Fossil Fuel Reserves and Demand
The size of global fossil fuel reserves and the predicament of how long current reserves will last are convoluted questions that many energy analysts have attempted to address over the years. Since the beginning of the Industrial Revolution, crude oil, coal, and gas have been fundamental non-renewable sources of energy that have contributed significantly to global development. The world’s energy market, which is still dominated primarily by fossil fuels, has been estimated to be worth roughly $1.5 trillion dollars (Goldemberg, 2006). According to a report from the World Energy Outlook (WEO), the energy that is generated from fossil fuels will continue to remain as the world’s chief source of power and will meet about 84% of global energy demand through 2030 (Shafiee, 2009). While the energy market is expected to continue to depend on fossil fuels as the primary source of global energy, uncertainty surrounding the future supply of fossil fuels has fueled worldwide research into other alternative forms of energy resources.
What is the quantity of crude oil, coal, and gas that is left on the planet? Over the years, many scientists, energy analysts, and political figures have developed a variety of methods to try to answer this question. One of the best-known estimates was produced in 2000 by the U.S. Geological Survey (USGS). In their 2000 assessment, USGS modeling estimated that the world held about three trillion barrels of recoverable oil, while about 710 billion barrels of oil were thought to have already been consumed by 1995 (Teslik, 2019). Conversely, in 2007, the Oil & Gas Journal estimated that the world’s proven oil reserves only amounted to about 1.3 trillion barrels of recoverable oil (Teslik, 2019). To put this number into context, the 2007 estimate from the Oil & Gas Journal predicted that the existing oil reserves would last another 43 years, given that the world was consuming roughly 30 billion barrels of oil per day. However, this prediction was predicated on a specific model that used estimates to calculate how much oil consumption will grow in the future, which is a hotly contested topic.
A Rise in Global Energy Consumption
According to University of Manitoba environmental scientist Vaclav Smil, global energy consumption rose roughly 17-fold between 1900 and 2000 (Mann, 2013). Even though a steady and reliable supply of oil and gas has remained central to the world’s economic well-being, the National Bureau of Economic Research has released research that shows how the U.S. has suffered 11 recessions since the end of the Second World War, with all but one associated with a spike in global oil prices (Mann, 2013). Therefore, given that the relationship between the economy and fossil fuel prices seem to be linked, it is imperative that new formulas and models continue to be evaluated to develop more conclusive predictions about global fossil fuel reserves and the rate of future energy consumption.
Modeling Fossil Fuel Reserves and Energy Consumption
The Klass model and the Econometrics model are two formulas that were developed following increasing pressure from economists and energy analysts to identify more accurate predictions about fossil fuel reserves and global energy consumption. The Klass model assumed a continuous compound rate of energy consumption and estimated a fossil fuel reserve depletion time of 35 years for oil, 107 years for coal, and 37 years for natural gas (Shafiee, 2009). For example, this timeline predicts that coal reserves would last until 2112 and would be the only remaining fossil fuel available following 2042 (Shafiee, 2009).
On the other hand, the Econometrics model develops predictions that are based on the relationship between global fossil fuel reserves, consumption, and price. Interestingly, the Econometrics model for oil suggests that if oil consumption were to increase by one million dollars annually, the global oil reserves would be increased by 66.48 billion barrels, given that the increasing consumption would lead to increasing investments to extract more oil. On the other hand, the Econometrics model also indicates that if coal consumption were to increase by one billion tons per year, global coal reserves would decrease by roughly 402.82 billion tons (Shafiee, 2009). The Econometrics gas model shows an outcome similar to that of the oil model, with increasing consumption of natural gas (at the 99% confidence interval) leading to a positive impact on global natural gas reserves.
There are a number of other global fossil fuel reserve predictions that were made in the early 1990s and 2000s that didn’t account for a rise in new drilling technology that has allowed the industry to access previously inaccessible fossil fuel deposits. These new technologies have vastly increased fossil fuel reserve estimates. The Kern River oil field in the San Joaquin Valley of California is a prime illustration of the wide array of reserve estimates that have come as result of emerging technology.
The Kern River Oil Field Predictions
The 120-year-old Kern River oil field has been a staple to California’s Central Valley and has become one of the most well-known oil fields in the U.S. since it first turned operational in the early 1900s. Today, the oil field yields approximately 70,000 barrels of oil per day (Onishi, 2014). Given these production numbers, it has become the third largest oil field in California, after the Midway-Sunset oil field and the Wilmington oil field, and also the fifth largest oil field in the nation.
Estimating the reserves of the Kern River field has proven to be a difficult task. In 1949, after about 50 years of extracting oil from the field, energy analysts estimated that only 47 million barrels of oil remained in reserves (Mann, 2013). However, since that estimate was first made, petroleum companies were able to extract over 945 million barrels over the next 40 years. Then in 1989, analysts reevaluated reserve predictions to 697 million barrels remaining. A decade later, a new analysis showed that the Kern River oil field had already produced over 1.3 billion barrels of oil in its lifetime, vastly trumping the 1949 estimate of 47 million barrels (Mann, 2013).
The continued expansion of the Kern River oil field has made it a challenge for analysts to estimate oil reserves. Covering an area of about 10,750 acres over the low hills north-northeast of Bakersfield, California, the oil field has been transformed into one of the densest oil drilling operations in the country, with hundreds of oil rigs, drilling pads, and associated oil-related infrastructure covering the barren landscape. The geology of the Kern River oil field has also challenged reserve estimates. While many of the other oil fields located in California’s Central Valley are made up of numerous smaller oil deposits, the Kern River field is comprised mainly of one large oil pool that was formed during the Pliocene-Pleistocene geological epoch. While the majority of the oil has now been extracted from the field, new technologies have made it possible to extract new deposits that were first deemed to be inaccessible.
The main Kern River oil pool is located about 400 to 1,300 feet below the surface of the ground. However, as new technologies emerged, oil companies have now been able to access two smaller oil reserves named the Vedder and Jewett, which are located at depths of approximately 4,700 and 4,220 feet and were formed during the Oligocene and Miocene geological epochs. In 1998, a new well was drilled an astonishing 17,657 feet below ground, which ultimately blew out as a classic oil gusher with flames spewing over 300 feet into the air (Mann, 2013). Interestingly, as Chevron (the current owner of the oil field) has continued to drill deeper into the ground to extract the Vedder and Jewett reserves, the company has also struck a much-needed supply of water for California’s drought-stricken Central Valley. Compared with the 70,000 barrels of oil that are produced each day, the oil wells are also producing about 760,000 barrels of water a day, with about half of the water going to the Cawelo Water District (Onishi, 2014).
Peak Oil and Rising Prices
Following the Kern River oil gusher, many other companies from around the country scrambled to also invest in new technology that would be able to drill to the depths where millions of barrels of deep oil could be found. However, investing in deeper drilling operations meant that companies would have to spend more financial resources extracting oil, which brought about new concerns over the peak oil theory and the end of the fossil fuel era. By 2008, oil prices soared again to levels not seen since the 1973 Arab Oil Embargo. Even President George W. Bush made headlines in 2008 as he exclaimed that, “The supply of oil is limited” (Mann, 2013). Bush also echoed concerns from previous administrations that the age of cheap oil was coming to an end because deposits were becoming financially challenging to access. The British government’s Energy Research Centre warned that, “A peak of conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020” (Mann, 2013).
As energy-related concerns flowed through the news headlines throughout the 2000s, economists started to reference fossil fuels in terms of its energy return on energy invested (EROEI), which has become a measure for the amount of energy needed to extract, process, and distribute an energy source into a useful form. By using EROEI, oil companies were better able to make calculated investments about the profitability of extracting certain fossil fuel reserves. Oil produced by OPEC for example, is estimated to have an average EROEI of 12 to 18, which indicates that 12 to 18 barrels of oil could be produced at a drilling operation for every barrel of oil expended during production (Mann, 2013). When compared to Canadian Tar Sands oil, which has an EROEI of 4 to 7, oil produced by OPEC is much cheaper and nearly three times as efficient to produce.
Sustained Growth for the Fossil Fuel Industry
While concerns over global fossil fuel reserves, the cost of production, and EROEI ratios have fueled increased investment in alternative forms of energy, the U. S. Energy Information Administration continues to reiterate a forecast that highlights the global dominance of coal, gas, and crude oil for decades into the future. By 2040, fossil fuels are still expected to account for 78 percent of global energy use. However, the U. S. Energy Information Administration has underscored that sustained growth in wind, solar, and hydro power are projected to be the fastest-growing sources of energy over the next two decades, expanding by approximately 2.6 percent annually through 2040 (Cusick, 2016). Nuclear energy is also expected to see sustained growth through 2040.
Given the rapid speed of adoption, it is clear that alternative forms of energy may overtake fossil fuel sources as the primary driver of global energy production. However, based on existing fossil fuel reserves, new technology making it financially feasible to extract hard-to-reach deposits, and the continued demand for fossil fuels, increasing oil, coal, and natural gas consumption will continue to dominate the energy market. In 2007, the National Petroleum Council, which is an advisory committee to the U.S. secretary of energy, employed a series of models to project that the demand for oil alone would rise from 86 million barrels per day to as much as 138 million barrels per day by 2030 (Teslik, 2019). Although, critics of this projection have pointed to the potential for a downward trend in fossil fuel consumption and production due to global environmental policies like the Paris Agreement or the U.S. Clean Power Plan. Yet, even with the Paris Agreement now on the table, experts expect even the most carbon-intensive forms of energy generation from coal-fired power plants to continue to increase in the coming decades.
Cusick, D. (2016). “Fossil Fuels May Not Dwindle Anytime Soon.” Scientific American.
Goldemberg, J. (2006). “The promise of clean energy. Energy Policy: 34, pp. 2185-2190
Mann, C. (2013). “What If We Never Run Out of Oil?” The Atlantic.
Onishi, N. (2014). “A California Oil Field Yields Another Prized Commodity.” The New York Times.
Shafiee, S. (2009). “When will fossil fuel reserves be diminished?” Science Direct.
Teslik, L. (2019). “The Future of Fossil Fuel.” Encyclopedia Britannica.