Established oil and gas reserves are likely to be depleted by 2034, but new technologies can tap 10.2 trillion barrels of unconventional reserves, says Lux Research
BOSTON, MA – November 13, 2012 – Current oil reserves are likely to run out by 2034, but new ways to tap unconventional oil and gas reserves could add over 250 years’ worth of resources, Lux Research said in a recent report.
Lux Research found that OPEC has overstated reserves by as much as 70%, but identified unconventional reserves totaling 10.2 trillion barrels. Production from tight oil, oil sands and shale gas will add 9.8 million barrels per day of production by 2035.
“New technology will lead to disruption in the energy section,” said Rick Nariani, Lux Research Analyst and the lead author of the report titled, “The Race to Replace Reserves.” “Some countries, such as Canada and Venezuela, have begun to develop their unconventional resources, but drastic innovation is needed to truly unlock the potential of these new reserves,” he added.
Lux Research analyzed global reserves, production forecasts, prospects for unconventional reserves and companies operating in the upstream sector. As unconventional reserves are tapped, it found that:
- Capital spending will skyrocket. This year, the oil industry is projected to spend over $728 billion, nearly half on unconventional projects, to find new reserves and develop technologies.
- New players are emerging. Though state-owned companies own the bulk of known reserves, Canadian companies such as Suncor Energy, CNRL, Athabasca Oil Sands and EnCana/Cenovus are all now among the top 50 reserve holders, producing primarily from unconventional reserves.
- EOR can ease prices. Enhanced oil recovery (EOR) has the greatest short-term potential as market forces push oil prices to $170 per barrel by 2020. EOR currently produces 1.62 million barrels per day, or 2% of global supply, and is growing as technology improves.
The report, titled “The Race to Replace Reserves,” is part of the Lux Research Exploration and Production Intelligence service.