OIL alone would not be able to meet the global energy requirements of the future, the Oslo-based energy consultancy Rystad Energy projected in a recently released report. World would need other forms of energy to meet its growing future requirements and cannot remain totally dependent upon fossil fuel, the report said, underlining why it's critical to focus on developing other, more sustainable and renewable forms of energy too. Fossil fuel would indeed continue to play a significant, rather dominant role in the global energy mix, yet the contribution from others would definitely need to go up, the report pointed out. The report said the total global oil reserves today stands at around 2092 billion barrels, or 70 times the current production rate of about 30 billion barrels of crude oil per year. For comparison, cumulatively produced oil up to 2015 amounts to 1300 billion barrels. Unconventional oil recovery accounts for 30% of the global recoverable oil reserves while offshore accounts for 33% of the total. The seven major oil companies hold less than 10% of the total. This data confirms that there is a relatively limited amount of recoverable oil left on the planet. "This data confirms that there is a relatively limited amount of recoverable oil left on the planet. With the global car-park possibly doubling from 1 billion to 2 billion cars over the next 30 years, it becomes very clear that oil alone cannot satisfy the growing need for individual transport," Rystad said. This is exactly what Saudi Arabia has been saying. Taking a long-term view and expecting the oil market to grow, and not decline in absolute terms, despite adverse changes in the global energy mix over the next two decades, Energy Minister Khalid Al-Falih told the Houston Chronicle a few weeks back: "Even if the share of oil goes down from, say, 30 to 25 percent, 25 percent of a much bigger global demand means a much higher absolute number of barrels that will be in demand by 2030 or 2040." However, Rystad analysis also comes out with some interesting, yet questionable conclusions. After analyzing data from 60,000 wells, over a period of three years Rystad Energy says the United States, and interestingly not Saudi Arabia, is the country with the largest volume of oil reserves in the world. As per the Rystad Energy estimates, recoverable oil in the US from existing fields, discoveries and yet undiscovered areas stand at 264 billion barrels. This surpasses, as per Rystad, Saudi Arabia's 212 billion and Russia's 256 billion in reserves. Officially Saudi reserves stand at around 266 billion barrels. Rystad Energy says it recorded only the economically viable reserves of each country. It also distinguished between reserves in existing fields, in new projects and potential reserves in recent discoveries and in yet undiscovered fields. Rystad's analysis thus included oil in proven, existing fields, oil that has been discovered and will probably be recoverable, as well as an estimate for recoverable oil in as-yet discovered oil fields. Calculating oil reserves is indeed a complicated and tough business, as countries deploy different, often opaque, methods to measure their resources, one needs to concede here. Not long ago, Matthew Simmons and some of his peers too raised questions about the Saudi crude oil reserve figures. That generated a healthy debate then. But it died down, once the global energy scenario underwent a complete metamorphosis with the onset of the US shale boom. Onus then shifted to Peak Demand from Peak Supply. There are question marks with the Rystad data too. With most crude assets in OPEC countries under state control, all depend upon the figures provided by the national oil companies. No independent auditing of the data is possible and permissible. How in the absence of any independent and fresh data, Rystad could reach a conclusion different from the already stated one, remains a big if. Other global oil reserves data, like the closely watched BP Statistical Review that is based on official reporting from national authorities, show the US still ranks behind countries such as Saudi Arabia, Russia, Canada, Iraq, Venezuela and Kuwait. Even when Rystad applied more conservative estimates of proven oil reserves, the United States fell to fourth place, behind Saudi Arabia, Russia, and Iran with just 29 billion barrels of proven reserves. Rystad too realizes there would be questions about the very credibility of its reserve figures. "We have done this benchmarking every year, and this is the first year we've seen that the US is above Saudi Arabia and Russia," Per Magnus Nysveen, head of analysis at Rystad Energy, said. He credited the rise in US reserves base to a sharp increase in the number of discoveries in the Permian basin in Texas over the past two years. "There is little potential for future surprises in many other countries, but in the US there is," Nysveen said, pointing to recent finds in the Permian Basin in Texas and New Mexico, the nation's most prolific oil producing area. Texas alone holds more than 60bn barrels of shale oil. "Three years ago the US was behind Russia, Canada and Saudi Arabia." And while the reserves numbers are crucial, the cost of production is just as vital, Richard Mallinson at London-based consultancy Energy Aspects was quoted in the press as saying. One interesting aspect of the Rystad report was the fact that more than half of the US's remaining oil reserves were in unconventional shale oil. And the cost of drilling unconventional resources is still considerably higher than the conventional reserves. And although US shale oil has become more economical to produce - costs have halved over the past two years to below $40 a barrel in some instances - Saudi Arabia and other Middle Eastern producers still pump oil at a fraction of that - and as per available estimates, some even for less than $10 a barrel. "Reserves numbers matter but lots of other factors also determine short and long term returns from what the oil companies and nations hold," said Mallinson. "The rise in prominence of the US doesn't diminish the role of Saudi Arabia or Russia, which have some of the cheapest to produce oil in the world," he added. "There is a sweet spot for conventional producers in OPEC. They want prices high enough to generate solid revenues to fund social spending in their countries, but not high enough to make too much expensive oil economically feasible," Mallinson underlined. Rystad data has left a number of queries unanswered. It has raised more questions than answering, and, the reserves riddle remains still to be solved!
