US oil reserves surpass those of Saudi Arabia and Russia

Discussion in 'Business & Economics' started by Plazma Inferno!, Jul 6, 2016.

  1. Plazma Inferno! Ding Ding Ding Ding Administrator

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    The US holds more oil reserves than Saudi Arabia and Russia, the first time it has surpassed those held by the world's biggest exporting nations, according to a new study.
    Rystad Energy estimates recoverable oil in the US from existing fields, discoveries and yet undiscovered areas amounts to 264bn barrels. The figure surpasses Saudi Arabia's 212bn and Russia's 256bn in reserves.
    The analysis of 60,000 fields worldwide, conducted over a three-year period by the Oslo-based group, shows total global oil reserves at 2.1tn barrels. This is 70 times the current production rate of about 30bn barrels of crude oil a year.

    http://www.cnbc.com/2016/07/05/us-oil-reserves-surpass-those-of-saudi-arabia-and-russia.html
     
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  3. exchemist Valued Senior Member

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    Ah, where is Fute when you need him?

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  5. iceaura Valued Senior Member

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    Imagine how large the US gold reserves will be when the technology to extract gold from seawater is developed. The US has more seawater within its territorial boundaries than most.
     
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  7. Ophiolite Valued Senior Member

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    The point that must be borne in mind is that Saudi Arabian oil can be developed and produced profitably at $20 a barrel. Much of the US oil reserves require prices of at least $40 and in some cases $60 or more a barrel to break even. Technology developments will continue to lower these numbers, but they will tend to do so for both Saudi and the US, maintaining the differential.
     
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  8. Ivan Seeking Registered Senior Member

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    https://www.epa.gov/energy/ghg-equivalencies-calculator-calculations-and-references

    http://numero57.net/2008/03/20/carbon-dioxide-emissions-per-barrel-of-crude/

    So using the more conservative numbers, 2.1 trillion barrels at 0.317 metric tons of CO2 per barrel gives us about 0.7 trillion metric tons of CO2, or about 700 gigatonnes.

    https://micpohling.wordpress.com/2007/03/30/math-how-much-co2-by-weight-in-the-atmosphere/

    So we have an ability to add another 23% CO2 to the atmosphere as measured by the total amount present. If this was all maintained in the atmosphere, this would put us at something close to double the amount added, or 70% above the pre-industrial average.

    I wonder what the true cost of a barrel of oil might be if we could measure the long term costs.
     
  9. Ivan Seeking Registered Senior Member

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    I thought it might be interesting to try to answer my own question. What would be the cost of oil if we include the long-term costs resulting from climate change.

    Using this estimate of the costs of climate change, in the US, between now and the year 2100...
    https://www.nrdc.org/sites/default/files/cost.pdf

    On page 5 we find the estimated costs for Hurricane damage, real estate losses, energy sector losses, and water costs, in 2006 dollars. I approximate the costs per year starting from 2025 through 2100 as follows:
    Costs/Year ~ 2^(k-25/25) x A
    Where
    k = Year - 2000 [the integral is taken from k = 25 to 100]
    A = cost in 2025 which is indicated to be USD 271 x 10^9

    I haven't had to do an integral like this by hand for a long time so perhaps someone can check, but I end up with 270A or USD 73 trillion. Assuming that the US uses about 20% of the oil produced globally, I get USD 73 trillion/(0.2 (2.1 trillion barrels)) ~= USD 175 per barrel.

    So it appears that for the remaining oil, in order to offset the real long-term costs of its use, we should tax it at a rate of USD 175 a barrel.

    Given its present cost, that puts oil at about USD 300 a barrel. And using this calculator
    http://gascalc.appspot.com/

    We find a price at the pump of about USD 10 per gallon.

    Or course this doesn't account for increased medical costs, lost jobs, geopolitical costs [like war], lost crops, etc. So we are only considering the most basic costs.

    Note: I don't know why parts are in italics and missing spaces. The text editor is doing that, not me.

    // Edit: [Moderator: Due to the way that this forum has integrated Latex support, no post may have 2 or more dollar signs without them being treated as math markup.] \( \$ \to \textrm{USD} \)
     
    Last edited by a moderator: Jul 8, 2016
  10. exchemist Valued Senior Member

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    I trust you are doing this on a discounted cashflow basis, right?
     
  11. Ivan Seeking Registered Senior Member

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    Why? This isn't an investment. It was just a way to relate the projected costs to the cost at the pump. But it might have been used to calculate the long-term costs. I didn't read the report. I was just using it as a reference.
     
  12. exchemist Valued Senior Member

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    Well if costs, prices and values are incurred a long time into the future, they cannot be compared with costs prices and values today unless an appropriate discount rate is used. This is true for anything. Admittedly the discount rates applicable today are at record lows, but it is nevertheless true that a cost incurred in the distant future has a lower true cost than the same cost incurred today, because of the time value of money.

    But I was being a bit facetious, I admit: it is in principle salutary to think about the sort of exercise you are attempting, even if the actual numbers you come up with are fairly arbitrary.
     
  13. Ivan Seeking Registered Senior Member

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    Ah, well, I did specify that this is all in 2006 dollars. The report also assumes that we continue on our current trajectory in terms of emissions and no mediating technology can be used to intercede. Also, I was applying all costs of climate change to oil consumption and ignored things like cement production, which is significant. We are also ignoring many potential costs associated with climate change that can't be anticipated. However, my background is in physics and to us a horse is approximately a sphere, and I am working in ideal dollars.

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    So yes, it was only intended to convey perspective, and it does convey the order of magnitude in terms relative to todays dollars. So perhaps we can consider it a zeroth order approximation.

    Note my final answer has one significant figure.

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    Haha, here you can find the discounted mitigation costs up to 2100. It is the Summary Report for Policy Makers from the 2014 Synthesis Report, from the InterGovernmental Panel on Climate Change.
    https://www.ipcc.ch/pdf/assessment-report/ar5/syr/AR5_SYR_FINAL_SPM.pdf

    I was wondering if they provide an estimate of the global costs due to the effects of climate change, to 2100, but they only seem to discuss mitigation costs.
     
    Last edited: Jul 9, 2016
  14. exchemist Valued Senior Member

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    If you are attributing it all to oil consumption then that seems to me rather a glaring weakness in the approach. Coal and gas are responsible for almost as much energy consumption as oil - and of course coal produces a lot more CO2/BTU than oil does. There is a graph of worldwide energy consumption by energy source here, for example: https://en.wikipedia.org/wiki/World_energy_consumption

    Oil cannot be responsible for more than a third of CO2 emission at most, I'd have thought.

    P.S. In fact, having now looked it up, it is dead on a third - see Figure 6 of this IEA report: https://www.iea.org/publications/fr...EmissionsFromFuelCombustionHighlights2015.pdf
     
    Last edited: Jul 9, 2016
  15. Ivan Seeking Registered Senior Member

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    Ah, but it's all just energy. It is left as an exercise for the reader to convert to the proper source of energy and apply the costs appropriately.

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    Joking of course but in the end we would be paying the same amount, but through different channels. The end cost is the same.

    What surprised me was that number was so low. I believe they've paid as much or nearly as much in Europe for many years. It suggests to me that the costs of climate change are more manageable that I would have guessed, given the proper planning and budgeting... and yes, taxes.

    The frustrating part to me is that some third-generation alternative fuels are almost competitive at the pump. Biodiesel from algae was close to $5 the last time I checked. If we were to take a few years worth of climate change costs, say a trillion dollars, and dedicate that to carbon-neutral fuels that are compatible with our current engines and distribution infrastructure, such as fuels derived from algae, we could end the problem of fossil fuel emissions, and probably within a few years, here in the US. Other nations are working with this technology as well. However the new glut of oil resulting from shale and fracking makes alternative fuels non competitive, and that is very bad for the environment. I don't see the free market solving this problem. And we must stop using the oil reserves that we have. In short, it appears that we aren't going to run out of oil in time to save ourselves.
     
    Last edited: Jul 9, 2016
  16. exchemist Valued Senior Member

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    But I thought you said you were attributing them all to oil. That's clearly wrong.
     
  17. Ivan Seeking Registered Senior Member

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    Now you are just nitpicking. And here I was stating to take you seriously. As I said, it was intended to determine the order or magnitude of the costs in relative terms. If you still don't get it then consider it a mystery.
     
  18. exchemist Valued Senior Member

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    OK if you divide by 3 then I agree we can use the numbers as illustrative.
     
  19. Futilitist This so called forum is a fraud... Registered Senior Member

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    I so rarely get to spread any good news these days, but I may have some very good news for you, Ivan Seeking. According to the Etp model, an innovative physics model derived from the Entropy Rate Balance Equation for Control Volumes, under the very best of circumstances we can expect that world oil production will essentially be at an end by 2021.

    http://www.thehillsgroup.org/depletion2_022.htm

    The Energy Factor, Part IV

    The Price of Oil

    The price of petroleum is controlled by two factors:

    1) The cost of production.
    2) The $ amount that the end consumer (the NEGs) can afford to pay for it.

    What the end consumer pays must be sufficient to cover the cost of production. All production cost must be borne by the end consumer, who includes the end buyer, and the societal cost required to produce petroleum, and its products.

    The Petroleum Price Curve, shown below, reflects the two factors that have, and will continue to control petroleum prices. The ETP derived Cost Curve is constructed from the ETP model, and has mapped the price of petroleum since 1960 with a correlation coefficient of 0.965. It is the most accurate pricing model that has ever been developed, (see report)*.

    The Maximum Consumer Price curve was also developed from the ETP model. It represents the maximum price that the end consumer can pay for petroleum. It is based on the observation that the price of a unit of petroleum can not exceed the value of the economic activity that the energy it supplies to the end consumer can generate.

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    A more complete explanation of how the Maximum Consumer Price curve was formulated is show in chart# 160 below:

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    The two Maximum affordable price curves labeled 71% (black), and 62% (light blue) are skewed logistic curves. There is no explicit mathematical equation to describe them. They are derived numerically, and the dots represent values for specific years. The 71% curve is the maximum theoretical energy that can be extracted from a unit of 37.5° API crude. Its value is derived from the combustion equations of hydrocarbons. The 62% curve is the average energy extracted from the same hydrocarbon by the end user. It passes through the ETP derived price curve at the inflection point of the ETP curve in year 2012. 2012 was the energy half way point for petroleum production. It was the year when it required one half of the energy content of petroleum to produce the petroleum, and its products.
    The individual points are generated from the equation:

    $/barrel = (Energy delivered - ETP value/ BTU/$) * 42.

    Energy delivered = 140,000 BTU/gal *0.62 (140,000 BTU/gal - the energy content of 37.5° API crude)
    ETP value is derived from the ETP function
    BTU/$ is taken from the BTU/$ graph - Graph# 12

    The Maximum Consumer Price curve is curtailed at 2020 at $11.76/ barrel. At this point petroleum will no longer be acting as a significant energy source for the economy. Its only function will be as an energy carrier for other sources. Production will continue as long as producers can realize the lifting costs at existing fields. E&D expenditures, and field maintenance costs will have been curtailed. All production from that point forward will be from legacy fields only. The economic impact that will result from the energy lost to the general economy is beyond the scope of this report.

    "Optimistic estimates place the initial world oil reserve at 4.3 [2] trillion barrels, of which 1.29 trillion
    have been extracted. If quantity were the sole criteria for utility there would be little question as to the
    availability of future supplies; there would obviously be several centuries of potential crude remaining.
    Individual field studies, and the ever escalating costs of oil production are, however, informing us that
    something is amiss with the strict quantity model; it fails to incorporate a verifiable "fitness for use"
    criteria.

    Most studies of world oil production are focused on the rate at which crude oil is extracted, and the
    volume that remains to be removed . Since petroleum is used primarily as an energy source to drive the
    majority of the world’s transportation machinery, the quantity of oil available for extraction would only
    be significant if over time a unit of it provided the same amount of energy for that purpose. The
    Second Law informs us that can not be the case; in fact, every barrel of oil on average, has required
    more energy to extract and process than the barrel that came before it. This is an inviolable mandate of
    the Second Law. Since the specific exergy of a unit of oil is, and always has been the same, less and
    less energy per unit remains for use by the end consumer. The "fitness for use" of crude oil must also
    then be dependent on variables relating to its energy delivery capabilities.

    Evaluations of reserve status generally rely on top-down, or bottom-up analysis. This approach requires
    knowledge of the production history of individual fields and their physical parameters; which are often
    scanty, inaccurate, or unavailable. It also requires questionable future projections for an oil price that
    can justify the economics of the production process. The only high quality data available relating to the
    world's crude oil reserves is the quantity of conventional crude oil that has been produced, and its price
    history. To overcome these limitations the entire production process (extraction, processing and
    distribution) is analyzed. Fitness for use is built into the methodology. Correlation is checked against
    the world production, and price data-sets. Causation is established through its bases in First and
    Second Law premises."
    ~BWHill
    from the introduction to the Etp model book

    And here is a graph I made showing the Etp model's recent performance:

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    As can be clearly seen above, the price of oil has tracked below and basically parallel to the Etp Maximum Price Curve for well over a year and a half.



    ---Futilitist

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    Last edited: Jul 10, 2016
  20. iceaura Valued Senior Member

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    Iraq and Iran are even cheaper. Last I checked (admittedly, before the war) Iraq was in theory the world's lowest cost producer, and its oil is very sweet.
    Those aren't logistic curves. https://en.wikipedia.org/wiki/Logistic_function
     
    Last edited: Jul 10, 2016
  21. exchemist Valued Senior Member

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    Haha, so this did after all bring you back out of the woodwork, Loren.

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    Evidently you are hungry for more astroturfing.
     
  22. Futilitist This so called forum is a fraud... Registered Senior Member

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    Na, I was just playing around, ex. It seems like you are the one who is curiously hungry to bring me out of the woodwork, though. Things are kinda boring around here without me, huh? You astroturfers are so unoriginal that you can't even come up with anything to talk about without my help. This site is dying.

    And what's with the first name basis shit? I don't remember us being friends. Have you been researching me? That's creepy, ex.

    Don't get too excited. I'm not back.



    ---Futilitist

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