Today’s oil-scape

By Stephen Hawboldt

The Globalist, a syndicated column in The Nova Scotian, a section of the Sunday Herald, asked which of a selection of countries would be the first to deplete its known oil reserves. The results were sobering and show the reality of today’s oil-scape.

The listing was based on the 2008 BP Statistical Review of World Energy. This is a highly regarded, industry-backed, report that has been published for 53 years so its data should be reliable.

The 2008 report shows that at current rates of production, the world's proven reserves of oil are sufficient to last for only about 40 years and nearly 77 percent of those reserves are located in OPEC countries.

According to The Nova Scotian, the United Kingdom will deplete its oil reserves in only six years. Norway is only three years later. In Mexico, the deadlines is only 10 years away.

The rest of North America, fares slightly better. Within 12 years, the world’s third largest oil producer, the United States, will run out of its known reserves. Canada will face the same fate in a mere 23 years.

The two largest countries in the world are also facing a crisis. Russian supplies will be depleted in 22 years and China will only have imported oil available to them in slightly more than 11 years. On the abundance curve, Venezuela and Saudi Arabia have about 60 to 90 years left.

These projections are based on known reserves and current well production. As international demand is growing by at least two per cent per year, production or prices can be expected to increase.

These projections are based on known reserves of conventional oil. As one is forced to drill deeper in offshore locations or other hostile environments like the Arctic, production costs and the energy required to exploit the resource will also increase.

Non-conventional oil sources have similar limitations. Extraction from the Alberta oil sands requires huge capital investments, several barrels of water for every barrel of oil and almost as much conventional oil is used to create the new barrel of non-conventional oil.

On paper this source may last for several decades, but the cost of production may soon overtake the return. Presently, these projects are receiving billions in federal and provincial tax incentives, which is why they are booming.

Reduced consumption and conservation could change these time lines to some extent. Since citizens seem to be resist pricing as a mechanism to reduce demand, than the solutions will be harder to finance.

Let’s put these time lines in perspective. Shortly after a baby born today starts school, oil supplies in Great Britain and Norway will be gone. Just after they finish high school, supplies in the United States, Canada, Mexico, Russia, and China will be almost depleted. Just as their parents are retiring, most of the known supplies of conventional oil in the world will have been consumed.

This is today’s oil-scape.

Comments are always welcome and can be addressed to stephenhawboldt@annapolisriver.ca