Download Paul Sullivan, Oil Supply in Handbook of Oil Politics

NS4054
Fall Term 2015
Handbook of Oil Politics
Paul Sullivan – Oil Supply
Supply of Oil I
• Paul Sullivan, Key Issues Surrounding the Supply of Oil
• What we are seeing is the peaking of conventional oil in
many areas and:
• Potentially extreme increases in infrastructure and
• Piracy and terrorism risks for the oil industry
• Leads to a series of questions:
• Where can new oil reserves, conventional and unconventional
be found?
• How much potential oil is out there?
• Answers are not as simple as one might think
• Different estimates of reserves
• Proved
• Probable
• Possible
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Supply of Oil II
• 2. Next level of estimates might include contingent
resources and perspective resources:
• Contingent resources
• Those quantities of petroleum which are estimated, on a given
date, to be potentially recoverable from known accumulations,
but which are not currently considered to be commercially
recoverable
• Contingent Resources may include, for example, accumulations
for which there is currently no viable market, or where
commercial recovery is dependent on the development of new
technology, or where evaluation of the accumulation is still at an
early stage.
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Supply of Oil III
• Perspective Resources
• those quantities of petroleum which are estimated, on a given
date, to be potentially recoverable from undiscovered
accumulations
• If we add up the global reserves and resource base of
conventional and unconventional oils it could be as
much or more than 5 trillion barrels
• At the global use of 30,000m barrels a year recently and
with a reasonable growth rate in demand over next 100
years – would have more than enough
• Still many uncertainties facing future of oil production
• Technological, economic, geological, political, and environmental
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Supply of Oil IV
Concerning the supply of oil, Sullivan concludes:
• We really don’t know how much oil or substitutes are out
there, although it is probably massive
• It is unclear what the future of peak conventional oil
reserves will trend towards, but many countries have
already peaked and some others likely to join that group.
• We are unsure of the economics of oil exploration and
production in the future
• We can be somewhat certain that
• The “cheap” oil has already been found and that
• The oil production in the future is likely to be from more
expensive areas and more expensive processes – especially in
the case of unconventional oil
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Supply of Oil V
• We are unsure of the possible trends in oil exploration
and production technologies that could add to our
proven oil reserves and overall oil resource base.
• Still a lot of oil in the ground that might be brought out
with new technologies
• Some reserves that look depleted could be reinvigorated with
enhanced recovery techniques
• However there seem to be significant limits and might account
for only 3m b/d today
• Unsure what they could account for in the future.
• We are also unsure about how future politics, political
instability and war could affect oil exploration and
production
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Supply of Oil VI
• Not sure what future climate change will bring and what
policies, directed at the oil industry, such changes could
bring.
• Still sure it will take a long time to change from a mostly
oil-based transportation system to something else
• If peak “cheap” oil and climate issues are to be serious
problems for the future then we should get moving on
this. -- will price signals provide the right incentives?
• What we now know as unconventional oil will likely be
renamed as conventional oil as this process of energy
change unfolds
• Some serious problem ahead for the production of oil,
and these problems include the obvious technical and
economic ones, but we also will have to face significant
political and policy uncertainties.
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Supply of Oil VII
• Oil reserves and resources might need to be redefined in
the context of scenarios related to all the potential risks
and uncertainties associated with future finds and future
exploration.
• Peak demand may actually determine peak oil before we
really get in a bind
• If peak conventional oil is a reality, then we really need to
move on to the unconventional oils much more quickly
and also re-fit our refineries and other energy-economy
systems for this transition in a more systematic and
methodological way than seems to have been so far.
• If global climate change is a serious problem, and is
caused by fossil fuels then we need fundamentally to
rethink direction of oil production in the future.
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Supply of Oil VIII
• The future of oil will be very complex and changeable due
to changes that an happen in
• Technologies
• Knowledge
• Geopolitics
• Economics and
• The often unpredictable nature of the systems within systems
that the oil industry is connected with
• The key to the demand for oil in the future will be how the
transportation industry changes
• If the politics of the areas where most of the oil is found
change for the worse in a major way, then all bets off on
what the future of oil will look like
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