Lecture #20; Geology 3950 spring 2006; CR Stern The future of by rraul


									Lecture #20; Geology 3950 spring 2006; CR Stern
The future of petroleum resources (text pages 427-439 4th ed and pages 15-23 5th ed)

This month last year (April 2005) the price per barrel of crude oil reached a record high
of $57 and prices for gas at the pump were running $2.25 a gallon (fig 1).

Today a year later a barrel sells for $67 and the price at the pump is about $2.60 per gal.

Petroleum accounts for over 60% of all energy used in the US today (fig 2 –it was 45% in
1975 and has now grown to over 60%), most importantly in transportation, agriculture
and industry. The price of oil has a major impact on all aspects of the US/world economy.

Petroleum is a fossil fuel formed by decay of marine biologic material buried in the earth,
and there is only a finite amount of petroleum. Petroleum is stored in shallow
sedimentary rock reservoirs. Deeper than 10 km in the earth the temperature begins to get
too hot to preserve petroleum, so you can not just drill deeper to find more petroleum.
The major petroleum reservoirs are well know and well described as they have been the
focus of constant exploration for almost 100 years. Most of this petroleum is Mesozoic in
age (250-65 million years old) and formed when sea-levels were high and global
temperatures warm in the Cetaceous. Older oil seeps away, and not much formed prior to
500 million years because there was not enough marine biomass. In North America the
major petroleum basins in Mexico, Texas, Colorado, Wyoming and up into Canada
formed mostly when this continent was covered by warm and shallow Cretaceous seas.
To understand the future of petroleum as an energy resource, one needs to know 1) how
much is the estimated total amount of petroleum that there is that can be recovered and
used; 2) how much have we used already and how much is left; 3) how fast are we using
what is left; 4) how fast is the yearly amount of petroleum consumed increasing (and it is
increasing); and 5) what happen when there is increasing use of a finite amount of a non-
renewable natural resource like petroleum – in other words what do we know happened
in similar cases with other finite resources.

How much is the estimated amount of petroleum available in the earth – this is
known as the “estimated ultimate recovery” or the total petroleum resource. A significant
amount of effort has been made to estimate this number, which is described as a certain
number of billion of barrels, and every year every petroleum company and petroleum
producing nation tries to estimate its own known reserves and these numbers are
tabulated on a global basis by various petroleum professionals. Fig 3 is a summary of the
estimates made by different professional organization beginning in the 1950’s
Most of the estimates vary from 1500 to 2500 billion barrels of petroleum, and estimates
made since 1995 seem to converge on the 1994 USGS estimate of 2300 billion barrels. A
few billion barrels more or less will not change the predictions for the future of petroleum
production by very much, as explained below, so I think that 2300 billion barrels is a
good conservation on the high side estimate.

As everyone knows, the distribution of oil is not the same all around the world, and the
biggest resources are in the middle east (fig 4 – shows resources (not counting how much
has already been used) in different geographic areas in billions of barrels)

How much petroleum are we using each year – fig 5 shows yearly production of
petroleum (and production equals consumption since none is stored) up to the year 1995.

In 1995 we (the whole world) was using 22 billion barrels of petroleum each year, but
today that figure has risen to 26 billion barrels each year, and it has been growing about
2% each year (see figure 1).
The consumption of petroleum grows for 3 reasons; 1) world population is increasing (it
is now over 6 billion (fig 6) and grows at approximately 2% per year, which means it

doubles every 70/2 = 35 years) and everyone uses energy; 2) underdeveloped
countries are developing their economies (China at a growth rate of almost 8% per year);
and 3) developed countries are also trying to grow their economies. Because developed
countries, particularly the US, use more petroleum per person (in the US each person uses
25 barrels of petroleum per year, more than 10 time the per capita use in underdeveloped
countries where the average is 1.5 barrels per year per person) and more total petroleum,
than underdeveloped countries, small population increases and economic growth in the
US accounts for the main increase in global petroleum consumption

How much petroleum have we already used – integrating the amount used each year as
shown in figure 6 indicates that 870 billion barrels of petroleum has already been used as
of 2000, and probably 1000 by this year since we use it at about 26 billion barrels per
year, leaving 1300 billion barrels of the estimated ultimate recovery left for the future.

How long will petroleum last into the future - if we keep using petroleum at 26 billion
barrels a year you might guess 51 years (1300/26), but this is not how it works. First the
use of petroleum is increasing, so it would no last 51 years, but more important, it is
going to get harder, in fact impossible, to produce the last ½ of all oil at the same rate the
first ½ was produced. Basically, for a finite resource like petroleum, case studies suggest
that production will peak and begin to decrease once ½ of the resource (fig 7), or 1150
billion barrels, is consumed, and this will be in only 6 more years, and some people have
suggested as soon as next year based on a lower EUR. When oil production peaks, it will
be production that determines and limits consumption, which is not the way it is today, as
production now expands to meet the consumption market. Oil prices will go up!!!
This model of peak production is based on case studies, for instance of the production
history in the US, which peaked in 1970 once one half of the estimated 200 billion barrels
of US oil had been already produced (see the US production curve in fig 4 above and
figure 8 below). The reason that producing more petroleum becomes more difficult each

year after ½ is already produced is because it becomes harder to discover, it is deep and
harder to produce, and less of it is recoverable.

World wide, discoveries, most of which were made in the 1960’s, have already decreased
(fig 9), and because of this reserves are also decreasing as we approach the year of peak
production. The current high price of oil and gasoline reflects the change that is occurring
The prediction for peak production by the World Oil Forecasting Program is shown in
figure 10 and one author on the topic has declared Thanksgiving Day 2005 as “World
Peak Production Day” after which it will be a different world. Just keep in mind that a
gallon of gas is still cheaper than a cup of cappuccino, at least until Thanksgiving

Other sources of energy that will replace petroleum in the future include renewable
resources such as solar, wind, and hydroelectric and other finite non-renewable resources
including coal and solid hydrocarbon resources such as tar sands and oil shale, and of
course nuclear (fig 11).

Colorado (on the western slope) and Wyoming have abundant oil shale resources, and if
the problems of their production can be solved, this region will become an important
locus of economic development just as Texas was during the peak of the petroleum
production industry. Invest in Colorado now – particularly western slope realistate!

Even these other finite hydrocarbon energy resources will be used up in the next few
hundred years. Thus will end the brief history of hydrocarbon man (fig 12)

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