How much oil is left in the world?

In the oil industry

We can get our data from a variety of sources, from the largest government agencies to expert small oil supply monitoring specialists. The question of how much oil is left in the world has been the subject of speculation for as long as the industry exists.

Just a few years before the 2008 financial crisis, peak oil supply was a popular topic, gaining a lot of front page space. Now, more than a decade later, the demand for peak oil is worrying the industry. Meanwhile, the question of how much oil is left in the world continues to fascinate.

That oil, like coal and natural gas, is a finite resource is nothing new. It was this limited nature of fossil fuels that prompted concern about peak oil supply. However, those concerned about peak oil did not consider the continued improvement of exploration and extraction technology and the development of new methods to exploit these limited resources.

Future procurement depends on current investments

However, investing in these improvements and using new extraction methods depends on oil prices, which in turn depends on a number of factors. And while it may seem contradictory, low oil prices tend to drive further improvements in oil extraction as companies strive to increase drilling efficiency while conducting, or even lowering costs.

This is what we saw during the 2014-2016 oil price crisis. In the United States, this was not just a period of many bankruptcies as exploration and production companies with high production costs failed to survive the price pressure. It was also a time of innovation, as those who still went on combat did more with less. Many industry observers today argue that the so-called second shale revolution is largely fueled by that drive for innovation.

It is precisely these improvements in exploration and extraction that make it difficult to determine exactly how much crude oil is left in the world. In 2016, for example, the US Geological Survey estimated that up to 20 billion barrels of crude oil were undetected and technically recoverable in the Wolfcamp basin. (Part of the Permian schist game). Two years later, the USGS revised this estimate to 46.3 billion barrels. In just two years, the extraction methods used in the US shale oil industry have changed enough to make recoverable in 2018 more than double the amount of technically recoverable oil.

However, prices can also encourage technical improvements in oil exploration and extraction. They can encourage overall audit growth, which is another thing when the industry cycle reaches a low point, and we have seen this relatively recently during the 2014-2016 crisis.

Reverse replacement ratios

Each oil company keeps an eye on its own reserve replacement ratio. This is the relationship between the new oil the company discovers through exploration and the oil it produces. If the company is to survive and remain profitable over the long term, it must maintain a reserve replacement ratio of at least 100%.

In 2015, the replacement rate of the seven Big Oil majors – Exxon, Shell, BP, Chevron, Total, ConocoPhillips and Eni – fell to 75%. As a result, energy consultancy Wood Mackenzie warned in 2016 that the world could face an oil shortage of up to 4.5 million BPD by 2035. To date, the replacement of reserves is at a minimum of 20 years, according to data from Rystad Energy; oil companies are replacing just one in six existing barrels with new discoveries.

Another metric also relates to the reserve replacement ratio that has an impact on estimates of world oil reserves. This is the era of reserves: the period during which an oil company can continue to produce a fixed amount of oil from its existing reserves. In 2017, Exxon’s oil reservoir life dropped from 17 to 13 years old and Shell’s from 12 to 10 years, according to a Reuters analysis.

Now for some tricky numbers.

In its latest World Energy Statistical Review, BP estimated that the world had 1.7297 trillion barrels of crude oil left at the end of 2018. It was an increase of 1.7275 trillion barrels a year earlier and 1.4938 trillion barrels of barrels in 2008. In. 1998, the world had 1.1412 trillion barrels in the remaining reserves.

Thus, as demand has continued to grow steadily over the past 20 years, so has the production and, in contrast, global oil reserves. And yet, in that same statistical review, BP claimed that these higher reserves would only last us another 50 years – another metric oil company is using it to measure the sustainability of their business.

Called the reserves / production ratio, this simply means a company’s – or planet’s – oil reserves at the end of a given year, divided by the oil production in that year. The caveat here is that the R / P ratio only gives us the length of reserves if production continues at the same rate. In other words, the world would have enough oil for another 50 years if production remained at 82-84 million BPD, which was on average in 2018.

This is unlikely to happen. Demand for energy has grown steadily along with oil production. Although demand is currently falling behind, most forecasters expect this to change as the global population grows rapidly, resulting in an equally rapid increase in demand for energy. In particular, according to Bloomberg NEF, demand for electricity is expected to increase by 62% by 2050. While much of the additional generation capacity will come from renewable sources, oil will continue to be an important element in the energy mix worldwide, making it legal. assume that production will continue to grow for some time.

As this happens, the work of the oil companies will become more challenging as the recoverability of oil reserves will decline. Here is another aspect of oil exploration and production that affects the answer to this fascinating question: how much oil do we have left?

As in other human activities, oil extraction begins with the “easiest” parts of a field, the places where the largest amount of oil is easily pumped out of the ground. As these vulnerabilities fade over time, manufacturers have to tap harder to access reserves, which cost more to develop.

Again, the US shale history is a case in point. Thirty or forty years ago few, if any, companies paid attention to shale because there was enough conventional oil. As this started to come to an end, E&P turned its attention to shale simply because there were no other alternatives.

Exploring deep sea is another case in point. Offshore production has historically shifted from shallow water to deeper and deeper deposits as natural depletion takes off. Onshore production has moved from conventional fields to shale sand and oil and from easily accessible oil to more challenging fields.


Thus, as the level of difficulty in extracting oil increases, so do the costs. When these reach a point where a company cannot profitably extract the oil, the deposit becomes economically irrecoverable. Although technically recoverable, it is still the bigger reason to take any estimate of global oil reserves with a pinch of salt. Whatever the technically recoverable oil in the world is, there is no economic recovery.

The amount of technically recoverable oil is likely to continue to increase year on year. Oilfield service companies are continually working to make exploration and extraction more reliable and efficient. In terms of economic recoverability, this is a whole other question. It depends on the demand for oil and many believe that the demand for oil is threatened by renewable energy, a threat that will only grow. We may have enough oil to last another 50 years. We need to see if this is enough time to wean out fossil fuels before it runs out.


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