Future of Oil

The Future of Oil

Roland N. Horne Energy Resources Engineering Stanford University 1

It’s a Fossil-Fueled World

6% 6%

35% Oil Natural Gas Coal 29% Nuclear Hydroelectric

24% 2 BP Statistical Review 2008

1 Crude Oil Price 140

120 $ money of the day $ 2007 100

60 US$/bbl

0 1860 1880 1900 1920 1940 1960 1980 2000 3 BP Statistical Review 2008

The Future?

1. Production and reserves. How much oil is there, and how long will it last? 2. Technology. How can we produce more of the oil in place? 3. Manpower. Who will work on these problems?

2 1. Production and Reserves • How much do we have? • How long will it last?

• Peak oil • Business as usual

Peak Oil

6 Lahererre, 2003 [http://www.oilcrisis.com/laherrere]

3 Peak Oil World, outside of swing producers - Saudi Arabia, Kuwait, Iran, Iraq, UAE

7 Lahererre, 2003 [http://www.oilcrisis.com/laherrere]

Peak Oil World, excluding extra-heavy oil

8 Lahererre, 2006 [http://www.oilcrisis.com/laherrere]

4 World Proven Oil Reserves 1600

1400 Oil and Oil Sands 1200

1000

800 Alberta oil sands added

Billion bbl Billion 600 OPEC restates reserves 400

200

0 1980 1985 1990 1995 2000 2005 2010 9 BP Statistical Review 2008

Technical vs. Political Reserves

10 Lahererre, 2007 [http://www.oilcrisis.com/laherrere]

5 World Oil (+NGL) Production 120,000 kb/d (EIA, June 2008) 110,000 IEA WEO 2006

100,000

90,000

80,000 kb/d

70,000

60,000

50,000

40,000 1970 1980 1990 2000 2010 2020 2030 Energy Information Administration, July 2008, www.eia.doe.gov/ipm/ 11 International Energy Agency, World Energy Outlook 2006, www.iea.org

World Oil (+NGL) Production 100 100,000 90 2007$ (BP, 2008) 95,000 kb/d (EIA, June 2008) 80 90,000 70 85,000 60 80,000 50 75,000 kb/d 2007$ 40 70,000 30 65,000 20 60,000 10 55,000 0 50,000 1970 1980 1990 2000 2010 EIA and BP Statistical Review 2008 12

6 World Oil (+NGL) Production

13 http://europe.theoildrum.com/node/2832

How Good Are Forecasts? 10

9 AEO 1985 US domestic oil production AEO 1991 8 AEO 1995 AEO 2000 7 AEO 2002

Mb/d AEO 2004 6 AEO 2006 AEO 2008 Actual 5

4 1985 1995 2005 2015

14 EIA: Energy Information Administration, Annual Energy Outlook, 1985- 2008. http://www.eia.doe.gov

7 The Second Trillion

USGS (2000)

World Oil

OPEC

O&GJ

0 200 400 600 800 1000 1200 1400 Gb International Energy Agency, World Energy Outlook 2004 15 USGS, U.S. Geological Survey World Petroleum Assessment 2000, http://pubs.usgs.gov/dds/dds-060/

2. Technology

• The “third trillion”: – (a) Discovering the undiscovered. – (b) Producing the unproductive. – (c) Unconventional sources. • New discoveries. • Enhanced oil recovery (EOR). • Oil sands and oil shale.

8 (a) World Oil Reserves and Resources

International Energy Agency, Resources to Reserves 2005 17 © OECD/IEA, 2005: Figure ES1, page 17, used with permission.

World Oil Production by Source

International Energy Agency, Resources to Reserves 2005 18 © OECD/IEA, 2005: Figure 2.1, page 41, used with permission.

9 Top World Oil Producers, 2006 (thousand barrels per day)

1 Saudi Arabia 10,665 2 Russia 9,677 3 United States 8,330 4 Iran 4,148 5 China 3,845 6 Mexico 3,707 7 Canada 3,288 8 United Arab Emirates 2,945 9 Venezuela 2,803 10 Norway 2,786 11 Kuwait 2,675 12 Nigeria 2,443 13 Brazil 2,166 14 Algeria 2,122

15 Iraq 2,008 19 Source: EIA

10 Saudi Arabia Oil Production 12,000

10,000

8,000

6,000 kb/d

4,000

2,000

70 86 19 1972 1974 1976 1978 1980 1982 1984 19 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 21 Source: EIA June 2008 International Petroleum Monthly

Working Harder to Find Oil

22 Stuart Staniford, March 2, 2007 http://www.theoildrum.com

11 Effectiveness of Wildcat Drilling

23 International Energy Agency, World Energy Outlook 2004

Effectiveness of Wildcat Drilling

12 Total Upstream Costs per Barrel

25 http://www.eia.doe.gov/neic/infosheets/crudeproduction.html

(b) Enhanced Oil Recovery

• Increasing recovery factor by recovering left-behind oil. • 10% of US oil production for more than 10 years. – Thermal methods.

–CO2 methods. – Chemical methods.

26 www.snf-oil.com

13 Recovery Factor

27 http://aspofrance.viabloga.com/files/JL-IGC2008-part3.pdf

Thermal Enhanced Oil Recovery

Dr. Abdul Muin, BPMIGAS The 4th Workshop of Indonesia PPM Case Study

kb/d June 13-17, 2006, Jakarta

28 http://www.ccop.or.th/ppm/document/INWS4/INWS4DOC02a_Indonesia_Abdul_Muin.pdf

14 CO2 Enhanced Oil Recovery

• US since 1980. • 80 projects. • > 230,000 b/d • Sequestration too.

29 http://www.encana.com/operations/canada/weyburn/index.htm

ASP Enhanced Oil Recovery

Alkaline Surfactant Polymer (ASP) Î Additional 20% of STOOIP

30 SPE 100855 (2006) Wang Yupu, and Liu He, Daqing Oilfield Co. Ltd

15 (c) Oil Sands

http://ostseis.anl.gov/guide/photos/index.cfm

31 www.energy.gov.ab.ca/OilSands/pdfs

Oil Sands

http://ostseis.anl.gov/guide/photos/index.cfm 32

16 Oil Sands

http://ostseis.anl.gov/guide/photos/index.cfm 33

Oil Sands - SAGD

34 www.opticanada.com/technology/bitumen_extraction/

17 Oil Sands - SAGD

http://www.longlake.ca/project/photo_gallery.asp 35

Oil Sands – Gas Consumption • 2004 consumption 0.7 Bcf/d (Canada 7.7 Bcf/d). • Producing 142 Gb of oil would need 200 Tcf of gas (Canada total reserves = 58 Tcf). • 2006 carbon emissions = 45 Mt/year. • Water and environmental concerns.

Söderbergh et al. (2007)

US imports 8.2 Bcf/d 2006 30 Bcm/y = 2.9 Bcf/d (14% of US consumption) = ~1 Tcf/y)

IEA World Energy Outlook 2006 36

18 Oil Shale

http://ostseis.anl.gov/guide/photos/index.cfm 37

Oil Shale

http://www.geolsoc.org.uk/gsl/ geoscientist/features/page874.html

38 http://www.dailyreckoning.com/rpt/OilShale.html

19 Oil Shale

39 http://ostseis.anl.gov/guide/oilshale/index.cfm

3. Manpower and Womanpower

• Who will do the work?

20 SPE Membership by Age 2007 SPE Membership, Excluding Student Members Average Age of Members is 46 100% 90% 65+ 80% 60-64 70% 55-59 50-54 60% 45-49 50% 40-44 40% 35-39 30% 30-34 20% 25-29 10% 20-24 0%

0 3 98 99 01 02 04 06 07 1997 19 19 200 20 20 200 20 2005 20 20 SPE (www.spe.org) 200741

Age Distribution

42 SPE Talent & Technology 2007

21 There are Sufficient People – But Not Distributed

43 Schlumberger: Surviving the Skills Shortage (2006)

3.5 The More Distant Future

• Peak oil • Peak gas • Peak coal • Peak uranium

• Ultimately, the fossil-fuel era will end, and the world must operate on renewable energy sources. 44

22 Futures for Graduates • Develop skills in fundamentals. • Foreign language skills allow mobility. • Flexibility to address new problems. • Petroleum engineers today will be energy engineers in the future.

Conclusions • “Easy” oil has been consumed. • Plenty of “difficult” oil still, but demand will soon surpass supply. • Technologies to improve recovery require advanced skills. • Shortages of professionals in many places. • Excellent opportunities for young people to enter professional careers with large challenges, great responsibility and substantial rewards.

23 47