In a presentation titled “The Global Oil Perspective” at the 18th World Petroleum Congress held at the end of September in Johannesburg, South Africa, ExxonMobil’s president and Saudi Arabia’s oil minister attempted to assuage concerns of possible depletion of oil reserves and rising oil prices.
ExxonMobil’s President Rex Tillerson said that although in the future the world will see a significant increase in energy demand, large oil resources abound.
“According to the U.S. Geological Survey, more than 2 trillion barrels of conventional oil remains to be recovered, twice what has already been produced in all of human history,” Tillerson stated. “Beyond that, more than a trillion barrels of frontier resources, like oil sands and oil shale, are expected to be recovered over time.”
H.E. Ali al-Naimi, Saudi oil minister, supported Tillerson’s sentiments that some current calculations underestimate the oil reserves supply. He explained that technological advances have improved Saudi Arabia’s knowledge of its underlying geological formations and have enabled it to economically recover a greater portion of the resource base, therefore adding to recoverable reserves. Al-Naimi stated that his country would soon add 200 billion barrels to its already existing 264 billion in oil reserves, and he called for more refineries to be built because the world’s current refining capacity is limited.
“Give us the customers and we will pump more oil,” he said.
There are some skeptics who do not buy into the claim that oil reserves are being underestimated. Matthew Simmons of Houston, Texas-based Simmons and Company International argues that with the rate of depletion and no new major sources being discovered, Saudi Arabia’s assessments are highly optimistic.
Dr. Muhammad-Ali Zainy, senior energy economist and analyst at London’s Centre for Global Energy Studies, also doubts the assurance of underestimation. “Since these OPEC countries [like Saudi Arabia] are closed, the only information available is available to themselves alone. So they can come up with a new reserves figure and the rest of the world will just have to take it,” he said.
Exxon produces the Energy Outlook, a worldwide forecast up to the year 2030 that predicts energy demand and economic growth. In the most recent version it suggests that oil demand may increase by an annual rate of about 1.5 percent, which is a little less than that for all other forms of energy. According to Exxon’s Web site, www.exxonmobil.com, it is estimated that while the amount of conventional oil-in-place is unknown, it could be between 6 and 8 trillion barrels.
The U.S. Energy Information Administration (EIA) projects that in 2005, the United States is consuming 20.7 million barrels of oil per day, and Exxon estimates that worldwide consumption is more than 80 million barrels per day.
In early 2005, Exxon Senior Vice President Stuart McGill explained how the company would tap into oil resources while increasing productivity. He cited enhanced recovery of conventional oil; production of extra-heavy oil, tar sands, and tight gas; liquefied natural gas and gas-to-liquids technologies; and deepwater and arctic operations as key strategies.
Al-Naimi emphasized that the problem is not the availability of oil, but rather its “deliverability” to consumers. He defined deliverability as a measure of the industry’s ability to boost the production capacity, oil transportation and refining, and delivery of petroleum products to end users.
“The biggest problem, I believe, is the downstream sector (refining and distribution) where we have seen a trend of diminishing spare capacity and flexibility. Refinery upgrading capacity worldwide has not kept pace with the growth in demand,” said Al-Naimi.
Saudi Arabia is currently the most dominant oil supplier, with one-fourth of the world’s proven oil reserves. According to EIA, during January-May 2005, Saudi Arabia supplied 15 percent of the United States’ crude oil imports.