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US oil discovery and production
58
US Oil Discovery and Production
Retrospective
A review section of past forecasts and the lessons they hold for today's forecasters
US OIL DISCOVERY AND PRODUCTION The projections of M. King Hubbert Edward Renshaw and Perry F. Renshaw Hubbert's projections, made in 1962, have been fairly accurate up to 1978. But discoveries are tailing off more rapidly than he predicted. Since 1946, each new well completed has added less to the proven reserves, and relatively little oil has been found offshore. In the 1980s, US oil production (as Hubbert projected) will decline sharply-unless tax incentives on investments are adjusted to favour improved recovery from old fields. IN A REPORT submitted in 1962 to the Committee on Natural Resources of the National Academy of Sciences, M. King Hubbert unveiled a new method of estimating the ultimate crude-oil production for the conterminous USA and its adjacent continental shelf.l His basic assumption was that cumulative discoveries of proven crude oil would continue to follow an S-shaped logistic curve fitted to the historical data (1900-1961). From this curve and a similar equation for cumulative production which lagged discoveries by 10·5 years, Hubbert concluded that cumulative discoveries would probably not. exceed 170 thousand million barrels and that crude-oil production in and adjacent to the 48 southern US states might peak by about 1967 and then begin to decline. Although the actual p~ Edward Renshaw and Perry F. Renshaw are with the Department of Economics, State University of New York at Albany, 1400 Washington Avenue, NY 12222, USA.
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duction peak did not occur until 1970, the projected values for cumulative discoveries and production have not yet been exceeded.
Hubbert'. model Growth phenomena which start slowly, gradually accelerate, and eventually level off at a maximum can be described by a logistic equation of the following form: rl_ Q.II (I) ~-l+ae-""
where Q.n represents cumulative discoveries, Q.H is the maximum amount of oil that will ever be discovered and produced, t is time, e is the base of natural logarithms, and a and h are parameters whose magnitudes must be determined by the data along with Q.x. By rearranging equation (I) and taking logarithms of both sides one can obtain: log[(Q.x/Q,n) -I] =Ioga-bt loge.
_-GO C 1_ IPC Bu,ln.., Pre..
(2)
US Oil Discovery and Production Equation (2) implies a linear relationship between log[(Qx/QD) -I] and I. Hubbert's method of fitting equation (2) was to plot [(QM/Qo) -I] as a function of time on semilogarithmic paper using an assumed value for QM. If the correct value is used for QM and if the data satisfy equation (I), the curve will be a straight line. By repeating this procedure (using several different values for QM) until a straight line was obtained, it was possible to find a best value for QM. The other two parameters, a and b, were then obtained from the linear graph. As determined in this manner, the increase of cumulative discoveries of proven crude oil (expressed in barrels) was found by Hubbert to be approximated quite well by the equation: 170xl0'
Q,n-I +46'8 e-o .... (t-UOO)·
(3)
ProjectecI di.coveri.. Actual discoveries have been less than those projected by Hubbert in every year except 1959 (Table I). The discrepancies, however, remained fairly small until the price of imported oil increased fourfold in 1974. Since then, the average annual shortfall in discoveries has been over 500 million barrels per year. Much of the shortfall can be attributed to a slump in upward revisions of the reserves associated with existing oil wells. Such revisions, which result from improved recovery techniques, have been the most important source of added crude-oil reserves in the southern 48 US states since the mid 1960s. In part, the decline in upward revisions may have been related to US price controls on domestic oil. Before President Carter unveiled his plan to decontrol the price of domestic oil, it was possible to deregulate the price of oil in some reservoirs by simply allowing production to decline to only ten
59
barrels of oil a day per well for a period of 12 consecutive months. This loophole may have made oil companies reluctant to install fluid injection, pressure maintenance, and the other advanced recovery techniques necessary to obtain more oil from some older reservoirs. I I t does not necessarily follow, however, that the decontrol of domestic crude-oil prices will lead to a large upward surge in the amount of oil to be recovered from existing oil wells. Indicated reserves (believed recoverable by fluid injection of old' oil fields) have declined from 7·6 thousand million barrels in 1967 to under 4·0 thousand million barrels at the end of 1978. . The petroleum industry may be running out of profitable opportunities to improve production with water flooding and other relatively inexpensive recovery methods. If this conjecture is correct, the gap between M. King Hubbert's projected discoveries and the actual cumulative discoveries will continue to widenuntil it becomes cheaper either to mine old oil fields,· or to invest in expensive recovery technology of a tertiary nature.
Cam_dve prodllctloa To estimate cumulative production, Hubbert simply modified the time coefficient in equation (3) to read (/-1910·5) rather than (/-1900). The resulting production curve does not give the best fit with actual figures, and only from 1928 to 1941 have the actual values for cumulative production exceeded Hubbert's projected values. This excess production may be related to the overdrilling of many large oil fields in the 1920s and early 1930s. ()verdriI1ing has been a ~ous problem.' Not until the mid 1930s and 19408 did the largest oil-producing states begin to solve this problem by encouraging unitisation of oil fields and
US Oil DiscoVlry IJIIIi Prod#&tion
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TABLE 1. ACTUAL AND PROJECTED CUMULATIVE US CRUDE-OIL DISCOVERIES AND PRODUCTION, 11157-2000
y .... 1957 19158 1951 1_ 1951 1962 19G3 1914 1965 1. 1957 111168 1968 1970 1971 1972 1973 1974 1m 1978 1977 1978 1979 1880 1981
,.
111B3 1984 1985 1890 1995 2000
Cumulative discovert.. (thousand million barrels)
Cumulative production (thousand million barrels)
actual
actual 57-4 59-a 82-a 114'7 a7·2 .·a 72'4 75'0
tn-7
go-a 94-0 98-a 98-& 101-1 1~ - a
105-9 108-0 111-7 114·a 117-0 119'0 121·& 124'1 125·a 127·a 129-7 130·9 132-3 133'7 135'0-
projected 88-0 go-9 93-8 98 -7 89-5 1al-a 105-1 107-8 110-5 11a'2 115'7 118-2 120-7 123-0 125'3 127-S 129'7 131-8 133-a 135-7 137'5 139'S 141'0 142·a 144-2 145'S 147'0 148'4 14&' 0 1SS'0 15&'1 182·1
dHrerence -o-a
-o-s 0-2 -0'4
-o·s -1-2 -1'8 -HI
-1-5 -1'5 -101 -1'2 -1'7 -1-1 -1'2 -2'0 -1·9 -2'1 -2·9 -S'4 -S'8 -4'.
n-7
eo·s
81i-1
811'7 89-8 93-0 95'2 99-4 111l-S 105-5 1IB'4 111-1 11a-8 118'4-
projected De-a 110-9 03-0 eo'4 eG'2 72'0 74 ' 8 77-a eo'7 83'S 811-5 89'4 92-S 915-2 98'1 100-9 1OS'7 106-5 108'2 111'8 114'4 117'0 119·5 121'9 124'2 126'5 128-8 130'8 132'8 141·a 148-0 154·8
difference -0-9 -101 -1·a -1·7 -2'0 -2-2 -2'5 -2-8 -3'0 -3,0 -2'9 -2'7 -2'5 -2'2 -1·9 -1'5 -1·1 -1'0 -0'8 -0-7
-o-s -o·e-
, . . : • PrelIminary utlmate.
by laying down minimum for new oil wells. From 1957 to 1966 the gap between actual and projected cumulative production ~dened froD1 9 hund~ Dlillion barrels to just over S thousand Dlillion barrels (Table I). Shut-in capacity and production controls in lOme of the main US oil-producing states were probably reaponaible for the widening of this gap. Since 1966, the difference between actual and projected cumulative production has narrowed considerably, to slightly lea than 6 hundred Dlillion barrels in 1978. The narrowing mainly occurred before April 1972, when the Texas Railroad CoIDIDission largely abandoned production controls and increased the allowable oll production froJn wel1a.
Table 2 shows that actual annual production was less than Hubbert'. projections from 1957 to 1966 and has ~ceeded projected production every year since then. The excess has, however, decreased from 360 million barrels in 1972 to only 40 million barrels in 1978. Since President Carter'. proposed D1ethod of decontrolling the price of domestic crude oil makes lOme categories of old oil left in the ground for production after 1981 decidedly more valuable than current oil production, the imInediate impact of decontrol might be to wonen the downward trend in domestic oil production rather than to reduce US iD1porta.1
US Oil Discowry and Protltietima
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TABLE 2. ANNUAL CONTERMINOUS US CRUDE-OIL PRODUCTION, 1957~
Y . .r 1957 1958 1959 1980 1951 1962 1963 1984 1955 1968 1987 1968 1959 1970 1971 1972
Actual production (thousand million barrels) 2'56 2'38 2'49 2·47 2'50 2'54 2'80 2'83 2'69 2·85 3·02 3'09 3'11 3'24 3·22 3'20
Projected production (thousand million barrels) 2'60 2·68 2'71 2'78 2'79 2·84 2'87 2·89 2'90 2'92 2'92 2'91 2·91 2'89 2'86 2'84
Difference -0'04 -0,28 -0·22 -0'29 -0'29 -0'30 -0'27 -0·28 -0'21 -0'07 0'10 0·18 0·20 0'35 0'36 0'36
If we assume that actual production will equal Hubbert's projected increase in production, however, crudeoil output in the conterminous USA will decline from 2·58 thousand million barrels in 1978 to 2·03 thousand million barrels in 1985, and only 990 million barrels in the year 2000. It is obvious that a decline of this magnitude would make it difficult for the USA to achieve President Carter's goal of substantially reducing petroleum imports.
Re.erve aclditio. . Table 3 splits the average additions to TABLE
Actual production (thousand million Year barrels) 1973 3'11 1974 2'95 1975 2·83 1978 2·77 1977 2'69 1978 2'58 1979 19110 1981 1982 1983 1984 1985 1990 1995
2000
Projected production (thousand million barrels) 2'79 2'78 2·71 2'85 2'80 2'54 2'48 2'40 2'34 2'28 2'19 2·11 2'03 1'66 1'34 0'99
Difference 0·32 0'20 0·12 0'12 0'09 0'04
cumulative proven US crude-oil discoveries into those which do or do not require additional drilling for recovery. From 1946 to 1955, total additions exceeded Hubbert's projections. This is probably because many sizeable oil fields were discovered during World War 2 and the depression of the 1930s but were not fully exploited until that war was ended. Subsequently, between 1946 and 1955 the annual number of oil wells completed in the USA gradually increased from about 16 thousand to 31·5 thousand. In the next decade, new oil-well completions declined rapidly-as did
a. OIL WELLS COMPLETED
AND ADDITIONS TO PROVEN DISCOVERIES, CONTERMINOUS USA, 1946-1978
Annual average additions to cumulative proven discoveries (million barrels)
Ne.
Annual average new wells completed (thousands) 20·5 28'8 28'2 20·4 14·8 12·5
Period 1946-1950 1951-1955 1956-1980 1961-1955 1966-1970 1971-1975 1976-1978 17·g
new discovert.. and extension. 1888
2237
1895 1410 D06 824 587
revision. of old oil-field reserves 1048 1003 907 1098 1881 1192 718
dlscoverl.. and extensions total per well dlscoverle., completed extension. Hubbert's (thousand and projections barrels) revisions IIIH 2680 2934 2870 83'5 3240 2900 72'5 2802 2770 69'1 2508 2500 61'3 2587 2150 50'1 1818 1840 33'3 1315
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US Oil Discovery and ProdII&titm
the discovery of new oil fields and the extensions of old ones. The slump in drilling activity and the decrease in reserve additions per well completed probably explains why actual additions dropped below Hubbert's projections for 1956-1965. From 1966 to 1970, the rapid decline of drilling activity and new-well pmductivity continued. Only a sharp upward revision in the amount of oil recoverable from old wells allowed total additions slightly to exceed Hubbert's projections. In the following 5 yean, upward revisions of existing oil wells were not so marked. Drilling activity and the productivity of new wells again declined and actual crude-oil additions fell below Hubbert's projections. Although drilling increased from 1976 to 1978, there was a further drop in new-well productivity, and new reserve additions continued their decline.
A prIee efreet The sharp decline in reserve additions per oil well completed since 1974 may be partly related to pricing. Franklin Fisher has found that drilling activity is more sensitive to economic incentives in small fields than in big ones: it is the development of marginal fields and reservoirs which is curtailed when oil prices fall and which is expanded the most rapidly when prices increase.' Similar thoughts have been expressed by Theodore Eck, chief economist for the Standard Oil Company of Indiana, who notes that reserve additions per foot of drilling in the southern 48 US states are now only about half what they were before 1967. The explanation or this phenomenon is PO doubt multifaceted. At least part or the answer is a concentration of activity in those known, but previously marginally unprofitable, plac:el DOW rude economical by higher prica.
These previously identified prospects, many of them shaIlow, with small reserves and low productivity, can be developed at minimum risk and total cost. The average depth per well for oil wells has decreased significantly with increased prices. This trend of shallower wells might be expected to continue until the 'inventory' of shallow, previously uneconomical prospects has been depleted.'
A 6% drop in the number of oil wells completed in 1978 is perhaps a sign that the inventory of low risk, low payoff projects may be nearing a state of depletion. Eck goes on to suggest that in-fill drilling in developed oil fields (to speed up oil production and convert some lower-tiered oil into higherpriced, upper-tiered oil) may have abo contributed to the trend towards shallower wells and declining reserve additions per well.
0&'''''' di••ppohatmeattl However, the persistent decline, since 1946, in reserve additions per well completed (Table 3) strongly suggests that oil companies may be running out of promising new places to search for petroleum in the 48 southern US states. Even on the continential shelf, the results, so far, have been rather discouraging. No significant oil discoveries have yet been made off the coast of Washington and Oregon, in the Gulf of Alaska, or in the Tanner Banks off southern California. The coastal sediments of Texas and Louisiana are prolific producers of oil and gas on land. Geologists therefore assumed that oil would be found offshore from Texas. But, after more than 25 years of exploration and drilling off both states, only about 5 thousand million barrels of oil have been discovered in the Louisiana continental shelf: the Texas shelf has yielded some gas but very little oil. Exploration off the Florida Gulf' c:out baa proved fruitlell and the ...".
....
,~-
US Oil Discowry tmd Pr_tion prospect of finding significant oil reserves off the Adantic coast is even bleaker. About 70 exploratory wells have been drilled in sedimentary basins in Canadian waters east of Nova Scotia and south of Newfoundland but only one minor oil discovery has been made. The twelve or more holes that have been drilled in the Baltimore Canyon off the coast of New Jersey have been equally disappointing. This lack of success at finding significant new oil deposits off the coast of the 48 southern US states is surely one of the reasons why the gap between actual cumulative discoveries and Hubbert's projected discoveries continued to widen in the 19705.
The ultimate Hmlt In describing his method of estimating future discoveries and production M. King Hubbert noted: The significance of the cumulative production curve needs no particular discussion. It will simply level off to the maximum QII when production is finished. The discovery curve Qn, however, merits further attention, because this curve is the embodiment of the results of all the improvements which have been made in discovery techniques, in drilling techniques, in recovery, and all the oil added by geographical extensions within the United States and its oflShore areas, since the beginning of the industry. We thus do not have to worry about how much oil may be contained in known oil fields over and above the API estimates of proved reserves, or how much improvement may be effected in the future in both exploration and productive techniques, for these will all be added in the future, as they have been in the past, by revisions and extensions in addition to new discoveries. And there is as yet no evidence of an impending departure in the future from the orderly progression which has characterised the evolution of the petr0leum industry during the last 100 yean.' When logistic curves are fitted to the more recent cumulative discovery data
1'UTU1l" ~-
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(1946-1978), the best-fit regression equation implies an upper limit to crude-oil discoveries and production of about 160 thousand million barrels for the 48 southern US states and their adjacent continental shelves. This limit is about 10 thousand million barrels less than Hubbert's projected ceiling. Both limits, however, are considerably lower than other recent estimates of recoverable crude oil. In 1975 the US Geological Survey estimated that cumulative discoveries and undiscovered recoverable resources in the southern 48 states and the continental shelf probably amount to at least 220 thousand million barrels.' While this higher estimate may eventually be exceeded it is unlikely to be the result of new oil fields being discovered. Most of the oil that has been found in the USA and elsewhere is located in a few large oil fields which are fairly easy to identify by visible structure-related traps.lO Once these larger fields have been discovered, many smaller traps can often be located-but the latter have litde appreciable effect on total oil reserves. l l In the USA over 60% of the remaining reserves of proven crude oil are located in 40 large fields, each of which is estimated originally to have contained over I thousand million barrels of oil (not all of which is recoverable). Only two large fields were discovered after 1950-both are in Alaska. 1I If all annual additions to crude oil reserves are allocated to oil fields by the year in which that field was fint discovered, there has been only one year, since 1950, when more oil was discovered in the USA than was produced and consumed. In the 9 years following the discovery in 1968 of 9·6 thousand million barrels of recoverable oil at Prudhoe Bay, Alaska, the total cumulative additions to proven oil reserves associated with new oil fields have amounted only to 3·4 thousand million barrels, 11 or about
US Oil Discovery and Production half the 1978 US consumption of petroleum products. If the time variable in equation (I) is replaced by the cumulative number of oil wells drilled in the USA and the resulting logistic equation is fitted to that portion of the additions to proven crude-oil discoveries resulting from new reservoir discoveries and old-field extensions, the best-fit relationship for 1946-1973 implies that only about 15 thousand million barrels of additional crude-oil reserves are likely to be obtained by future drilling. Had Hubbert been more cautious and had he restricted his projections of future discoveries and production to oil that can easily be recovered by primary and secondary methods, his projected ceiling of 170 thousand million barrels might never have been exceeded. Enha·cecI recovery
At the end of 1977, it was believed that about 423 thousand million barrels of crude oil lay under the 48 southern states and adjacent coastal waters. Of this total, only 133·7 thousand million barrels (31·6%) had either been produced or added to the stock of proven crude-oil reserves. If the figure could be raised to 40·2 % of the original oil in place, it would be possible to exceed Hubbert's ultimate cumulative production figure of 170 thousand million barrels without discovering any more new oil fields. Many petroleum geologists are now convinced that new recovery techniques such as steam injection, in situ combustion, chemical and polymer flooding, light-oil injection, and the use of carbon dioxide as a recovery agent will eventually enable the petroleum industry to achieve over 40% average recovery. Ted Geffen has suggested that up to 60 thousand million barrels of additional oil may be extracted through advanced recovery techniques.l& How-
ever, most of these techniques are expensive and major difficulties have been encountered in extrapolating from laboratory results to field tests. Considerable research, therefore, will probably be necessary before some of these techniques can be considered economically worthwhile. l I Even so, a number of studies havc suggested that it might be possible to increase annual tertiary recovery from less than 100 million barrels in 1976 to over 500 million barrels before 1990, with less disruption to the environment and at a smaller cost than would be required to obtain the same amount of oil from shale or coal. I. Considerable success has already been achieved in obtaining more petroleum from heavy-oil deposits in California by injecting steam into the producing sediments. I7 An advantage of tertiary over primary and secondary recovery is that the average pay-off period is shorter than the 10·5 years assumed by Hubbert in converting his cumulative discovery curve into a production curve18 More output can therefore be obtained from a given quantity of reserves and actual cumulative production will probably exceed Hubbert's projected values before cumulative reserve additions catch up with the projected discoveries implied by equation (3). The prospect of a shorter pay-off period makes heavy oil from steaminjected reservoirs an attractive source of additional petroleum for the mid 1980s. Since significant quantities of • synthetic fuels are unlikely to be available before 1990, and since few major new oil fields have been found recendy, it makes sense for policy makers to emphasise steam injection and other advanced techniques.
Tashaceadve. The present US system of taxing crude-oil investments, however, appears
US Oil DisctJM'Y and Produetion
to be biased in favour of new discoveries. About 70% of the costs of drilling and completing oil wells, classified as "intangible costs", may be claimed as expenses in the calculation of taxable income. I t Advanced recovery requires heavy additional investments in boilers, compressors, injection, and separation equipment which cannot be entirely written off against current income. The tax bias against synthetic crude is even more severe--very little of the necessary but expensive investment in plant and equipment can be claimed as tax-deductible expenses at the time the investments are made. If corporations were allowed to immediately claim about half of the capital costs associated with syntheticfuel plants or advanced recovery as tax-deductible, the tax bias in favour of investment in conventional drilling would be reduced. Such a measure would also help to provide the financial resources necessary to stabilise US domestic oil production. Economic efficiency would be further improved if a similar privilege were accorded to individuals and businesses investing in building insulation, solar collectors and storage equipment, and the capital facilities necessary to convert organic wastes into useful energy.
_pres."
accuraey
Alan Lohse has suggested that too much is made of Hubbert's technique for predicting the quantity of ultimate crude-oil recovery: The area under the curve representing cumulative production of the resource is detennined by man and not by nature. Nonliving earth resources do not become extinct, as did the ancient dionsaun, but become progressively scarcer until their finding and production costs can no longer compete with an alternative resource. It is, therefore, fallacious to ~ the shape of the back side of a symmetrical beU-shaped curve to predict decline of availability of the resource when the back side is determined by economics and national policies
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in future decades that are significantly different from those that determine the front of the curve in past decades.·'
Although there is much truth in this assessment, one cannot help being impressed by how well Hubbert's model has captured the peaking out of US domestic oil output and has continued to predict cumulative production since 1962. Actual production has exceeded Hubbert's projected increase in production every year since 1966 but by such small amounts in recent yean as to raise doubts as to whether that will continue to be the case in the next several yean. The actual values for cumulative production are likely eventually to surpass Hubbert's projected values, but it may not be easy to achieve that objective in the near future. There may be no new oil fields left to discover. The USA should conserve petroleum and policy makers should recognise that future oil production will probably depend more heavily on investments which allow producers to obtain more oil from existing fields than on the discovery of new fields. Naee. .... reI~ 1. M. King Hubbert, EtwrD &sowr;a (Washington, DC, National Academy of Sciences-National Research Council. 1962). 2. Edward F. Renshaw, "Taxation of crude oil, gasoline, and related fuell and commodities", Growth aNi~, January 1979, pages 78-M. 3. It has been estimated that there are 383 known shallow oil fields (under 500 feet of overburden) in the USA. If these were mined, the oil recovery might be increased from the usual 25%-40% attained by ordinary wen. to perhaps 90%. See E. C. Herkenhoff, "When are we going to mine oil ?", Enginming tI1Ui Mining JfIrImIll, June 1972 pages 132-138. 4. M. Adelman, "Efficiency in resource use in crude petroleum", StllllMnt ~ JfIrImIll, October 1964, page 122.
A.
66
US Oil Discowry fIIIIl ProduetiMa
5. This problem could be IOlved by converting the present implicit tax on domestic oil (which is currendy distributed to consumers in the fonn of a lower average price for petroleum products) and the President's proposed tax on windfall profits into a more efficient lump-sum tax that is independent of how much oil is actually produced in future periods. See Edward Renshaw, "The decontrol of domestic oil production in the United States", forthcoming, Energy Policy, March 1980. 6. Franklin M. Fisher, Supply aNi Costs in 1M US IrulJutry (Baltimore, MD, Johns Hopkins University Pre., 1964), pages 3-39. 7. Theodore R. Ed, "Changing economic perspectives of oil and gas production", in &plqralitm and &ottomia of IN Pdrol#um Industry (New York, Matthew Bender for the Southwestern Legal Foundation, 1977), volume 15, page
211. 8. M. King Hubbert, oJ1 &it Reference I,
page 60. 9. Betty M. Miller d al, "Geological estimates of undiscovered recoverable oil and gas resources in the United States", Geologi&al Survey Circular 725 (Washington, DC, US Geological Survey, 1975), page 4. 10. H. D. Klemme, "World oil and gu reserves from analysis of giant fields and petroleum basins", in R. F. Meyer, ed, The Fulurl SlI/JPIy of Nablrl-MtuII Ptlroleum and Gas (New York, Pergamon, 1977), page 237. I I. This point has been nicely illustrated by Klemme, ibid; and, in connection with the West Texas, Southeast New Mexico petroleum district, by Todd Doscher, "Tertiary recovery of crude oil", in R. F. Meyer, ed, ,. &it Reference 10, pages 457-459. 12. American Petroleum Inatitute, IWmJu of Crude Oil, Nablral Gas £biuids, t11UI Natural Gas in IN United Slalu aNi Canada tu qf DamINr 31, 1971, volume 32, June
1978, pages 78-79. 13. Ibid, page 25. 14. Ted M. Geffen, "Here'. what'. needed to get tertiary recovery going" , World Oil, March 1975, pages 53-57; L. E. Elkins, "How and when enhanced oil recovery may significandy add to the crude oil supply in the USA", in &pIoralitm anti Economics qf tM PetroUum Industry (New York, Matthew Bender for the Southwestern Legal Foundation, 1976), volume 14, pages 175-192. 15. D. O. Shaw and R. S. Schechter, eda, Improved Oil Recovery by Surfactant ond Polymer Flooding (New York, Academic
Press, 1977). 16. V. A. Kuuskraa, II al, "Potential and economics of enhanced oil recovery", in R. F. Meyer, ed, op cil Reference 10, pages 481-529; and National Petroleum Council, Enhan&,d Oil Recovery (Washington, National Petroleum Council, 1976). 17. R. F. Meyer, ed, op cit Reference 10, chapten 33 and 44. 18. Ted M. Geffen, oj) cil Reference 14, page 56, has noted that IOlvent slugs are expensive and will be wed on a one-through basis. Only minor cycling of the injection fluid can be tolerated which is not the case in a water flood. An analytical steam injection model developed by J. A. Kuuskraa, op cit Reference 16, page 506, assumes a production unit that will stay in operation for six yean until the decreasing oil-steam ratio makes further operation uneconomic. 19. Thomas R. Stauffer, "International taxation of oil production: some current issues", in Exploration and Economics qf 1M Petroleum Industry (New York, Matthew Bender for the Southwestern LegaI Foundation, 1978), volume 16, page 338. 20. Alan Lohse, "Total energy resource evaluaion as part of future oil and gas exploration", in R. F. Meyer, ed, tIP cit Reference 10, page 78.
"""Ita .....,-
US Oil Discovery and Production
Retrospective
A review section of past forecasts and the lessons they hold for today's forecasters
US OIL DISCOVERY AND PRODUCTION The projections of M. King Hubbert Edward Renshaw and Perry F. Renshaw Hubbert's projections, made in 1962, have been fairly accurate up to 1978. But discoveries are tailing off more rapidly than he predicted. Since 1946, each new well completed has added less to the proven reserves, and relatively little oil has been found offshore. In the 1980s, US oil production (as Hubbert projected) will decline sharply-unless tax incentives on investments are adjusted to favour improved recovery from old fields. IN A REPORT submitted in 1962 to the Committee on Natural Resources of the National Academy of Sciences, M. King Hubbert unveiled a new method of estimating the ultimate crude-oil production for the conterminous USA and its adjacent continental shelf.l His basic assumption was that cumulative discoveries of proven crude oil would continue to follow an S-shaped logistic curve fitted to the historical data (1900-1961). From this curve and a similar equation for cumulative production which lagged discoveries by 10·5 years, Hubbert concluded that cumulative discoveries would probably not. exceed 170 thousand million barrels and that crude-oil production in and adjacent to the 48 southern US states might peak by about 1967 and then begin to decline. Although the actual p~ Edward Renshaw and Perry F. Renshaw are with the Department of Economics, State University of New York at Albany, 1400 Washington Avenue, NY 12222, USA.
OOf....a7/80/01OO118-01
duction peak did not occur until 1970, the projected values for cumulative discoveries and production have not yet been exceeded.
Hubbert'. model Growth phenomena which start slowly, gradually accelerate, and eventually level off at a maximum can be described by a logistic equation of the following form: rl_ Q.II (I) ~-l+ae-""
where Q.n represents cumulative discoveries, Q.H is the maximum amount of oil that will ever be discovered and produced, t is time, e is the base of natural logarithms, and a and h are parameters whose magnitudes must be determined by the data along with Q.x. By rearranging equation (I) and taking logarithms of both sides one can obtain: log[(Q.x/Q,n) -I] =Ioga-bt loge.
_-GO C 1_ IPC Bu,ln.., Pre..
(2)
US Oil Discovery and Production Equation (2) implies a linear relationship between log[(Qx/QD) -I] and I. Hubbert's method of fitting equation (2) was to plot [(QM/Qo) -I] as a function of time on semilogarithmic paper using an assumed value for QM. If the correct value is used for QM and if the data satisfy equation (I), the curve will be a straight line. By repeating this procedure (using several different values for QM) until a straight line was obtained, it was possible to find a best value for QM. The other two parameters, a and b, were then obtained from the linear graph. As determined in this manner, the increase of cumulative discoveries of proven crude oil (expressed in barrels) was found by Hubbert to be approximated quite well by the equation: 170xl0'
Q,n-I +46'8 e-o .... (t-UOO)·
(3)
ProjectecI di.coveri.. Actual discoveries have been less than those projected by Hubbert in every year except 1959 (Table I). The discrepancies, however, remained fairly small until the price of imported oil increased fourfold in 1974. Since then, the average annual shortfall in discoveries has been over 500 million barrels per year. Much of the shortfall can be attributed to a slump in upward revisions of the reserves associated with existing oil wells. Such revisions, which result from improved recovery techniques, have been the most important source of added crude-oil reserves in the southern 48 US states since the mid 1960s. In part, the decline in upward revisions may have been related to US price controls on domestic oil. Before President Carter unveiled his plan to decontrol the price of domestic oil, it was possible to deregulate the price of oil in some reservoirs by simply allowing production to decline to only ten
59
barrels of oil a day per well for a period of 12 consecutive months. This loophole may have made oil companies reluctant to install fluid injection, pressure maintenance, and the other advanced recovery techniques necessary to obtain more oil from some older reservoirs. I I t does not necessarily follow, however, that the decontrol of domestic crude-oil prices will lead to a large upward surge in the amount of oil to be recovered from existing oil wells. Indicated reserves (believed recoverable by fluid injection of old' oil fields) have declined from 7·6 thousand million barrels in 1967 to under 4·0 thousand million barrels at the end of 1978. . The petroleum industry may be running out of profitable opportunities to improve production with water flooding and other relatively inexpensive recovery methods. If this conjecture is correct, the gap between M. King Hubbert's projected discoveries and the actual cumulative discoveries will continue to widenuntil it becomes cheaper either to mine old oil fields,· or to invest in expensive recovery technology of a tertiary nature.
Cam_dve prodllctloa To estimate cumulative production, Hubbert simply modified the time coefficient in equation (3) to read (/-1910·5) rather than (/-1900). The resulting production curve does not give the best fit with actual figures, and only from 1928 to 1941 have the actual values for cumulative production exceeded Hubbert's projected values. This excess production may be related to the overdrilling of many large oil fields in the 1920s and early 1930s. ()verdriI1ing has been a ~ous problem.' Not until the mid 1930s and 19408 did the largest oil-producing states begin to solve this problem by encouraging unitisation of oil fields and
US Oil DiscoVlry IJIIIi Prod#&tion
60
TABLE 1. ACTUAL AND PROJECTED CUMULATIVE US CRUDE-OIL DISCOVERIES AND PRODUCTION, 11157-2000
y .... 1957 19158 1951 1_ 1951 1962 19G3 1914 1965 1. 1957 111168 1968 1970 1971 1972 1973 1974 1m 1978 1977 1978 1979 1880 1981
,.
111B3 1984 1985 1890 1995 2000
Cumulative discovert.. (thousand million barrels)
Cumulative production (thousand million barrels)
actual
actual 57-4 59-a 82-a 114'7 a7·2 .·a 72'4 75'0
tn-7
go-a 94-0 98-a 98-& 101-1 1~ - a
105-9 108-0 111-7 114·a 117-0 119'0 121·& 124'1 125·a 127·a 129-7 130·9 132-3 133'7 135'0-
projected 88-0 go-9 93-8 98 -7 89-5 1al-a 105-1 107-8 110-5 11a'2 115'7 118-2 120-7 123-0 125'3 127-S 129'7 131-8 133-a 135-7 137'5 139'S 141'0 142·a 144-2 145'S 147'0 148'4 14&' 0 1SS'0 15&'1 182·1
dHrerence -o-a
-o-s 0-2 -0'4
-o·s -1-2 -1'8 -HI
-1-5 -1'5 -101 -1'2 -1'7 -1-1 -1'2 -2'0 -1·9 -2'1 -2·9 -S'4 -S'8 -4'.
n-7
eo·s
81i-1
811'7 89-8 93-0 95'2 99-4 111l-S 105-5 1IB'4 111-1 11a-8 118'4-
projected De-a 110-9 03-0 eo'4 eG'2 72'0 74 ' 8 77-a eo'7 83'S 811-5 89'4 92-S 915-2 98'1 100-9 1OS'7 106-5 108'2 111'8 114'4 117'0 119·5 121'9 124'2 126'5 128-8 130'8 132'8 141·a 148-0 154·8
difference -0-9 -101 -1·a -1·7 -2'0 -2-2 -2'5 -2-8 -3'0 -3,0 -2'9 -2'7 -2'5 -2'2 -1·9 -1'5 -1·1 -1'0 -0'8 -0-7
-o-s -o·e-
, . . : • PrelIminary utlmate.
by laying down minimum for new oil wells. From 1957 to 1966 the gap between actual and projected cumulative production ~dened froD1 9 hund~ Dlillion barrels to just over S thousand Dlillion barrels (Table I). Shut-in capacity and production controls in lOme of the main US oil-producing states were probably reaponaible for the widening of this gap. Since 1966, the difference between actual and projected cumulative production has narrowed considerably, to slightly lea than 6 hundred Dlillion barrels in 1978. The narrowing mainly occurred before April 1972, when the Texas Railroad CoIDIDission largely abandoned production controls and increased the allowable oll production froJn wel1a.
Table 2 shows that actual annual production was less than Hubbert'. projections from 1957 to 1966 and has ~ceeded projected production every year since then. The excess has, however, decreased from 360 million barrels in 1972 to only 40 million barrels in 1978. Since President Carter'. proposed D1ethod of decontrolling the price of domestic crude oil makes lOme categories of old oil left in the ground for production after 1981 decidedly more valuable than current oil production, the imInediate impact of decontrol might be to wonen the downward trend in domestic oil production rather than to reduce US iD1porta.1
US Oil Discowry and Protltietima
61
TABLE 2. ANNUAL CONTERMINOUS US CRUDE-OIL PRODUCTION, 1957~
Y . .r 1957 1958 1959 1980 1951 1962 1963 1984 1955 1968 1987 1968 1959 1970 1971 1972
Actual production (thousand million barrels) 2'56 2'38 2'49 2·47 2'50 2'54 2'80 2'83 2'69 2·85 3·02 3'09 3'11 3'24 3·22 3'20
Projected production (thousand million barrels) 2'60 2·68 2'71 2'78 2'79 2·84 2'87 2·89 2'90 2'92 2'92 2'91 2·91 2'89 2'86 2'84
Difference -0'04 -0,28 -0·22 -0'29 -0'29 -0'30 -0'27 -0·28 -0'21 -0'07 0'10 0·18 0·20 0'35 0'36 0'36
If we assume that actual production will equal Hubbert's projected increase in production, however, crudeoil output in the conterminous USA will decline from 2·58 thousand million barrels in 1978 to 2·03 thousand million barrels in 1985, and only 990 million barrels in the year 2000. It is obvious that a decline of this magnitude would make it difficult for the USA to achieve President Carter's goal of substantially reducing petroleum imports.
Re.erve aclditio. . Table 3 splits the average additions to TABLE
Actual production (thousand million Year barrels) 1973 3'11 1974 2'95 1975 2·83 1978 2·77 1977 2'69 1978 2'58 1979 19110 1981 1982 1983 1984 1985 1990 1995
2000
Projected production (thousand million barrels) 2'79 2'78 2·71 2'85 2'80 2'54 2'48 2'40 2'34 2'28 2'19 2·11 2'03 1'66 1'34 0'99
Difference 0·32 0'20 0·12 0'12 0'09 0'04
cumulative proven US crude-oil discoveries into those which do or do not require additional drilling for recovery. From 1946 to 1955, total additions exceeded Hubbert's projections. This is probably because many sizeable oil fields were discovered during World War 2 and the depression of the 1930s but were not fully exploited until that war was ended. Subsequently, between 1946 and 1955 the annual number of oil wells completed in the USA gradually increased from about 16 thousand to 31·5 thousand. In the next decade, new oil-well completions declined rapidly-as did
a. OIL WELLS COMPLETED
AND ADDITIONS TO PROVEN DISCOVERIES, CONTERMINOUS USA, 1946-1978
Annual average additions to cumulative proven discoveries (million barrels)
Ne.
Annual average new wells completed (thousands) 20·5 28'8 28'2 20·4 14·8 12·5
Period 1946-1950 1951-1955 1956-1980 1961-1955 1966-1970 1971-1975 1976-1978 17·g
new discovert.. and extension. 1888
2237
1895 1410 D06 824 587
revision. of old oil-field reserves 1048 1003 907 1098 1881 1192 718
dlscoverl.. and extensions total per well dlscoverle., completed extension. Hubbert's (thousand and projections barrels) revisions IIIH 2680 2934 2870 83'5 3240 2900 72'5 2802 2770 69'1 2508 2500 61'3 2587 2150 50'1 1818 1840 33'3 1315
62
US Oil Discovery and ProdII&titm
the discovery of new oil fields and the extensions of old ones. The slump in drilling activity and the decrease in reserve additions per well completed probably explains why actual additions dropped below Hubbert's projections for 1956-1965. From 1966 to 1970, the rapid decline of drilling activity and new-well pmductivity continued. Only a sharp upward revision in the amount of oil recoverable from old wells allowed total additions slightly to exceed Hubbert's projections. In the following 5 yean, upward revisions of existing oil wells were not so marked. Drilling activity and the productivity of new wells again declined and actual crude-oil additions fell below Hubbert's projections. Although drilling increased from 1976 to 1978, there was a further drop in new-well productivity, and new reserve additions continued their decline.
A prIee efreet The sharp decline in reserve additions per oil well completed since 1974 may be partly related to pricing. Franklin Fisher has found that drilling activity is more sensitive to economic incentives in small fields than in big ones: it is the development of marginal fields and reservoirs which is curtailed when oil prices fall and which is expanded the most rapidly when prices increase.' Similar thoughts have been expressed by Theodore Eck, chief economist for the Standard Oil Company of Indiana, who notes that reserve additions per foot of drilling in the southern 48 US states are now only about half what they were before 1967. The explanation or this phenomenon is PO doubt multifaceted. At least part or the answer is a concentration of activity in those known, but previously marginally unprofitable, plac:el DOW rude economical by higher prica.
These previously identified prospects, many of them shaIlow, with small reserves and low productivity, can be developed at minimum risk and total cost. The average depth per well for oil wells has decreased significantly with increased prices. This trend of shallower wells might be expected to continue until the 'inventory' of shallow, previously uneconomical prospects has been depleted.'
A 6% drop in the number of oil wells completed in 1978 is perhaps a sign that the inventory of low risk, low payoff projects may be nearing a state of depletion. Eck goes on to suggest that in-fill drilling in developed oil fields (to speed up oil production and convert some lower-tiered oil into higherpriced, upper-tiered oil) may have abo contributed to the trend towards shallower wells and declining reserve additions per well.
0&'''''' di••ppohatmeattl However, the persistent decline, since 1946, in reserve additions per well completed (Table 3) strongly suggests that oil companies may be running out of promising new places to search for petroleum in the 48 southern US states. Even on the continential shelf, the results, so far, have been rather discouraging. No significant oil discoveries have yet been made off the coast of Washington and Oregon, in the Gulf of Alaska, or in the Tanner Banks off southern California. The coastal sediments of Texas and Louisiana are prolific producers of oil and gas on land. Geologists therefore assumed that oil would be found offshore from Texas. But, after more than 25 years of exploration and drilling off both states, only about 5 thousand million barrels of oil have been discovered in the Louisiana continental shelf: the Texas shelf has yielded some gas but very little oil. Exploration off the Florida Gulf' c:out baa proved fruitlell and the ...".
....
,~-
US Oil Discowry tmd Pr_tion prospect of finding significant oil reserves off the Adantic coast is even bleaker. About 70 exploratory wells have been drilled in sedimentary basins in Canadian waters east of Nova Scotia and south of Newfoundland but only one minor oil discovery has been made. The twelve or more holes that have been drilled in the Baltimore Canyon off the coast of New Jersey have been equally disappointing. This lack of success at finding significant new oil deposits off the coast of the 48 southern US states is surely one of the reasons why the gap between actual cumulative discoveries and Hubbert's projected discoveries continued to widen in the 19705.
The ultimate Hmlt In describing his method of estimating future discoveries and production M. King Hubbert noted: The significance of the cumulative production curve needs no particular discussion. It will simply level off to the maximum QII when production is finished. The discovery curve Qn, however, merits further attention, because this curve is the embodiment of the results of all the improvements which have been made in discovery techniques, in drilling techniques, in recovery, and all the oil added by geographical extensions within the United States and its oflShore areas, since the beginning of the industry. We thus do not have to worry about how much oil may be contained in known oil fields over and above the API estimates of proved reserves, or how much improvement may be effected in the future in both exploration and productive techniques, for these will all be added in the future, as they have been in the past, by revisions and extensions in addition to new discoveries. And there is as yet no evidence of an impending departure in the future from the orderly progression which has characterised the evolution of the petr0leum industry during the last 100 yean.' When logistic curves are fitted to the more recent cumulative discovery data
1'UTU1l" ~-
63
(1946-1978), the best-fit regression equation implies an upper limit to crude-oil discoveries and production of about 160 thousand million barrels for the 48 southern US states and their adjacent continental shelves. This limit is about 10 thousand million barrels less than Hubbert's projected ceiling. Both limits, however, are considerably lower than other recent estimates of recoverable crude oil. In 1975 the US Geological Survey estimated that cumulative discoveries and undiscovered recoverable resources in the southern 48 states and the continental shelf probably amount to at least 220 thousand million barrels.' While this higher estimate may eventually be exceeded it is unlikely to be the result of new oil fields being discovered. Most of the oil that has been found in the USA and elsewhere is located in a few large oil fields which are fairly easy to identify by visible structure-related traps.lO Once these larger fields have been discovered, many smaller traps can often be located-but the latter have litde appreciable effect on total oil reserves. l l In the USA over 60% of the remaining reserves of proven crude oil are located in 40 large fields, each of which is estimated originally to have contained over I thousand million barrels of oil (not all of which is recoverable). Only two large fields were discovered after 1950-both are in Alaska. 1I If all annual additions to crude oil reserves are allocated to oil fields by the year in which that field was fint discovered, there has been only one year, since 1950, when more oil was discovered in the USA than was produced and consumed. In the 9 years following the discovery in 1968 of 9·6 thousand million barrels of recoverable oil at Prudhoe Bay, Alaska, the total cumulative additions to proven oil reserves associated with new oil fields have amounted only to 3·4 thousand million barrels, 11 or about
US Oil Discovery and Production half the 1978 US consumption of petroleum products. If the time variable in equation (I) is replaced by the cumulative number of oil wells drilled in the USA and the resulting logistic equation is fitted to that portion of the additions to proven crude-oil discoveries resulting from new reservoir discoveries and old-field extensions, the best-fit relationship for 1946-1973 implies that only about 15 thousand million barrels of additional crude-oil reserves are likely to be obtained by future drilling. Had Hubbert been more cautious and had he restricted his projections of future discoveries and production to oil that can easily be recovered by primary and secondary methods, his projected ceiling of 170 thousand million barrels might never have been exceeded. Enha·cecI recovery
At the end of 1977, it was believed that about 423 thousand million barrels of crude oil lay under the 48 southern states and adjacent coastal waters. Of this total, only 133·7 thousand million barrels (31·6%) had either been produced or added to the stock of proven crude-oil reserves. If the figure could be raised to 40·2 % of the original oil in place, it would be possible to exceed Hubbert's ultimate cumulative production figure of 170 thousand million barrels without discovering any more new oil fields. Many petroleum geologists are now convinced that new recovery techniques such as steam injection, in situ combustion, chemical and polymer flooding, light-oil injection, and the use of carbon dioxide as a recovery agent will eventually enable the petroleum industry to achieve over 40% average recovery. Ted Geffen has suggested that up to 60 thousand million barrels of additional oil may be extracted through advanced recovery techniques.l& How-
ever, most of these techniques are expensive and major difficulties have been encountered in extrapolating from laboratory results to field tests. Considerable research, therefore, will probably be necessary before some of these techniques can be considered economically worthwhile. l I Even so, a number of studies havc suggested that it might be possible to increase annual tertiary recovery from less than 100 million barrels in 1976 to over 500 million barrels before 1990, with less disruption to the environment and at a smaller cost than would be required to obtain the same amount of oil from shale or coal. I. Considerable success has already been achieved in obtaining more petroleum from heavy-oil deposits in California by injecting steam into the producing sediments. I7 An advantage of tertiary over primary and secondary recovery is that the average pay-off period is shorter than the 10·5 years assumed by Hubbert in converting his cumulative discovery curve into a production curve18 More output can therefore be obtained from a given quantity of reserves and actual cumulative production will probably exceed Hubbert's projected values before cumulative reserve additions catch up with the projected discoveries implied by equation (3). The prospect of a shorter pay-off period makes heavy oil from steaminjected reservoirs an attractive source of additional petroleum for the mid 1980s. Since significant quantities of • synthetic fuels are unlikely to be available before 1990, and since few major new oil fields have been found recendy, it makes sense for policy makers to emphasise steam injection and other advanced techniques.
Tashaceadve. The present US system of taxing crude-oil investments, however, appears
US Oil DisctJM'Y and Produetion
to be biased in favour of new discoveries. About 70% of the costs of drilling and completing oil wells, classified as "intangible costs", may be claimed as expenses in the calculation of taxable income. I t Advanced recovery requires heavy additional investments in boilers, compressors, injection, and separation equipment which cannot be entirely written off against current income. The tax bias against synthetic crude is even more severe--very little of the necessary but expensive investment in plant and equipment can be claimed as tax-deductible expenses at the time the investments are made. If corporations were allowed to immediately claim about half of the capital costs associated with syntheticfuel plants or advanced recovery as tax-deductible, the tax bias in favour of investment in conventional drilling would be reduced. Such a measure would also help to provide the financial resources necessary to stabilise US domestic oil production. Economic efficiency would be further improved if a similar privilege were accorded to individuals and businesses investing in building insulation, solar collectors and storage equipment, and the capital facilities necessary to convert organic wastes into useful energy.
_pres."
accuraey
Alan Lohse has suggested that too much is made of Hubbert's technique for predicting the quantity of ultimate crude-oil recovery: The area under the curve representing cumulative production of the resource is detennined by man and not by nature. Nonliving earth resources do not become extinct, as did the ancient dionsaun, but become progressively scarcer until their finding and production costs can no longer compete with an alternative resource. It is, therefore, fallacious to ~ the shape of the back side of a symmetrical beU-shaped curve to predict decline of availability of the resource when the back side is determined by economics and national policies
"""- ,.....,5
65
in future decades that are significantly different from those that determine the front of the curve in past decades.·'
Although there is much truth in this assessment, one cannot help being impressed by how well Hubbert's model has captured the peaking out of US domestic oil output and has continued to predict cumulative production since 1962. Actual production has exceeded Hubbert's projected increase in production every year since 1966 but by such small amounts in recent yean as to raise doubts as to whether that will continue to be the case in the next several yean. The actual values for cumulative production are likely eventually to surpass Hubbert's projected values, but it may not be easy to achieve that objective in the near future. There may be no new oil fields left to discover. The USA should conserve petroleum and policy makers should recognise that future oil production will probably depend more heavily on investments which allow producers to obtain more oil from existing fields than on the discovery of new fields. Naee. .... reI~ 1. M. King Hubbert, EtwrD &sowr;a (Washington, DC, National Academy of Sciences-National Research Council. 1962). 2. Edward F. Renshaw, "Taxation of crude oil, gasoline, and related fuell and commodities", Growth aNi~, January 1979, pages 78-M. 3. It has been estimated that there are 383 known shallow oil fields (under 500 feet of overburden) in the USA. If these were mined, the oil recovery might be increased from the usual 25%-40% attained by ordinary wen. to perhaps 90%. See E. C. Herkenhoff, "When are we going to mine oil ?", Enginming tI1Ui Mining JfIrImIll, June 1972 pages 132-138. 4. M. Adelman, "Efficiency in resource use in crude petroleum", StllllMnt ~ JfIrImIll, October 1964, page 122.
A.
66
US Oil Discowry fIIIIl ProduetiMa
5. This problem could be IOlved by converting the present implicit tax on domestic oil (which is currendy distributed to consumers in the fonn of a lower average price for petroleum products) and the President's proposed tax on windfall profits into a more efficient lump-sum tax that is independent of how much oil is actually produced in future periods. See Edward Renshaw, "The decontrol of domestic oil production in the United States", forthcoming, Energy Policy, March 1980. 6. Franklin M. Fisher, Supply aNi Costs in 1M US IrulJutry (Baltimore, MD, Johns Hopkins University Pre., 1964), pages 3-39. 7. Theodore R. Ed, "Changing economic perspectives of oil and gas production", in &plqralitm and &ottomia of IN Pdrol#um Industry (New York, Matthew Bender for the Southwestern Legal Foundation, 1977), volume 15, page
211. 8. M. King Hubbert, oJ1 &it Reference I,
page 60. 9. Betty M. Miller d al, "Geological estimates of undiscovered recoverable oil and gas resources in the United States", Geologi&al Survey Circular 725 (Washington, DC, US Geological Survey, 1975), page 4. 10. H. D. Klemme, "World oil and gu reserves from analysis of giant fields and petroleum basins", in R. F. Meyer, ed, The Fulurl SlI/JPIy of Nablrl-MtuII Ptlroleum and Gas (New York, Pergamon, 1977), page 237. I I. This point has been nicely illustrated by Klemme, ibid; and, in connection with the West Texas, Southeast New Mexico petroleum district, by Todd Doscher, "Tertiary recovery of crude oil", in R. F. Meyer, ed, ,. &it Reference 10, pages 457-459. 12. American Petroleum Inatitute, IWmJu of Crude Oil, Nablral Gas £biuids, t11UI Natural Gas in IN United Slalu aNi Canada tu qf DamINr 31, 1971, volume 32, June
1978, pages 78-79. 13. Ibid, page 25. 14. Ted M. Geffen, "Here'. what'. needed to get tertiary recovery going" , World Oil, March 1975, pages 53-57; L. E. Elkins, "How and when enhanced oil recovery may significandy add to the crude oil supply in the USA", in &pIoralitm anti Economics qf tM PetroUum Industry (New York, Matthew Bender for the Southwestern Legal Foundation, 1976), volume 14, pages 175-192. 15. D. O. Shaw and R. S. Schechter, eda, Improved Oil Recovery by Surfactant ond Polymer Flooding (New York, Academic
Press, 1977). 16. V. A. Kuuskraa, II al, "Potential and economics of enhanced oil recovery", in R. F. Meyer, ed, op cil Reference 10, pages 481-529; and National Petroleum Council, Enhan&,d Oil Recovery (Washington, National Petroleum Council, 1976). 17. R. F. Meyer, ed, op cit Reference 10, chapten 33 and 44. 18. Ted M. Geffen, oj) cil Reference 14, page 56, has noted that IOlvent slugs are expensive and will be wed on a one-through basis. Only minor cycling of the injection fluid can be tolerated which is not the case in a water flood. An analytical steam injection model developed by J. A. Kuuskraa, op cit Reference 16, page 506, assumes a production unit that will stay in operation for six yean until the decreasing oil-steam ratio makes further operation uneconomic. 19. Thomas R. Stauffer, "International taxation of oil production: some current issues", in Exploration and Economics qf 1M Petroleum Industry (New York, Matthew Bender for the Southwestern LegaI Foundation, 1978), volume 16, page 338. 20. Alan Lohse, "Total energy resource evaluaion as part of future oil and gas exploration", in R. F. Meyer, ed, tIP cit Reference 10, page 78.
"""Ita .....,-