Reserve-to-production

FIGURE F-2 Annual production scenarios for the mean resource estimate showing sharp and rounded peaks, 1900-2125. Growth rate leading to either peak is 2 percent. Sharp peak occurs in 2037 followed by decline at reserve to production ratio of 10. Rounded peak occurs in 2030 followed by decline at 5 percent. U.S. volumes were added to the USGS (2000) foreign volumes estimate to obtain a world total of 3,000 billion barrels (mean value) of ultimately recoverable resources. SOURCE EIA (2000). 

One commonly used indicator of the Nation s gas supply posture is the reserve-to-production (R/P) ratio. The R/P ratio is a measure of the remaining years of proved reserves at the current level of production. Although the R/P ratio does not consider many of the physical limita-... 

A commonly used method of approximating the productive capacity of a body of reserves is to assume that a minimum reserve-to-production ratio (usually 10) is required to provide for adequate delivery rates. This rule of thumb approach does not consider the sometimes rather wide variations experienced with actual gas reservoirs. In an attempt to make an improved approximation of future long-term gas deliverability, the FPC staflF developed a method to estimate the national production capability for each year by the computerized application of a national availability curve. This curve was synthesized from FPC Form 15 deliverability data from more than 900 individual sources of supply which comprised more than 88% of the interstate and 62% of the national reserves in 1968. This method is superior to an R/P limit approach because it is derived from deliverability data which consider actual reservoir production characteristics. 

Their known reserves actually increased, which combined with their reduced production rates, caused all of their ratios of reserves to production to go up. The anomalously high values seen for Iraq and Kuwait are largely the consequence of the 1990 Gulf War and its aftermath. 

Reserves million (tonnes) Ratio of reserves to production Reserves (million tonnes) Ratio of reserves to production Reserves (million tonnes) Ratio of reserves to production Reserves (million tonnes) Ratio of reserves to production... 

Anomalously high values for the ratios of reserves to production are obtained here during the early stages of development of a new large petroleum producing area. North Sea oil (see text). 

Fuel Proven reserve Reserve to production ratio... 

The dwindling energy sources and increased dependence on foreign imports has prompted research to develop alternate sources to increase the availability of natural gas. The ratio of gas reserves to production has been continually fluctuating since World War II and in 1995 this was estimated to be 31. This means that the present gas reserves without the addition of any new sources would be exhausted in 31 years. Thus it is important to find ways to add to the natural gas resources we already have. 

While current energy consumption depends primarily on fossil fuels, the world cannot rely on them forever. We eventually will be constrained by resources. Reserve estimates and corresponding reserve-to-production (R P) ratios, defined as the number of years reserves will last at current production levels, are summarized in Table 1.1. 

For oil, the R P ratios indicate that remaining oil reserves are sufficient to last 35-78 years at current production levels. Reserve-to-production ratios are highly misleading for several reasons. First, production levels will increase to meet the projected 45% increase in oil demand projected for 2025 (EIA 2005). Reserve sizes are not fixed. Reserves are resources... 

Understanding our long-term energy needs necessitates a review of reserves and estimates of reserves by fuel type. How long these reserves may last may be considered using a simple measure of reserve size, the reserve-to-production (R P) ratio, or a more complex method, the Hubbert Peak analysis. This analysis assumes production from oil fields basically follows a bell curve, where production increases until the maximum production rate is reached when half the resource has been... 

Two methods commonly are used to assess the adequacy of existing reserves the reserve-to-production ratio and the calculation of the timing of peak production from existing fields, or Hubbert s Peak methodology. The simplest is the R P method. R P ratios for oil reserves are summarized in Table 2.3. At first glance, they suggest oil reserves will last approximately 40 years at current production rates. Of course, as world demand soars, production also will increase, lowering the R P ratio. 

Reserve-to-production ratios are highly misleading as they assume steady production, but no one expects production to remain at current levels. The DOE estimate suggests oil production will increase by over 50% from current levels by 2025. At the same time, reserve sizes are, by definition, not fixed. They will increase as prices increase, technology... 

As is often noted by critics of "peak oil" theory, reserve-to-production ratios have, with the exception of a few years, steadily increased throughout the last couple decades, as discoveries have outweighed production (Figure 2.12). Specifically, the global R P increased almost every year through approximately 1990, especially during the period from 1987 to 1990 when members of OPEC were inflating reserves to... 

Figure 2.12. World oil reserve-to-production ratio, 1980-2002. Source EIA 2005b, 2006d.)...

However, as production increases, the reserve-to-production ratio will decrease if the production is not countered by increased reserves. Campbell and Laherr re (1998) caution that this increase exists only because countries have been reporting growing reserves while failing to report resource depletion. And even a Chevron ad says, "The world consumes two barrels of oil for every barrel discovered" (Aleklett 2006). Rather than increasing, Campbell and Laherrere argue that R P actually has been decreasing because for every barrel of oil found, three are consumed. 

Figure 2.15. Global natural gas reserve-to-production ratio, 1980-2001. Sources Oil Gas Journal 2003 ElA 2005b.

This uneven distribution and consumption results in varying reserve-to-production ratios (Figure 2.20). While the United States and other developed countries such as the United Kingdom and Canada have reserves sufficient to last fewer than 10 years at current production levels, others have hundreds of years of supply. Because of Iraq s large supply and comparatively low level of production, their R P is over 1000 years. China and India, where consumption levels are increasing as they... 

Figure 2.18. Crude oil reserve-to-production ratios for selected countries. Source BP 2004.

The reserve-to-production (R/P) ratio denotes a number of years of continued use of fossil fuels when the reserves remaining at the end of any year are divided by the production in that year. From the year 2008 the world R/P amounts to 122 for eoal, 60 for gas and 42 for oil (BP 2009). Therefore, the limit of fossil fuels to serve energy carriers is one side in approaching the transfer from the fossil fuel era... 

Fuel type Consumption (billion toe per year) Reserves (billion toe) Resources in billion toe Reserves-to-production ratio in years Resources-to-production ratio in years... 

Figure 5.1.17 shows the production rate and the reserves (i.e., the amount currently technologically and economically recoverable) of crude oil in the period 1950-2009. Production has increased strongly in the last 60 years from 0.5 billion tonnes in 1965 to 4 billion tonnes in 2009, but this has (until now) not led to a decrease in the reserves-to-production ratio (about 50 years in 2009) because known reserves have increased to a similar extent. 

The ratio of reserves to production is a way of gauging natural reserves in terms of the years the proven reserves would sustain current production rates. Yet, if this measurement is taken literally, one might wonder how the petroleum industry grew and prospered during periods when there were less than 20 years of reserves. An explanation lies in the fact that the exploration and production segments of the petroleum industry seek and find oil sources to replace depleting ones. Note, for example, how the ratio jumped during the period between 1950 and 1955 as a result of the big oil reserves discovered in Middle Eastern countries. 

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