API DP 081:1995 pdf download.The Record of Oil Resource Assessment
Petroleum is an exhaustible resource. Like coal and natural gas, it was originally generated by infinitesimally slow geologic processes occurring over a span of millions of years, in which fluids and gases from organic matter were trapped in the pore space of sedimentary rock formations. At such a pace, the amount of natural replacement occurring over the span of even a few hundred years would be trivial, so for all practical purposes the volume of original oil-in-place in the earth’s crust at the birth of the petroleum industry in the mid-19th century imposes an upper bound on what can ultimately be produced over the industry’s entire lifetime. Consequently, in a (trivial) sense, we are always “running out” of oil in the sense that each barrel consumed brings us precisely one barrel closer to that upper bound. That is, at any moment, the amount of resource remaining is simply this upper bound less the cumulative production up to that point. If this upper bound were known with certainty, and consumption was expected to grow indefinitely, the imminence of exhaustion would require a simple calculation comparing expected rates of consumption to this stock of remaining resource. But of course, this is a very big if. While production volumes are measured with relative precision, the remaining resource volume is completely unobservable and consequently highly speculative 14 . Moreover, there are prices in the range of historical experience at which world consumption has stopped growing, or even declined, as was seen in Figure 1.
At some point, of course, oil use will be displaced by some other fuel, just as U.S. coal consumption in some uses was replaced by oil in the early part of this century, or wood was replaced by coal in England at the onset of the industrial revolution. Seldom if ever has such a transition been due to exhaustion of the resource or even to increases in resource cost. Rather, it often simply represents the emergence of a new use in which an alternative fuel has one or more characteristics superior to its predecessor 15 . As a consequence, both the amount of oil originally in the ground at the industry’s birth and the amount remaining after the industry’s demise are both unknown numbers, not necessarily of significant empirical importance.