Oil

Basics•one of the three fossil fuels (with coal and natural gas)•include liquid, but exclude solid forms like oil shale and tarsands… we’ll discuss these separately•originated as solar energy, transformed by photosynthesis tochemical energy•most formed 50 to 150 million years ago•heat and pressure transform plant material to fossil fuels•oil and gas are light (low density) enough that they “float”, ormigrate to the surface. They migrate through porous rocks (likesandstone) and collect when there is a trap… else they evaporateinto the atmosphere

Traps

Traps

Oil R/PReserves are proven reserves and estimated reserves

Proven reserves: that which is economicallyrecoverable and known to exist

Estimated reserves: estimates based on what wethink is there, as well as what we think we canphysically recover

About 50 to 70% of the oil remains in theground… not economically recoverable. Abouthalf of that is not recoverable even at a higherreasonable cost

Oil R/PR/P values vary with types of reserves considered… becareful!

Current global R/P is about 35 to 50 years, usingproven reserves

R/P is up to 80 years using all reserves

Both of these are based on current use rates… animprobable assumption

World oil reserves change withtime…Saudi’s

recalculate theirreserves

Focus on major oil producing countries

Country

Production

rate

Proven

reserves R/P (years)

% of proven

reserves

Saudi Arabia 3700 257500 69.6 38%

Former USSR 2900 57000 19.7 8%

United States 2500 26000 10.4 4%

Iran 1900 92000 48.4 13%

China 1200 24000 20.0 3%

Venezuela 1500 58000 38.7 8%

Mexico 1300 51000 39.2 7%

United Kingdom 1000 3800 3.8 1%

Nigeria 800 17000 21.3 2%

Iraq n/a 100000 n/a 15%

Total 16800 686300 40.9

Notes

Units are million barrels of oil per year andmillion barrels of oil

Total R/P is for these countries only

Note difference in R/P betweenindustrialized countries and developingcountries

Regional R/P’s (in years):

global 40developing countries 60industrialized countries 12North America 10

OPEC hasmost of the

reserves(75% of

total)Industrializedworld has about12% of reserves(but consumesover 50% ofoil… more later)

Nobody expects infinite oil:Hubbert’s Peak

Discovery now lags production: spending yoursavings… or, oil in its retirement years

Oil’s Future• Lifetime is about 20 years if demand continues

to increase…R/P calculator• Depends on many factors

– use by developing countries (China, India, others)– Capability for substitution… cars?– As price increases, supply increase expected– Competition form other energy sources

• Most (>50%) of all the oil ever used has beenused in the last 30 years… power ofexponential growth of use

Oil Shale and Tar Sands

• These are less liquid, more rock-boundforms of oil

• Each is about equal to oil in amount• Canada has most of the tar sands, and

is extracting these as cost of oil rises• US has most of the oil shales, still not

clear how we will extract these cleanlyand if the costs will be competitive

Oil Shale and Tar Sands

• Technology to release the oil isevolving… use steam or hot water

• Higher cost for recovery means thatthese are not economically viable now

• They may be more important as priceof oil rises… unless other forms ofenergy out-compete them