Forecasting World Crude Oil Supply

Abstract

Abstract No one can underestimate the importance of crude oil in the modern world today. It is considered the key foundation of the world's first trillion-dollar industry and the principal item in the balance of payments and exchanges between nations. To truly appreciate the significance of this precious commodity, just imagine the day when all of the world's transportation systems and factories cease to function when the world has consumed its last drop of oil. This brings us to the main and crucial question: How long will oil last? Crude oil is the lifeblood of the 12 member-nations of the Organization of Petroleum Exporting Countries (OPEC), which produces 40% of the world's oil supply and holds three-quarters of the proven reserves. Reaching oil production peak can be alarming to OPEC members, where oil revenue is the main feeding stream of the gross national product (GNP). Many researchers, in the past decades, tried to find an answer to this crucial and critical question. Unfortunately, crude oil supply forecasting is a challenging endeavor. This paper presents our forecast for the OPEC countries supply of crude oil to years beyond 2050. We applied the "multi-cyclic Hubbert" approach that accurately models the oil-production history of OPEC countries, which are virtually most of the world's crude oil supplier. The analysis indicates that the OPEC ultimate oil recovery is about 1.137 trillion barrels. Of this amount, about 0.9117 trillion barrels remain to be produced by the end of 2080, where the peak is expected to be in 2025 at the production rate of 90 million barrels per day. OPEC has 77% of the world's remaining reserves. Furthermore, most OPEC countries will peak between 2020 and 2030, and they will remain the world main supplier of crude oil for the next 200 years. Introduction Crude oil is the world's most important internationally traded commodity. Modern man takes completely for granted an uninterruptible supply of cheap hydrocarbon fuels for transportation, home heating, electrical power generation, and industrial fuels and lubricants. The world is not running out of oil itself, but rather its ability to produce high-quality cheap and economically extractable oil on demand is declining. After more than 50 years of research and analysis on the subject by the most widely respected and rational scientists, it is now clear that the rate at which oil producing countries can produce oil is reaching the maximum possible level. This is what is referred to as Peak Oil. With a great effort and expenditure, the current level of oil production can possibly be maintained for a few more decades, beyond which oil production will begin a permanent and irreversible decline. One of the prime objectives of the petroleum industry is to supply the modern world with crude oil while making a profit. Petroleum liquids are exhaustible resources; thus, it is necessary to forecast their physical volumes by years into the future to be produced for a wide variety of purposes including the petroleum industry itself, nations, and groups of nations such as OPEC. One of the best known forecasting models used to forecast future hydrocarbon production using the ultimate reserves is the Hubbert curve.