This information, the Rosetta stone that will unlock the future of oil, lies in the historical and current production reports of about 250 medium to supergiant oilfields that produce between 80 and 85 percent of global oil supplies. Many oil-producing countries and almost all major oil companies publish total production figures, but almost never the field-by-field data that would make possible a reliable, detailed, bottom-up supply forecast. Absent this detail, all our supply forecasts are simply guesses.
No, we don’t know what lies below. But we could. If all key oil producers were forced to report field-by-field data on production and remaining proven reserves, we would finally have the pieces to the puzzle of exactly how big usable global reserves are. Staffers at the International Energy Agency have pushed the idea of setting up field-data collection agencies, perhaps at the United Nations or G8, but have gotten nowhere, in part because most producers guard this information as a trade secret. But Britain and Norway have published field-by-field data for years, with no harm done to their competitive strength. And this information allowed forecasters to accurately predict the peak of North Sea production in the late ’90s.
The argument that field data are critical assumes that there are few, if any, major fields yet to be discovered, a point most big oil companies and mainstream analysts will dispute. But consider the probabilities. The average size of new finds has steadily declined for decades. The last new major oil basins were all found between 1967 and 1969, on Alaska’s North Slope, in western Siberia and in the North Sea. The last supergiant oilfield, Cantrell in Mexico, was found in 1976.
Many oil authorities routinely produce surprisingly detailed long-term oil-supply outlooks and tables on current proven reserves, often detailed by country. The United States Geological Survey, a well-intentioned and respected source, produces detailed data on remaining global oil reserves. The USGS analysts are able geologists, but all they can do is guess at the number of hydrocarbon-bearing structures that might be found, then guess at the size of each discovery, then guess at the percentage of each future discovery that might be technically and commercially recovered. No commercial lender in the world would loan real money based on this kind of guesswork, yet many public-policy leaders cite this sketchy information as proof that the world is not even close to peak oil output.
The world is not running out of oil, but the world is fast approaching peak output. Once this Rubicon is crossed, oil production will begin to decline. The key question is not whether but when. If strict new disclosure standards, requiring production reports on a quarterly basis going back five years, are imposed on the owners of just these 250 top-producing fields, it would be simple to create a bottom-up forecast of how our current global oil-production base will play out over the next three to five years. The answer is out there; we just can’t get to it.
