SPE Economics & Management
Volume 3, Number 2, April 2011, pp. 79-92

SPE-130196-PA

Quantifying the Uncertainty in Estimates of Ultimately Recoverable World Conventional Oil Resources

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DOI  More information 10.2118/130196-PA http://dx.doi.org/10.2118/130196-PA

Citation

  • Tien, C.-M. and McVay, D.A. 2011. Quantifying the Uncertainty in Estimates of Ultimately Recoverable World Conventional Oil Resources. SPE Econ & Mgmt  3 (2): 79-92. SPE-130196-PA. doi: 10.2118/130196-PA.

Discipline Categories

  • 6.7.4 Probabilistic Methods
  • 3.2.1 Risk, Uncertainty, and Risk Assessment
  • 3.7.5 Future of Energy/Oil and Gas

Keywords

  • uncertainty quantification, world oil resources, peak oil

Summary

Since Hubbert proposed the "peak oil" concept to forecast ultimate recovery of crude oil for the US and the world, there have been countless debates over the timing of peak world conventional oil production rate and ultimate recovery. Forecasts presented in the literature can be grouped into those that are like Hubbert's, with an imminent peak, and those that do not predict an imminent peak. Although both groups have bases for their positions, viewpoints from the two groups are polarized and the debate is often heated. A big reason for the large divide between the two groups is the failure of both to acknowledge the significant uncertainty in their estimates. Although some authors attempt to quantify uncertainty, most use deterministic methods and present single values, with no ranges.

Our objective is to quantify the uncertainty in estimates of world conventional ultimately recoverable resources (URR) and time to peak oil rate. We use two different methodologies. First, we employ a mathematical modeling technique based on regression of historical production data using Hubbert's logistic model and a normal distribution model. However, we conduct the analyses probabilistically, considering errors in both the data and the model, which results in likelihood probability distributions for URR and time to peak rate. Second, we use a multiple-experts analysis to combine estimates from the multitude of papers presented in the literature, yielding an overall distribution for estimated world URR.

Both the mathematical modeling and the multiple-experts analysis indicate that there is considerable uncertainty in estimates of world conventional oil URR. Our best estimate is a P10 - P90 range of 1.8 - 4.4 trillion bbl with a mean of 2.9 trillion bbl. Because of some conservative assumptions in our analysis, we believe the uncertainty is actually greater than indicated above, and the additional uncertainty is in the upside, resulting in larger P90 and mean values. In short, we do not have enough information at this time to say with reliability what the ultimate world conventional oil recovery will be. It could peak soon, somewhere in the distant future, or somewhere in between. It would be wise to consider all of these possible outcomes in planning and making decisions regarding capital investment and formulation of energy policy.

© 2011. Society of Petroleum Engineers

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History

  • Original manuscript received: 9 March 2010
  • Meeting paper published: 9 March 2010
  • Revised manuscript received: 15 September 2010
  • Manuscript approved: 30 October 2010
  • Published online: 7 April 2011
  • Version of record: 7 April 2011