Oil reserves of the world
Oil reserves of the world is a figure which is difficult to prove since there are so many factors entering into the calculations. The official definition of oil reserves is oil in place which is recoverable under existing economic conditions. To define the statement more closely, one adds the concept of the recovery factor which is the portion of the oil reserves which are recoverable given a specific set of economic conditions.
Oil reserves of the world do not officially include oil that is in the ground as not all of that oil is economically feasible to recover and process.
The Securities and Exchange Commission of the United States has a more specific definition of oil reserves of the world. Their regulations state that reserves are an estimate of the amount of petroleum sources that can be demonstrated with reasonable certainty to be recoverable under existing operating and economic condition. The key points to remember from this definition are that it's an estimate; Second that it must be demonstrated with reasonable certainty to be recoverable; and third that the recovery figure would be under conditions that currently exist.
With two estimates and a variable included in the definition, is it any wonder that oil reserves of the world is a very shaky figure?
In addition to the realization that estimate is the correct term which applies to oil reserves of the world, it's important to remember that simply describing an estimated volume of reserves of oil still does not provide an accurate picture of the reserves, since the quality of the reserves enters into the equation as well. Low quality crude oil may not produce the volume of finished petroleum product as higher quality even though the output of the well is the same.
A third factor has to do with the changing oil prices and how that impacts the existing economic and operational conditions. Proven oil in the ground which would cost an estimated $18 per barrel to recover is not going to be put into production if oil prices are at $18 per barrel. There must be an expectation of some level of profit which will vary depending upon the company and the economic times over some future period before it is profitable to open or reopen an oil field.
Changing technology also plays a part in the definition of what is feasible to recover of the oil reserves of the world. An example of this statement is the growing technology making it possible to profitably produce oil from oil sand. In the past, the technology did not exist to process the bituminous sand, but technology now is able to accomplish the task.
One other almost unrelated factor impacts the reporting of oil reserves of the world, and that is the political aspect. In order to have even a good estimate, you must assume that all political subdivisions which report oil reserves have chosen to accurately reflect the estimates they have, when describing their reserves to the world press.
Oil reserves of the world do not officially include oil that is in the ground as not all of that oil is economically feasible to recover and process.
The Securities and Exchange Commission of the United States has a more specific definition of oil reserves of the world. Their regulations state that reserves are an estimate of the amount of petroleum sources that can be demonstrated with reasonable certainty to be recoverable under existing operating and economic condition. The key points to remember from this definition are that it's an estimate; Second that it must be demonstrated with reasonable certainty to be recoverable; and third that the recovery figure would be under conditions that currently exist.
With two estimates and a variable included in the definition, is it any wonder that oil reserves of the world is a very shaky figure?
In addition to the realization that estimate is the correct term which applies to oil reserves of the world, it's important to remember that simply describing an estimated volume of reserves of oil still does not provide an accurate picture of the reserves, since the quality of the reserves enters into the equation as well. Low quality crude oil may not produce the volume of finished petroleum product as higher quality even though the output of the well is the same.
A third factor has to do with the changing oil prices and how that impacts the existing economic and operational conditions. Proven oil in the ground which would cost an estimated $18 per barrel to recover is not going to be put into production if oil prices are at $18 per barrel. There must be an expectation of some level of profit which will vary depending upon the company and the economic times over some future period before it is profitable to open or reopen an oil field.
Changing technology also plays a part in the definition of what is feasible to recover of the oil reserves of the world. An example of this statement is the growing technology making it possible to profitably produce oil from oil sand. In the past, the technology did not exist to process the bituminous sand, but technology now is able to accomplish the task.
One other almost unrelated factor impacts the reporting of oil reserves of the world, and that is the political aspect. In order to have even a good estimate, you must assume that all political subdivisions which report oil reserves have chosen to accurately reflect the estimates they have, when describing their reserves to the world press.
