GEOL 115: The Earth’s Energy Resources

Little thought had been given to the finite nature of domestic oil supplies prior to the 1970’s. The domestic oil industry was viewed as an industry that required protection from cheap foreign imports. Thus, prior to 1971, the Texas Railroad Commission limited the production from oilfields in the State of Texas and from 1959 to 1973 there were strict limits on the amount of oil that could be imported into the US. But in the 1970’s major oil companies began to feel the arithmetic pinch between the amount of oil that they could sell in a single year and the amount of oil that they would typically discover in a year.

Two events drove this new order. One was the occasion of the US reaching peak oil production in 1971. The second was the nationalization of Mideast oil production. The Saudi government assumed full responsibility for Saudi Aramco and the Kuwaiti government nationalized the Kuwait Petroleum Corporation. Production was also nationalized in Iraq and Libya. A number of major oil companies had controlled reserve totals that were large compared to their annual production, that was no longer the case after nationalization.

Recall that giant oil fields (those will yield more than 500 million barrels) are rare beasts. In the decade of the 90’s approximately 35 giant oil fields were discovered worldwide and only 2 were discovered in the USA. A large oil company like ExxonMobil or Chevron will produce on the order of 900 million barrels of oil each year. Consider the number of fields that a company would have to discover annually to replace that production. If the average size of the discovery is 50 million barrels then the company has to discover 18 oil fields every year. That’s not easy. But most oil fields in any one province are (such as the Gulf of Mexico) are small. Large oil companies are therefore looking for large oil accumulations; only giant fields can keep them in business.

The problem is even worse when viewed from the perspective of a country. The US uses 7.5 billion barrels of oil each year; you need to find 15 giant oil fields annually to feed that beast. But if we look at the discovery date for the largest fields on the planet we find that they are all old. We haven’t been discovering supergiant fields are the rate that we need to to assure a continued supply of petroleum.

We also looked at some reserve data obtained from OPEC that seems to indicate that the reserve data you see tossed around for many OPEC countries are “unusual.” Many OPEC nations seemed to have increased their reserves dramatically in the 1980’s. These increases may be real. On the other hand, the sharp, coincidental increases in reserves for so many OPEC countries, combined with the stable reserve numbers over years of production are reason to view the values sceptically. Because those values are used to assess world petroleum supply it is likely that those estimates are not very accurate.

In this lecture we looked at the technique that Hubbert apparently used to make his estimate of ultimate US oil recovery and the years of peak production. Deffeyes has good chapters on this subject in his books and I advise you to read them (its on reserve in Love Library).

The Hubbert technique plots annual production rate (P; measured in billions of barrels per year) divided by the cumulative total production (Q; measured in billions of barrels) against cumulative total production (Q). The value P/Q starts at 1 and begins to fall; eventually reaching 0 when production ceases. Hubbert apparently realized that he could extrapolate P/Q values to zero and read the ultimate cumulative total production from the intercept of the extrapolated line with the abscissa (x-axis).

We looked at some examples in class.  Each of the OPEC examples is suggestive that much less oil will be recovered than what many nations list as “reserves.”  The value to Hubbert’s technique is that it doesn’t rely on nations to tell the truth or to be good at petroleum production; it merely looks at what they do.