(EnergyAsia, June 26 2012, Tuesday) — The world still has serious energy worries ahead despite a near 1.9% rise in its oil reserves to a record 1,653 billion barrels at the end of 2011 to keep well ahead of consumption growth of only 0.7%, according to BP’s latest annual Statistical Review of World Energy.
Exploration activities and finds rose as record crude prices, with Brent averaging US$111.26 a barrel over the course of 2011, and improved technology made marginal projects commercially viable.
On paper, BP said these reserves would help cover the world’s production at current rates for 54 years. In addition, the world’s recoverable natural gas reserves rose by 6.3% to 208.4 trillion cubic metres.
Despite these improvements, the world will face mounting concerns over the political stability of the main producing countries, environmental and safety issues in relation to upstream activities in frontier areas, and the quality of published data on which most countries base their long-term energy and economic policies.
According to BP, almost all the world’s oil reserves growth of 30.5 billion barrels came from one war-torn country, Iraq, which raised its estimates by 28.1 billion barrels to 143 billion barrels at the end of 2011. Russian reserves rose by 1.6 billion barrels to 88.2 billion barrels while Saudi Arabia added 0.9 billion barrels to its 2011 reserves of 265.4 billion barrels.
That is, if these numbers are to be believed at all.
The issue of the validity of the published oil reserves data was again highlighted when BP decided to recognise Venezuela’s reserves claim of 296.5 billion barrels in the 2011 edition, enabling it to take spot from long-time leader Saudi Arabia’s 265.4 billion barrels. In the 2010 edition, Venezuela only had 211 billion barrels; thus, its reserves were sharply revised up by more than 40% in a year.
As with the case of the Middle Eastern oil producers, BP is unable to accurately and independently verify the claims submitted by the Venezuelan government.
Another source of concern is that the poorer quality of Venezuela’s Orinoco heavy oil reserves means it will not have the same energy output as the lighter oil from Saudi Arabia’s rapidly declining fields.
While new technology will facilitate the exploitation of difficult sources such as the heavy oilfields of Venezuela and Canada, and deep waters off the coasts of Latin America and West Africa, the cost of exploring and producing those barrels will be substantially higher compared with on-going work on established onshore acreages.
Oil and gas from shale and other unconventional sources, touted as the long-term solution to meeting the world’s new demand, will also take time and cost to develop, said BP.
The popular hydraulic fracturing or fracking method to produce hydrocarbons from shale has run into environmental opposition as it employs toxic chemicals that have found their way into underground water aquifers. Fracking has also been linked to earthquakes in parts of the US and UK.