According to the president and CEO of real Big Oil, Saudi Aramco, only 18% has been tapped so far:
VIENNA, Austria – The world has tapped only 18 percent of the total global supply of crude, a leading Saudi oil executive said Wednesday, challenging the notion that supplies are petering out.
Abdallah S. Jum’ah, president and CEO of the state-owned Saudi Arabian Oil Co., known better as Aramco, said the world has the potential of 4.5 trillion barrels in reserves – enough to power the globe at current levels of consumption for another 140 years.
Jum’ah challenged oil ministers and petroleum executives at an OPEC conference in Vienna to step up exploration “and leave the minimum amount of oil in the ground.â€
“The world has only consumed about 18 percent of its conventional potential,†Jum’ah said, contending that should lay to rest fears that the world is in danger of being tapped out within a few decades.
The folks at The Oil Drum, the most important site I know of devoted to the Peak Oil hypothesis, are, shall we say, skeptical:
Westexas: How do you know the Saudis are lying?
GliderGuilder: Their lips are moving?
What follows is probably as well-informed and intelligent a discussion of the issue as you’re likely to find. One of the commenters makes the vital point:
There may well be 10 trillion barrels left. But that’s not the point. It’s the cost of producing it. And not the dollar cost.
Why would the CEO of the national Saudi oil company say this? Lynne Kiesling of The Knowledge Problem reminds us that “prices are a function of expectations of future supply and demandâ€.
That doesn’t make much sense to me. If you wanted to drive prices up, you would want to invoke scarcity, not a secure supply. I think it much more likely that they are trying to encourage complacency. Fear of rapidly diminishing reserves must be one of the major factors driving research into alternative energy sources. You can imagine why Saudis would not want that to progress too quickly.
Walrus,
You may also consider the political impact on the royal family. They barely hold on to power now. What if everyone thinks they’re beginning to decline in production. As someone said “off with their heads.”
I believe they’re trying to stave off conservation measures.
The Saudi’s are notorious for keeping their own reserves a tight secret (many geologists feel they habitually overstate the numbers), so this may be a continuation. Their largest fields have been producing for some 50 years, and while they are huge, the remaining petroleum will become progressively more difficult to produce.
In any case, I find it hard to believe they can pinpoint the amount left globally (which includes undiscovered and untapped).
He’s correct on one thing: the cost of producing the petroleum is what is critical. Geologists know of far more deposits and prospects than are being drilled simply because the costs are so high. Much of this petroleum will stay in the ground until the cost of a barrel climbs above $100, which is why we will *never* run out of oil.
It won’t be enough to talk about large global reserves to stave off conservation. More oil will need to be produced. In the face of increasing demand, production will need to increase by some 2% a year (not an easy task) just to keep up.
Oil reserves must be viewed through the lens of the economic cost to extract the oil. For example, we have several hundred years of oil trapped in shale in the western US, but extracting it would cost $90+ dollars a barrel, so at current prices it’s not economical. So I think reserves are misleading. What are the world reserves that can be economically produced at $50 a barrel? I’m not sure anyone knows. What’s certain is that as the price of oil goes up, economic reality increases the economically available supply. Once the “cheap” oil is gone, new supplies can be economically produced at a higher price.