Rate vs. Reserves

There's a great article over at Peak Opportunity called, Peak Oil: Why is it so difficult to Explain/Understand? which puts a fly in the ointment of all those claiming that we have so much oil in the ground that we won't reach world peak production until at least 2030 and won't see significant decreases in our lifetimes. Apparently, it's not about how much oil we have in the ground (the reserves) it's about how much and how quickly that oil can be processed and brought to market (the rate).

The maximum production RATE for a given field or group of fields in not arbitrary! In other words, it can’t just be anything you want it to be! For instance, if a field has RESERVES of say 10 million barrels, the maximum RATE might be several thousand barrels per day, but it could never be 1 million barrels per day.

Why? OK, here is the key take-away:

Due to the physics of the flow of oil through rock, a field’s (or a country’s, or the world’s) maximum oil production RATE is not arbitrary but is dependent on the RESERVES:

• SIZE (how big is the field in terms of area and thickness?)
• AGE (is the field newly discovered/produced, or is has it been producing for 40 years?)
• QUALITY (how well does the oil flow through the rock?)

Examples:

• All of the world’s largest oil fields – Ghawar, Cantarell, Burgan and Daquing - have excellent SIZE and excellent QUALITY ... but their AGE is old! Hence, all of these (except possibly Ghawar) are in decline (their RATE is declining each day).
• The Athabasca tar sands, on the other hand, have excellent SIZE, they are essentially “new” in AGE (relatively little compared to the RESERVES has been produced so far), but they have the very poorest QUALITY – the oil is so thick it won’t flow and must be melted with heat, dissolved with solvents or mined.

The whole article is very informative. In case you missed the link at the top, you can find the full article here.