Larry Nation, AAPG’s communications director, sent me a press release about a study conducted by two University of California-Davis civil and environmental engineers, recently published in Environmental Science & Technology. Their study concluded that global oil will run out 90 years before the technology to replace gasoline and diesel fuel is ready.*
Their study, to quote the abstract, “establishes a probabilistic theoretical approach based on market expectations reflected in prices of publicly traded securities to estimate the time horizon until the appearance of new technologies related to replacement of nonrenewable resources, for example, crude oil and oil products.”
They use the market capitalization of oil and alternative companies, the dividends paid by the oil companies and oil reserve replacement rates to determine when the technology will be available to replace gasoline and diesel fuel as transportation fuels.
Their calculations indicate the time when “renewable replacement fuels can be self-sustaining, at least from a market perspective,” is 131 years in the future.
To many of us, their conclusion would seem faulty – even ridiculous. Biodiesel is already available and it could likely be commercially available within 131 years. It appears the technology for potentially commercial renewable fuels already exists.
Nonetheless, I think anyone who dares to speculate about technology development that far in the future deserves some consideration.
A simple calculation indicates the authors expect the world to run out of oil in 41 years. The world’s current rate of crude oil consumption is approximately 30 billion barrels of oil per year; therefore, they are using an estimate of approximately 1,230 billion barrels of world crude oil reserves.
This estimate is not very different from BP’s published world oil reserves of 1,333.1 billion barrels as of 2009 (Statistical Review of World Energy 2010). By BP’s analysis, we have a reserve life of 44 years at current production rates.
I applaud the authors’ desire to take a long-term and sustainable view of the world’s energy situation. However, what the authors fail to appreciate is that, based on BP’s statistics, the world has had an average estimated crude oil reserve life of 42 years every year since 1990.
During that period, approximately 540 billion barrels of crude oil have been produced. Through discoveries and reserve additions to existing fields, we have managed to maintain a crude oil reserve life of about 42 years throughout that period.
Granted, crude oil is a finite resource, but the authors do not seem to grasp the difference between oil reserves and oil resource.
If their estimate of 131 years to development of a new commercial transportation technology is applied to the replacement of the internal combustion engine, that would seem to be a little more plausible. Electric vehicles are currently available for short trips, but we still generate 70 percent of our electricity from coal and natural gas. At this point, electric vehicles do not run on a renewable energy source. The biggest hurdles to the development of a commercial transportation system based on renewable fuels are long-haul trucks, trains and airplanes.
I hope the world will have that technology in 131 years. Until that occurs, crude oil and natural gas will continue to be an integral part of our energy requirements.
*Nataliya Malyshkina and Deb Niemeier; Future Sustainability Forecasting by Exchange Markets: Basic Theory and Application; Environmental Science and Technology (American Chemical Society); Nov. 8, 2010.
David G. Rensink, AAPG President (2010-11), is a consultant out of Houston. He retired from Apache Corp in 2009.