1. THE FUTURE OF WORLD OIL SUPPLIES David Long Oxford Petroleum Research Associates CGES Retreat, 11-12 November 2001 www.oxfordpetroleum.com

2. …the fundamental decision – whose oil reserves are going to be developed to what extent and in which order. Paul Frankel, Oil: The Facts of Life, 1962

3. …whose oil reserves?

4. …to what extent? Sources: DeGoyler & MacNaughton, BPSR, CGES

5. ... and in which order?

6. How much oil is needed?

7. How much oil can be produced? Ultimately recoverable reserves (URR) of conventional oil

8. Two contrasting views Ultimately recoverable reserves (URR) of conventional oil

9. World oil liquids supply billion barrels Cumulative production701 Known oil reserves890 Undiscovered 210 - 728 Total (without growth) 1800 - 2319 Reserves growth 0 - 684 Total (with reserves growth) 1800 - 3003 Heavy/extra-heavy oil 460 - 600 Bitumen/tar sands 300 - 400 Total (with unconventional) 2560 – 4003 Natural gas liquids ~200 Oil liquids yet-to-be produced 2000 - 3500 Oil shales ~14,000

10. Hubbert’s peak

11. World oil production peak delayed… Conventional oil only – excludes NGLs and unconventional sources Source: CGES

12. …by around 20 years 1% demand growth 2% demand growth Conventional oil only – excludes NGLs and unconventional sources

13. Opec vs Non-Opec Source: US Geological Survey, Mean URR, 2000

14. But non-Opec peak is closer … Conventional oil only – excludes NGLs and unconventional sources

15. … leaving a growing supply gap …

16. … to be filled with whose oil?

17. It all depends on the oil price Opec Known oil reserves Non-Opec

18. The economic facts of life >$20/bbl – Opec loses market share, supply gap filled by non-Opec crude and unconventional oil. $15-20/bbl – Opec holds market share, high-cost non-Opec and unconventional oil not economic. $10-15/bbl – Opec gains market share, falling non-Opec supply, unconventional not economic. <$10/bbl – only large low-cost Opec fields are economic, no new non-Opec investment.

19. A persistent paradox “Much of the low-cost oil stays underground, whereas the higher-cost variety is being produced up to its technological limit.” Paul Frankel, Postscript, 1988

20. THE FUTURE OF WORLD OIL SUPPLY David Long Oxford Petroleum Research Associates CGES Retreat, 11-12 November 2001 www.oxfordpetroleum.com