How perceptions have changed of world oil, gas resources

James W. Schmoker, Thaddeus S. Dyman
U.S. Geological Survey
Denver

The U.S. Geological Survey periodically conducts geology-based assessments of the oil and gas resources of the world in recognition of the fact that U.S. economic security is closely linked to energy resources outside the U.S. Four such petroleum assessments have been published in recent years.^1-4

A summary of these assessments (Table 1 [77,576 bytes]) indicates the magnitude of world conventional oil and gas resources, as perceived in the 1980s and 1990s by the USGS.

These four successive world petroleum assessments evidence changes in perception through time. The assessments were prepared using a consistent methodology by the same core group of geologists. Because of this continuity, differences among the four assessments can be largely attributed to an evolving understanding of world recoverable oil and gas resources rather than to procedural or philosophical changes.

In this article, some of the trends in the estimates of Table 1 are examined, with a view toward better understanding world oil and gas resources in the context of the next few decades.

The already discovered

Most of the world's foreseeable supply of oil resides in accumulations already discovered.

USGS estimates of world undiscovered conventional oil resources changed relatively little from Jan. 1, 1981, to Jan. 1, 1993 (Fig. 1 [93,732 bytes]). In contrast, estimates of world identified (discovered) oil reserves increased during this 12-year period by a total of 379 billion bbl of oil. This increase occurred despite declining exploration success, as shown in Fig. 6 in Masters4 (exploration success converts undiscovered resources to identified reserves) and removal from identified reserves through production of 254 billion bbl of oil (Table 1).

Thus, the USGS assessments indicate that the bulk of conventional oil yet to be produced in the world resides in fields that have already been discovered (Fig. 1). If the trends of Fig. 1 continue the proportion of discovered to undiscovered oil resources will increase in the future.

A migration of industry focus from new-field exploration to the more intense development of known productive areas has already begun. Worldwide, the addition to petroleum reserves through activities other than wildcat drilling has become the most important reserves trend of the 1990s.⁵

The trend of increasing estimates of identified oil reserves with each successive assessment (Fig. 1) is interpreted here to indicate that future reserve growth of discovered oil fields is being chronically underassessed. If the oil supply likely to result from reserve growth is being significantly underestimated, a near-term imbalance of oil demand over supply due to world resource exhaustion is less likely.

Gas less exploited

World gas resources are less exploited than are world oil resources.

USGS estimates of world undiscovered conventional natural gas resources increased from Jan. 1, 1985, to Jan. 1, 1993, as did estimates of world identified (discovered) natural gas reserves (Fig. 2 [86,113 bytes]). The ratio of discovered to undiscovered gas resources was slightly greater than 1.0 in the 1993 assessment (Fig. 2).

In contrast, discovered reserves of oil already exceeded undiscovered oil resources in the estimates of the 1981 assessment (Fig. 1).

The proportion of undiscovered to discovered resources is higher for gas than for oil (Figs. l and 2), implying that the overall exploitation of world natural gas resources lags that of oil, perhaps by several decades. The USGS assessments indicate that a significant fraction of the conventional natural gas still to be produced in the world will come from fields that are not yet discovered (Fig. 2).

Supply balance

Foreseeable world resources of conventional oil and gas are approximately equal.

On an energy equivalent basis, substantially more oil than gas has been produced in the world (Fig. 3 [86,272 bytes]). Does this primarily reflect the more vigorous exploitation of oil resources (one aspect of which is the flaring of natural gas), or is the world endowment of recoverable oil in conventional fields much greater than that of gas?

Three successive USGS world petroleum assessments concluded that world future resources (discovered reserves plus undiscovered resources) of conventional oil and gas are approximately equal on an energy equivalent basis (Fig. 4 [81,745 bytes]). These predictions resulted from the summation of detailed basin-scale geologic evaluations by regional experts and could not have been anticipated a priori.

In the U.S., which is heavily explored and where gas generally finds a ready market, cumulative oil production is only 1.2 times greater than cumulative gas production on an energy equivalent basis.4 The USGS domestic petroleum assessment,⁶ done in 1995 independently of USGS world assessments, predicted approximately equal future resources of conventional oil and natural gas in the U.S.

The world future resources of conventional oil and natural gas foreseen in recent USGS assessments do not differ from one another nearly so much as cumulative production data (Fig. 3) might suggest and, in fact, are estimated to be nearly equal on an energy equivalent basis.

Perceptions increasing

Perceptions of the world petroleum resource base are increasing through time.

USGS estimates of world total recoverable resources (cumulative production, identified (discovered) reserves, and undiscovered resources) for conventional oil plus natural gas increased by 910 billion bbl of oil and oil equivalent in the 8-year span from Jan. 1, 1985, to Jan. 1, 1993 (Fig. 5 [71,936 bytes]). The amount of world "ultimate" oil and gas resources is not seen by USGS assessments as a fixed, absolute quantity, but rather as a time-dependent volume that increases as perception limits recede.

Upward revisions in petroleum resource forecasts are not unique to the USGS. Estimates of total resource limits regularly increase.⁷ If world recoverable petroleum resources are envisioned as forming a continuum extending from high- to low-quality accumulations, an argument can be made that the end of this continuum is not yet in sight.

Nonetheless, oil and gas resource assessments that are firmly grounded by data serve a valuable purpose. As summarized by Masters,⁸ such assessments present a numerical hypothesis-the "where and when"-for petroleum resource conditions of the earth as perceived at a particular point in time.

Quantitative assessments facilitate recognition of the big picture, which is necessary for purposes of planning and investment, and also form the foundation for periodic adjustments to the big picture made necessary by changes in technology and scientific understanding.

References

Masters, C.D., Root, D.H., and Dietzman, W.D., Distribution and quantitative assessment of world crude oil reserves and resources, Proceedings 11th World Petroleum Congress, John Wiley & Sons, Chichester, England, Vol. 2, 1984, pp. 229-237.
Masters, C.D., Attanasi, E.D., Dietzman, W.D., Meyer, R.F., Mitchell, R.W., and Root, D.H., World resources of crude oil, natural gas, natural bitumen, and shale oil, Proceedings 12th World Petroleum CongressVol. 5, 1987, pp. 3-27.
Masters, C.D., Root, D.H., and Attanasi, E.D. World resources of crude oil and natural gas, Proceedings 13th World Petroleum Congress, John Wiley & Sons, Chichester, England, 1991, pp. 51-64.
Masters, C.D., Attanasi, E.D., and Root, D.H., World petroleum assessment and analysis, Proceedings 14th World Petroleum Congress, John Wiley & Sons, Chichester, England, Vol. 5, 1994, pp. 529-541.
Oil and gas reserves, oil output rise in 1996, OGJ, Vol. 94, No. 53, Dec. 30, 1996, pp. 37-38.
U.S. Geological Survey National Oil & Gas Resource Assessment Team, 1995 National Assessment of U.S. oil and gas resources, USGS Circular 1118, 1995, 20 p.
Adelman, M.A., and Lynch, M.C., Fixed view of resource limits creates undue pessimism, OGJ, Vol. 95, No. 14, Apr. 7, 1997, pp. 56-60.
Masters, C.D., World petroleum resources-Where, why, and how much:, Geol. Soc. Of Malaysia Bull. 33, 1993, pp. 5-19.

The Authors

Jim Schmoker is a geophysicist with the Central Region Energy Team of the U.S. Geological Survey in Denver, where he has been employed since 1974. His areas of research include petroleum resource assessment, studies of reservoir quality (in particular the evolution of porosity with burial), and the petroleum potential of organic-rich black shales. He holds BS and MS degrees in physics from the University of Minnesota and a PhD in geophysics from VPI.
Ted Dyman is a petroleum geologist with the USGS Central Region Energy Team in Denver, where he has been employed since 1976. His areas of research include geologic controls and resource potential of natural gas resources, stratigraphy, and petroleum potential of Cretaceous rocks in the Western Interior basin and quantitative applications to petroleum geology. He holds BS and MS degrees in geology from Northern Illinois University and a PhD in geology from Washington State University.