This article began with a simple question - when will we run out of oil to drill? It’s likely that you must have come across the answer that puts the date around 2050, which is derived by dividing the proven reserves we have by the annual consumption. Another answer considers the game of demand and supply. Oil will progressively get expensive as we run out of it, in the face of which, the alternatives will become much cheaper. That is true, but it still carries an unspoken assumption that we are, in fact, running out of oil pretty quickly.
But, the surprising truth is the exact opposite. We have so much untapped fossil fuels reserves that it can last us for a really long time and still remain affordable. The bad news is to save the planet earth we have to reduce emissions anyway.
Running Out of Oil: A History
Prediction that we are running out of oil is as old as the oil industry itself. Big reason why Rockefeller was able to become the wealthiest person wasn’t just his ruthless tactics but his ability to bet big when it was widely held belief that the industry didn’t have that many years left.
In 1855, an advertisement for Kier’s Rock Oil advised consumers to “hurry, before this wonderful product is depleted from Nature’s laboratory.” (ref.)
In 1874, the state geologist of Pennsylvania, the nation’s leading oil producing state, estimated that only enough U.S. oil remained to keep the nation’s kerosene lamps burning for four years. (ref.)
In 1914, U.S. Bureau of Mines projected that the world will run out of oil in 10 years. (ref.)
In 1919, David White, chief geologist of the United States Geological Survey, wrote of US petroleum: “… the peak of production will soon be passed, possibly within 3 years. (ref.)
In 1953, Eugene Ayers, a researcher for Gulf Oil, projected that if US ultimate recoverable oil reserves were 100 billion barrels, then production in the US would peak no later than 1960. (ref.)
In 1973, a report title Limits to Growth, estimated that the world will run out of oil and other fossil fuels by 1990. (ref.)
In 1989, one expert forecast that world oil production would peak that very year and oil prices would reach $50 a barrel by 1994. (ref.)
In 1995, a respected geologist predicted in World Oil that petroleum production would peak in 1996, and after 1999 major increases in crude oil prices would have dire consequences. He warned that “[m]any of the world’s developed societies may look more like today’s Russia than the U.S.” (ref.)
A 1998 Scientific American article entitled “The End of Cheap Oil” predicted that world oil production would peak in 2002 and warned that “what our society does face, and soon, is the end of the abundant and cheap oil on which all industrial nations depend. (ref.)
The most famous of all projections is Hubbert’s Peak Oil theory. American geophysicist, M. King Hubbert, predicted that oil production will follow a bell shaped curve, that oil production in US would peak around 1970; from then, it will be a gradual decline. Oil production did mimic Hubbert’s peak for a long while, so much so that it induced a panic in the US Government about energy security during the 70s. And then… it deviated.
Why Do We Never Run Out?
In 1949, after 50 years of drilling, analysts estimated that just 47 million barrels remained in reserves (at Kern River Oil Field) —a rounding error in the oil business. Kern River, it seemed, was nearly played out. Instead, oil companies removed 945 million barrels in the next 40 years. In 1989, analysts again estimated Kern reserves: 697 million barrels. By 2009, Kern had produced more than 1.3 billion additional barrels, and reserves were estimated to be almost 600 million barrels. (ref.)
What happened at Kern River Oil Field is what has happened at almost every oil field. The derricks start to pump out oil, and after several years, it’s predicted that the field has reached its limit. But until you’ve drilled, it isn’t entirely clear how big the oil field is. New set of tools, and technology, enables you to drill previously inaccessible oil. For instance: In 1998, an oil rig near the Kern Oil Field found an oil gusher at 17,657 feet. This was several thousand feet deeper than deepest wells at that time.
Of course, fields do run out, but the point of highlight here is technology. The oil industry keeps finding newer ways to drill resources to keep up with the demand. There is no better example of it than what happened in the last decade that changed the entire energy landscape: fracking and shale oil boom in US.
Fracking is the process of the process of injecting liquid at high pressure into rocks to force open existing fissures and extract oil or gas. Fracking isn’t recent innovation, it goes back to early 50s, but a combination of technological innovations (I have to research further what they were) skyrocketed US domestic oil production. By 2018, US became world’s largest crude oil producer leaving behind even Saudi Arabia. Fracking explains the large deviation in Hubbert’s curve.
The engine of innovation is so powerful that how much reserves we have now is a short-sighted question. The better question is what’s our potential?
It’s impossible to ascertain reserves we have. And even with those we know of, we can’t say for sure if they will be feasible in the future. Technology can reach its limit. But even with those considerations, it helps to know where we can tap in the future.
Two facts that will help us put in perspective the figures that follow :
- Human consume around 100M barrels of crude oil per day. It can go up in future once developing countries’ economies grow, but other factors like efficiency and new sources of energy would try to balance that out. It’s not far-fetched to assume that 100M ± 50M / day barrels might be our peak consumption.
- Humans have consumed around 1.3 Trillion barrels of oil since 1870. (ref.)
Fossil fuel figures:
- The world has around 1.65T barrels of convention oil left (2016 figure) (ref.). Prediction about running our of oil around 2050 is based on just this.
- The world also has 6T barrels of shale oil deposits, out of which 1.2T barrels (ref.) is proven to high quality and economically recoverable.
- The estimated deposits of tar sands is around 2T barrels. (ref.) Tar sands are a bit energy intensive to extract from but we can predict that in future they could be extracted more economically.
- And to top of that we have methane hydrate deposits, which by an estimate, contain more energy than all the fossil fuels combined. (ref.) Currently, it hasn’t become commercially viable to extract gas from these deposits, but research is under way and just as we saw in case of shale gas, there’s a strong likelihood of it becoming economical.
And this doesn’t cover all potential discoveries we will potentially make. Oil wells are doing deeper and venturing further into the ocean. Drilling will indeed get expensive, and crude oil won’t remain a $20-30/barrel commodity, but even around $50-60/barrel, it would still be affordable.
It’s clear that we won’t run out of fossil fuels anytime soon. Any commercial telling the consumers to save for the future generation is misleading and it detracts from a more crucial message - we have to make the switch anyhow. The clock on climate change is ticking and it’s imperative we switch to cleaner energy regardless of economic incentives.