Tuesday, November 27, 2007

Oil Discoveries by Year

Shown above is a bar chart displaying how "many" oil reserves (in billion barrels or gigabarrels) were discovered/booked on an annual basis, from 1930 until 2005. This simple graph is really what drives "Peak Oil". Namely, the amount of new oil that we discover each year "peaked" in the 1960's. Or put another way, we are not finding nearly as much oil now as we were in the 1960's. This despite major technological advances such as 3D seismic, horizontal drilling, etc. Interesting note: both 3D seismic and horizontal drilling are technologies that help us find or develop things that we couldn't find or develop otherwise - there's a message there.

Now realize that when we talk about the amount of oil discovered each year, we are talking about RESERVES. "Peak Oil" is really about the worldwide, maximum production RATE. But the maximum production RATE is reached ("Peak Oil") sometime in the future, following the peak in the discoveries. In other words, when you discover a field, it takes a years before you get it producing its first oil, then fully develop it, etc. Then at some point you have drilled all the infill and stepout wells you can in that field - and then the production begins to decline.

Note that the world currently consumes about 85 million barrels of oil per day. So, if we found 5 billion barrels in 2005, that would last an incremental ... 60 days. Now you are getting the picture. 5 billion barrels seems like a lot of oil - but not when you consume 85 million barrels per day. The recent 8 billion barrel, deepwater discovery in Brazil is wonderful, but we use that much oil in 94 days. It's that "SCALE" thing.

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