"A central thesis of those who advocate for complete “decarbonization” of the global energy economy is that the world’s reserves of oil and natural gas are steadily declining and becoming far too expensive to produce.1
The “end of oil” story has been published many times over several decades, and by repetition alone has become broadly accepted in the media and by many in government.
The purpose of this series of essays is to examine what the best available expert analysis indicates about the present and potential future of oil and natural gas resources and what this means for the climate policy debate in The US and other countries.
What these essays will show is that the world’s supply of economically and technically recoverable oil and gas resources is enormous and growing. The sources of supply in the future will increasingly move to developing regions that value their economic contribution, and it will be virtually impossible for climate campaigners to impair these developments.
Defining Supply
Too often, those unfamiliar with oil and natural gas industries consider the supply of these commodities purely in terms of their annual production. When they think of future security of supply, they consider it as the period of time during which the currently proven reserves can supply current levels of demand.
Thus, the website Worldometer recently presented the current level of proven oil reserves in the world as 1.65 trillion barrels, about 47 times current levels of oil consumption, and stated this indicated there was only 47 “years of oil left”.
The reality is that the oil and gas industry invests in the exploration of new supply sources only at the rate determined by its projections of demand and its cash flow available to support the investment. Proven reserves are defined as those that are demonstrated by drilling to be accessible and producible on commercial terms.
Sometimes proven reserves are divided into those for “conventional” and “unconventional” sources, with conventional oil and gas reserves referring to concentrations that occur in discrete accumulations or pools. These pools traditionally have high porosity (the percentage of void space in a rock) and permeability (the ease with which a liquid or gas passes through a material).
Conventional oil and gas pools are developed using vertical well bores and using minimal stimulation. Unconventional reserves and resources are oil-bearing or gas-bearing units where the permeability and porosity are so low that the oil and gas cannot be extracted economically through a vertical well bore. Instead they require turning a drilling string from vertical to horizontal over about a depth of 3000 feet with drill pipe flexible to the degree of 3% per 100 feet.
Once in place the surrounding rock around the well bore undergoes hydraulic fracturing to achieve economic production. Unconventional oil also includes oil produced by mining or enhanced recovery techniques from bituminous oil sands such as those found in Alberta, Canada and the Orinoco region of Venezuela.
As production technology changes over time, many agencies differentiate between “reserves” that are recoverable under present economic and technological conditions and “technically recoverable resources”, a term applying to oil or gas that can be extracted using current methods and technology, but that may not be profitable. These estimates can be uncertain and tend to vary considerably with time.
There’s an even larger category, which is undiscovered technically recoverable resources, which are defined as “those that are estimated to exist based on geology, geophysics, geochemistry, and our familiarity with similar basins and rock formations. They have not yet been proven to exist via drilling”.2
Proven Reserves
There are many different estimates of proven reserves of oil and gas. A generally accepted and current source of such estimates is the British Petroleum Statistical Review of World Energy 2021. According to that source, at the end of 2020 global oil reserves totaled 244.4 billion tonnes (1.73 trillion barrels). Global proven reserves of natural gas at the end of 2020 were 6,642 trillion cubic feet (Tcf).
The Middle East has almost half (48.3%) the world’s oil reserves, South and Central America (mainly Venezuela) have 18.7% and North America has 14%. Thus, four fifths of the world’s proven oil reserves are in three regions. Table 1 lists the 12 countries with the largest proven oil reserves.
Table 1
Countries with the Largest Proven Oil Reserves at End 2020
Country Reserves (billion barrels) Share of Total(%)
Venezuela 303.8 17.5%
Saudi Arabia 297.5 17.2
Canada 168.1 9.7
Iran 157.8 9.1
Iraq 145.0 8.4
Kuwait 101.5 5.9
Russia 107.8 6.2
Oman 101.5 5.9
United Arab Em 97.8 5.6%
United States 68.8 4.0
Libya 48.4 2.8
Nigeria 36.8 2.1
Source: BP Statistical Review of World Energy 2021
We draw the following observations from this table.
Over one third of the world’s proven
oil reserves are in two countries
– Venezuela and Saudi Arabia.
Almost two-thirds are in only five countries.
Canada has a far higher share of the world’s proven reserves than is generally recognized; the United States, in contrast, has only one twenty-fifth of the world’s proven reserves.
There is no European country on the list. Norway is the only European country with large proven oil reserves – 7.9 billion barrels, or 0.5% of the world total.
Almost 30% of the world’s proven reserves are located in countries (Venezuela, Iran, and Libya) where geopolitical factors or extremely poor governance have sharply constrained oil production. If conditions in those countries improved considerably, it could result in large increases in oil production.
In the meantime, the OECD (Organization for Economic Cooperation and Development) countries, composed of 37 European nations, and especially the North Atlantic Treaty Organization (NATO) countries should be more aware of the importance to their present and future security of US oil resources. Stated in other terms, the undermining of investment in these resources arguably presents a serious threat to NATO’s security.
Contrary to the thesis that the world is running out of oil, global proven reserves grew from 1.3 trillion barrels in 2000 to 1.6 trillion barrels in 2010 to 1.7 trillion barrels in 2020.
Hopefully in the not too distant future the US and the world will realize that oil and natural gas will support our energy needs for the foreseeable future and simultaneously recognize that mankind and carbon dioxide emissions have no measurable impact on our planet’s thermostat."
2 Joshua Learn, Is the World Running Out of Oil? Science that Matters, February 25, 2021