Conventional Reserves

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Fundamentals of Global Energy Business

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University of Colorado System

Fundamentals of Global Energy Business

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Learn about diverse and integrated markets for primary energy, and the essential considerations driving business leaders and policy makers in development of global energy resources.

À partir de la leçon

Energy Supplies and Market Allocations

A broad range of primary resources are used to satisfy our need for energy. Accessing these resources depends on many factors, including available technologies and skills, and a number of political factors. We will address these factors as well as issues and trends in energy supply.

Where Are Primary Resources Located?3:54

Conventional Reserves10:01

Renewable Potential8:04

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Michael J. Orlando
Lecturer
Global Energy Management, Business School

So let's turn to some charts on coal.

And consider the situation of coal reserves.

So this chart illustrates the distribution of coal reserves around the globe.

These charts were taken from the

British Petroleum Statistical Review of World Energy.

Which they, they publish I think on an annual basis.

A number of the major oil companies publish

very valuable resources for understanding global energy supply.

So we're going to take a look throughout today's lecture

at a few of these charts provided by BP.

first, the, what you notice is that the

bulk of coal reserves are located in three areas.

Okay.

North America, the Asia Pacific region, and Europe and Eurasia.

Each of these areas contains roughly a third of global proved coal reserves.

Okay, next, notice that reserves have actually shrunk

over the past ten years, which is somewhat interesting.

Now it might be interesting to ask why exactly.

With these, reserve with the reserve base have fallen

over this past, this past period because what we anticipate

is even though we're, we might think that reserves are

always going to fall, in fact, the companies that are producing.

Which is actually consuming some of the existing reserves.

They are also all the time exploring and looking for new reserves.

So, typically, you see reserve additions throughout time, as well as production.

But, it is interesting to go through

a period where reserves have actually shrunk.

You see, they actually increased from '92

to 2002, and actually declined more recently.

So, it's interesting to ask, why?

Because you might wonder, why didn't we go out and continue to find more?

Did coal prices decline, so it's no more, no

longer economically justified to add to the reserve base?

Did costs increase?

Maybe that's what affected the reserve base.

What exactly is driving this, and actually what I'd like you to do is take up this

question on the discussion board, and consider taking

on this question for our case assignment which is

which an assignment that I will provide at the end of this week.

That you'll be required to do prior to week three.

So so I'm not going to spend too much more time on

explaining that, but I do think that's a very interesting recent development.

Finally, one last thing is, notice how

global shares of reserves have evolved over time.

We have a decrease in the share of reserves from Europe and Eurasia.

And an increase.

So you have this decline here, okay?

But you have an increase in reserves coming from

North America and the Asia Pacific region.

Okay?

So we have this large increase here.

At least fractionally in an increase, while

we have a decline in Europe near Asia.

So I think those are some of the interesting features to

take away from our, little glimpse at the state of coal reserves.

So next, I'd like to look at oil.

And, you know, the first thing that I find useful is just

search around on line and, and take a look at some maps.

This map illustrates, it actually sizes

countries in proportion to their oil reserves.

Now, it's a little bit dated, but just I

as a visual representation of where, where reserves have

been, I think it's interesting to take a quick

glance at this and you see some, you know.

Some of the obvious stuff here.

You know, here in the Middle East,

there's really the vast bulk of global reserves.

Okay?

In North America, which consumes lots of oil.

Don't really have all that many reserves, in fact in

the Americas, that's really Venezuela that pops out as most significant.

Russia we think of as a pretty large oil producing nation, really

doesn't pop out that enormously, and in this visual.

So I think that's kind of interesting and illustrative.

But let's take a look at some more recent data on oil.

So here we have distribution of proved oil reserves

and how it's evolved over the last 20 years.

We take a closer look at these.

We see unsurprisingly, again in here, that the bulk is located in the Middle East.

[BLANK_AUDIO]

Okay.

Followed by the Americas.

So if you look at the Middle East and the

Americas, you know, makes up very

significant fraction of global oil reserves.

[BLANK_AUDIO]

Okay.

The greatest changes in shares are actually is actually

the decline I guess, in the share in the Middle East.

Not really because Middle East production is declining.

But because, you know, other pre-, I'm sorry,

reserves not that the reserves are declining dramatically,

but it's really the reserves that are being

added in other countries at a very rapid pace.

So even though we see this decline in shares, actually

overall, production has grown so dramatically over the last 20

years that all areas have actually added to their reserve base.

So reserves have grown, I should say, so dramatically over the

past 20 years, all areas have added to their reserve base.

Taking a look at natural gas reserves, we notice

what we see is that shares of reserves in the Middle East, Europe, and Eurasia have

grown from about two thirds to three quarters over the past 20 years.

Okay, so you can see that those two wages basically okay but reserves have grown so

dramatically, natural gas reserves have grown so dramatically,

that they actually on a nominal basis have increased.

For all regions.

So we see a similar with oil reserves, just a dramatic

increase in the global magnitude of natural

gas understood to be commercially recoverable out of the ground.

Now, I think it's important to take note of

a particular type of gas reserve and that is

shale gas.

And so what I want to do is just conclude this little section by talking just a bit

about shale gas basins because shale, shale gas, most of

the reserves on the previous slide reflect natural gas from conventional reservoirs.

You know, conventional sandstone reservoirs, let's say that

we've been sort of chasing for, for decades.

But, the shale gas revolution is less than a decade old, for the most part.

And what you notice on this map is just where those shale gas

resources are located as depicted by these known basins around the world.

Importantly, we see quite a bit of

resource in North America, Eurasia, maybe South America.

China, okay?

Also importantly we don't see that much of a resource in the Middle East here.

Which is where a lot of hydrocarbons traditionally have been developed.

So, you know if you were thinking about how the prior chart is going to evolve and

change over the short term, you might kind of

anticipate that geographically we could see some additions from these areas.

Kind of outpace the additions in coming

from the Middle East, the reserve additions.

So I encourage you to read a bit about

shale gas resources and just how much things have

changed say, from, I don't know, the middle to

the latter part of the last decade to now.

This is one of the major transformational issues not only in.

And that petroleum sector, the hydrocarbon sector

that also for global energy more generally.

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