Delta Scan: The Future of Science and Technology, 2005-2055: Abundant Oil for the 21st Century

Key Pages

Category:
Science and Technology

Domain:
Energy

Keywords:
Energy - oil, Hubbert’s Peak

Outlook:
Despite current high oil prices and concerns about suppliers beyond the 2040s, there may be enough oil to meet the world’s energy needs for the 21st century.

Summary Analysis:
In 1969, M. King Hubbert, a pre-eminent US geologist, made a series of predictions regarding oil production. Hubbert theorized that oil production would follow a bell-shaped curve. The apex of the curve, known as Hubbert's Peak, marked when a country or region would be producing its maximum output. Hubbert predicted that US oil production would peak in the early 1970s, a prediction that was reasonably accurate. Given the accuracy of this prediction, many are now concerned over Hubbert’s prediction that world oil production would peak in 2000. If true, it would mean that we will soon see the rapid decline of oil as a readily available energy resource, with dramatic consequences for the world economy.

According to the US Energy Information Administration (EIA), there are reserves containing approximately 2.9 trillion barrels of oil in the world, with 1.28 trillion barrels of that oil in reserves currently labelled as 'proven'. These estimates vary depending upon the methodologies used, but even the most conservative estimates show at least 2.0 trillion barrels. From the industry’s behaviour to date, we can surmise that as the price of oil rises, more investment will be made in oil (and synfuels) extraction, increasing the extractable reserves.

EIA also estimates current world oil consumption at around 85 million barrels per day, rising to about 119 million barrels per day in 2025 (a 1.9% annual increase). At current consumption rates, the world has nearly 40 years of proven oil reserves left and nearly 92 years of total reserves. (Proven reserves are those that can be extracted economically with existing technology at "current" prices. Total are those that technically cannot be reliably extracted or only at an uneconomic price. Note the figures are those given by international companies and exclude any nationally managed reserves that have not been traditionally involved in the world free market.) In 2025, assuming no increases in proven or total reserves, it is estimated that the world will have enough proven reserves to last until 2037 and enough total reserves until 2076. Any additional oil reserves uncovered or technological enhancements that allow for a larger percentage of oil to be extracted from existing reserves will increase these figures.

Further, these figures do not include vast reserves of methane hydrate which are excluded because we can neither effectively survey them nor technically extract them. If extraction problems are solved then reserves will probably increase by at least an order of magnitude.

Predictions that the world is running out of oil are not incorrect, but end of extractable oil is probably not imminent. Most energy experts expect oil prices to gradually recede from the price spikes seen in 2004–05. Yet, given the rapid industrialization of China and other Asian countries, the increased demand for oil may create a new floor for cheap oil (in the $30s a barrel instead of the upper $20s), and oil will likely show a gradual long-term rise in price with continued short-term volatility. While there seems to be no need to panic about running out of oil, beginning to explore alternatives also seems prudent.

Implications:

Continued predominance of oil as the world's energy source for the rest of this century, barring the development of affordable solar or cold fusion on a mass scale
Likelihood of gradually increasing oil prices over the long term, with periods of volatility
Increasing need, not yet urgent, to explore alternative energy sources

Early Indicators:

Predictions by M. King Hubbert about oil production and estimates by the US Energy Information Administration regarding oil consumption and amount available in reserves

What to Watch:

A return to oil below $35-40 a barrel signals plenty of supplies for the foreseeable future.
High oil prices sustained over several years severely retard economic growth and indicate that supply is having difficulty keeping up with growing demand.
Saudi Arabia cannot significantly increase oil production during periods of high prices, signaling a rough production ceiling of world oil supply.
Continued rapid economic growth, especially in China and other emerging Asian economies, strains global oil supply.

Parallels/Precedents:

Hubbert’s predictions of oil production in the US, showing the rapid decline of supply in what was once the world’s largest producer
Historical large spikes in oil prices followed by periods of sustained low prices as investment pours in chasing higher prices

Enablers/drivers:

Technological innovations in oil discovery and extraction that enable unearthing additional reserves and increasing production at existing sites
Continued development of synfuels, alleviating demands on pure oil reserves

Leaders:
Regions:

Saudi Arabia

Institutions:

OPEC
US Energy Information Administration
BP Global (Statistical Review of World Energy)
European Network for Energy Economics Research [link]
CEB Monitor Group Ltd., Beijing
3i Oil and Gas [link]
British Geological Survey [link]
Heriot Watt Institute of Petroleum Engineering [link]
The Association for the Study of Peak Oil and Gas [link]

Figures:

A1 Years of Estimated Oil Reserves Remaining <”Oil Reserves” sheet on “Energy Data Updated” file>

Sources:

"2005 International Energy Outlook." Energy Information Administration. [link]
"International Energy Agency" International Energy Agency [link]
"Cambridge Energy Research Associates" Cambridge Energy Research Associates [link]
Deffeyes, Kenneth. Beyond Oil – The View from Hubbert’s Peak. New York: Hill and Wang, 2005.
Bauquis, Pierre-Rene "A Reappraisal of Energy Supply and Demand in 2050." July 2002, Institute of Energy Economics, Japan [link]
"Statement on the Oil Situation." Energy Committee, The Royal Swedish Academy of Science, Oct 14 2005 [link]
"Peak Oil." WorldWatch magazine. Jan/Feb 2006 [link]
US Department of Energy Methane Hydrate Research and Development Programme [link]

At A Glance:
When:
21–50 years +

Where:
Global

How Fast:
Years

Likelihood:
High

Impact:
Medium

Controversy:
High

Related Outlooks:

About this outlook: An outlook is an internally consistent, plausible view of the future based on the best expertise available. It is not a prediction of the future. The AT-A-GLANCE ratings suggest the scope, scale, and uncertainty associated with this outlook. Each outlook is also a working document, with contributors adding comments and edits to improve the forecast over time. Please see the revision history for earlier versions.

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Category:	Science and Technology
Domain:	Energy
Keywords:	Energy - oil, Hubbert’s Peak
Outlook:	Despite current high oil prices and concerns about suppliers beyond the 2040s, there may be enough oil to meet the world’s energy needs for the 21st century.
Summary Analysis:	In 1969, M. King Hubbert, a pre-eminent US geologist, made a series of predictions regarding oil production. Hubbert theorized that oil production would follow a bell-shaped curve. The apex of the curve, known as Hubbert's Peak, marked when a country or region would be producing its maximum output. Hubbert predicted that US oil production would peak in the early 1970s, a prediction that was reasonably accurate. Given the accuracy of this prediction, many are now concerned over Hubbert’s prediction that world oil production would peak in 2000. If true, it would mean that we will soon see the rapid decline of oil as a readily available energy resource, with dramatic consequences for the world economy. According to the US Energy Information Administration (EIA), there are reserves containing approximately 2.9 trillion barrels of oil in the world, with 1.28 trillion barrels of that oil in reserves currently labelled as 'proven'. These estimates vary depending upon the methodologies used, but even the most conservative estimates show at least 2.0 trillion barrels. From the industry’s behaviour to date, we can surmise that as the price of oil rises, more investment will be made in oil (and synfuels) extraction, increasing the extractable reserves. EIA also estimates current world oil consumption at around 85 million barrels per day, rising to about 119 million barrels per day in 2025 (a 1.9% annual increase). At current consumption rates, the world has nearly 40 years of proven oil reserves left and nearly 92 years of total reserves. (Proven reserves are those that can be extracted economically with existing technology at "current" prices. Total are those that technically cannot be reliably extracted or only at an uneconomic price. Note the figures are those given by international companies and exclude any nationally managed reserves that have not been traditionally involved in the world free market.) In 2025, assuming no increases in proven or total reserves, it is estimated that the world will have enough proven reserves to last until 2037 and enough total reserves until 2076. Any additional oil reserves uncovered or technological enhancements that allow for a larger percentage of oil to be extracted from existing reserves will increase these figures. Further, these figures do not include vast reserves of methane hydrate which are excluded because we can neither effectively survey them nor technically extract them. If extraction problems are solved then reserves will probably increase by at least an order of magnitude. Predictions that the world is running out of oil are not incorrect, but end of extractable oil is probably not imminent. Most energy experts expect oil prices to gradually recede from the price spikes seen in 2004–05. Yet, given the rapid industrialization of China and other Asian countries, the increased demand for oil may create a new floor for cheap oil (in the $30s a barrel instead of the upper $20s), and oil will likely show a gradual long-term rise in price with continued short-term volatility. While there seems to be no need to panic about running out of oil, beginning to explore alternatives also seems prudent.

	Implications:	Continued predominance of oil as the world's energy source for the rest of this century, barring the development of affordable solar or cold fusion on a mass scale Likelihood of gradually increasing oil prices over the long term, with periods of volatility Increasing need, not yet urgent, to explore alternative energy sources
	Early Indicators:	Predictions by M. King Hubbert about oil production and estimates by the US Energy Information Administration regarding oil consumption and amount available in reserves
	What to Watch:	A return to oil below $35-40 a barrel signals plenty of supplies for the foreseeable future. High oil prices sustained over several years severely retard economic growth and indicate that supply is having difficulty keeping up with growing demand. Saudi Arabia cannot significantly increase oil production during periods of high prices, signaling a rough production ceiling of world oil supply. Continued rapid economic growth, especially in China and other emerging Asian economies, strains global oil supply.
	Parallels/Precedents:	Hubbert’s predictions of oil production in the US, showing the rapid decline of supply in what was once the world’s largest producer Historical large spikes in oil prices followed by periods of sustained low prices as investment pours in chasing higher prices
	Enablers/drivers:	Technological innovations in oil discovery and extraction that enable unearthing additional reserves and increasing production at existing sites Continued development of synfuels, alleviating demands on pure oil reserves
	Leaders:	Regions: Saudi Arabia Institutions: OPEC US Energy Information Administration BP Global (Statistical Review of World Energy) European Network for Energy Economics Research [link] CEB Monitor Group Ltd., Beijing 3i Oil and Gas [link] British Geological Survey [link] Heriot Watt Institute of Petroleum Engineering [link] The Association for the Study of Peak Oil and Gas [link]
	Figures:	A1 Years of Estimated Oil Reserves Remaining <”Oil Reserves” sheet on “Energy Data Updated” file>
	Sources:	"2005 International Energy Outlook." Energy Information Administration. [link] "International Energy Agency" International Energy Agency [link] "Cambridge Energy Research Associates" Cambridge Energy Research Associates [link] Deffeyes, Kenneth. Beyond Oil – The View from Hubbert’s Peak. New York: Hill and Wang, 2005. Bauquis, Pierre-Rene "A Reappraisal of Energy Supply and Demand in 2050." July 2002, Institute of Energy Economics, Japan [link] "Statement on the Oil Situation." Energy Committee, The Royal Swedish Academy of Science, Oct 14 2005 [link] "Peak Oil." WorldWatch magazine. Jan/Feb 2006 [link] US Department of Energy Methane Hydrate Research and Development Programme [link]

At A Glance:	When:	21–50 years +
	Where:	Global
	How Fast:	Years
	Likelihood:	High
	Impact:	Medium
	Controversy:	High