Oil and gas world production peaks: 13 slides

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WORKSHOP OR OIL AND GAS RESSOURCES WORKSHOP OR OIL AND GAS RESSOURCES

The depletion of oil and gas world reserves and their consequences on major energy issues

By Pierre-René Bauquis

Former head of strategy and planning of TOTAL Group.

Associated Professor IFP School

Swiss Federal Office of Energy

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1.

Oil and gas world production peaks: 13 slides

When ?

At which production levels ?

2.

Consequences for the world energy mix: 2 slides

3.

Consequences for transportation systems: 2 slides

PLAN OF PRESENTATION

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Part 1:

Oil and gas world production peaks.

- When ?

- At which production levels ?

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1919 “... The peak of U.S. production will soon be past - possibly within three years”

1936 “…it is unsafe to rest in the assurance that plenty of petroleum will be found in the future merely because it has been in the past.”

1981 “If petroleum is not there to begin with, all of the human ingenuity that can be mustered into the service of exploration cannot put it there…”

1990 “… non-OPEC production in the longer term will at best remain stagnant and is more likely to fall gradually due to resource constraints.”

1998 “Global production of conventional oil will begin to decline sooner than most people think probably within 10 years”

Source : Daniel BUTLER, U.S. EIA/DOE AEO 2001 conference

PESSIMISTS HAVE HISTORICALLY BEEN WRONG

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WhatWhat people "can seepeople "can see": ": publishedpublished information, i.e. proven information, i.e. proven reserves

reserves, , which is which is an an economical economical concept, concept, which therefore which therefore changes

changes with with changes in changes in technologytechnology andand oil prices oil prices -- These are the These are the visible part of the iceberg

visible part of the iceberg

What What 99% of people "99% of people "cannot see", i.e. the non visible part of the cannot see", i.e. the non visible part of the iceberg, i.e. the

iceberg, i.e. the already discovered resources already discovered resources in place on one in place on one hand the

hand the ultimate reserves ultimate reserves on the on the other other handhand

are not

are not publishedpublished, but , but could be could be estimated at

estimated at 3,000 3,000 GbblGbbl i.e. i.e. three times three times the proven reserves the proven reserves of 1,000 Gbblof 1,000 Gbbl

today

today ((estimated estimated 2000/3000 2000/3000 GbblGbbl) are ) are two two to to three times the three times the proven reserves proven reserves of of around around 1,000 1,000 GbblGbbl

Discovered resources Discovered resources

Ultimate reserves Ultimate reserves

RESERVES and RESSOURCES

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Observing

Observing the "visible part of the iceberg" the "visible part of the iceberg" leads leads to to conclude conclude that we

that we have have plentifulplentiful and fastand fast growing oilgrowing oil andand gas reservesgas reserves andand that there is that there is no problemno problem

Oil Oil world world reservesreserves

Gas world Gas world reservesreserves

19731973

Years Years ofof consumption consumption GTOEGTOE

20002000

8686

5252

3030

4848

140140

4040

6565

PROVEN RESERVES : AN OPTIMISTIC PICTURE

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Beetween

Beetween 1973 and 2000 1973 and 2000 there is practically no there is practically no increase increase in in ultimate conventional oil reserves estimates

ultimate conventional oil reserves estimates

Gbarrels Gbarrels

1973 1973

Ultimate

Ultimate world world oiloil

conventional reserves conventional reserves

2000

2000 - - 3000 3000 2000 2000 - - 3000 3000 2000 2000

ULTIMATE RESERVES : A PESSIMISTIC VIEW

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Source: IFP/DSEP adapted from Martin (1985) and Campbell (1992) - Updated 2000 Bern

* Cumulative production + proven reserves + possible reserves yet to be discovered

Gb

0 500 1000 1500 2000 2500 3000 3500

Pratt (1942) Duce (1946) Pouge (1946) Weeks (1948) Leverson (1949) Weeks (1949) MacNaughton (1953) Hubbert (1956) Weeks (1958) Weeks (1959) Hendricks (1965) Ryamn (1967) Shell (1968) Weeks (1968) Hubbert (1969) Moody (1970) Weeks (1971) Warman (1972) Bauquis (1972) Schweinfurth (1973) Linden (1973) Bonillas (1974) Howitt (1974) Moody (1975) WEC (1977) Nelson (1977) De Bruyne (1978) Klemme (1978) Nehring (1978) Nehring (1979) Halbouty (1979) Meyerhoff (1979) Roorda (1979) Halbouty (1979) WEC (1980) Strickland(1981) Coliti (1981) Nehring (1982) Masters (1983) Kalinin (1983) Martin (1984) Ivanhoe (1984) Masters (1987) Campbell (1991) Masters (1991) Townes (1993) Petroconsult. (1993) Masters (1994) USGS (2000)

19401940 19491949

19501950 19591959

19601960 19691969

19701970 19791979

19801980 19891989

19901990 20002000

HISTORICAL VIEWS ON ULTIMATE RESERVES

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THE IRREVERSIBLE DECLINE OF OIL THE IRREVERSIBLE DECLINE OF OIL

PRODUCTIONS IN THE USA PRODUCTIONS IN THE USA

Discoveries(*) Gbbl/year

Productions

(*) Discoveries are registered as per their initially declared sizes and their timing is « forwarded » by 33 years

Source : King Hubbert 1956 - Updated by Jean Laherrere

years

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World: oil remaining reserves from political and technical "backdated mean" sources

0 100 200 300 400 500 600 700 800 900 1000 1100 1200 1300

1950 1960 1970 1980 1990 2000 2010

year

API oil P current BP Review oil P current WO oil P current OGJ oil P current

OPEC oil P current

tech. O+C - crude prod.

tech.O+C - liq. prod.

Jean Laherrere April.2003

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World oil+condensate discovery (FSU reduced & excl.

extra-heavy oils) and production

0 10 20 30 40 50 60 70 80

1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010

year

discovery

disc smooth 5 yr production liquids production crude oil

Jean Laherrere April.2003

Gach Saran Tia Juana

Burgan

Ghawar Zakum Marun Berri

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10 4 4 5 3 5

77

6

146

32

121 206

260

139 176

67 57 89 72

172

144

10 18 27

36 45

65 91

113

128 113 118

102

0 50 100 150 200 250 300

pré- 1900

01-05 06-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 76-80 81-85 86-90 91-95 96-00 0 50 100 150 200 250 300

26

36 10 7 8

50 59

“Classical” Discoveries Deep Offshore

Kashagan Production

Source: IHS, Total (est)

Bbl (5 years period)

Oil: towards a world of mature reservoirs Oil: towards a world of mature reservoirs

Oil historical trend of discoveries and production

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2 14 4

26 12

26 87

123

214

109

71

110

62 65 48

242

36 44 32

76 62 68

51

0 50 100 150 200 250 300

pré- 1900

01-05 06-10 11-15 16-20 21-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-70 71-75 76-80 81-85 86-90 91-95 96-00 0 50 100 150 200 250 300

48 6 11

69

“Classical” Discoveries Deep Offshore

Kashagan/Shah Denisz Production

Bbep (5 years period)

107

Source: IHS, Total (est)

Gas: same trend with 20 y delay and less impact Gas: same trend with 20 y delay and less impact

Gas historical trend of discoveries and production

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Increase in proven reserves from 1973 to 2000 largely due to old discoveries reevaluations and not essentially to new discoveries

Reevaluations due both to increases in expected recovery rates, and to underestimation of accumulation volumes at early evaluation stages

A secondary factor has been the acceleration of the delineation - development process

Last but not least the emergence of non conventional reserves as part of new proven reserves (permanent blurring of frontiers beetween the two categories)

Source : P.R. BAUQUIS. Fort Lauderdale 28 NOV 2000 Source : P.R. BAUQUIS. Fort Lauderdale 28 NOV 2000

CAN WE RECONCILE LONG-TERM VIEWS

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Extra

Extra heavy crude heavy crude -- bitumens will represent the major portion of bitumens will represent the major portion of new "

new "reservesreserves""

((See See World World Energy Congress Energy Congress Houston Houston September September 1998 1998 -- PaperPaper by P.R. by P.R. BauquisBauquis))

Orinoco Orinoco

Athabasca Athabasca

2030

2030 estimatedestimated reserves reserves 1995

1995 estimatedestimated reserves

reserves Estimated

Estimated volume in place volume in place

1,200 1,200

1,700 1,700

100 100

300 300

In billion In billion of barrels of barrels

THE ROLE OF ULTRA-HEAVY OIL IN FUTURE

RESERVES GROWTH

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Part 2:

Consequences of the oil and gas peaks for the world energy mix

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Source: Revue de l'Energie, 50 ans, n° 509 Sept. 99

20002000 GtepGtep %%

20202020 GtepGtep %%

20502050

GtepGtep

OilOil Natural gas Natural gas Coal

Coal ((including including lignite)lignite)

3.73.7 2.12.1 2.22.2

4040 2222 2424

5.05.0 4.04.0 3.03.0

4040 2727 2020

3.53.5 4.54.5 4.54.5

2020 2525 2525

%%

Total

Total fossil fossil fuelsfuels 8.08.0 8686 12.012.0 8787 12.512.5 7070 Renewables

Renewables From which used From which used forfor electricity generation electricity generation

0.70.7 (0.5) (0.5)

7.57.5 11 (0.7) (0.7)

6.56.5 1.51.5 (0.9) (0.9)

88

Nuclear

Nuclear 0.60.6 6.56.5 11 6.56.5 44 2222 Total commercial

Total commercial energiesenergies 9.39.3 100.0100.0 14.014.0 100.0100.0 18.018.0 100.0100.0

AUTHOR SYNTHETIC ENERGY FUTURE VIEW

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Assumption

Assumption 1: use of 1 1: use of 1 GtC generates GtC generates an an increase of 0.277 increase of 0.277 ppm ppm COCO22 in the atmospherein the atmosphere Assumption

Assumption 2: use of 1 2: use of 1 GtC generates GtC generates an an increase increase of 0.228 of 0.228 ppm ppm COCO2₂ in the in the atmosphereatmosphere

COCO22 ppmppm

200 250 300 350 400 450 500 550

1960 1980 2000 2020 2040

Assumption Assumption 22 Assumption

Assumption 11

Mauna Loa Mauna Loa

datadata

THE RELATED GREEN-HOUSE GASES ISSUE

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Part 3:

Consequences: what energy supplies for transportation systems in the long term ?

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