Production of crude oil as a percentage of proved reserves: Recent worldwide and U.S. trends
26 March 2019
by Michael Sivak.
In this analysis, I examined the relation between crude-oil production and crude-oil reserves in the world and in the United States. The variable of interest was the amount of crude oil produced as a percentage of proved reserves of crude oil. (This variable is inversely related to the reserves-to-production ratio.) The years examined were 1987 through 2017 (in five-year increments).
The raw data for this study were proved reserves of crude oil (obtained from Oak Ridge National Laboratory), and annual crude-oil production (calculated from the information in the same source).
The results are shown in the table below.
Let’s first consider the recent changes in the two underlying variables. From 1987 to 2017, proved reserves of crude oil increased by 136% in the world, compared with an increase of 24% in the United States. Analogously, during the same period, production of crude oil increased by 43% in the world, compared with an increase of 12% in the United States.
The main findings concerning the issue of primary interest—production of crude oil as a percentage of proved reserves—were as follows. For the world, production of crude oil in 1987 represented 3.0% of proved crude-oil reserves. The corresponding percentage in 2017 was down to 1.8%, which was the minimum for the examined years. For the United States, production of crude oil in 1987 represented 10.8% of proved crude-oil reserves. The corresponding percentage in 2017 was down to 9.7%. The minimum for the examined years—8.2%—was reached in 2012.
Production of crude oil as a percentage of proved reserves of crude oil was substantially greater for the United States than for the world for each year examined. For 2017, the corresponding percentages were 9.7% and 1.8%, respectively.
Between 1987 and 2017, production of crude oil as a percentage of proved reserves of crude oil decreased for both the United States (from 10.8% to 9.7%) and the world (from 3.0% to 1.8%).
Michael Sivak is the managing director of Sivak Applied Research and the former director of Sustainable Worldwide Transportation at the University of Michigan.
If the current trend continues, crude oil may be available for 2 to 3 more centuries?
Posted by: HarveyD | 26 March 2019 at 08:23 AM
I think it will be available for a lot longer than that. As the effects of climate change increase the world will have to wake up long before the reserves are all used.
Posted by: Paroway | 26 March 2019 at 02:40 PM
2% production means 50 years.
Posted by: SJC | 26 March 2019 at 04:33 PM
The oil companies are very busy working with the current Trump administration to gain access to the parklands, and the Atlantic Sea Shelf, from Florida to New York, to explore for additional reserves using seismic methodologies, i.e., explosives.
I think we know by now, the Arab embargo and peak oil were nonsense and created events...it appears the World floats on oil...the idea leading to a clean environment is how not to have to use it.
Posted by: Lad | 26 March 2019 at 05:09 PM
Gotta start leaving that carbon in the ground. Oil company balance sheets show these reserves as assets. They are going to go to the mat against anything that impairs those assets (e.g. carbon tax, whatever). This is the fight of the 21st century.
Posted by: Nick Lyons | 26 March 2019 at 05:35 PM
Energy Return on Energy Invested (EROI) is an interesting metric that helps us understand "when is it energetically worth it to increase reserves?"
Increasing reserves is not free. Producing a marketable product from a given type of reserve requires different investments and risks, depending on what the geology and geography are, and depending on the policy and regulations.
The Bush administration and Donald Rumsfeld released the tight shale "fracking" industry from Clean Air and Clean Water Act regulations. The EROI is much lower, but without having to worry about environmental regulation, and a high price because of YES the peak and decline of conventional oil production - the fracking boom can play out.
Deep sea has certain risks. New Zealand has banned the seismic exploration in marine habitat. Bold Move. Will retraction of social licence for harming whales and dolphins start to increase risks of increasing off shore reserves? The current political climate in USA favours reckless environmental practice, but courts will still hold oil companies to account to some degree.
So - is it worth it? Might it be a better strategy to not put more money into increasing reserves and let the price rise up? The oil companies hold all the cards, why not play them and see how high the price can go?
Posted by: DrSKrumdieck | 29 March 2019 at 09:15 PM