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The issue of security of supply is now at the top of the energy policy
agenda. Concern is focused both on price security and the security of
physical supply. At present around 80% of global energy demand is
met by fossil fuels. The unrelenting increase in energy demand is
matched by the finite nature of these resources. At the same time,
the global distribution of oil and gas resources does not match the
distribution of demand. Some countries have to rely almost entirely
on fossil fuel imports. The maps on the following pages provide an
overview of the availability of different fuels and their regional
distribution. Information in this chapter is based partly on the report
‘Plugging the Gap’ 60 , as well as information from the International
Energy Agency’s World Energy Outlook 2008 and 2009 reports.
status of global fuel supplies
Oil is the lifeblood of the modern global economy, as the effects of
the supply disruptions of the 1970s made clear. It is the number
one source of energy, providing 32% of the world’s needs and the
fuel employed almost exclusively for essential uses such as
transportation. However, a passionate debate has developed over the
ability of supply to meet increasing consumption, a debate obscured
by poor information and stirred by recent soaring prices.
the reserves chaos
Public data about oil and gas reserves is strikingly inconsistent, and
potentially unreliable for legal, commercial, historical and
sometimes political reasons. The most widely available and quoted
figures, those from the industry journals Oil & Gas Journal and
World Oil, have limited value as they report the reserve figures
provided by companies and governments without analysis or
verification. Moreover, as there is no agreed definition of reserves or
standard reporting practice, these figures usually stand for different
physical and conceptual magnitudes. Confusing terminology -
‘proved’, ‘probable’, ‘possible’, ‘recoverable’, ‘reasonable certainty’ -
only adds to the problem.
Historically, private oil companies have consistently underestimated
their reserves to comply with conservative stock exchange rules and
through natural commercial caution. Whenever a discovery was
made, only a portion of the geologist’s estimate of recoverable
resources was reported; subsequent revisions would then increase the
reserves from that same oil field over time. National oil companies,
mostly represented by OPEC (Organisation of Petroleum Exporting
Countries), have taken a very different approach. They are not subject
to any sort of accountability and their reporting practices are even
less clear. In the late 1980s, the OPEC countries blatantly overstated
their reserves while competing for production quotas, which were
allocated as a proportion of the reserves. Although some revision was
needed after the companies were nationalised, between 1985 and
1990, OPEC countries increased their apparent joint reserves by
82%. Not only were these dubious revisions never corrected, but
many of these countries have reported untouched reserves for years,
even if no sizeable discoveries were made and production continued
at the same pace. Additionally, the Former Soviet Union’s oil and gas
reserves have been overestimated by about 30% because the original
assessments were later misinterpreted.
Whilst private companies are now becoming more realistic about
the extent of their resources, the OPEC countries hold by far the
majority of the reported reserves, and their information is as
unsatisfactory as ever. Their conclusions should therefore be treated
with considerable caution. To fairly estimate the world’s oil
resources a regional assessment of the mean backdated (i.e.
‘technical’) discoveries would need to be performed.
non-conventional oil reserves
A large share of the world’s remaining oil resources is classified as
‘non-conventional’. Potential fuel sources such as oil sands, extra
heavy oil and oil shale are generally more costly to exploit and their
recovery involves enormous environmental damage. The reserves of
oil sands and extra heavy oil in existence worldwide are estimated
to amount to around 6 trillion barrels, of which between 1 and 2
trillion barrels are believed to be recoverable if the oil price is high
enough and the environmental standards low enough.
One of the worst examples of environmental degradation resulting
from the exploitation of unconventional oil reserves is the oil sands
that lie beneath the Canadian province of Alberta and form the
world’s second-largest proven oil reserves after Saudi Arabia.
Producing crude oil from these ‘tar sands’ - a heavy mixture of
bitumen, water, sand and clay found beneath more than 54,000
square miles 61 of prime forest in northern Alberta, an area the size
of England and Wales - generates up to four times more carbon
dioxide, the principal global warming gas, than conventional drilling.
The booming oil sands industry will produce 100 million tonnes of
CO2 a year (equivalent to a fifth of the UK’s entire annual
emissions) by 2012, ensuring that Canada will miss its emission
targets under the Kyoto treaty. The oil rush is also scarring a
wilderness landscape: millions of tonnes of plant life and top soil
are scooped away in vast opencast mines and millions of litres of
water diverted from rivers. Up to five barrels of water are needed
to produce a single barrel of crude and the process requires huge
amounts of natural gas. It takes two tonnes of the raw sands to
produce a single barrel of oil.
gas
Natural gas has been the fastest growing fossil energy source over the
last two decades, boosted by its increasing share in the electricity
generation mix. Gas is generally regarded as an abundant resource
and public concerns about depletion are limited to oil, even though
few in-depth studies address the subject. Gas resources are more
concentrated, and a few massive fields make up most of the reserves.
The largest gas field in the world holds 15% of the Ultimate
Recoverable Resources (URR), compared to 6% for oil.
Unfortunately, information about gas resources suffers from the same
bad practices as oil data because gas mostly comes from the same
geological formations, and the same stakeholders are involved.
60 ‘PLUGGING THE GAP - A SURVEY OF WORLD FUEL RESOURCES AND THEIR IMPACT ON
THE DEVELOPMENT OF WIND ENERGY’, GLOBAL WIND ENERGY COUNCIL/RENEWABLE
ENERGY SYSTEMS, 2006.
61 THE INDEPENDENT, 10 DECEMBER 2007
69
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energy sources and security of supply | STATUS OF GLOBAL FUEL SUPPLIES