios outlined above. For instance, in April 2008, IEA (OMR,
2008) revised down projections on global oil demand growth in  Cumulative global production of oil between 2005 and 2030
2008 by record high 20%, from 1.5 to 1.2 mmbls/d, mainly as a will reach around 860 billion barrels (bbls) constituting around
direct consequence of International Monetary Fund (IMF) adjust- 70% of current proven reserves as given by BP (2008) and the
ing down forecasts on global GDP. In particular, the combined low-end estimate of proven and probable reserves as given by
effects on both security of supply and climate change from IHS (2006a).11
increased use of renewable energy sources and conservation of  Cumulative production of oil in non-OPEC countries will have
demand, should not be underestimated and there is a growing reached 460 bbls by 2031, which may for instance be compared
recognition that reducing energy consumption on all levels will with BP’s (2008) proven reserves of 168 bbls for non-OPEC
also contribute to further reduce energy dependency.10 Further- countries at the end of 2005.
more, it seems apparent to most observers that although oil and  Brazil, Mexico, Russia and US will reach a cumulative
gas resources may be sufficient to cope with demand up to 2030, production of 27, 28, 97 and 43 bbls by the end of 2030,
the resources are unlikely to provide non-OECD with the same respectively, while their proven reserves at the end of 2005
consumption patterns as we are currently seeing within OECD stayed at 12, 14, 78 and 30 bbls, respectively (BP, 2008).

Fig. 1 shows cumulative global production of conventional oil

between 1856 and 2005 (the figure shows production from year
8
Projections in the more recent IEA WEO 2007 and EIA IEO 2007 differ only 1900 but includes production from year 1856) and as projected by
marginally from the projections in the 2006 edition, for instance by 0.8 mmbls/d in
IEA (2006) up to 2030 with IEA’s growth rate over the last period
2015 and no difference at all in 2030 in the case of IEA while in the case of EIA
1 mmbls/d in 2015 and 0.4 mmbls/d in 2030. extrapolated to 2050 together with depletion of resources
9
EIA (2008) recently released its 2008 edition of the IEO projecting lower assuming between 3.3 and 3.7 trillion barrels (Tbls) ultimately
global demand than in previous editions. Global liquids demand according to the
2008 edition is estimated to reach 112.5 mmbls/d in 2030 as opposed to
11
117.6 mmbls/d in the 2007 edition leading to 63 bbls lower cumulative liquids According to IHS (2006a) the low-end estimate of proven+probable reserves
demand (or 2.5%) between 2006 and 2030. which is estimated to 1251 bbls by the end of 2005 includes only proven reserves
10
In his latest State of the Union address to the US Congress (23 January in North America and only developed resources of oil sands and extra-heavy oil.
2007), President Bush urged cuts in gasoline use and more biofuel production to Furthermore, the low-end estimate does not include future reserve growth or
reduce energy import dependency. discoveries made after 31 December 2005.
 ARTICLE IN PRESS

J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464 445

6000
Conventional Resource Growth, Undiscovered Unconventional

5000

Range unconv:

4000 ~1.0-1.3 Tbls Range unconv:

Billion barrels

~1.0-3.0 Tbls

3000 Ultimately Remaining

Conventional, Range:

~ 0.9 - 1.4 Tbls

2000
Ultimately Remaining
Conventional

1000 Ultimately Remaining

Conventional
2P ? 1P1P

0
IHS CERA ExxonMobil IEA BP O&GJ ASPO ODAC

Fig. 2. Various estimates of proven reserves and remaining oil resources by the end of 2005 (IEA end of 2004, ASPO end of 2003). Remaining ‘‘conventional’’ resources refer
to 1P reserves (BP and O&GJ), 2P reserves (IHS) and ultimate (ExxonMobil, IEA, ASPO/ODAC). However, both BP and O&GJ include some Canadian and Venezuelan
unconventional oil. CERA’s remaining conventional resources include arctic and deepwater. Sources: IHS (2006a), CERA (2006), ExxonMobil (2007a), BP (2007a), O&GJ
(2006), IEA (2005a), ASPO (2007b) and ODAC (2006).

recoverable conventional oil12 (see Fig. 2, Section 4) which
corresponds to current high-end estimates of ultimate recovery.
To delay the midpoint under assumed supply/demand level,
ultimately recoverable conventional reserves will have to exceed
3.3 or 3.7 Tbls, respectively, or the share of unconventional oil will
have to increase. Assuming instead production evolving as
outlined in the Alternative Policy Scenario (APS) in IEA (2006)
will only delay the midpoint by 1–2 years depending on initial
reserves.
It is thus apparent that IEA (as well as EIA and ExxonMobil, see
Fig. 2) expects significant additions to the proven reserve base
over the coming decades, not at least because global production
appears to be increasing all the way up to 2030. There is however,
nothing remarkable by this, and the key to understand how
reserves evolve over time is to look at resource growth in existing
fields and the discovered resource base instead of proven reserves
which is discussed below.
In conclusion, all five reference demand scenarios described
above are almost identical on aggregated levels leading to that
more than half the world’s ultimately recoverable oil (based on
current high-end estimates) and two thirds of current estimates of
proven reserves will have been consumed by 2030. Therefore, it
will be necessary to ‘‘prove up’’ more oil to meet demand and to
avoid a peak in production before 2030 or to significantly reduce
global oil consumption. While it is difficult to see global demand
exceeding the projections outlined above, there are a number of
reasons that may lead to slower growth, such like concerns for
12
Cumulative global production of oil between 1856 and 1964 has been
provided by EIA (2007b) while cumulative production of oil and NGL between
1965 and 2005 has been taken from BP (2007a). URR has been taken from
ExxonMobil (2007a) and CERA (2006).
supply security and climate change and this has also to some
extent been incorporated in more recent projections. Measures to
comply with CO2 emission targets as recommended by the IPCC
will have a profound impact on future demand for oil.
4. Oil resources
The discussions around global oil reserves have received much
attention in recent years with the concept of peak oil being widely
discussed in media. The large reserve additions by the OPEC
members in the 1980s have created significant uncertainties
which have been further enhanced by the veil of secrecy
surrounding oil production and reserves data in OPEC states as
well as in countries like Russia and Venezuela. However, in order
to determine when oil production will peak in a specific oil field,
basin, country or globally, one will obviously have to know the
amount of oil that ultimately will be recovered as well as how
production will evolve over time, factors that are usually not
known (oil field operators will nevertheless often have a relatively
clear indication on the production profile in individual fields, see,
however, Fig. 4). Perhaps the best examples of countries having
large fluctuations in annual oil production with several inter-
mediary peaks are found among the OPEC members, e.g. Iran, Iraq,
Indonesia, Nigeria and Saudi Arabia. A useful discussion on the
concept of predicting peak oil can be found in GeoArabia (2006),
Mabro (2006) and Nehring (2006).
Indeed, new discoveries have fallen sharply since the 1960s.
According to IEA (2004) discoveries in the last decade
(1993–2002) have only replaced half the oil produced. The
declining trend seems to continue with discoveries in 2004
and 2005 being noted as the lowest since the World War 2
 ARTICLE IN PRESS
446 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
(IHS, 2006b). According to IEA (2004) the fall in oil discoveries
have been most dramatic in the Middle East and the former Soviet
Union as a result of reduced exploration activity, but also because
the average size of discovered fields has fallen worldwide.
Nevertheless, proven reserves as reported by for instance the
O&GJ and BP have increased by around 20% over the last 15 years.
Also some significant discoveries have been made over the recent
years (2006–2008), like the Jack discovery in the tertiary basin in
the Gulf of Mexico, the discovery of the Jidong Nanpu field in
Bohai Bay in China, the Tupi, Carioca and other discoveries in sub-
salt formations off Brazil, reserve additions in the Shah Denis field
in the Caspian Sea as well as Lukoil’s two discoveries in the
Russian part of the Caspian Sea (Vladimir Filanovsky field and
the Tsentralnaya structure), the Waraga and Kingfisher wells in
the Lake Albert Area in Uganda and the Jubilee field off Ghana
(see Section 4.5).
Three simple but critical questions are being raised and
discussed in this section; (i) How much oil has been discovered
to date? (ii) How much of this oil can we recover? and (iii) How
much more oil can we expect to find?
Section 4.1 explains briefly the resource classification system
adapted by the Society of Petroleum Engineers (SPE) and the
World Petroleum Council (WPC) since this and similar classifica-
tion systems are being adapted by most IOCs and at least by some
NOCs and several countries. Section 4.2 discusses the discovered
conventional resource base while Section 4.3 treats the concept of
resource growth. Section 4.4 deals with unconventional oil and
Section 4.5 with the potential for new discoveries. Main conclu-
sions with regard to the oil resource base are being reviewed in
Section 4.6.
4.1. Classification of resources
When evaluating oil resources we must take into consideration
the total discovered conventional resource base, subtracted by the
cumulative production up to today, what volumes of conventional
oil that potentially may be discovered in the future as well as
unconventional reserves (oil sand, extra-heavy oil and oil shale).
According to the Petroleum Resources Management System
(PRMS) adopted by the Society of Petroleum Engineers (SPE), the
World Petroleum Congress (WPC), the AAPG and the Society of
Petroleum Evaluation Engineers (SPEE) in 2007, there are five
major resource classes; Production, Reserves, Contingent Re-
sources, Unrecoverable Resources and Prospective Resources with
the latter referring to undiscovered oil and the four others to
discovered oil (strictly spoken there is also unrecoverable
undiscovered oil). Reserves, Contingent Resources, Unrecoverable
Resources and Prospective Resources are defined as (SPE, 2007):
 Reserves or Commercial Resources are those quantities of
petroleum anticipated to be commercially recoverable by
application of development projects from a given date forward
under defined conditions.
 Contingent Resources or Sub-commercial Resources are dis-
covered quantities of petroleum, which are estimated, on a
given date, to be potentially recoverable, but which are not
currently considered to be mature enough for development due
to one or more contingencies.
 Unrecoverable Resources include those quantities which are
believed, at a given date, not to be recoverable by future
development projects. A portion of these quantities may
become recoverable in the future as commercial circumstances
change or technological developments occur.
 Prospective Resources are quantities of petroleum estimated,
at a given date, to be potentially recoverable from undiscov-
Table 2
Various oil reserve estimates key OPEC members plus Russia, bbls
ASPO BP O&GJ IHS
Iran 59.9 137.5 132.5
Iraq 62.2 115.0 115.0 98.7
Kuwait 60.3 101.5 104.0 55.0
Saudi Arabia 144.0 264.2 266.8 292.0
UAE 49.3 97.8 97.8 55.1
Russia 60.0 74.4 60.0 120.0
Total 435.7 790.4 776.1 620.8
BP (2007a) and O&GJ (2006) refer to proven reserves year-end 2005.
IHS (2007c) and IEA (2005b) refer to 2P reserves year-end 2004 apart from Russian
reserves possibly referring to year-end 2006.
ASPO (2007b) refers to remaining recoverable oil, probably year-end 2003.
ered quantities by application of future development projects.
Prospective Resources have both an associated chance of
discovery and a chance of development.
Therefore, the key factor for moving resources upwards in the
chain of resource classes is development status or project
maturity. Contingent Resources may be considered commercially
producible, and thus reserves, if the entity claiming commerciality
has demonstrated firm intention to proceed with development of
the resource and where such intention is supported by specific
criteria such as (SPE, 2007):
 Evidence to support a reasonable timetable for the develop-
ment.
 A reasonable assessment of the future economics of such
development projects meeting defined investment and oper-
ating criteria.
 Evidence that the necessary production and transportation
facilities are available or can be made available.
 Evidence that legal, contractual, environmental and other
social and economic concerns will allow for the actual
implementation of the recovery project under evaluation.
The range of uncertainty of recoverable and/or potentially
recoverable volumes may be determined by either deterministic
scenarios or by a probability distribution, which can be equally
applied to reserves and contingent and prospective resources,
although it is usually denoted differently depending on resource
class. If probabilistic methods are being used a low, best and high
estimate should be provided, which, in the case of estimated
reserves, are denoted 1P, 2P and 3P, respectively, while the
corresponding terms for contingent resources are 1C, 2C and 3C
and finally, low, best and high for prospective resources.
Estimated proven reserves (so-called 1P) should have at least
90% probability that the quantities actually recovered will equal
or exceed the estimate. Estimated proven plus probable reserves
(2P) require at least 50% probability that the entire integrated
volume will be produced while proved plus probable plus possible
(3P) require at least 10% probability that the entire integrated
volume will be produced. As mentioned above, low, best and high
estimates of contingent and prospective resources are classified in
the same way (SPE, 2007).
Empirical evidence suggests that some countries as well as
most international and some national oil companies adapt the
above methodology to quantify the discovered conventional
resource base (see Table 3, Fig. 3 and corresponding text in
Section 4.2).
In addition to the SPE/WPC classification mentioned above,
companies quoted on the US stock exchanges will have to adapt
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
OOIP: 68.1 BBLS
Contingent Resources: 17.1 bbls
25%
10%
5%
20%
Possible: 6.8 bbls
(incremental)
Remaining proven: 13.9 bbls
Probable: 3.4 bbls
(incremental)
Fig. 3. Resource distribution as of the end of 2003 in the Ain/Dar Shedgum area of the Ghawar field. Source: Saudi Aramco (2004).
the reporting standards laid down by the US Securities and
Exchange Commission (SEC), which usually are stricter than other
standards and typically, only those reserves that are proven with a
confidence level above 90% (1P) may be reported13 (IEA, 2004).
4.2. Proven and contingent conventional resources
The total global endowment of conventional oil is believed to
amount to somewhere between 6 and 8 Tbls of which only a
fraction can be recovered. By the end of 2005 the world had
produced almost 1.1 Tbls cumulative and the worldwide average
recovery factor (RF) is currently believed to be around 34–35%
(IEA, 2005a, 2006; IHS, 2007a). In other words, applying the
current RF on the total global endowment and subtracting
cumulative production up to date indicates that between 1.0
and 1.7 Tbls conventional oil remains to be produced as of year-
end 2005, including undiscovered conventional oil. Applying
cumulative production of 1.1 Tbls to ultimate conventional
resources of 1.9 Tbls as suggested by ASPO (2007b) indicates that
there is only around 800 bbls left to produce as of year-end
2005.14 However, as we shall see, most reports and observers
assume that the RF will increase substantially over time and
further enhance ultimate recovery of conventional oil resources.
In addition to conventional resources there is around 7 Tbls of
unconventional oil (IEA, 2005a; US NPC, 2007).
Various estimates of proven reserves and remaining recover-
able conventional and unconventional oil are shown in Fig. 2. Note
that the various sources refer to different classifications of oil
reserves and to reserves as of 1 January 2006, apart from ASPO
and IEA who refers to year-end 2003 and 2004, respectively. BP
13
In June 2008, SEC announced that they had proposed revised oil and gas
company reporting requirements reflecting the significant changes that have taken
place in the oil and gas industry since the adoption of the original reporting
requirements more than 25 years ago. More specifically, the proposals suggest,
among other things, that companies may be allowed to disclose probable and
possible reserves in addition to proven reserves, that companies may be allowed to
classify previously excluded resources, such as oil sands, as reserves, and that oil
and gas reserves should be reported based on average prices over a 12-month
period rather than year-end prices as is practised in the current system (SEC,
2008).
14
According to ASPO (2007b) cumulative global production amounted to
some 920 bbls as of year-end 2003. Adding 60 bbls produced in 2004 and 2005 (BP,
2006) gives a cumulative production of 980 bbls by the end of 2005, which may be
compared with IEA (2006) estimating 1080 bbls.
447
Produced (end 2003): 26.9 bbls
40%
and O&GJ refer to proven reserves including different volumes of
unconventional reserves in Canada and Venezuela while ASPO and
ODAC refer to URR. IHS reserve figures refer to the so-called ‘‘high-
end’’ estimate where 2P conventional includes discoveries up to 1
January 2006 (for the low-end estimate see footnote 11).
Estimates of remaining proven conventional reserves (1P) vary
from 1.2 to 1.3 Tbls, while ultimately remaining conventional
reserves ranges from 0.9 to 1.4 Tbls, as estimated by ASPO15 and
ODAC, to between 2.3 and 2.6 Tbls as quoted by IHS, CERA,
ExxonMobil and IEA. Additionally, CERA (2006), ExxonMobil
(2007a) and IEA (2005a) estimate between 1 and 3 Tbls recover-
able unconventional resources with decreasing level of confidence
as the volume increases.
ASPO’s and ODAC’s estimates of ultimately remaining recover-
able conventional oil are considerably lower than all other
estimates, which also highlight the key difference between the
peak oil community and more conventional groupings. In theory,
one can model peak oil to occur at any point in time under a given
production/demand profile since peak will depend basically on
one single parameter, namely the assumption on URR (or, if not
considering past production, ultimately remaining recoverable
oil). Choosing a low URR will lead to an early peak while choosing
a higher URR will prolong the period up to peak.
It is often being claimed by the ‘‘Peak Oil’’ community that
most countries have passed their peak production and conse-
quently that there are fewer and fewer countries left to ascertain
an increasing global oil production also in the future (EWG, 2007).
This is true, looking for instance at BP’s (2007a) annual statistical
review, more than 30 countries16 have passed their point of peak
production, not including Iran, Iraq, Kuwait and Libya since it is
not at all clear that oil production in these countries have peaked.
Combined production of all the countries that have passed peak as
of 2007, including the regional aggregates specified by BP, peaked
in 1984 at a production of 34.8 mmbls/d. It is interesting to note,
15
According to ASPO (2007b), ASPO does not provide any official estimates of
global oil reserves. The reserve figures shown in Fig. 1 have been provided by
Professor K. Aleklett, who is the current president of ASPO. In a thesis work at the
Uppsala Hydrocarbon Depletion Study Group F. Robelius (2007) suggest a value of
1250 bbls as ultimately remaining conventional reserves.
16
BP (2007a) specifies oil production for 49 countries while remaining
production, constituting only a marginal share of global production, is listed as
regional aggregates. Out of the 49 specified countries, at least 26 have passed peak
as well as each regional aggregate.
 ARTICLE IN PRESS
448 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
however, that the combined production of these countries has
been maintained at almost constant level since 1984 with an
average annual decline rate of less than 0.3%, i.e. the same
countries produced 32.7 mmbls/d in 2006 (BP, 2007a).
Robelius (2007) projects global oil production to peak between
2008 and 2013 and in 2018 in a demand adjusted scenario.
Robelius report focuses on giant fields underlining the importance
of URR to determine future production profiles. The report
includes a table which lists the range of estimated URR for the
20 largest oil fields in the world indicating that total estimated
URR for all fields ranges from around 350 to 650 bbls. Clearly, peak
production will be affected by the chosen level of URR but what
level of URR Robelius has used in his projections remains unclear
apart from in a few fields in some of the scenarios, which of course
is of little relevance given the large difference on aggregated
levels. Furthermore, it appears that Robelius main source to URR
in the giant fields is AAPG (2003) who, as explained above (see
Section 2), uses reserve data from IHS Energy dating back to 1998.
However, IHS Energy published revised 2P reserve data for some
70 oil fields in the MENA countries in the 2005 edition of IEA’s
WEO suggesting 2P liquids reserves in these fields of 720 bbls as
opposed to URR of 400 bbls for the same fields as quoted by AAPG
(AAPG, 2003; IEA, 2005b; Horn, 2008). Table 1 shows AAPG’s and
IHS estimates for some of the largest fields. Note that AAPG (2003)
quotes several reserve estimates for each field and Table 1 shows
the highest estimate including condensates. It should also be born
in mind that IEA/IHS reserve figures have been derived by adding
three figures; cumulative production up to 2004, remaining
reserves year-end 2004 and 2004 production (IEA, 2005b).
The reasons why Robelius (2007) apparently has chosen to
apply URR dating back to 1998 instead of revised 2P data in spite
of the data originating from the same source (IHS Energy) is not
known but the choice has of course affected Robelius resulting
production profile. It is of course difficult to realistically model
production from future discoveries as well as from future reserve
growth in fields already discovered. Yet, any attempt to model
future oil production must include an attempt to model future
discoveries and future reserve growth together with application of
correct URR.
A close review of a large amount of reports from the peak
community, among others Aleklett and Campbell (2006), Robelius
(2007), Simmons (2005) and EWG (2007) it can be concluded that
they do not recognize:
 The current ‘‘conventional’’ estimates of proven reserves. The
main reason for this is the substantial upgrading of reserves
among Middle East OPEC members in the late 1980s.
 That there are substantial volumes of already discovered
recoverable oil beyond what is proven (also outside OPEC).
 The importance of resource growth in existing fields.
 US Geological Survey’s (USGS, 2000) estimates of future
discoveries.
These issues are all being addressed below in addition to
unconventional resources.
Iran, Iraq, Kuwait, Russia, Saudi Arabia and UAE accounted for
66% of proven reserves by the end of 2006 and almost 40% of 2006
oil production as reported by BP (2007a). Furthermore, apart from
Iraq, they all belong among the top 10 oil-exporting countries in
the world with Saudi Arabia and Russia being the top two oil
exporters (EIA CAB). According to IEA (2006), their oil production
will increase by more than 60% between 2005 and 2030, from 31
to 50 mmbls/d. Most OPEC members stopped reporting field-by-
field production and reserves data in 1982 and between 1983 and
1989 Iran, Iraq, Kuwait, Saudi Arabia and UAE collectively raised
their proven reserves with around 250 bbls without any signifi-
cant new discoveries being reported. According to IHS (2007b),
this raise in reserves in the five OPEC member states may be
attributed to a combination of at least four factors:
 Conservative treatment of proven reserve estimates by inter-
national oil companies prior to oil market nationalisation in
these countries.
 Advances in extraction technology resulting in potentially
higher recovery factors (see Section 4.3 on resource growth).
 Improved economics as a result of higher oil prices in the
period from 1979 to 1985.
 Motivation to publish large reserves (presumably as a
bargaining factor in future OPEC quota negotiations).
Table 2 shows reserves quoted by various sources for the five
above-mentioned OPEC members plus Russia since Russian oil
resources are also widely discussed in the literature.
There are large differences between the various estimates,
summarised for all six countries reserves vary from 436 bbls
as quoted by ASPO (2007b) to 790 bbls as quoted by the BP
(2007a).
It is widely known that Kuwait’s and UAE’s officially stated oil
reserves probably are exaggerated. However, this is nothing new
and has been incorporated at least in IHS reserve figures for some
time and was brought up and discussed by IEA (2005b). Oil fields
in both Iran and Iraq are suffering from poor maintenance and
outdated technology leading to high decline rates and low
recovery factors, e.g. the overall recovery factor in Iran is
estimated to range between 24% and 27% and, according to IEA
OMR (2006) citing the Iranian oil minister, Iran is grappling with
an annual oil field decline of 500 kbls/d. Some reservoirs in
southern Iraq have been so badly managed that their ultimate
recovery rates might be as low as 15–25% (EIA CAB; IEA, 2005b).
However, in April 2007, in a press release, IHS (2007d) stated that
Iraq’s oil reserves could be up to 116 bbls indicating at the same
time that there could potentially be another 100 bbls of un-
discovered oil in Iraq’s western desert. The IHS report was later
dismissed as being speculative in an article that appeared in the
Oil and Gas Journal (2007a). In light of the considerable problems
both countries are experiencing with existing fields, proven
reserves in Iran and Iraq may be exaggerated especially consider-
ing the SPE/WPC’s definition of the term (see Section 4.1). On the
other hand, there should be considerable scope for increasing
recovery factors, i.e. ultimate recovery.
It is impossible to draw any firm conclusions with respect to
Saudi Arabia’s oil resource base and future production ability
since reserves and condition of individual fields are un-audited.
EIA (CAB), citing Platts Oilgram, claims that Saudi Arabian oil
fields sustain an annual decline rate of 6–8% and that some
700 kbls/d of new capacity will have to be added each year just to
compensate for natural decline.17 Simmons (2005) raises various
concerns over almost every oil field discovered in Saudi Arabia,
claiming that fields in production are in a much worse state than
what is generally reported and are either close to peak or have
already peaked while fields not yet in production have poor
reservoir properties and/or are expensive to develop. For instance,
the water cut in the world’s largest oil field, Ghawar, is now
exceeding 60% according to Simmons (2005), Bakhtiari (2006) and
Campbell (2006), contrary to statements by Saudi Aramco (2004),
claiming that the water cut has decreased from a peak of 37% in
17
This is largely confirmed by IEA (2005b) referring to an annual decline rate
of 6% and that 600 kbls/d of new capacity has to be added each year to maintain
current production levels.
 ARTICLE IN PRESS

J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464 449

Table 3
Discovered resources of oil plus gas as of year-end 2005/2006/2007 for international oil companies, bblsoe

1P 2P 3P Cont. resource Resource base Year-end

ExxonMobil 22.7 72.0 2007

Shell 11.9 66.0 2007
BP 17.8 59.9 2007
ChevronTexaco 10.8 62.0 2007
ConocoPhillips 10.6 451.0 2007
Total 11.1 20.5 2006
Eni 7.0 12.5 425.0 2006
PEMEX 15.5 30.8 45.4 2006
Lukoil 20.4 32.7 38.7 2006
Rosneft 20.1 31.4 41.8 27.5 2006
TNK-BP 9.2 17.4 29.3 2005
Tatneft 5.9 8.1 8.5 2005
Novatek 4.7 7.4 2006
Gazprom liquids 12.6 19.0 2006
Gazprom Total 134.8 194.7 2006
Anadarko 3.0 6.6 2006
Marathon 1.2 6.6 2007
Talisman 1.7 2.7 3.6 4.5 10.3 2006
CNR 4.2 6.4 2006
OMV 1.216 2.036 2007
Nexen 1.0 1.7 9.6 2006
Tullow Oil 0.197 0.354 2006
Husky Energy 1.0 3.2 5.6 2007
BG-group 2.1 3.5 1.8 10.0 2007
Murphy Oil 0.4 0.8 1.1 2.7 2007
Burren Energy 0.079 0.217 2006
Santos 0.4 0.8 2.2 2006
Regal Petroleum 0.089 0.1906 2005
RWE-DEA 0.7 1.1 2006

Contingent resources are in addition to 1P, 2P and 3P reserves while resource base includes all categories.
Eni and Talisman: Resource base denoted proved+unproved reserves+risked exploration.
Conversion from gas to blsoe based on 6000 ft3/barrel.
Year-end indicates the year the resource quotation refers to.
Sources: Company reports and press releases.

1999 to around 32–33% in 2005–2006.18 Another example is the
mothballed Khurais field, which according to Simmons (2005),
has a weak supporting aquifer and deteriorating reservoir quality
towards the peripheries of the field and ‘‘production probably
reached an all-time peak’’ of 144 kbls/d in 1981. However, the
Khurais field is currently under development to start producing
1.2 mmbls/d in 2009 (IEA, 2005b; Saudi Aramco, 2007; OPEC,
2007; Robelius, 2007, see also Table 1). In fact, Simmons (2005)
claims that Saudi Arabia’s production is at, or very near, its peak
sustainable production and is likely to go into decline in the very
foreseeable future.19 Saudi Aramco, on the other hand, has
announced a number of projects aiming to raise production
capacity from the current average of 10.8–12.5 mmbls/d in 2009.
Work on several of these projects has already been initiated and
construction contracts have been awarded for instance for the
AKF, Khurais, and Manifa projects, which together will add around
2.8 mmbls/d when they come on line in 2008 and 2009 (SUSRIS,
2008; Saudi Aramco, 2007; OPEC, 2007; IEA OMR, 2008a, b). It
appears unlikely that Saudi Aramco would go through all this
trouble risking their reputation and credibility within a matter of
few years. Also, it seems far-fetched that institutions like IEA, EIA
and CSIS, and companies like IHS/CERA, all seem to have drawn
the wrong conclusions and that their data apparently are
insufficient as opposed to data from organisations like ASPO (as
shown above, Robelius (2007) appear to use IHS reserve data
dating back to 1998). Resource growth in existing fields has had a
18
On average, worldwide, the average water cut in oil fields is around 80%
while in mature areas, like in the US and the North Sea many oil fields may have
water cut exceeding 90% (IEA, 2005b).
19
Simmons (2005) also proposes that Saudi Arabia’s production may have
peaked already 25 years ago.
significant impact on reserves over the last two and a half decades
(see Section 4.3) and it appears likely that also Saudi Aramco, who
is known to be an oil company with a high technical capability,
has raised Saudi Arabia’s reserves considerably through the use of
artificial pressure maintenance and more advanced extraction
technologies. Perhaps the most convincing argument that Saudi
Arabia has substantial oil reserves (and thus production ability) is
the fact that by announcing that they are increasing production
capacity levels they contribute to hold the oil price down.
It is also widely accepted that Russia probably has higher
reserves than what is quoted by for instance BP and the Oil and
Gas Journal. Officially, Russia quotes their so-called ABC1 reserves
to 120 bbls with a further growth potential (denominated C2
reserves) of 50 bbls.20 Grace (2005) quoted Russia’s proven
reserves to around 68 bbls at the end of 2003, while 3P reserves
were estimated to 135 bbls and DeGolyer and MacNaughton
estimates Russia’s 3P reserves to 150 bbls (IEA, 2004). At the end
of 2006 the three largest oil companies Lukoil, Rosneft and TNK-
BP alone reported audited proven reserves of 50 bbls, while 2P and
3P reserves were estimated to 82 and 110 bbls, respectively (see
Table 3).
Nevertheless, reserve levels in the above-mentioned countries
are uncertain and this fact will continue to underpin the resource
debate and thus also contribute to increasing oil price volatility.
On the other hand, it should be recognised that none of the above-
mentioned countries have any obligation to report reserves and
resources according to standards adopted by the west.
20
Russia applies another reserve reporting standard than most other countries
with ABC1 reserves roughly equal to 2P reserves while C2 reserves is roughly equal
to 3P reserves (Grace, 2005; IHS, 2007c).
 ARTICLE IN PRESS

450 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464

Empirical evidence indicates that the discovered conventional

global resource base is substantially larger than officially reported
proven reserves. According to the World Energy Council (WEC,
2007) Algeria had proven crude oil and NGL reserves at year-end
2005 of 23.3 bbls, while proven amount in place21 was estimated
to 78.7 bbls. Likewise India and Romania had proven reserves of
6.2 and 0.4 bbls, respectively, while proven reserves in place were
stipulated to 12.4 and 14.6 bbls, respectively (WEC, 2007). WEC
(2004) claimed that proven crude oil and NGL reserves in China at
year-end 2002 amounted to 24.2 bbls, while proven crude oil and
NGL in place were quoted to 161 bbls.22 In the US, some 582 bbls
of oil have been discovered of which 390 bbls are still in the
ground. To put this in perspective, total proven reserves in the US
is currently (year-end 2007) estimated to 29 bbls23 (DOE, 2006;
IEA, 2005a; BP, 2008). Estimated oil initially in place in Oman
amounts to almost 80 bbls of which nearly 12 bbls had been
produced by the end of 2005, while proven reserves stood at
5.5 bbls with another 5.5 bbls reported as potentially recoverable,
i.e. there will still be some 55–60 bbls left in the ground when
proven and potential reserves have been recovered (EIA CAB;
O&GJ, 2006; PDO, 2006). Mexico has proven reserves of around
16 bbls, while 2P reserves are twice as large and 3P reserves are
almost three times as large at 31 and 45 bbls, respectively (see
Table 3, Pemex, 2007a; IHS, 2006c).
A survey of annual reports of various oil companies discloses Fig. 4. Prognosis (shadowed fields) for oil production at time for submittance of
that they all have substantial discovered resources beyond proven Plan for Development and Operation (PDO) compared with actual production (red
curves) for four Norwegian oil fields, source: NPD (2006), with permission.
reserves. Table 3 lists reported proven reserves of oil plus gas in
bblsoe as of year-end 2007 (or 2005/2006) together with the
company’s own estimates of 2P and/or 3P reserves, contingent Fig. 3 has been reproduced from a Saudi Aramco (2004)
resources and/or the total discovered resource base. presentation at CSIS in February 2004 and shows resource
Note in particular the large resource base reported by the five distribution at year-end 2003 in the Ain/Dar Shedgum area of
oil majors, ExxonMobil, ChevronTexaco, ConocoPhillips, Shell and the Ghawar field.
BP, who combined have a resource base of more than 310 bblsoe, At least two conclusions may be drawn from Fig. 3; (i) Saudi
four times their proven reserves.24 Likewise, the three largest Aramco appears to apply the reserve classification methodology
Russian oil companies Lukoil, Rosneft and TNK-BP have audited 3P given by SPE/WPC and which is explained above although
reserves amounting to 110 bblsoe, more than twice their reported probability factors are not being revealed, and (ii) assumed
proven reserves. Gazprom’s total resource base has been cate- recovery factors are very high ranging from 60% in the case of
gorised as Russian ABC1 reserves (see footnote 20) and consists 1P reserves to 75% in the case of 3P reserves (see, however,
mainly of gas but has nevertheless been included in Table 3 to footnote 29 below). As stated above, the worldwide average RF is
illustrate that the methodology of categorising reserves into now estimated to 34–35%25 but recoverability will always be a
various sub-classes is being widely applied. How much oil and gas function of technology, cost and oil price (IEA, 2005a; IHS, 2007a).
that finally will be recovered from the discoveries referred to in
the table is impossible to predict but according to for instance
ExxonMobil (2006a), the resource base includes, in addition to 4.3. The concept of resource growth
proven reserves, quantities of oil and gas that are not yet classified
as proven reserves, but which ExxonMobil believes is likely to be Even though discoveries have declined over the last one and a
moved into the proved reserves category and produced in the half decade and in spite of a cumulative global production of
future. Several smaller oil companies are also applying the same around 425 bbls over the same period, proven reserves appear to
methodology, see for instance Lundin Petroleum (2008), Noble have increased by around 20%, see for instance BP (2007a) or Oil
Energy (2008), Ithaca Energy (2007) and Valiant Petroleum and Gas Journal reserve estimates from this period. The reason for
(2008). this is significant additions to reserves from existing fields.
According to for instance IHS (2006a, d, 2007a), cumulative global
production between 1995 and 2004 amounted to 236 bbls, while
21
According to WEC (2004) proved amount in place is the resource remaining only 144 bbls were discovered over the same time period.
in known natural reservoirs that has been carefully measured and assessed as However, gross reserve additions reached 457 bbls as a conse-
exploitable under present and expected local economic conditions with existing
available technology.
quence of revisions of reserves in existing fields discovered before
22
IEA (2007), citing IHS, claims that China’s and India’s proven plus probable 1995, leading to a net increase of 365 bbls over the period.26
reserves (2P) year-end 2005 were 29.4 and 5.4 bbls, respectively. There are numerous examples of fields on all continents
23
US reserve data have been taken from BP (2008), which includes NGL and continuously increasing their reserves as production proceeds.
condensate, while O&GJ (2007b) reports crude oil reserves of 21 bbls.
24 One of the more familiar one is the Troll field in the North Sea,
ChevronTexaco (2008) provides a good example of how conservative the oil
companies are when they book oil and gas reserves. The Gorgon project in which is believed to contain more than 4 bbls of oil. When the
Australia refers to a three-train 15 Mtpa LNG facility sourcing gas from a number of Troll field was discovered in 1979 the oil layers in the field were so
fields with combined discovered resources of 1130 bcm, or nearly 7 bblsoe. As of
early 2008, the project has received environmental approval for two trains and
25
signed Heads of Agreements (HOAs) with four potential buyers for annual supply However, IEA (2005a) also states that numbers of this order are often
of 4.5 Mtpa. However, since no binding sales agreement is signed at present, quoted but rarely supported by abundant data.
26
Chevron has not yet booked its share (50%, or 3.4 bblsoe) as proven reserves. It should be added that IHS refers to proven plus probable reserves.
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
7000
696
6000
5000
2395
4000 609
mmbls
3000
2713 2861
2000
1000
266
615 694
0 181
2001 2002
-1000
Revisions of reserves-in-place
Fig. 5. Oil reserve additions by category 2001–2006 for the five oil majors ExxonMobil, BP, Shell, ChevronTexaco and ConocoPhillips, sources: Company Annual Reports.
thin (between 4 and 26 m) that the oil was believed not to be
economically recoverable. However, deployment of various tech-
nologies like horizontal drilling and multilateral wells have
increased the field’s oil reserves fivefold between 1990 and 2002
and by the end of 2007, around 1.2 bbls of crude oil had been
recovered (plus NGL, condensate and gas) while another
320 mmbls crude is booked as proven reserves by 1 January
2008 (NPD, 2008). Furthermore, the company StatoilHydro AS,
which is the operator of Troll, is now targeting a total recovery of
1.9 bbls of oil (Hydro, 2006).
The average recovery factor in Norway is currently around 46%,
up from 40% in 1995, and expected to increase further in the
future, possibly exceeding 50% by a good margin (see also footnote
29). Eight out of ten developed hydrocarbon fields in Norway have
achieved higher recoverable resources than what was first
estimated and, on average, this has increased Norwegian
resources by around 60% (NPD, 2006). Fig. 4 shows initial
estimates of oil production at the time for submittance of a Plan
for Development and Operation (PDO) along with actual produc-
tion from start-up to 1 January 2006 for four Norwegian oilfields
(NPD, 2006).
In the US, only 12% of cumulative reserve additions of crude oil
between 1977 and 2004 have occurred as new field discoveries.
Cumulative production in USA between 1977 and 2004 adds up to
70 bbls, while over the same time proven reserves have decreased
by around 12 bbls, from 33.5 bbls at the end of 1976 to 21.4 bbls at
the end of 2004 implying that 58 bbls have been added to the
recoverable resource base between 1977 and 2004. Out of the
58 bbls that have been added, only 6.7 bbls can be attributed to
new discoveries, while the remaining 51 bbls have occurred as a
result of extensions, revisions and adjustments27 (DOE, 2005). The
potential to raise recovery further in the US is substantial. In 2005,
Advanced Resources International (ARI) carried out a study for the
US DOE, which estimated a technically recoverable CO2 EOR
potential in 10 major oil basins of 89 bbls applying current CO2
EOR technologies. Advanced EOR technologies could possibly raise
the ultimate recovery even higher (DOE, 2006) and higher oil
27
Extensions are those reserves added by extending the proved area of
previously discovered reservoirs. Reserve revisions are upward or downward
changes to previous estimates as a result of new information obtained from
development drilling and production history, or from changes in economic factors.
Improved (or enhanced) oil recovery (IOR/EOR) refers to reserves resulting from
the application of improved recovery techniques.
451
633 422
1349
560
2303
388
1451
1497
2049
1669
1485
1047 943
-89
2003 2004 -424 2005 2006
Purchases Extensions & Discoveries IOR
prices or a price of CO2 emissions may lead to increased interest
for CO2 EOR.
Looking at proven reserves for five of the oil majors
(ExxonMobil, BP, Shell, ChevronTexaco and ConocoPhillips) re-
serves have increased by, on average, 0.9% p.a. between 2001 and
2006, from 39.7 to 41.6 bbls. Gross annual reserve additions, i.e.
without considering production, is shown by category in Fig. 5.
Note that extensions of reserves in existing fields are grouped
together with discoveries.
The largest contribution comes from extensions and discov-
eries accounting for 45% of all reserve additions during the period,
or 11.7 bbls. The second largest contribution comes from pur-
chases of reserves accounting for 36% of all additions, or 9.4 bbls.
Increased oil recovery (IOR) and revisions account for 13% and 7%,
respectively, or 3.3 and 1.9 bbls. Since extensions are grouped
together with discoveries, Fig. 5 does not reveal the true extent of
resource growth in existing fields but it should nevertheless be
noted that IOR, revisions plus extensions and discoveries added
some 17 bbls gross between 2001 and 2006.
As stated above the total global endowment of conventional oil
is believed to amount to somewhere between 6 and 8 Tbls, while
the world average recovery factor currently is estimated to
34–35%. In other words, increasing the worldwide RF by only a
few percentage points will add substantial resources to the
reserves. Initially, oil is recovered through the energy that is
occurring naturally within the reservoir, either by natural gas
drive (gas expansion) or water drive. This method is called the
primary recovery method and usually between 10% and 30% of
the oil in place is recovered in this way. When the energy in the
reservoir is no longer sufficient to produce the oil, secondary
recovery methods are being applied. Secondary recovery involves
injection of water and/or gas into the reservoir to maintain the
pressure and between 30% and 50% of the oil in place may be
extracted combined from primary and secondary recovery (IEA,
2005a; IHS, 2007a).28
According to IHS (2007a) application of artificial pressure
maintenance (APM) is the main reason for the large growth in
reserves up to today claiming that this process alone has added
between 400 and 500 bbls to global reserves since the mid-1960s.
28
The specific recovery factors have been taken from IEA (2005a). IHS (2007a)
claims considerably higher recovery factors for the various processes, typically
between 10% and 40% after primary recovery and between 30% to more than 60%
after secondary recovery.
 ARTICLE IN PRESS
452 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
However, today almost 100% of all producing reservoirs that can
benefit from APM are using this method. Future growth in
discovered reserves is therefore likely to come from mainly four
processes (IHS, 2007a):
 Fine tuning of the APM process in fields already on APM since
this is a gradual process.
 Natural resource growth in discovered but undeveloped
reserves.
 APM being applied to the discovered but undeveloped
reserves.
 EOR usually denominated tertiary recovery methods and
involves injection of more complex materials (polymer solu-
tions in water, steam, surfactants, microbes, nitrogen and
carbon dioxide).
EOR addresses the rock and fluid processes within a reservoir
and according to IHS (2007a) more than 50% of the world’s
reservoirs can utilise EOR while only 11% currently are on EOR.
Combined, IHS believes that the above-mentioned processes may
add between 200 and 1000 bbls to the reserves in the future.
Possible reserve additions of this scale are also largely confirmed
by the IEA (2005a).
Several technological innovative projects aimed at increasing
recovery factors are breaking ground at present. Statoil’s SIOR
(Subsea Improved Oil Recovery) project is targeting recovery
factors of 55% from sub-sea completed fields and installation of a
sub-sea separation, boosting and injection system on the mature
Tordis field in the North Sea is expected to raise the recovery
factor from current 49% to 55% (Statoil, 2007).29 Another
innovation expected to raise recovery factors in offshore fields
by up to 25% is the sub-sea multibooster, developed by the
Norwegian company Aker Kvaerner. The world’s first pilot
installation of a sub-sea multibooster took place in the North
Sea in 2005, while the first full-scale commercial delivery was
applied in 2007 to the BP-operated King field in the Gulf of Mexico
(Aker Kvaerner, 2007). According to BP, once the sub-sea multi-
booster has proved successful, sub-sea pumping will be consid-
ered in future development plans in BP’s global portfolio to
improve recovery (BP, 2007b).30
In summary, there is little doubt that resource growth in
already discovered fields has contributed significantly to reserve
growth in the past and the key question is whether reserve
growth will continue in the future. IEA (2005a) and IHS (2007a)
both identify a number of fundamental drivers to continued
growth underlining, however, the importance of costs, oil price,
technology development and not at least access to reserves, i.e.
the extent to which state of the art EOR technologies may be
applied in countries with large resources like in the Middle East
and Russia.
4.4. Unconventional resources
It is common knowledge that there are large unconventional
oil resources, e.g. roughly estimated by the IEA (2005a) to 7 Tbls of
which around 2.2 Tbls as oil shales in the US, 2.5 Tbls as oil sands
(natural bitumen) in Canada,31 1.3 Tbls as heavy oil in Venezuela
and almost 500 bbls unconventional in the transition economies
29
Even higher is Statoil’s recovery factor in the Gullfaks field, which already
has passed 60% and where Statoil now is targeting 70% (Statoil, 2008a).
30
According to a BP press release dated 4 December 2007, the pumps will
enhance production by 20%, raise overall recovery by 7% and extend the field life
by 5 years.
31
2.5 Tbls refer to the ultimate potential while established reserves are around
1.6 Tbls (CNEB, 2006).
(see Fig. 2). According to a report by the US Geological Survey
(USGS) estimating the total global endowment of oil shale to
2.8 Tbls, the true number is likely to be several billion tons32
higher since numerous deposits are largely unexplored or has
simply not been included in the estimate above (USGS, 2006).
The unconventional oil resources are also becoming increas-
ingly interesting as the price of oil increases and as more
advanced technology reduces the costs of recovery and IEA
(2005a) estimates 1–3 Tbls as technologically recoverable (see
Fig. 2). Some of the unconventional resources in Canada and
Venezuela are included in the official reserve estimates, for
instance both BP (2007a) and O&GJ (2006) estimate total proven
reserves in Venezuela to 80 bbls by the end of 2006 including
around 37 bbls heavy oil,33 but while BP includes some 11 bbls
Canadian oil sands, equivalent to resources under active develop-
ment, O&GJ includes around 175 bbls as proven reserves by the
end of 2006. IHS includes only developed resources (around
50 bbls) in their low-end estimate (see footnote 11) of worldwide
remaining liquids while they include 575 bbls in their high-end
estimate (see Fig. 2, IHS, 2006a). EIA (CAB) suggests that up to
270 bbls of heavy oil could eventually be recovered in Venezuela.
According to Canada’s National Energy Board (CNEB, 2006),
Alberta oil sands contain an ultimately recoverable bitumen
resource of 315 bbls with remaining established reserves of
174 bbls at the end of 2004. Assuming 315 bbls recoverable out
of 1600 bbls oil originally in place (OOIP) gives a recovery factor of
20%. There are currently extensive activities within Canada’s oil
sands industry with capital expenditure in publicly announced
projects amounting to some C$125 billions up to 2015. CNEB
projects production to increase from current 1.1 mmbls/d (2005)
to between 1.9 and 4.4 mmbls/d in 2015 with a base case of
3 mmbls/d (CNEB, 2006). Two of the largest projects are the
Suncor and Syncrude expansions, which will take combined
production up from 385 kbls/d in 2005 to around 910 kbls/d in
2015.
As stated above officially reported reserve figures of Venezuelan
heavy oil amounts to 37 bbls but ultimately recoverable are much
higher, estimated to 260–270 bbls implying a recovery factor of
around 20% with an OOIP of 1360 bbls. In 2006, production at the
four existing heavy-oil projects averaged around 570 kbls/d (IEA
OMR, 2006, 2007). PdVSA, the Venezuelan state oil company,
recently launched phase 2 of the Orinoco Magna Reserva program
hoping to eventually raise reserves in the Orinoco belt by some
235 bbls through reclassification of extra-heavy oil as reserves.
According to EIA (CAB), the program has begun to yield some
concrete project proposals with PdVSA and Petrobras jointly
developing block 1 in the Carabobo area. First oil is expected late
2008 at a rate of 20 kbls/d and production will eventually plateau
at a rate of 200 kbls/d34. The US$4 billion project includes an
offsite up-grader converting the heavy oil into a lighter syncrude
(EIA CAB). PdVSA has targeted a doubling in production up to 2012
reaching around 1.2 mmbls/d, however, there are significant
political and fiscal uncertainties not at least considering the
recent nationalisation of the heavy oil projects followed by
ExxonMobil’s and ConocoPhillips’ withdrawal from their opera-
tions in the country.
In the US, large oil shale deposits are located in the Green River
formation, which covers portions of Colorado, Utah and Wyoming,
however, no oil reserves are booked as of the end of 2006. The US
32
1 ton of oil is approximately 7.5 barrels.
33
The inclusion of 37 bbls heavy oil in Venezuela refers to officially reported
Venezuelan reserves figures.
34
Late February 2007, O&GJ announced that PdVSA and Enarsa (Argentina’s
state oil company) announced that they would develop the 477 km2 block 6 in the
Ayacucho region aiming to certify 21 bbls of reserves in the block.
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
government has since long recognised the strategic importance of
the oil shale resources and DOE has released a number of
documents including a roadmap for federal decision making in
order to develop the resources in a sustainable way (DOE, 2004).
Several attempts have been made in the past to produce oil from
oil shale but they have all failed mainly due to project economics
and a low oil price. However, it is expected that a higher oil price
will stimulate development in the future.35
The in-situ conversion process (ICP) being developed by Shell
heats up the subsurface kerogen to 343 1C for a period of 3–4 years
during which time very dense oil and gas is expelled from the
kerogen and then undergoes a series of changes to develop lighter
hydrocarbons that easily can be moved towards production wells.
Around one third of the produced hydrocarbons are gas and two
thirds oil. Shell estimates recovery rates of 65–70% of OOIP and
believes that the method will be commercially attractive at an oil
price of US$25/bl. A commercial project decision may be taken by
2010 (Shell, 2005, 2006; Rand, 2005). In April 2005, Shell
appeared before a senate hearing on oil shale resources to explain
their technology and in December 2006, the US Department of
Interior issued research, development and demonstration leases
for five oil shale projects in Colorado’s Piceance basin proposed by
Shell, ChevronTexaco and EGL Resources (O&GJ, 2007c).
It may easily be concluded that the unconventional resource
base is substantial and in light of current project plans IEA’s
projections on a global unconventional oil production of
4.5 mmbls/d in 2015 and 9 mmbls/d in 2030 do not appear
unrealistically high. According to IEA (2006), unconventional oil
will account for 4.5% of total liquids supply in 2015 and slightly
less than 8% in 2030. It is thus equally clear that unconventional
oil will contribute only marginally to global fuel supply up to
2030.
4.5. Future discoveries
When it comes to future discoveries any volumetric estimate is
obviously bound to be uncertain. It is also clear that there are still
some large regions, which are still more or less poorly explored for
a variety of reasons. In the Middle East and Russia it has simply
not been necessary since the discovered resource base already is
large and additionally, in Russia’s case, the remaining most
prospective areas exist in very difficult environments with harsh
climate and little or no existing infrastructure.
The most cited study on undiscovered oil and gas resources is
the World Petroleum Assessment (WPA) finalised in 2000 by the
USGS. The USGS study estimated oil and natural gas reserves that
potentially could be added to reserves in a 30-year timeframe and
is frequently cited and applied for instance by IEA, EIA and IHS.
The 2000 WPA divided the world into approximately 1000
petroleum provinces, based primarily on geological factors, and
significant petroleum resources are known to exist in 406 of these
provinces. Geologists analysed 159 Total Petroleum Systems (TPS)
containing 270 Assessments Units (AU) and formally assessed 149
TPS and 246 AU, located in parts of 128 provinces. The assessed
provinces account for 95% of the world historic production of
hydrocarbons and include both significant established and
prospective provinces. To assess undiscovered oil USGS applied
discovery-history analysis, accumulation density analysis, pro-
35
In July 2008, the US Department of Interior’s Bureau of Land Management
(BLM, 2008) published proposed regulations to establish a commercial oil shale
program. However, there is a moratorium on finalizing oil shale development
regulations that will have to be lifted by the Congress before development can
move forward. The current administration (year 2008) with President Bush has
called for the Congress to remove the ban but even with the ban being removed it
may take up to 10 years until commercial scale production can start.
453
spect counting, prospect simulations, geologic synthesis and
looked at what they call analogues. The methodology was
reviewed by partners in industry, government and professional
associations. Finally, results were obtained by performing quanti-
tative probabilistic estimates with uncertainty ranges. The 2000
WPA estimated worldwide undiscovered conventional liquids
resources as of the end of 1995 to between 0.5 and 1.6 Tbls with
a mean of 0.9 Tbls. Fig. 6 shows the regional breakdown of the
mean estimate for crude and NGL (USGS, 2000).
As can be seen from Fig. 6 most undiscovered oil is expected to
be found in the Middle East and North Africa, on the American
continent and in former Russia, which together are believed to
contain some 770 bbls undiscovered liquids (as of 1 January 1996),
or 82% of the total global estimate.
Three observations can be made with respect to the USGS 2000
WPA:
 The study is the most comprehensive evaluation of remaining
global resources. However, there are some more recent studies
providing better estimates (see below) on regional levels.
 The assessment of Arctic resources is highly uncertain as most
of the assessment technologies specified above could not be
applied due to lack of data. Additionally, there are significant
geologic, engineering, economic and environmental uncertain-
ties with regard to Arctic resources.
 Many frontier geologic provinces worldwide remain to be
assessed, i.e. they were not assessed by USGS (2000).
According to a recent assessment by the USGS (2007a) around
11% of the estimated undiscovered oil had been discovered in the
8 years period between 1996 and 2003.
In November 2006, Wood Mackenzie and Fugro Robertson
released an extensive study on the Arctic region indicating much
less potential petroleum resources than previously estimated and
that gas probably would be the dominating hydrocarbon in the
region (WoodMac, 2006). The entire Arctic region was assessed
applying detailed geo-scientific analysis of individual basins and
their various petroleum reservoirs calibrated against industry
data on exploration wells and existing discoveries. According to
Wood Mackenzie’s press release the study shows only about a
quarter of the oil volumes previously assessed in key North
American and Greenland basins and under a most likely scenario
the study projects that the Arctic will contribute some 3 mmblsoe/d
of liquids production at its peak (WoodMac, 2006). There are also
other indications that the Arctic may contain less oil than
previously anticipated. Exploration efforts in the Norwegian parts
of the Barents Sea have so far not met expectations and the
Norwegian Geological Survey (NGU) is currently investigating
whether ice erosion combined with land uplift in the tertiary and
quaternary times may have affected the oil and gas reservoirs. The
project is funded by the Norwegian Research Council, project
name is GlaciPet and the project will be completed by mid-2009
(NGU, 2006). In August 2007, USGS (2007b) released a new study
of prospective oil and gas resources of northeast Greenland, which
indicated significantly less hydrocarbon resources than in the
2000 WPA. The assessment also confirmed the results from the
WoodMac study that the region is gas prone, i.e. the region is
believed to hold mainly gas resources. The results from the two
studies are shown in Table 4.
Finally, a recent assessment by the USGS (2008a) estimated
undiscovered liquids north of the Arctic Circle to around 90 bbls
oil and 44 bbls NGL (plus some 47 Tcm gas) including some 36 bbls
oil and NGL in the Arctic Alaska. A previous assessment of the
Arctic Alaska estimated undiscovered oil and NGL to 51 bbls
 ARTICLE IN PRESS

454 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464

250
229.9 Crude NGL

200

153.5
150
bbls

116.0
105.1
100
81.7
71.5

54.8
50
29.8
22.3 20.2
15.4 13.7
7.9 10.8
3.6 2.6
0
Fm Soviet-union Middle East & Asia Pacific Europé North America C & S America Sub-Saharan South Asia
North Africa Africa &
Antarctica

Fig. 6. Estimate of worldwide undiscovered crude oil and NGL by region and as of January 1st 1996, source: Data from USGS (2000).

Table 4 Agreement (EPSA) with Libya’s National Oil Company to initiate

East Greenland rift basins province mean assessment results, 2000 WPA and 2007
study
Oil (bbls) Gas (Tcf) NGL (bblsoe)
2000 WPA 47.1 80.7 4.2
2007 assessment 8.9 86.2 8.1
Source: USGS (2000, 2007b).
(USGS, 2005), i.e. the 2008 assessment substantiated WoodMac’s
results (see above).
However, even considering less resources than previously
anticipated in the Arctic region, large areas are still more or less
poorly explored on almost all continents. In Africa, the central
parts and the entire east coast as well as the south and south west
coast remains to be explored and some key wells are going to be
drilled off the coast of Kenya, Madagascar, Mozambique, Namibia
and South Africa during 2007–2008 (IHS, 2007e). In Sudan, some
large oil fields have been discovered in the Melut and Muglad
basin increasing the country’s proven reserves almost tenfold over
the last 3 years, while in Uganda promising discoveries have been
made in the Lake Albert area by Hardman Resources (Waraga
well) and Heritage Oil (Kingfisher well). There are yet large
deepwater regions to be explored in northwest Africa, e.g. drilling
has not yet reached down to sub-salt layers (see Brazil below).
There are also remaining prospective basins both in Algeria and
Libya. For instance, according to IEA (2005b), it has been
estimated that only a quarter of Libya’s territory has ever been
licensed and much of this has not been explored using modern
techniques. Furthermore, also according to IEA (2005b), six large
sedimentary basins may contain as much as 220 bbls oil in place
representing an undiscovered potential of 107 bbls. ExxonMobil
signed in February 2007 an Exploration and Production Sharing
exploration activity in a 2.5 million acres area in the deepwater
Mediterranean Sea off Libya’s coast (ExxonMobil, 2007b).
On the North American continent there are regions in Alaska,
parts of the Gulf of Mexico as well as the US Outer Continental
Shelf (OCS) that remain prospective.36 US Minerals Management
Service (MMS) latest assessment of the OCS estimates undiscov-
ered oil resources at 67–115 bbls with a mean of 88 bbls and with
the bulk assumed to be discovered off Alaska and in the Gulf of
Mexico (US MMS, 2006). Recent discoveries in the lower tertiary
trend in the deepwater Gulf of Mexico have for instance opened a
completely new play (potential oil-bearing structures) that may
contain as much as 9–15 bbls of oil although spread over several
fields and with considerable efforts remaining before the oil
eventually could be produced. USGS (2008b) recently published a
report suggesting mean undiscovered resources of around 3.8 bbls
oil and NGL in the Bakken formation which underlies much of
North Dakota and eastern Montana. Finally, prospective (undis-
covered) resources in seven deepwater basins in Mexico has been
estimated to around 54 bblsoe, of which almost 90% in the
Mexican part of the Gulf of Mexico and off Vera Cruz (IHS, 2006c;
Pemex, 2007b).
In South America, large areas in Argentina (offshore), Colombia
(on- and offshore), Ecuador, Peru (on- and offshore), Paraguay and
Venezuela (north offshore), to a large extent remains poorly
explored (see for instance IHS, 2007f). Brazilian exploration has so
far been concentrated to tertiary and upper cretaceous reservoirs
and according to IEA (2006), drilling concessions have been
36
On 20 December 2006, President Bush signed the Gulf of Mexico Energy
Security Act of 2006 mandating approximately 580,000 acres in the Eastern Gulf of
Mexico planning area being offered for oil and gas leasing (US MMS, 2006).
However, it appears unlikely that the Congress will lift the ban on drilling in the
OCS in the near future.
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
offered for less than 7% of the promising areas in Brazil. Petrobras
recent discoveries in the Santos basin have revealed significant
hydrocarbon potential in an 800 km long and 200 km wide area in
Brazilian deepwater pre-salt basins. For instance the Tupi field
discovered in 2007 has estimated recoverable reserves of between
5 and 8 bbls (Petrobras, 2007) and the Carioca field, discovered in
2008, may contain even larger volumes of recoverable oil. Similar
sub-salt layers also exist offshore West Africa but as of mid-2008
no drilling has yet taken place. A drilling campaign offshore
Falkland Islands in 1998 revealed a so-called world class lower
cretaceous source rock and five out of six wells encountered
hydrocarbons.37 In October 2007, BHP Billiton acquired interest in
14 exploration and production licenses off Falkland Islands with
plans to start drilling in 2009 (IHS, 2006e; BHP Billiton, 2007).
In the Middle East the vast Rub-Al-Khali Desert together with
the Red Sea region and the region close to the border with Iraq in
Saudi Arabia as well as the western desert in Iraq, the Caspian Sea
region and central region in Iran, all have large potential. Also,
only a few deep wells have been drilled in the Middle East. In
former Soviet Union, the Russian part of the Caspian Sea, Eastern
Siberia including Sakhalin Island and the Arctic offers significant
potential. Two large discoveries have also recently been made by
Lukoil and Gazprom in the Russian part of the Caspian Sea. One
example of potential undiscovered resources in Russia is Rosneft’s
prospective oil resources which have been estimated to be in the
range 23–79 bbls with a best estimate of 48 bbls by DeGolyer and
MacNaughton applying SPE standards (Rosneft, 2006).
In Asia-Pacific, ExxonMobil (2006b) entered into an agreement
to explore for hydrocarbons in a two million acres large area in the
deepwater off Philippines Islands, while TGS-NOPEC early
January 2007 announced a ‘‘mega’’ project in under-explored
frontier basins in Indonesia that will survey an area of around
1 million km2 in 16 sedimentary basins (TGS-NOPEC, 2007). In
May 2007, Petrochina reported one of the largest discoveries
in China over the last decade; the Jidong Nanpu field located in
shallow waters in Bohai Bay off the coast of Hebei with between
3.2 and 4.6 bbls recoverable oil (3P) together with 140 bcm gas
(Petrochina, 2007; IEA OMR, 2007). The Taranaki basin and Great
South basin, both located off New Zealand, have several interest-
ing prospects and in July this year ExxonMobil announced that it
had been awarded exploration blocks in the Great South basin.
According to IHS (2007g) the Great South Basin contains a proven
petroleum system with tested hydrocarbons from upper cretac-
eous sandstones sealed by overlying marine shales.
In Europe, Norway has still not opened for exploration drilling
in the three remaining most prospective blocks, Nordland 6 and 7
and Troms 2, while in the UK the Rockall basin west of Scotland
must be considered as a frontier area yet to be explored. Similarly,
the Atlantic margin off Irelands west coast is essentially
unexplored and worth mentioning is that ExxonMobil in 2006
farmed in on the Dunquin prospect in the Porcupine basin off
Ireland’s south coast with prospective resources of some 4 bbls of
oil and 700 bcm of gas.
Also, some completely new exploration areas may become
accessible in a not too distant future. According to IEA (2005a)
very little exploration has been carried out at depths deeper than
4000 m and there is no reason why such deep sediments should
not be hydrocarbon bearing sediments. In April 2008, UN’s
Commission on the Limits of the Continental Shelf, confirmed
Australia’s jurisdiction over an extra 2.5 million km2 of seabed, an
area five times larger than France, giving Australia the rights to
37
A source rock is a rock rich in organic matter, which, if heated sufficiently,
will generate oil or gas. A rich source rock may have as much as 10% organic
matter. According to IHS (2006e) and British Geological Survey (BGS, 2008), the
source rock in the North Falkland Basin is rated as one of the richest in the world.
455
minerals and hydrocarbons beneath the seabed (Australian
Government, 2008). Furthermore, geologists from the Norwegian
Petroleum Directorate have obtained the necessary scientific data
to enable Norway to submit a claim to the continental shelf
commission in the UN to extend the national border beyond the
200 nautical mile zone. The area being claimed covers an area of
250,000 km2 and if the Norwegian claim is approved, it will most
certainly be followed by similar claims from other states (NPD,
2006).
Some other estimates of global undiscovered potential exist.
IHS (2006f) estimates around 750 bbls liquids including reserve
growth with almost a third being located in the Middle East but
with substantial volumes also in North and South America as well
as in the former Soviet Union. Fugro Robertson (2000) estimated
some 860 bblsoe at the 16th World Petroleum Congress in Calgary
in 2000, but that includes all hydrocarbons. The estimate was
based on analysis of 175 basins indicating a yet-to-find potential
of 216 bblsoe with an equal mix of oil and gas which subsequently
was extrapolated for the entire world.
4.6. Conclusions—resources
It is evident that resource growth has played an important role
in replacing reserves in the past but continued growth will
depend on costs, oil price, technology development and not at
least access to reserves, i.e. the extent to which state of the art
EOR technologies may be applied in countries with large
resources like in the Middle East and Russia. Empirical evidence
suggests that remaining discovered conventional oil resources are
large, considerably exceeding proven reserves. In particular, it
should be observed that two thirds of all oil discovered in the US
to date, some 390 bbls, is still in the ground and that five of the oil
majors have a discovered oil and gas resource base of 310 bblsoe,
more than four times proven reserves. Reserves in Kuwait and
UAE are believed to be considerably below official estimates,
while there are signs that Iran in particular is struggling to
maintain its production levels. On the other hand, there are clear
indications that Russian resources are underestimated and that
Saudi Arabia is increasing its oil production capacity significantly,
which probably would not have been possible if they were close to
peak as claimed by Simmons (2005), ASPO (2006) and EWG
(2007). Worldwide average recovery factor is expected to increase
substantially from the current figure of around 35% due to
technology development. Increasing the worldwide average
recovery factor by only a few percentage points is likely to add
significant resources to the reserve base, in particular in countries
with large resources and a poor recovery factor, like in Iran, Iraq
and Russia. In this context, it has not been found that the ‘‘Peak
Oil’’ community raises any critical issues beyond what is already
known.
In addition to remaining conventional resources it is generally
accepted that there are very large unconventional resources,
primarily in Canada, US and Venezuela. The potential for
remaining undiscovered oil is of course uncertain but it is
nevertheless concluded here that a number of interesting and
prospective regions remain to be thoroughly explored. Addition-
ally, the potential in deeper structures remains to be examined
and maritime borders may be extended substantially increasing
potential acreage for exploration and production in the future.
5. Supply and demand for oil
Over the last 2 years global oil production growth has slowed
down considerably, in particular in 2007 when global production
increased by a modest 0.2%, or 200 kbls/d (IEA OMR, 2008a). The
 ARTICLE IN PRESS
456 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
slow growth in 2007 was caused by rapidly declining production
in the North Sea and in Mexico’s largest field, the super-giant
Cantarell field, deferral of several new projects that were
scheduled to come online during the year and numerous
unscheduled field outages. Furthermore, half a million barrels of
production capacity remained shut-in in Nigeria and in early 2008
production data indicated that Russia’s oil production growth had
stalled. In combination with increasing global demand OPEC’s
surplus production capacity was further eroded, from around
4 mmbls/d in February 2007 to less than 3 mmbls/d in May
2008.38 These factors together with an expected peak in non-OPEC
conventional oil production in the next decade, a worsening of the
situation in Nigeria and Sudan, increasing state control over
oil resources in Russia and Venezuela and President Chavez
(Venezuela) increasingly hostile attitude towards USA, the situa-
tion in Iraq and the nuclear issue with Iran, who also struggles to
maintain oil production levels, have all contributed to the
perception that future supply will not meet demand. This have,
in turn, led to soaring oil prices and since January 2005, oil prices
have more than tripled passing US$140/bl in June 2008. In spite of
a tightening market OPEC has consistently refused any immediate
raise in production levels claiming that the market was in balance
and that instead a weak US dollar and market speculations should
be blamed for the high oil price. Late June 2008 Saudi Arabia
called for a meeting between oil producers and consumers along
with representatives from the oil industry, IEA, the International
Energy Forum (IEF), OPEC, Goldman Sachs and Morgan Stanley.
However, apart from renewed assurances from Saudi Arabia that
they are raising sustainable39 production capacity by around
2 mmbls/d to 12.5 mmbls/d by the end of next year40 (SUSRIS,
2008), the meeting provided few assurances on any immediate
improvements in the supply situation.
Although the resource base appears sufficient to cover demand
for the next two decades (see Figs. 1 and 2), it is a completely
different matter to get the oil up from the ground and transported
to markets in a timely manner in order to meet increasing global
demand. The current supply situation with declining growth in oil
production during a period with strong demand and sustained
high oil prices is partly the result of many years of under-
investment in the upstream oil sector. Moreover, under prevailing
market conditions and policies there are few signs that this
situation will improve, in particular considering the fact that oil
increasingly will have to be sourced from countries in the Middle
East, Russia and Venezuela.41 The underinvestment problem
within the oil sector is well known and has been extensively
analysed and discussed in for instance Mabro (2006) and IEA
(2003, 2005b).
On the other hand, over time the high oil prices should
materialise into increased efforts in exploration and production,
development of marginal fields and enhanced oil recovery
projects as well as increased interest in the production of
38
In fact, effective surplus capacity, which excludes potential surplus capacity
in Indonesia, Iraq, Nigeria and Venezuela, was only 2 mmbls/d (IEA OMR, 2008a).
39
Sustainable production capacity is defined by IEA OMR as capacity that can
be reached within 30 days and sustained for 90 days.
40
According to Saudi Arabia’s Minister of Petroleum and Mineral Resources,
Mr Al-Naimi, Saudi Arabia has also identified a series of future crude oil mega
projects adding another 2.5 mmbls/d of capacity that could be developed if
warranted. Also, according to Al-Naimi, Saudi Arabia is adding 2 mmbls/d of
refining capacity both in Saudi Arabia and abroad over the next 5 years (SUSRIS,
2008).
41
However, at least in Russia, the production slowdown is beginning to attract
Government attention with the Russian Prime Minister, Vladimir Putin, suggesting
fiscal reforms to halt declining output (Bloomberg, 2008; IEA OMR, 2008a). Also,
the situation in Iraq appears to have improved slightly and the country is now
preparing to raise oil production and is currently (July 2008) discussing oil service
contracts with the western oil majors.
synthetic fuels. However, these efforts are constrained by limited
access to resource rich areas, lack of skilled personnel, equipment
and rigs throughout the industry. The high oil prices should also
affect demand but due to various reasons the effects so far appear
to be limited.
Section 5.1 looks at the underlying factors that have con-
strained investments in exploration and production for years and
how these factors may affect future production. Section 5.2 deals
with oil production growth in the short-term up to around 2012
including prospects for production of synthetic fuels. Section 5.3
discusses future demand while main conclusions are summarised
in Section 5.4.
5.1. Factors constraining investments in oil exploration and
production
As mentioned above, several factors have constrained invest-
ments into exploration and production of oil in the past and these
factors are to a large extent responsible for the current (2008)
situation with tight supply and record high oil prices. It is
therefore vital to analyse whether the investment climate will
improve over time allowing for sufficient and timely investments
into exploration and production of oil.
Most of the oil fields that entered into production between
2000 and 2008 were discovered a decade earlier, i.e. between
1990 and 2000. In the late 1970s and early 1980s, OPEC’s
production declined dramatically caused by rising non-OPEC
production and declining global demand. Consequently, OPEC
ended up with having a huge surplus capacity in the mid-1980s
and had therefore little interest in raising production capacity
further. Also, in the mid-1980s the oil price dropped ending up
around US$20/bl for almost one and a half decade leaving little
interest among oil companies to raise investments (Mabro, 2006;
BP, 2008). According to IEA (2006), IMF (2008a) and Mabro
(2006), investments into oil and gas exploration and development
have risen since the beginning of the current decade, and will
continue to rise to 2010. However, much of this increase is due to
cost inflation and a shift to more complex and costly projects in
locations where no infrastructure exists (IEA, 2006). Furthermore,
it is costly to maintain a spare production capacity and few
producers, apart from possibly Saudi Arabia, are willing to invest
the large amounts required to hold idle capacity.
Access to existing reserves and resources as well as to
exploration acreage will be vital to ensure sufficient production
in the future. NOC’s control an increasing share of global resources
while IOC’s face deteriorating fiscal terms and difficulties in
accessing reserves. According to Mabro (2006), IOC’s have full
access to around 14% of total global oil and gas reserves and some
equity access to 11% of the reserves held by NOC’s, while 17% of
global reserves are held by Russian companies and the remaining
58% by NOC’s without any access for IOC’s.42 More recently,
nationalisation of energy resources in Russia together with
increasingly tougher fiscal terms may have led to declining
investments in the upstream sector partly being responsible for
the stalled production growth observed in Russia in 2007 and
2008 (see for instance Milov, 2008). It remains to be seen whether
the recent nationalisation of Venezuela’s resources will enhance
oil production but most analysts are sceptical. Also, promising
exploration acreage has been closed for many years in Alaska
and offshore USA’s east and west coast as well as in the Gulf of
Mexico and off northern Norway, including the promising blocks
42
According to Statoil (2008b) the situation may actually have worsened with
IOC’s now holding full access to only 7% of global oil and gas reserves, while
Russian companies and NOC’s control 16% and 77%, respectively.
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
8000 7.6 mmbls/d
7000
6000 5.8 mmbls/d
5000
kbls/d
4000
3000
2000
1000
0
2800
Africa Asia Pacific
Fig. 7. Regional capacity additions by start-up year and expected plateau production level 2008–2012, sources: Company reports, OPEC (2007), various issues of O&GJ and
PetroleumReview.
Nordland 6 and 7 and Troms 2.43 There are few signs that this
situation will improve in the near term as demonstrated by the
recent nationalisation of resources in Russia and Venezuela, the
repeated failures of opening potentially promising exploration
acreage in the US, the transfer of ownership of the Kashagan field
to a larger share for Kazakhstan’s NOC as well as the failure to
implement project Kuwait.
There are many other factors explaining the low investments in
the past in the upstream oil sector like the budgetary constraints
often faced by NOC’s and various geopolitical factors affecting
investments in countries like Iran, Iraq, Nigeria and Sudan. The
capital expenditure budget of the NOC is often determined by
some governmental authority which may cause inefficiencies and
yield sub-optimal rates of investment (Mabro, 2006; Energy
Policy Research Foundation Inc, EPRINC, 2008). In Venezuela, the
national oil company PdVSA, funds various social programs as
well as infrastructure projects directly from its budget (EIA CAB)
and according to IEA OMR (2008a), modest energy sector reforms
proposed by President Calderon in Mexico and widely seen as
necessary to reverse production decline, now appear stalled.
Furthermore, civil strife and attacks on oil infrastructure in
Nigeria has more or less permanently shut-off some 500 kbls/d
of production capacity since December 2006 and attacks on oil
infrastructure has also recently increased in Sudan. At the same
time, oil production in Iran has been hampered by the investment
climate and poor financial terms offered to IOC’s as well as
economic sanctions imposed by the US. More recently, the nuclear
issue with Iran appears to have further raised the fears for future
production problems. On the other hand, production has in-
creased in Iraq consistently since 2005 passing 2 mmbls/d in 2007
and approaching 2.5 mmbls/d through the first 5 months of 2008
(IEA OMR, 2008a).
IOC’s are often accused of spending too much of their revenues
to favour generous shareholder dividends and expensive buy-back
programs instead of increasing spending on exploration and
production. Critics have also been raised against IOC’s for applying
too conservative estimates for future oil prices when deciding
upon development projects (Mabro, 2006; IEA, 2003). As men-
tioned above, limited access to reserves and increasingly tougher
43
Seismic shootings have now commenced in the promising blocks off
Norway.
457
6.4 mmbls/d
4.8 mmbls/d
3.7 mmbls/d
2900 2010 2110 2210
Europé Russia/Caspian Middle East North America South America
fiscal terms in countries where they already operate are also
constraining investments and probably leading to projects not
being developed since each dollar will be directed towards
projects yielding the highest net returns.
Most of the factors mentioned above are likely to continue to
hamper oil production in the foreseeable future and it is therefore
also perfectly possible that global oil production may peak or
plateau in a relatively near future, not as a consequence of limited
resources but because too many factors over long time constrain
investments into E&P. It should, however, be emphasised that
most of the issues outlined above are under prevailing market
conditions and policies, which, over time, may be subject to
considerable change.
5.2. Supply
As mentioned above, global oil production increased by a
modest 200 kbls/d in 2007 in spite of some 85 large-scale projects
coming online during the year adding around 4.5 mmbls/d gross
production capacity when producing at plateau. However, as
explained below there are several reasons for the modest net
increment in global production. Several project start-ups were
delayed to 2008 of which the most significant were South Pars in
Iran, phases 6–8, Khursaniya in Saudi Arabia and Thunder Horse
in USA. Together, these projects alone will add more than
1 mmbls/d in gross production capacity when producing on
plateau.
Looking at future production, Fig. 7 shows estimated gross
production capacity additions for conventional and unconven-
tional oil by region between 2008 and 2012 based on plateau
production rates and start-up year. It can be assumed that most
large-scale projects coming on line between now and up to 2012
have already been announced, while more projects probably will
be added in 2012. Fig. 7 includes projects in Iraq that will add
around 0.8 mmbls/d in gross capacity up to 2013 although these
have recently been removed from OPEC’s (2007) project list.44
Kashagan phase 1, initially scheduled to come online in 2005 but
44
OPEC (2007) has replaced the Iraqi projects with their own assumptions on
production growth indicating that Iraq’s gross production capacity will increase
from 2 mmbls/d in 2007 to 2.8 mmbls/d in 2010. See even IEA OMR (2008a)
(February and March issue).
 ARTICLE IN PRESS
458 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
delayed several times and now scheduled to come online in 2013,
and project Kuwait, together adding almost 1 mmbls/d in gross
capacity additions, have not been included. Production from the
recently discovered Tupi field in sub-salt layers off Brazil has been
assumed to add 100 kbls/d to production capacity in 2010.
In total, some 28 mmbls/d of gross production capacity will be
added between 2008 and 2012. However, few projects produce for
the entire year in the start-up year and many fields use several
months to build up to plateau level indicating that actual gross
capacity addition for any year is lower than the combined plateau
level shown in Fig. 7. On the other hand, this applies of course to
any year (although to varying extent) meaning that some fields
that came online in for instance 2006 and 2007 were still building
up to plateau level in 2008 adding to capacity in that particular
year. Also, a number of projects have been announced without
disclosing production figures and there are numerous marginal
additions worldwide almost on a continuous basis of which it is
impossible to keep a track. CERA (2006) quantifies the latter by
adding 10% of known capacity additions as capacity additions
from small fields and field upgrades. However, it seems unlikely
that all announced projects should go on line according to
schedule, in particular considering the fact that more than
8 mmbls/d of the incremental capacity up to 2013 will occur in
Iran, Iraq, Russia and Venezuela. Therefore, total gross capacity
additions between 2008 and 2013 are not likely to significantly
exceed 30 mmbls/d.
Assuming a global average decline rate in existing fields of
between 5% and 8% (CERA, 2006, 2008a, IEA, 200645; IEA OMR,
2008a) indicates that between 19 and 29 mmbls/d of production
will have to be replaced by 2013 just to replace current
production. Adding demand as forecasted by IEA (2006)46
indicates that between 27 and 37 mmbls/d will have to be added
between 2008 and 2013. In other words, the global decline rate
cannot be allowed to exceed more than marginally the 5% average
annual decline as envisaged by CERA (2006, 2008a) if supply and
demand is to be in balance, provided of course that demand
evolves as outlined in IEA (2006, 2007), EIA (2006, 2007a) and
ExxonMobil (2007a). Regarding the sensitivity in applying decline
rates see also IEA (2007)47. Fig. 7 also shows that the supply
situation will ease somewhat in 2009 and possibly even in 2010
since relatively large capacity additions are expected during the
second half of 2008 and in 2009.
In addition, it should be added that we do not know the state of
many of the world’s 20 super-giant oil fields, which in 2004
accounted for almost a quarter of global oil production.48 Fourteen
of these fields have been on line for four decades or more and at
least three of the super-giant fields are currently in decline;
Dacqing in China, Prudhoe Bay in Alaska and Cantarell in Mexico
with the latter approaching annual decline rates of 25% (IEA OMR,
2008a; IHS, 2007f). Furthermore, and as mentioned above, several
of the super-giant fields in Iran and Iraq are suffering from poor
maintenance and use of outdated production technology. More
frequent occurrences of unscheduled field outages in increasingly
more mature production areas like the North Sea and Gulf of
45
IEA (2006) claims that applied decline rates are based on information
obtained in consultations with international and national oil companies, oilfield
service companies and consultants and that observed decline rates generally are
much lower as they reflect investments to maintain or boost output at existing
fields.
46
Demand in 2012 has been derived by applying the average annual growth
rate projected by IEA (2006) between 2004 and 2015 on actual 2007 demand, i.e.
1.7% p.a. growth on 86.0 mmbls/d giving a total demand of 93.6 mmbls/d in 2012.
47
In fact, IEA’s 2008 edition of the World Energy Outlook will take a detailed
look at the issue of decline rates.
48
The world’s 20 largest oil fields produced 20.3 mmbls/d in 2004 accounting
for 24% of global production (IEA, 2005b; Pemex, 2007a; O&GJ, 2005).
Mexico may also reduce expected future production. In fact, in
July 2007, IEA OMR (2007) introduced a reliability adjustment
factor in their oil production forecasts for certain countries to
account for unscheduled outages.49 Finally, lack of skilled people,
material, equipment and rigs will continue to hamper develop-
ment as well as drive up costs. According to for instance CERA
(2008b), costs associated with developing new oil and gas
upstream facilities have doubled since 2005. Goldman Sachs
(2008) claims that the oil price required to return cost of capital
for the marginal barrel has increased from around US$50 in 2004
to US$80 in 2007, while the corresponding oil price for the average
barrel has increased from around US$19 to US$44 over the same
period. This means of course that an increasing share of capital
expenditure goes to discover and produce the incremental barrel.
Rising concerns for energy security, high oil prices and, in the
case of biofuels, climate change, have led to renewed interest for
production of synthetic fuels, in particular in countries with
large (stranded) gas reserves or coal resources. Synthetic fuels
(synfuels) can be produced from any raw material containing
carbon and hydrogen, i.e. natural gas, coal and biomass and the
various concepts are usually denoted gas-to-liquids (GTL), coal-to-
liquids (CTL) and biomass-to-liquids (BTL). According to IEA
(2006) reference scenario GTL and CTL will only have a modest
impact on total liquids supply reaching around 3 mmbls/d in 2030
and thus accounting for less than 3% of total supply while biofuels
is projected to cover 4% of global road-transport demand at the
end of the projection period.50 Key drivers for expansion of
synfuels will continue to be the oil price, concerns for energy
security but also increasingly stricter environmental regulations
in the transport sector throughout the world. More recently,
escalating construction costs51 have led to that several planned
synfuels projects have been moved forward into the next decade
or been shelved entirely.
GTL has two major advantages; (i) it diversifies the portfolio for
development of stranded gas (GTL and LNG) and (ii) the synthesis
gas is converted into very clean conventional oil products, mostly
diesel. The drawback is a highly energy-intensive conversion
process consuming around 45% of the feedstock gas (e.g. IEA,
2004). As of March 2007 there are only three GTL plants in
operation worldwide with a combined capacity of 95 kbls/d.
Another two plants with a combined capacity of 174 kbls/d are
under construction, while 16 plants with a total capacity of
1.1 mmbls/d are under various stages of planning. Qatar will soon
become the dominating global supplier with 34 kbls/d in opera-
tion, 140 kbls/d under construction and 455 kbls/d under plan-
ning. In February 2007, the American company Syntroleum
Corporation (2007) signed a Memorandum of Understanding
(MoU) with the Chinese oil company Sinopec to jointly develop a
17 kbls/d GTL plant in China. Syntroleum is also considering
construction of a 50 kbls/d GTL plant in Papua New Guinea. IEA
(2006) estimates a global capacity of 300 kbls/d in 2015 rising to
2.3 mmbls/d in 2030, while Sasol Chevron (2006) believes GTL
could provide some 4% of global diesel consumption in 2015, i.e.
around 750 kbls/d. A qualified guess would be that IEA’s
intermediate projections for 2015 are too low given that at least
49
The reliability adjustment factor reduces base case production forecasts for
those countries which historically have been most prone to unscheduled
disruptions or delays.
50
The reference scenario in IEA (2007) assumes slightly lower contribution
from non-conventional sources (including GTL and CTL), for instance 8.5 mmbls/d
in 2030 versus 9.0 mmbls/d in the 2006 edition. Biomass use in the transport
sector is however 11% higher in 2030 relative to the 2006 edition.
51
For instance, Global Insights (2007) claims that project costs of the Palm
GTL project in Qatar, which was shelved by ExxonMobil and Qatar Petroleum, is
estimated to cost between US$12–18 billions at today’s (2007) values compared
with some US$5–6 billions when the project was initially mooted in 2003–2004.
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
270 kbls/d will be on line already in 2010 but it appears at the
same time that GTL is unlikely to have anything but modest
impact on long-term liquids supply.
The increasing global competition for oil and gas resources,
concerns for security of supply and soaring oil prices have raised
the interest for CTL in countries with large coal resources such as
Australia, China, India and the US. However, CTL plants are cost
and energy intensive, emit seven to ten times more CO2 than a
conventional refinery and consume and often pollute large
quantities of water.52 IEA (2006) gives capital costs for an
80 kbls/d unit to around US$5 billions, while the capital cost for
an equivalent GTL unit is less than US$2 billions. According to IEA
(2006), at current (2006) coal prices, CTL has a break even price
well over US$50/bl, while according to Sun (2008), the break even
price for China’s first CTL project, currently under construction, is
between US$35 and 40/bl. IEA (2006) projects global CTL capacity
to increase modestly from the current 160 to 750 kbls/d in 2030.
There is currently only one CTL plant in operation worldwide, the
Sasol plant in South Africa with a capacity of 160 kbls/d. Sasol is
also planning a new plant in South Africa, the Mafutha project,
with a capacity of 80 kbls/d. One CTL plant with a first stage
capacity of around 20 kbls/d (1 million tons of liquids per year) is
under construction by the Shenhua group in the Shaanxi province
in China while another six are under development. Apparently,
the Shenhua plant is being prepared for CCS, either for injection of
CO2 into a nearby aquifer or for enhanced oil recovery (Sun, 2008).
China is targeting between 0.6 and 1.0 mmbls/d of liquids from
CTL by 2020, which will utilise between 240 and 400 Mt of coal
annually53 (IEA CCC, 2007; CIAB, 2006). In the US, the air force
is currently testing synthetic fuels on their aircrafts aiming to
certify the entire fleet of almost 6000 aircrafts for use of synthetic
fuels by 2011 and to purchase 50% of its aviation fuel require-
ments from domestic synfuel sources by 2016 (Futurecoalfuels,
2008; Rentech, 2008; Air Force Link, 2008). In Australia, the
Monash Energy Clean Coal Project is under development by Anglo
Coal and Shell. The Monash plant will use around 25 Mtpa of
lignite to generate 60 kbls/d of liquids with commissioning
expected shortly after 2015 (Monash Energy, 2008). Numerous
other plants are under development or have been proposed,
mainly in China, India and the US. One plant is planned in Europe,
a 3 kbls/d pilot plant in Germany. Although it appears that IEA’s
projections again may be too low, in particular considering
persistent high oil prices above US$100/bl, CTL is not expected
to make anything but marginal contributions to global liquids
supply by 2015.
Global biofuel production has increased by 70% over the last 2
years reaching 1.1 mmbls/d in 2007, accounting for 1.3% of global
liquids supply. The prospects for biofuels have improved tremen-
dously over the last 2 years driven foremost by concerns for
energy security and climate change and the high oil prices in
combination with decreasing production costs. The USA, Brazil
and Europe account for the bulk of global biofuel production.
While ethanol is the dominating biofuel product in Brazil and the
USA, biodiesel is the main product within Europe accounting for
more than 80% of total biofuel production. In January 2008, the EU
Commission proposed that sustainable biomass consumption
should account for at least 10% of overall petrol and diesel
consumption in 2020, but in July 2008 the European Parliament’s
Environment Committee rejected the Commission’s proposal
52
Water is being used in the CTL process partly as a source of hydrogen for the
product and partly for cooling and other processes.
53
According to IEA (2007), the Chinese Government has recently expressed
doubts about the feasibility of achieving ambitious plans for CTL production due to
uncertainty about production costs, the magnitude of coal consumption and the
environmental impact including that on water resources.
459
(Platts, 2008). Also, based on current trends EU-15 will only reach
slightly more than half the target set in the biomass action plan
for 2010 (Eurobserver, 2006). US DOE biofuel initiative aims to
replace 30% of current gasoline consumption with biofuels by
2030. The Energy Policy Act passed during the summer of 2005
aims to boost biofuel output to 22.5 Mt in 2012 by imposing
mandatory measures. In 2007, ethanol production in the US
increased by 30% reaching 545 kbls/d accounting for more than 7%
of total liquids production and according to IEA OMR (2008a)
production will reach 660 kbls/d in 2008. China, India and other
Asian countries like Malaysia and Indonesia have also started to
realise the potential of biofuel both with respect to energy
security and climate change. India has for instance targeted
production of 6 million tons biodiesel by 2010 increasing to 30
million tons in 2020 and 60 million tons in 2030 (Automotive
Research Association of India, ARAI, 2007). However, the growing
demand has also led to an upward pressure on food prices and to
increased deforestation and deterioration of wetlands and peat
soils, which has actually increased CO2 emissions (IEA, 2008). IEA
OMR (2008b) recently downgraded their expectations on medium-
term growth projecting total global production to reach around
2 mmbls/d in 2015, accounting for 2% of total liquids supply. On
the other hand, second-generation biofuels54 may have the
potential to significantly reduce demand for oil in the long term.
As mentioned above, IEA (2008) investigates how CO2 emissions
in 2050 can be brought back to current levels (ACT scenarios) or be
reduced by 50% (BLUE scenarios) through inclusion of, among
other things, a sizeable contribution from biofuels. In the ACT Map
scenario biofuels consumption reaches 570 Mtoe in 2050 account-
ing for 17% of total transport fuel demand, while in the BLUE Map
scenario consumption reaches 693 Mtoe in 2050 accounting for
26% of total transport fuel demand (IEA, 2008). However, IEA
(2008) also states that it remains unclear what level of biofuels
production that can be achieved globally on a sustainable basis by
2050 referring in particular to food security, land competition and
potential impact on water resources.
5.3. Demand
Economic growth, increasing population, urbanisation and
infrastructure development will drive growth in demand for oil in
countries like China and India. In China, GDP growth has averaged
nearly 10% annually between 1980 and 2005 and escalated to
almost 11% in 2006 and the first half of 2007. In India, GDP grew
by almost 6% annually in the 1980s and 1990s and has increased
further in recent years from more than 8% in 2004 to almost 10%
in 2006 (IEA, 2007). Car sales are booming in the so-called BRIC
countries (Brazil, Russia, India, China), increasing in 2007 by
almost 60% in Russia, 30% in Brazil and more than 20% in China,
while in India, production of the Tata Nano car with an expected
selling price of US$2500 is expected to allow millions of people to
buy their own car (CIBC, 2008). In the Middle East, oil demand
grew by 3.0% p.a. between 2000 and 2007, while corresponding
growth averaged 2.7% in Africa and Asia-Pacific, raising global
demand by 6.3 mmbls/d. In total, these three regions accounted
for more than 70% of total worldwide increase in oil demand
between 2000 and 2007. Table 5 shows key indicators in 2005
for oil demand for the BRIC countries compared with the
same indicators for EU-27, Japan and USA. The data have been
taken from European Commission (EC, 2008), IEA (2007), United
Nations Population Division (UNPD, 2008), Organisation for
54
Second-generation biofuels will use biomass comprised of the residual non-
food parts of current crops as well as biomass waste from other sectors such as the
forestry sector.
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460 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464

Table 5
Key indicators 2005 global oil demand

Unit EU-27 Japan USA China India Russia Brazil

Population millions 490 128 297 1313 1134 144 187

Urban population % of total 80 66 81 40 29 73 84
GDP in PPP terms billion US $ 13,054 3870 12,376 5333 2341 1698 1585
GDP/Capita in PPP terms US $ 26,652 30,290 41,674 4091 2126 11,861 8606
TPEC Mtoe 1815 527 2340 1717 537 647 210
TPEC/Capita toe 3.7 4.2 7.9 1.3 0.5 4.5 1.1
POCa Mtoe 671 249 952 327 129 133 85
POC/Capitaa toe 1.4 1.9 3.2 0.2 0.1 0.9 0.5
No of vehiclesb millions 230 69 232 34 11 35 27
No of cars/1000 peopleb cars/1000 people 466 540 776 26 13 245 145

POC: primary oil consumption.

Sources: EC (2008); IEA (2007); UNPD (2008); OECD (2008); IMF (2008b).
a
POC and POC/Capita refers to 2005 apart from Brazil (2004).
b
Refers to passenger cars for all countries apart from India (LDVs) including all 2-axis, 4-tyre vehicles in USA and minicars in Japan, year 2006 for EU-27 and Russia,
2005 other countries.

Economic Co-operation and Development (OECD, 2008) and IMF
(2008b).
Projections of future demand by IEA (2006, 2007), EIA (2006,
2007a, see footnotes 8 and 9) and ExxonMobil (2007a), all foresee
global oil demand to reach between 116 and 118 mmbls/d by
2030, indicating an average annual growth of around 1.3% relative
to real demand in 2007. As expected, the growth is driven
foremost by the transport sector in developing countries in Asia,
Middle East and Africa but also in countries like Brazil and Russia,
while growth within OECD is expected to be modest, at around
0.5% per annum up to 2030.
Sustained high oil prices together with concerns for security of
supply and the environment may, however, have the potential to
significantly alter the relatively robust expectations on future
demand as outlined above. Already, the high prices seem to have
affected demand within the OECD, most notably in the US, and IEA
OMR (2008a, b) has on several occasions recently written down
their expectations on short-term demand growth. Nevertheless,
growth in demand is expected to rise again from 2010 in
combination with increasingly stronger growth in global GDP
(IEA OMR, 2008b). The most recent report by EIA (2008) has also
revised down their long-term growth forecasts although the
impact on cumulative demand between 2006 and 2030 is
relatively modest (see footnote 9). Although inflation adjusted
oil prices have passed previous record levels noted in 1980 there
are several factors implying that the global economy is less
vulnerable to high oil prices than in the past which in turn suggest
that the high prices may only have modest impact on demand.
First of all, the so-called oil burden, or global oil expenditures as
share of global GDP, is lower today than it was in 1980. According
to IEA OMR (2008a), the oil burden stood at 4.2% in 2007 versus
7.3% in 1980. In practice therefore, income gains have more than
offset price increases. Secondly, global oil intensity has halved
since the 1970s, most markedly within OECD countries, while
at the same time many non-OECD countries have reached the
stage, in terms of GDP per capita where oil demand typically
accelerates (IEA OMR, 2008a). Also, the depreciation of the US
dollar against many currencies, taxes in Europe and fuel subsidies
in Asia, Latin America and the Middle East and lack of any real
substitute to oil in the transport sector are contributing to
maintain strong demand. For instance, according to IEA OMR
(2008a), only a very large price adjustment to subsidised retail oil
prices in China would have the potential to effectively curb
demand in Asia and could in fact also have the opposite effect by
improving supply.
As outlined in Section 2, concerns for climate change has the
potential to significantly alter future demand for oil, in particular
considering the fact that global CO2 emissions should be reduced
by between 50% and 85% between 2000 and 2050 to limit the
global temperature increase to 2.0–2.4 1C (IPCC, 2007). A positive
side-effect of reducing oil consumption is the potentially
significant improvement in national energy security and the
combined effect of concerns for climate change and energy
security could have the potential to significantly influence future
demand for oil. According to IEA (2008) global demand for oil (not
liquids) could reach 135 mmbls/d in 2050 under a baseline
scenario based on energy and climate policies implemented to
date. However, efforts to reduce global CO2 emissions back to
2005 level by 2050 could reduce demand by 30%, while a 50%
reduction in CO2 emissions could reduce demand by 55%, in both
cases relative to the baseline scenario. The latter scenario,
denominated BLUE Map, envisages global oil demand (not liquids)
to reach 61 mmbls/d in 2050, almost 30% below current
consumption levels. The BLUE Map scenario is based on, among
other things, that:
 Electric vehicles (EVs) and fuel cell vehicles (FCVs) reach 20%
and 40% of light-duty vehicle (LDV) sales, respectively in 2050.
 Beginning in 2015, plug-in hybrid electric vehicles (PHEVs)
reach a 60% share in travel on electricity by 2050.
 Gasoline and diesel hybrids have a 70% market share in LDVs
by 2030 dropping to 35% in 2050 (i.e. replaced by EVs, FCVs
and PHEVs).
 70% reduction in new LDV fuel efficiency (fuel/km) by 2050
from FCVs and EVs.
 FCVs and EVs each account for 25% of total stock of trucks.
 Between 35% and 50% fuel efficiency improvements in buses,
rail, air and water transport.
 Second-generation biofuels accounting for almost 20%
(693 Mtoe) of total global liquids supply in 2050.
According to IEA (2008) the BLUE Map scenario will require
urgent implementation of unprecedented and far-reaching new
policies in the energy sector. Moreover, increased Research,
Development and Deployment(RD&D ) over the next 15 years
into energy storage systems, fuel cell systems and advanced
biofuels systems appears critical to bringing down longer-term
costs of CO2 reductions in the transport sector where marginal
CO2 emission reduction costs could reach as high as US$500/ton
(IEA, 2008).
 ARTICLE IN PRESS
J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464
5.4. Summary—supply and demand for oil
The observations given above indicate that although there are
substantial capacity additions to global production in the short
term (2008–2010), in the medium-term long lead times in project
development, lack of skilled personnel and equipment, frequent
field outages, declining production from operating fields, limited
access to large resources in the Middle East, Russia and Venezuela
and the fact that new oil increasingly will have to be found and
produced in more difficult environment will continue to constrain
global production. Prevailing market conditions and policies
indicate that limited access to resources and deteriorating fiscal
terms for IOC’s together with budgetary constraints for large
NOC’s and continued geopolitical tensions will limit oil produc-
tion growth also in the long term. Additionally, few oil companies/
nations, apart from possibly Saudi Arabia, are likely to be willing
to maintain surplus production capacity and we do not know the
condition of many of the world’s 20 super-giant oil fields
accounting for almost a quarter of global oil production. As a
consequence it is a distinct possibility that global oil production
may peak or plateau in a relatively near future, not as a
consequence of limited resources but because too many factors
over long time constrain investments into E&P. Unconventional oil
production is currently expanding rapidly in Canada, but world-
wide production is not expected to significantly exceed projec-
tions by the IEA, indicating a relatively modest contribution from
unconventional oil up to 2030. Synthetic fuels are not believed to
attain more than a marginal role in the short term but still offer
significant production potential in the long term. Fundamentals
clearly indicate continued rapid expansion in worldwide demand
for oil, driven foremost by the transport sector in Asia, Africa,
Middle East, Brazil and Russia. Given the above analysis it is
difficult to project anything but continued tight oil supply, also in
the long term but it must be underlined that this assumption is
under prevailing market conditions and policies.
A global concerted effort to mitigate climate change may, alone
or together with concerns for energy security, have the potential
in the long term to profoundly reduce demand for oil. Concerns for
energy security are already leading to steps being taken to curb
growth in demand in China, USA and Europe and, as shown by IEA
(2008), if the world seriously wants to reduce CO2 emissions in
order to meet IPCC emission reduction targets, drastic measures
will have to be taken to reduce consumption of fossil fuels
including oil.
6. Overall conclusions
By assessing available data and literature on the oil market this
paper has examined the oil resource base and the prospects for
future oil supply in light of demand scenarios from IEA, EIA and
ExxonMobil. Although no decisive conclusions or quantitative
assessment can be made with respect to the oil resource base,
resources appear to be sufficient to meet demand up to 2030. This
is due to several facts;
 Most oil companies and countries investigated in this work
have already discovered resources that are substantially larger
than proven reserves.
 There is still a large potential for resource growth in fields
already discovered.
 Although impossible to quantify, the prospects to find more oil
appear promising.
 There are very large deposits of unconventional oil.
 Modest but still increasing contribution from synfuels.
461
Although the resource base appears large, the oil will have to
be produced and transported to the market in a timely manner to
meet increasing demand which is a completely different matter.
We conclude that global supply of oil probably will continue to be
tight, not only in the medium term but also in the long term. The
main reasons behind this are assumed to be the rapid decline in
production in Mexico and the North Sea, slow progress of
announced projects in some countries, limited access to large
resources in the Middle East, Russia and Venezuela, budgetary
constraints for some large national oil companies, geopolitical
tensions, unwillingness among producers to build up a costly
surplus production capacity and the fact that new oil increasingly
will have to be found and produced in more difficult environment.
Furthermore, we do not know the present condition of several
of the world’s 20 ageing super-giant fields, which together
account for almost a quarter of global production and there
are signs indicating that for instance Iraq’s and Iran’s super-
giants may have been mismanaged in the past leading to
considerable problems in maintaining field production. Produc-
tion of unconventional oil is believed to rise rapidly in Canada,
while the prospects for growth in Venezuela are more uncertain.
Yet, the share of unconventional oil in global oil production
is not likely to exceed the projections made by the IEA, i.e. less
than 5% in 2015 and 8% in 2030. Production of oil shale in the US
will not have any significance up to at least 2020, possibly not
until 2030. Likewise, production of other synfuels like GTL, CTL
and BTL will only account for marginal contributions in the
medium term and it may take decades until technologies for
synfuels production can play more than a marginal role in global
liquids supply.
Given the above analysis it is difficult to project anything but
continued tight oil supply, also in the long term. In light of the
above it is also concluded that there is a distinct possibility that
global oil production may peak or plateau in a relatively near
future, not as a consequence of limited resources but because too
many factors over long time constrain investments into E&P.
However, it is important to underline that this assumption is
under prevailing market conditions and policies, which may very
well be subject to change over time. For instance, a concerted
global effort to mitigate climate change may, alone or together
with concerns for energy security, significantly reduce the long-
term demand for oil. Concerns for energy security are already
leading to steps being taken to curb growth in demand in China,
USA and Europe and if the world seriously wants to reduce CO2
emissions in order to meet IPCC emission reduction targets,
drastic measures will have to be taken to reduce consumption of
fossil fuels including oil.
Non-OPEC oil production costs are set to increase as oil
increasingly will have to be produced in deepwater and arctic
regions and since the contribution from unconventional oil will
rise. Oil production costs are expected to rise also in the Middle
East as an increasing amount of smaller fields will have to replace
production from declining super-giants, although the rise in costs
will originate from a considerably lower base level than costs in
non-OPEC countries.
The lack of transparency within the oil industry obviously
prevents any accurate analysis of future production and supply
ability. Moreover, our ability to analyse the sector is likely to
become more difficult in the future as oil increasingly will have to
be sourced from those countries, which today have a poor
transparency in the oil sector. Additionally, there is an ongoing
increase in polarisation between oil-consuming countries and the
producing countries. Countries in the Western Hemisphere will be
increasingly dependent on a few countries in the Middle East and
Russia not only for the supply of oil but also for the supply of
gas, which to a large extent will be utilised for power and
 ARTICLE IN PRESS

462 J. Kjärstad, F. Johnsson / Energy Policy 37 (2009) 441–464

heat generation.55 A responsible policy should under these NOC: national oil companies
circumstances seek to enhance energy security, which should be NGL: natural gas liquids
directed towards promoting energy efficiency measures (reduce NPD: Norwegian Petroleum Directorate
demand) in combination with increased utilisation of indigenous OC db: Oil Companies Database
fuel resources including coal but in combination with carbon OCS: Outer Continental Shelf
capture and storage (CCS). ODAC: Oil Depletion Analysis Centre
OECD: Organisation for Economic Co-operation and Develop-
7. Definition of terms and list of abbreviations ment
OF db: Oil Field Database
Adjustments to proven reserves: annual changes in published OFP db: Oil Field Project Database
reserve estimates that cannot be attributed to other oil: crude oil, condensates and natural gas liquids (NGL).
reserve change categories because of the statistical oil shale:sedimentary rock containing kerogen, which releases oil
estimation methods employed and gas when heated
AAPG: American Association of Petroleum Geologists OOIP: oil originally in place
APM: artificial pressure maintenance OPEC: Organisation of the Petroleum Exporting Countries
ARI: Advanced Resources International PDO: Plan for Development and Operation
ASPO: Association for the Study of Peak Oil PHEV: plug-in hybrid electric vehicles
bbls: billion barrels, i.e. 109 barrels Play: potential oil-bearing structures
bblsoe: billion barrels oil equivalent POC: primary oil consumption
CAGR: compounded annual growth rate, i.e. average annual PRMS: Petroleum Resources Management System
growth rate prospective resources: those quantities of petroleum estimated,
CCS: carbon capture and storage as of a given date, to be potentially recoverable from
CERA: Cambridge Energy Research Associates undiscovered accumulations by future development
CGES: Centre for Global Energy Studies projects, i.e. the resources have both an associated
CIAB: Coal Industry Advisory Board chance of discovery and a chance of development.
CNEB: Canada’s National Energy Board revisions: changes upward or downward made to previous
CSIS: Centre for Strategic and International Studies estimates as a result of new information obtained from
Discovered resource base: all oil discovered to date without any development drilling and production history or from
considerations on recoverability changes in economic factors.
DOE: US Department of Energy RF: recovery factor
EIA: US Energy Information Agency SEC: US Securities and Exchange Commission
EIA CAB: EIA Country Analysis Briefs semi-submersible rig: a floating drilling installation that is
EOR: enhanced oil recovery supported by underwater pontoons; generally used for
EPSA: Exploration and Production Sharing Agreement exploration purposes only.
EV: electric vehicles source rock: rock rich in organic matter, which, if heated
EWG: Energy Watch Group sufficiently, will generate oil or gas.
Extensions of proven reserves: those reserves added by extend- SPE: Society of Petroleum Engineers
ing the proved area of previously discovered reservoirs SPEE: Society of Petroleum Evaluation Engineers
FCV: fuel cell vehicles super-giant oil field: 5 bbls or more ultimately recoverable
Giant oil field: 0.5–5.0 bbls ultimately recoverable reserves reserves
GIS: Geographical Information System SUSRIS: Saudi Arabia US Relations Informations Office
Heavy oil: oil with API gravity between 101API and 201API and a Synfuels:synthetic fuels made from natural gas (gas-to-liquids,
viscosity greater than 100 centipoise. GTL), coal (coal-to-liquids, CTL) and biofuels (biomass-
HOA: head of agreement to-liquids, BTL).
IEA: International Energy Agency Tbls: trillion barrels, i.e. 1012 barrels
IEA APS: IEA Alternative Policy Scenario TPEC: total primary energy consumption
IEA OMR: IEA Oil Market Report UAE: United Arab Emirates
IEA WEO: IEA World Energy Outlook URR: ultimately recoverable reserves
IMF: International Monetary Fund USGS: US Geological Survey
IOC: International Oil Companies US MMS:US Minerals Management Service
IPCC: Intergovernmental Panel on Climate Change US NPC: US National Petroleum Council
kbls/d: kilo-barrels per day, i.e. 103 barrels per day WEC: World Energy Council
liquids: crude oil, condensates, NGL, unconventional oil and WPC: World Petroleum Council
synthetic fuels (synfuels).
LNG: Liquid Natural Gas
MENA: Middle East and North Africa
mmbls/d: million barrels per day, i.e. 106 barrels per day Acknowledgement
Mtoe: million tons of oil equivalents
Mtpa: million tons per annum This work was financed by the AGS project ‘‘Pathways to
natural bitumen: oil whose API gravity is less than 10oAPI and Sustainable European Energy System’’.
%
whose viscosity is commonly greater than 10,000
centipoise. References

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