In case you've missed it, I'm Randi Martinsen, current president of AAPG.
And I am very honored to be able to introduce today's Halbouty lecturer, Dr.
Tom Ahlbrandt, Wyoming native son, and a University of Wyoming distinguished
alumn. Tom received both his BA and his PhD in geology from the University of
Wyoming. And so we're quite proud of them.
Tom's had a bit of a varied and broad career in both industry working for
large integrated companies like Exxon Mobile, Pan American, couple of
independents, some small consulting companies, in addition to he spent 22 years
at the USGS, and served as world energy project chief. And I remember him
telling me a story one time about how you worked for the CIA or worked with the
CIA, because resources and global resources are tremendous political impact.
Anyway, currently, Tom is president of Thomas and Partner Associates, a
senior vice president of exploration for Systems Petroleum, and a principal of
his own little company, Ahlbrandt Consulting, all of which are located in
Denver. So this is his home base. And I've been talking to some people lately,
and they told me that Tom is cutting back. So I'm thinking, only involved with
three companies? That's cutting back? Yeah, that's a geologist.
Anyway, he's held numerous high profile positions, serving as vice chairman
of the United Nations, ad hoc Group of Experts on the Supply of Fossil Fuels.
And this really bowls me over. 250 publications. Wow. He's received numerous
awards, including being an AAPG distinguished lecturer. And he's received
AAPG's Distinguished Service Award.
He served on the executive committee as a chair of the House of Delegates.
And these are just some of his major contributions to AAPG. There's a whole
list of other ones, both to AAPG to the profession and to the science. He's
been recognized by the Department of the Interior for his contributions. He has
been recognized by the RMAG as outstanding scientist of the year. And this is
not his first Halbouty lectureship. He was a Halbouty lecturer for GSA several
Anyway, I think it's fair to say that Tom's a globally recognized expert on
petroleum systems and oil and gas resources. But I believe probably his
proudest accomplishments professionally-- not personally, but professionally--
his discoveries in both conventional and unconventional petroleum systems in
the Rockies and around the world. He and his company recently discovered oil in
the world's oldest petroleum system, 1.4 billion years old.
And sometime in the last year or so, he came up to Wyoming and gave a talk
like that. It's just an incredible system. Anyway, it's in the Beetaloo Basin
in Australia. So let's welcome Doctor Tom Ahlbrandt, this year's AAPG Halbouty
Well, thank you very much, Randi. And thank AAPG for having me speak on this
distinguished lecture. Michel Halbouty was a passionate proponent of the
petroleum industry, and I'm proud to speak in honor of his service to the
From Petroleum Scarcity to Abundance-- Opportunities and Implications for
the US and the World is the title of my talk. And it's been a long journey,
about 48 years so far. I introduced Michel a session at AAPG, and he had 61
years at the time. And so I've got a ways to go. I'd like to thank my USGS
colleagues that much of this work we'll see. Pete McKay, Pete Stark, and IHS,
Apex Engineering. David Knapp, particularly at Energy Intelligence Group in
London helped me with the update publication that you'll see later.
My friends at OPEC, thee International Energy Agency, the International
Economic Forum, Ray Thompson at Thompson Petroleum Associates, that's been a
mentor as well. And World Energy Consortium members reformed 48 organizations
that helped us with defining the petroleum systems of the world. I'd particularly
like to-- because I no longer work at the USGS, I can thank Exxon particularly,
and Dick Bishop and Art Green. I would very much like to thank them for their
guidance and support in this whole effort, and it's much appreciated.
Well, I've been talking about this for a couple of decades now, the coming
petroleum revolution. And in this talk, I want to talk to you a little bit
about what I call the static view, some history associated with that, the shift
to the dynamic view, shifting the paradigms from rocks to petroleum. I was
involved with OPEC a little in writing a chapter for Oil Supplies in the 21st
century. And they had utilized estimates. And they were always concerned about
demand, not not supply, and I believe they got it right.
Fortunately, we've narrowed down oil prices, and there's experts on all of
these topics. Between $10 and $200 in the next couple of years. And so we don't
need to worry about-- we tried doing this price predict. It didn't work so well
at anything we did. But I do understand the view of a long-term price below
$100, because there is quite a supply of hydrocarbons in the world.
There are some open questions, and I don't have the answers to this. I tried
these exercises in various offshore basins. The resource plays-- are they
viable offshore? It's an open question to me. We'll think about that a little
bit. All conventional petroleum systems-- and we're going to talk about what we
call total petroleum systems, which included the unconventional, the resource
aspect of the petroleum system.
With conventional petroleum systems, there's always associated the basin
center gas or basin center oil accumulation. There's a shortage of these
professionals. This downturn has not helped. It requires new skills, training,
and technology. And there are people predicting a new oil crisis this year and
next year, in spite of evidence to the contrary.
So the coming oil crisis. The peak of production has been predicted for a
long time. Dave White, chief geologist at USGS, said-- and this is reflected
interest in World War I, and the use of hydrocarbons, and the perceived
shortages that would occur there-- the peak in production has been suggested in
'89, 2000, '97.
At any rate, very dire consequences. I was at a World Energy Forum meeting.
1997, when we were just starting this exercise. And told by the year 2000,
everyone in the audience was going to be dead because civilization was going to
collapse. There would be no one around to see this. I won't name the individual
who said that. And fortunately, some of us made it.
So anyway, the oil crisis mentality, one of the proponents say we return to
the caves, the Olduvai theory. And there's people this year predicting a crisis
this year. When you study petroleum around the world and you put a number on a
resource estimate in some country, or state, or entity, you get the attention
of a lot of people.
And so I used to think I was just studying oil and gas. You study a lot more
than that. You study the organization of societies, religious beliefs. And
there's a whole group of people who I categorize as Catastrophists. And they
believe that the end is near. And some groups even extend this to the
Rapturists' approach, where that coming is a good thing, and that those that
survive will be enlightened and save mankind after this. Even the Methodists
have an energy plan. And I was involved in a conference with energy and ethics,
and learned quite a few things there. And actually, their energy plan wasn't
that bad, even though I'm not a Methodist.
So it affects many things. So this is the history of civilization as posted
on oilcrisis.com that, oh, for a long time, we lived in caves. We had spears
and clubs. Hydrocarbons caused an Industrial Revolution. It peaked starting in
the late '20s, early '30s. And because of the declining availability of
hydrocarbons, by the year 2025, 2/3 of the population of the Earth dies, and
catastrophes throughout the world. And then we go into the post-industrial era,
but we did get bows in the meantime. So that's one view of what's coming.
I characterize this as a static view. It's rock-focused and static. I was
trained this way. It's focused on plays, and technology was focused on
reservoirs. Hydrocarbon composition was viewed as relatively static, and
predicting the type of hydrocarbons often led to some surprises. Reservoirs
were deemed to be mostly on structures, and off structures were viewed as less
favorable, and often career-shortening if you proposed such things.
Unconventional resources were viewed as generally uneconomic, and far less
significant than conventional resources. Source rocks were interesting. I had a
president of a company I worked for said, I don't care where oil came from. I
just want to know where it went. And the inescapable conclusion was that we are
near the end of the hydrocarbon era.
And I've met all these people on stages, various parts of the world. And
they have a theme that we're running out of hydrocarbons, oil, gas. Hubbert's
Peak, Out of Gas, Farewell Fossil Fuels. There are many. Where did this all
come from? Pete Rose is sitting in the audience here. And Pete characterized M.
King Hubbert is in the same organizational unit that he supervised. And I was
sort of in that unit, too, but didn't really work with M. King Hubbert. But he
was at the USGS after he worked at the-- chief geologist of Shell.
And so Pete McKay put together a nice overview of this. The Rise and Fall of
the Hubbert Curve, Its Origins and Current Perceptions. And it's a symmetrical
Gaussian curve. The production rises. Production falls. It's fairly
What most people don't know is that the organization of society was of
interest to M. King Hubbert. And he was the number two individual in a
technocracy movement that was going to form a technate. I'll show you the
distribution of the technate, which was broader than just the United States,
forming a self-sufficient North American state. And was related to energy.
And some of his ideas I kind of liked. He was going to abolish the political
system. He did not enjoy the political system at the time. This is focused
around the time of the Depression. And you'll see the influence of that.
The state would be run by scientists and engineers. I'm OK with that one.
Abolish money and an Institute of System Energy Unit Certificates would be put
in its place. Unemployment would be abolished. And liberal arts education would
go away. My wife is not that thrilled with that.
Statistical trends could then be used to scientifically anticipate the
future needs of society. And so here is M. King Hubbert, and he associated
himself with a colorful gentleman who was the director of technocracy, Howard
Now, Howard Scott had a colorful career and had some problems with the
Tennessee Valley Authority that he was involved with, and created problems
later on, as you're going to see.
But here is Howard Scott and M. King Hubbert at a technocracy meeting. I
love this. This is the technate shown that includes Greenland, Canada, all of
North America, Mexico, Venezuela, the Caribbean islands were going to be
governed in this technocracy movement.
He and Hubbert and Scott in 1934 published this technocracy study guide. And
I like his view of political interference. "Intimately linked with the
activities of the legal profession, with business enterprise is our political
government, the general incompetence of which, from the local wards and
precincts to the national government is a matter of such commonplace knowledge
as to require little comment here." He was not happy with the political
arrangements of that time.
He did find some use in the technical bureaus, such as the Geological
Survey, Department of Agriculture, and a couple of others. But this was the
technocracy guide. And it's interesting reading if you ever want to read it.
They had meetings. This is in the Hollywood Bowl in California. Their symbol
sort of reminds me of the World Petroleum Congress, but it was the symbol for
the technocracy movement.
And here we see, this is M. King Hubbert right here, Howard Scott in the
center. He was the Associate Director of the technocracy movement.
Well, the Howard Scott legacy proved to be a problem. And technocracy got
associated with Columbia University, and then it was subsequently kicked out
because of this controversy here in 1933. But during the course of these early
efforts, much of the supply functions that we see today in all the commodities
came originally from a man hours and distribution document that M. King Hubbert
published, and you'll see in this technocracy movement. And his view at this
time, and appreciating that this is in the time of the Depression, is that the
peak of production, man hours, had peaked in the late '20s, and was declining
in the '30s. And this symmetrical distribution became the focus of many other
views of resources and commodities.
This is 1936. When you go back and look at what he actually talked about--
there's a certain irony here-- he talked about four types of distributions of
various commodities and entities. And he concluded that the number four curve,
the normal Guassian curve, applied to mineral and economic, oil and gas
commodities. And he applied this Gaussian curve to energy demand.
Now, he also predicted the peak of automobile production, railroad tonnage.
All of these were vastly exceeded by these early estimates. But they were all
this symmetrical Gaussian distribution.
And in '38, he published his first estimates of when peak oil would begin.
He said that the easy oil has been found, that the peak of production will
occur and decline, and this probably can't be postponed any later than 1950.
Well, he published about seven estimates of this peaking in the United
States. Ultimately he got it correct for US oil supply in the middle '70s, and
gas originally peaked there.
You look in his peaks, and where we are in US in the lower 48 for the US for
oil and gas, you see we're way off these curves. They didn't follow this
symmetrical model at all. And we've seen this curve. US oil and gas production.
We're nearing the peak, again, of oil production, and surpassed that early '70s
peak in gas production.
Now, to say that catastrophe is upon us has affected many parts of our
civilization. I have survived beyond 2000, but it has clearly been detrimental
to rock music quality, the peak of production of oil in the late '60s, early
'70s. And you can see the terrible impact it's had on rock music quality
published by Rolling Stone in this exercise.
So it affects many things. There are graphs like this for movie quality and
oil production. It affects many, many things.
Hubbert then went on to make predictions of world oil supply. In 1956 he
said 1.2 trillion barrels of oil. And by 1969, he realized he had a problem.
The symmetrical distribution, he now had a range, 1.3 to 2.1 trillion barrels
And he has many disciples. It's an easy thing to follow. This is Colin
Campbell 1989 peak, and then a very symmetrical decline after that. He
rethought this in 2002 and made it a double sort of peak estimate, but still
the Hubbert curve. And Dr. Al-Husseini in Arabian formerly with Aramco, he
talked about this. And he made his own analysis. And we'll see this in a
But by 1969 M. King Herbert recognized that technology, particularly
secondary recoveries and other types of recoveries were changing his perception
of the simple symmetrical unimodal model. It was presented in workshops in AAPG
in 1969. And it has been almost universally ignored.
He talked about a multi cycle curve. And many of the proponents of this
unimodal concept have obviously not seen this. But he recognized technology was
having an effect.
This is the Hubbert curve, which actually kind of works for small fields,
uneconomic fields, where it's a limited supply. But if you apply additional
investments through time and through reserve growth, and this is my idea of the
plateau concept. And actually he had this concept a long time ago. He just
hadn't applied it. So it extends the higher level of production with additional
investment and the concept of reserve growth, and then eventually depletion.
So we transition from the static view to the dynamic or petroleum system
view. And in this view fluids are unstable. They're dynamic. We're focused on
fluids, not on rocks. Basins are complex, non-linear, dynamic systems that
maintain equilibrium, but are thrown in and out of thermodynamic and pressure
equilibrium, which affects the resulting resources. Petroleum is constantly in
a state of flux and responding to burial uplift and changing pressure, volume,
Source rocks are the critical element and are cyclic. They can be rejuvenated.
And maybe the reservoir is self-contained. In Libya, for example, there's four
cycles of hydrocarbon generation from the same source rock that we've seen.
Unconventional and conventional petroleum are linked. And we all now are
focused in the kitchen, in thermal maturity, often off structures. It's related
to this petroleum system view.
And the petroleum systems themselves have life cycles, young, middle aged,
and old, which link them. And a lot of hydrocarbon has been lost. The fate of
petroleum is to escape to the atmosphere, and which it has done.
So this was initially done in the USGS 2000 study, DDS 60. It was about a
100 person year effort. It was released as a four CD-ROM set, DDS 60. A fella
came to me one time. He said he wanted to read it before a talk. Well, it's
32,000 pages. He went to Kinko's and said, well, that's about 11 feet of paper.
I don't think we can get it done by tonight. So it's a big volume.
In addition to that, we publish digital geologic maps of the world. But not everybody
used them for petroleum. They were used in many interesting ways, I came to
Now, Dick Bishop strongly recommended this. And AAPG supported that through
the core committee, that don't do just the petroleum systems. Do the digital
supporting maps of the world.
We identified 1,000 provinces. 437 provinces had some potential for
petroleum. We assessed 128 provinces that had over 90% of the known petroleum
volume at the time, and emerging provinces that we studied.
We boiled this down to a couple hundred pages in the AAPG memoir 86, Global
Resource Estimates From Total Petroleum Systems. And the provinces we studied
are shown in red.
And here in southern Iraq and Iran we show migration pathways coming out of
an upper Jurassic source rock. Oil's migrating into rather significant fields.
But underneath it all is a base and center accumulation that resides under much
of the Mesopotamian basin.
So the World Petroleum Assessment we added in the North American assessments
that came from the USGS. The darker the green, the higher the color. You can
see the former Soviet Union was the number one in terms of total volumes of oil
and gas. And here it was region one. So you're looking at West Siberian Basin
and places like that. The Middle East, of course, is very large, the southern
Atlantic margins. In a distribution, just look at the concentrations of the oil
endowment. And there are four components of the oil endowment that we'll talk
about subsequently here.
And then we looked at the various components, how much oil had been
produced. 710 billion barrels of oil. 891 reserves at the time. We did a world
assessment of how much reserve growth there was. 688 billion barrels was our
estimate, and 732 billion barrels of undiscovered, adding up to about a
resource endowment for oil about 3 trillion barrels. 3/4 of it remaining. About
1/4 of it gone.
When you look at gas, when we looked at natural gas throughout the world,
the endowment looks different. The focus here is on the undiscovered component
of it. But you see the former Soviet Union. Big gas reserves. Big gas reserves
in the Middle East, and distributed differently than the oil, because it's
different source rock characteristics.
Far less utilized in the same four endowment components, 292 in terms of
billion barrels of oil equivalent. Half of that was used in the United States.
And the endowment added up to only about 2 and 1/2 trillion barrels of oil
equivalent, half a trillion barrels less than the oil, which surprised us. 88%
of that gas resource was remaining. And 66% of it had been discovered. Far less
Well, in our assessment we studied migration modeling. Here's some 3D
modeling in the Mesopotamian basin using hydro pyrolysis kinetics, Mike Lewan's
work, which I find now intriguing, more than I did at the earlier times. And
you see a base and center gas accumulation, the bottom of the basin, a mature
oil zone, and then immature zones, and then migration pathways to significant
And so we've attempted to define these total petroleum systems throughout
the world. And I emphasize the word total. This is the one I worked on in
Libya. Sirte Basin. And we'd identified the geochemistry of the oils. And the
shaded area is the pod of active source rock. And we had subdivisions of the
petroleum systems into assessment units. And there's a hypothetical one, which
is a resource play. We did not assess unconventional at the time.
Some of our insights that we had about the world's petroleum, petroleum is
trapped in many ways. Structures less than half. Type II source rocks were
dominant. Mesozoic source rocks are the most important volumetrically. Cenozoic
petroleum systems are volumetrically dominant. And old systems have lost a lot
A lot of the climate modelers don't always take this into account, how much
petroleum has escaped to the atmosphere through time, and continues to occur.
Major petroleum systems are cyclic and concentrated at era boundaries.
Continental reservoirs are dominant at the time of this assessment. And classic
dominant reservoirs were viewed then to dominate future discoveries.
Vertical migration was by far the dominant type of migration. Although salts
are very effective seals, most of the seals in these petroleum systems are
shale. And, again, the linkage between conventional and unconventional
So this is just a plot in terms of volume of known undiscovered oil and gas.
And it's volumes in billion barrels on the vertical axis. This was a surprise
to us. Type one, type three kerogens and mixtures of them were far less
volumetrically important than type two kerogens of a variety of kerogens, both
for the discovered and the undiscovered.
When we looked at the time, the volumes of hydrocarbons generated by age of
the source rock, we see that the upper Jurassic through early Cenozoic is by
far the dominant period of hydrocarbon generation. And a lot has apparently
been lost from much earlier petroleum systems.
If you look at the distribution of petroleum by age of peak maturation,
young petroleum systems by far are dominant, as you can see this time spread of
the here 147 petroleum systems that were studied and updated.
We learned that offshore had about half the undiscovered conventional
potential at that time for both oil and for natural gas. We saw a shifting that
was going on from OPEC to OECD and other regions. And that has occurred. And
the Arctic at that time was viewed to be about a quarter of the undiscovered
resource potential. That's been reassessed, and viewed about in the same
volumes, but more gas prone than was previously viewed.
Well, we studied a phenomena for the first time in the USGS studies reserve
growth. And this was very controversial. We used a US analog. I think of
reserve growth now as badly behaving data. And there's a whole story of this. A
lot of significant reserve growth that was observed in the fields in
California, in the Permian Basin, and others that lowered the correlation
coefficient of data in projecting what the size of these fields would be. But
pay attention to that data. It was telling an important story.
The changes in reserve estimates, there's a number of factors that affect
this, the delineation of new stratigraphic horizons, increases in recovery
efficiency, technological and political regulatory changes, such that fields
grow bigger than they originally were. Tim Claton, a number of people did this
Well, it's a big deal. Reserve growth has accounted for about 80% of all
reserve additions in the last 15 years. There's publications that support this.
Oil about four times larger for significant accumulations in gas, nine times
So it was the first time we assessed it for the world. We only did it for
the world in total. And we later reallocated it.
We had some contrarian views within the group that said that world reserve
growth didn't occur, particularly in the former communist nations. And so a
study was done the West Siberian basin.
And it turned out in the protocols of their drilling activity they did that
it was 13 times greater than the original field estimates. And then we went
back and looked at the world growth subsequent to the assessment. And we'll see
But at the time of the assessment, and using 1196 data, reserve growth was
viewed about comparable, a little less, but comparable for oil, gas, and
natural gas liquids to the undiscovered. And you'll see that.
So now I'm going to calibrate you with what's happened since. 18 years have
gone by. At the time of the assessment we had 128 provinces. We knew 437 had
the possibility of oil. So there's more potential than that. That had grown to
2012, 13 to 174 provinces.
We'll look at all four of those endowment components, reserves, remaining
reserves, undiscovered, and reserve growth through time increments of 2003,
2005, 2008, '10, '12, and current.
Well, one of the first exercises we did was allocate reserve growth to the
regions. And you see in the orange bars here beneath the green bars that the
reserve growth component was slightly less than the undiscovered component in
all the regions of the US, cause it was an allocation. And we went and looked
at it, Tim Claton, Ron Sharp and others. And it's wise to preserve a continuous
record of fields throughout the world. And we accessed them. And we found that
new field discoveries were far smaller than reserve growth at discovered fields
by almost an order of magnitude in all the regions in the world.
And so this is by 2005. And the data is about through 2004 at this time,
which is eight years subsequent to the data of the assessment. Reserve growth
was adding most of the resources for oil. And for natural gas, the allocations
here, the orange is the allocated reserve growth. And the undiscovered was the
green above it. And roughly comparable, when you looked at what actually
happened with new field discoveries and reserve growth, an order of magnitude
more for the reserve growth for natural gas as well.
So what happens in the evolution through time, now the USGS assessment in
2000 we had about 3 trillion barrels of oil estimated for the endowment, 2 and
1/2 trillion barrels of gas. And in estimates subsequent in the early part of
the last decade of the last century, or 2000 to 2005 time frame, rather were
increasing. And so our views were viewed as relatively modest at that time.
I viewed 2 million or less as pessimists. 2 to 4 trillion barrels,
moderates. And above 4 trillion, really optimists.
And you see some very high numbers here. You see these estimates are the
Russians work for oil that up to 11 trillion at this time were viewed way high
by any other assessments. And it's interesting what's going to happen here.
But we see cycles in resource estimates. You see periods of optimism
increasing, and then another period of optimism, and then a period of
pessimism. And then a period of optimism going in to this century.
Well, I borrowed this from Pete and Bob Fryklund did a nice summary of this.
And I'm borrowing some of their data. So what happened in terms of new field
And there's a lot of discoveries that have been occurring in this time
framework that have been annotated. And 140 billion barrels of oil during that
period have been discovered, but not yet producing fully. And so there's a
significant new field discovery, but not all of it is on stream during that
Well, this data and these discoveries, which were more optimistic than
originally anticipated, many of the authors that were at the 2 trillion range
mark had data prior to 1990 that they were extrapolating. And Dr. Husseini, he
got that kind of result, 2 trillion barrels of what he called the producing
But if you take the new field discoveries that were occurring in 2000, or in
that subsequent period, he came out with about 2.9 trillion using the Hubbert
analysis, which is not far off from the mean estimate the USGS had given.
He himself, though, predicted the peak of production to occur next year
using this world view. So we step forward. This is energy intelligence view.
Global oil changes. Onshore, offshore, deepwater, Arctic, heavy, and shale oil,
enhanced oil recovery are all increasing. And they're increasing in all the
regions of the world by their analysis.
If you look at BP's view in 10 year increments of oil supply, 1992, 2002,
2012, it just keeps increasing, from a trillion. We're up to 1.7 trillion
barrels of oil, in spite of producing 390 billion barrels of oil in the period
from the 2000 assessment to this time period.
So we've produced over a trillion barrels of oil. And our reserves have gone
up. It's such that we have about 53 years of oil reserves currently in this
And if you look at global gas reserves, they also have increased in those
time frameworks. And this is measured in trillion cubic feet. 56 years of
production at current reserves level. We're not running out of oil and gas.
And we know this story from the US. We've increased and predicted increases
of crude oil and liquids in the United States. And that's projected to increase
as well. Downturn now. But it's projected to increase.
Well, one of my colleagues that was critical of this study, a friend-- won't
name him-- he thought we had done a pioneering piece of work that probably
would not be replicated with the intensity of effort, and completely disagreed
with the conclusion, that we were not running out of oil and gas. He felt we
So he sent me this after a long discussion about this. He put this on the
cover of his letter. And he said, "Don't worry. Technology will save
you," as a humorous view of what technology would do. Cause he didn't
think it would save us. And it did.
New technology brought a lot of change in drilling completion procedures.
Petroleum system models have shifted the vocabulary and concepts. Reservoir
scales are now nanodarcies, millodarcies. I have friends working in the
picodarcie range, which is 1 times 10 to the minus 12 millodarcies that are
Now the discussion's about, you see the talks here. TOC's, brittleness,
Poisson's ratios, Young's Modulus. It's much more lab focused. It's hard to get
data out of labs, and pressure regimes and their identification. And it
requires a lot of new training.
This is the 55 summary from an AAPG volume. The gas resource plays in red.
The green are oil. And the mixed are in yellow. There's a lot of activity. And
the downturn is causing focusing and cost containment in these. But very
viable. It's been a tremendous asset for the United States and going the world.
So about 22 proven oil, 17 gas, and 16 unproven are in evaluation. Well, all
of this, and I was involved with the international Economic Forum a couple of
times, that are very concerning to OPEC and other parts of the world. About US,
IEA in 2012 said by 2017, due to these resource plays, the US could be
self-sufficient in energy, which it was a contrarian thing, didn't think that
could happen that quickly. It was interesting to be on that side of the
But it is very significant. And, as we all know, we're now the second
largest hydrocarbon producer, only behind Saudi Arabia in oil. And in gas we're
now the most significant producers.
The example of three of these plays, the Bakken, the Eagleford, and Barnett
now produce as much oil as the offshore Gulf of Mexico. And the Bakken itself
has moved North Dakota to the second largest oil producing state. And globally
from a 98th oil production ranking to 13th in five years.
The Niobrara here in the DJ Basin is a similar 40 year growth study. So my
friends at Apex provided this. They were active in the Bakken. And just to show
what's happening with technology improvements in 2005, '07 range, 250 barrels a
day in horizontal was a pretty good well.
Went to 5 to 750, 1,500 to 3,000. By 2010 it had gone to 4,000 and 5,000.
It's even higher now. It's just been tremendous. And its impact has been felt
It isn't new. Wattenberg Field, which is just north of us here in the Denver
Basin, is an old resource accumulation. And it has been developed for many
years. And you can see all the pay zones through the Sussex, Shannon, Niobrara,
Codell, D, J Sands, and source rocks interspersed with them as well.
And it isn't new. For 40 years the Wattenberg has been adding new pay zones,
refracts. It continues to go up. And we see this particular site, 2006 20 acre
density, the latest thinking in the sweet spots in the Niobrara and in Wattenberg
in general, not just in the Niobrara, is 40 wells per section. 40 wells, 4,000
foot horizontals. People are doing this system. It's just incredible the amount
of intensity that's going on in some of these plays. And they're not new.
So if we take that into a global perspective, there are about 2,400
thermally mature source rocks in the world's basins that we know of now. About
200 of these are type II kerogens which are oil prone to be developed.
If you look and you compare the United States petroleum systems with the
petroleum systems elsewhere in the world, only three of the top 20 provinces
occur in the United States. The largest ranking is ninth.
In other words, the best source rocks are not necessarily in the United
States, and yet to be developed. I've been involved overseas with
unconventional resource plays there. They haven't always been focused on the
best source rocks. For example, Poland, and political problems, like in the
Paris Basin. I was involved in the Peru Basin, South Africa moratoria there on
fracking. It's slowed down the development of these. And the technology has
largely had to come from people who have experienced this, largely from the
It doesn't always have to be over pressured. Under pressured oil plays, like
the Domanik, Devonian Domanik in Russian and the Volga urals have been
producing for a long time. And it takes access to pretty sophisticated
databases to figure out that it's not producing from the reefs, that it's
producing from the fractured shales where the reefs should be, above them.
And under pressured gas plays, for example, in the Ordovician-Silurian in
Jordan, have been producing for many years. So if you look at active resource
plays in the world I've been involved, several continents here. And in here.
And some in the Middle East as well. The resource plays, these were not
assessed. They were identified in the world assessment. But they were not
assessed, cause there just wasn't the database to support it. But they have
Here is an example from the Domanik in the Devonian identified in the play.
And they were making 100 to 200 barrel a day wells for a long time in the Volga
ural provinces and several other provinces in that part of the world.
If you look at unconventional gas resource plays, this is one view of it in
brown. They dwarf the conventional resources. And an enormous amount of
unconventional shale, coal bed methane, and other resources dwarf the
conventional supply. And you can see a lot of that is overseas.
So we updated. I worked with the Energy Intelligence Group in London. And we
updated the world assessment through this time. Big differences. There were 174
provinces instead of 128.
During that period the petroleum endowment went up 33%. Reserves were up
55%, in spite of 16 years of production, 390 billion barrels of oil, 100
billion barrels oil equivalent of natural gas.
Reserve growth was clearly underestimated in that effort. It's an order of
magnitude more than Newfield discoveries. And it occurs in many regimes, in
many environments, not all of them capitalistic. West Siberian being an
And so we have been looking probably at about 25% of the world's endowment.
75% of it probably is available with bringing this technology to the rest of
the world. The Arctic is now viewed as more gas prone than it was in the
assessment. And the Middle East resources were significantly reduced, partly
because of the turmoil in the Middle East. But it affected the undiscovered oil
A factor that's very important, in my opinion, are the assets for oil is
heavy oil and bitumens can maybe nearly double the available world oil supply.
So this is an update. This was put in the recent Tethy's volume, the memoir
that just came out last year with AAPG.
And what I would show, these areas were added from 2000 to subsequent 2011,
'12 framework. And huge gas discoveries in the Eastern Mediterranean, Nile
delta, Levantine, or Levant Basin, called by various names.
So they have changed the distributions. Just an example of what was added in
this new edition. So we now look through 2012 at resource estimates throughout
the world. And we see they've continued to increase.
Here's where the USGS numbers fell in that 2000 time framework. And all
assessments are now significantly higher on this trillion barrel scale.
So if you look at the pessimists, zero to two, in my view. Two to four are
the moderates. And the optimists higher. We have increasing trends. This is
trying to fit a line through this is an entertaining exercise. But increasing
oil estimates and gas estimates through time.
So in the world assessment in 2000, we had about 5.9 trillion barrels of oil
equivalent, three oil, 2 and 1/2 gas, and about a third NGL.
This updated effort that we worked on, we now are about 8 trillion barrels
of oil equivalent. In our view, about 4.4 trillion oil, 3.1 trillion barrels of
oil equivalent of natural gas, and NGL, a little over a third. So it's a very
And if you look at this new view of where this potential produced and
potential oil and gas, the darker color in the center of this, and the
potential in a lighter shade around it, you can see the former Soviet Union,
North America, South Atlantic, the Middle East dominate the liquid supply. And
the bigger the bubble, the big bubbles are 100 billion barrels and more.
If you allocate them to countries, you can see that the potential for the
future, Venezuela, United States, Russia, Saudi, Iraq. And the potential in the
production is colored in the deeper green underneath all of these. The vertical
scale is $560 billion barrels on the top of that axis. A very large remaining
potential allocated to the countries of the world. I can't go through all of
that in this talk.
Natural gas, when we looked at natural gas, a different distribution, more
widely distributed. Again, Russia parts of the former Soviet Union, very large.
North America, of course, very large, and very successful.
Middle East now, that includes these potential new discoveries, and, of
course, the huge discoveries that have been made in fields that have grown
together, and a large potential in the Middle East.
So when you look at a country distribution of that global gas potential,
huge volumes in the US and Russia, particularly. Saudi, the Caspian, UAE, and
all the countries of reasonable occurrences of hydrocarbons, both produced and
their potential are shown on this graph. I can't go through at all, but the big
ones you can see.
Now, this is not often discussed in this scenario of global oil supply. But
if you look at heavy oil by regions, there is estimated 3.2 to 15 trillion
barrels of oil in place, and about a trillion barrels of it recoverable. And a
lot of that is located in North and South America, and in the Middle East.
These are API gravities, 10 to 20 degrees. Viscosities greater than 10
centipoise, which is about like maple syrup.
I know in the Middle East there are a number of oil horizons that the oil
gravities, if they were below 20, were not even counted as a reserve in places
I'm familiar with.
If you look at natural bitumens, 5.5 trillion barrels of oil in place. 1
trillion barrels may be recoverable. API gravity is less than 10. Viscosity
greater than 1,000 centipoise. It's like molasses. And North and South America
really dominate this potential in our view.
So there's been other calibrations that have gone on. This is a view that
Shell had put out. They had 1600 billion barrels of yet to find oil resources
distributed around the world, and almost three times as large as what the USGS
had estimated in the 2000 assessment.
View is that global oil and gas production in the next decade will shift to
difficult reserves, to the unconventionals, to the Western hemisphere, onshore,
and to those significant conventional resources offshore.
So you can see a distribution of unconventionals significantly adding to this.
But Western Hemisphere is looking highly favorable.
There's other views of this. Exxon Mobil's view, they see declining
conventional, and additions of deepwater and other tight oil, and other
International Energy Agency recently summarized that the liquids, we were at
about 4.4 trillion barrels. They're at 5 and 1/2 trillion. And so they're more
optimistic even than we were.
So there have been a lot of studies, a lot of papers about this. The
Economist recently did a special report in energy and technology. And all of
this data I'm showing you and the production that's associated with this
revolution has dealt a final blow to the notion of peak oil. There's no
shortage of hydrocarbons in the Earth's crust and no sign that mankind's about
to reach a peak technology. And that even though there's turmoil, there is
plenty of opportunity.
So in summary, I would say this. And you don't hear this often. Praise for
petroleum. Petroleum is the most valuable commodity traded on the Earth for
monetary exchange, ranging from estimates of $500 to $750 trillion worth of
assets. It's an enormous prize. It affects all phases of civilization.
I do not think we're nearing the end of this revolution. I think we're at
the end of the beginning, not the beginning of the end. We're not running out
of oil and gas or natural gas. It's the most valuable commodity in terms of
exchange in the support of civilizations.
It enhances society. Prosperity is associated with energy use. It promotes
prosperity, health, fertilizers. In many ways, it's a very valuable resource.
And we don't seem to get a lot of credit for it, unless there's an accident or
some problem. But it's truly life changing for countries and governments.
For 150 years we focused on static petroleum resources, which represented
maybe 10% to 25%, depending on who you believe of the petroleum endowment of
the world. The unconventional technology is coming to the global industry. It's
starting in that process. It's a long ways to go. There's a lot of upside to
it, because there's some really excellent petroleum systems it can be applied
Reserve growth globally represents an enormous opportunity. The US model for
reserve growth of the world probably underestimated the real reserve growth
possibilities for the world.
It isn't that new. My colleagues about reserve growth point out in
California that Monterrey has been known about for some time. 80 to 100 year
old, very old fields growing for a very long time. And many other places have
had this experience, the Permian Basin and other places too.
A lot of oil has been found but not developed. World oil and gas reserves
are at all time highs. US production is rising and moving towards
self-sufficiency. And there are concerns now of oversupply, as we are well aware
in this downturn, because prices have responded.
I think it's not all positive. I think concerns about demand, price
maintenance, and qualified professionals are primary concerns. The revolutions
are here, but these down cycles create a long term shortage of revolutionaries.
It reminds me a lot of 30 years ago. That wasn't so much fun then. And it's
not so much fun if you're trying to survive, and a young geoscientist today.
But I am optimistic about the future and proud to be part of it. Thank you very
Yeah. If there are any questions, I'd be glad to try to answer them.
Tom, what's your prediction for the price of oil for the next two years?
I get to sit with some interesting people. And for a long time, $75 oil has
been a target for Middle Eastern countries. And OPEC always felt that was a
sustainable price range. I understand, they got a lot of oil to sell, and the
worries about it. But I would say that somewhere in that range is what we're
looking at for longer term.
And it'll bring back a lot of production. I'm sitting on a couple of wells myself
that have been shut in, waiting for prices to go above $65 a barrel.
I think $75 a barrel is going to bring back a lot of these. There's many
wells that are shut in right now, not being completed that it's going to
revitalize the whole industry, again.
And we're in the process of reducing costs. Prices, they come down as the
commodity prices come down. So that's kind of where I feel that we're at. But I
don't see $200 oil, by any means. Or even $150. There's just a lot of oil out
there, and gas too.