The future of oil and gas

Oil

* Member countries of OPEC (Organisation of Petroleum Exporting Countries)

It can be seen that just several Middle East countries, all OPEC members, account for 2/3 of world oil reserves. With a special mention for Saudi Arabia which possesses almost a quarter of these reserves. OPEC has 78 % of world reserves, whereas it currently produces only 43 % of the oil consumed worldwide – a situation that gives a very high number of years of reserves, approaching, or often exceeding, one hundred years. Thus the logical conclusion: the Middle East, already a strategic zone for oil production, is going to become more and more so as the years go by.

At the present time, oil reserves represent forty or so years of consumption. But that has been the situation for many years. In other words, until now, the oil consumed was able to be replaced by new reserves (discoveries as a result of exploration, improvement of recovery rates in existing fields, oil price increases making the development of expensive fields an economic proposition). At the beginning of the 21st century, we are at a turning point. Exploration to find new fields is no longer sufficient by itself for renewal of reserves. Even though we can still count on an improvement in recovery rates, oil supplies will be exhausted in a few decades. But well before this point of total exhaustion, in the very near future,  in 5 years for the pessimists and in 25 for the most optimistic, the threat of shortage will be present : it is unlikely that the oil on offer will continue to be able to meet an ever-increasing demand : we will have reached the Hubbert peak for oil. The ‘after-oil’ scenario should be of great concern to all of us today. It is absolutely necessary to find rapidly alternative energy sources, so that the remaining oil could be totally devoted to essential uses (such as plastics and synthetic fibre manufacture, agricultural applications – mechanisation, fertilisers, pesticides …- and so on). Those new energy sources could also allow very significant energy savings, particularly in the developed countries.

Gas

World reserves of natural gas, by country (2005)

Natural gas is distributed a little more evenly throughout the world than oil. Nevertheless, the Middle East and the CIS bloc (Commonwealth of Independent States, created following the break-up of the URSS) boast almost three-quarters of world reserves. At the same time, the United States and, to a lesser extent, China, are seeing their domestic reserves reduced to just several years of production: as for oil, a real geo-strategic free-for-all for access to natural gas reserves is in the making!

60 years of reserves worldwide, at 2005 consumption levels. In other words, the issues surrounding the future of natural gas are the same as for oil, but with a delay of an additional twenty years or so. This extra time applies, not only to the total exhaustion of reserves, but also to the Hubbert peak for natural gas, which is expected 15 to 20 years after that of oil. Natural gas, therefore provides a breathing space that we must exploit in the best way possible to prepare the “after-hydrocarbon” future.