Petroleum review article says global oil reserves underestimated

The June issue of the authoritative journal Petroleum Review will publish an article by Royal Society of Chemistry chief executive, Richard Pike - a career petrochemicals industry executive - in which he claims that the world's oil reserves have been, and are still being, grossly underestimated, with profound implications for the global environment this century and possibly beyond. 

Dr Pike, formerly an international senior manager with one of the world's biggest oil companies, writes that widely-accepted, but nevertheless flawed, calculation practices are employed to estimate world reserves and he goes on to suggest the way that oil reserves should be calculated.  The first is typically based on a simple addition of proven reserves while the second should be based on a more sophisticated probabilistic analysis which may be up to twice the size. 

The root of the miscalculation lies in intentionally conservative reserves figures (reported publicly by companies to protect investors) being used erroneously by energy and environmental analysts to predict future hydrocarbon supplies and potential carbon dioxide releases into the atmosphere.  

In the future the scientific community will particularly need to tackle more widespread carbon capture and sequestration, and the development of alternative fuels. It should not be forgotten, however, that this could include hydrogen based on the extensive fossil hydrocarbon accumulations still remaining. 

Addressing the consequences of the mistaken methodology he writes: 

"Rather than there being general agreement on the quantitative limits of these resources, which would encourage all parties to address remedies and also seek out alternative energy routes, the relative abundance of oil recognised by individual producers themselves may inhibit this search.

"Despite transparency and innovative approaches by some of the leading oil companies, the overall global response has been inconsistent and uncoordinated." 

He added: "There is also anecdotal evidence that some countries are under-reporting proven reserves to maintain a high oil price. Altogether as a result, the world is under-stating the environmental challenge facing generations to come, and appears unprepared for the difficult compromises that will have to be made.

"For more coherent global energy and environmental planning, it will be essential to use estimates that reflect proven plus probable reserves, and address issues of openness and confidentiality that this raises."