Comments on: U.S. Has More Oil Reserves Than Iran and Venezuela

By: elizabeth

elizabeth — Tue, 29 Jul 2008 12:17:30 +0000

The problem with proven reserves in the US is a huge chunk of them are in South Texas where ExxonMobil, Chevron, Shell and some other major own large old leases that allow for one well to hold the acreage. The SEC allows for an accounting strategy to book “proven reserves” as capital assets. Most of these old leases aren’t getting developed. Exxon owns 600,000 acre lease called the King Ranch that sits there. I live on a 38,000 ranch with huge proven reserves, and ExxonMobil and Chevron do the bare minimum. If a company has “proven reserves” booked as an asset, it makes no sense to develop them because every dollar in sales is actually a loss on the books. Also, many of these wells have been shut in since 1996, and that can make them harder to produce, should the SEC rules ever change.

By: Joshua Price

Joshua Price — Tue, 17 Jun 2008 20:14:14 +0000

What it means is that there is a strong possibility that there is a significant amount of reserves.

You are technically correct, but you make it seem as though these estimates are pulled out of a hat. They’re not.

We know for a fact that we are not fully exploiting the reserves in the Gulf of Mexico. So we’re not even close to capacity there.

We also we have pretty reliable data with respect to ANWR due to the hypersensitivity of the radical environmentalists.

Who says it take 10 years to usefully extract any located reserves? So what if it did? Does that mean that simply because it might take 10 years to fully realize the supplies that we shouldn’t drill?

The larger issue here–and I want to see if you agree with me on this–is that we must do everything possible to move away from oil being supplied to us by the Arab Gulf States.

Would you at least agree with this? If so, how do you propose we do it?

Ethanol? Yeah look at the price of corn.

Hybrid? Ok, there’s some promise in that, but are we within 10 years of it becoming much more efficient and affordable?

If we can agree on the premise that we need to move away from foreign oil, then I want to know how we can do it.

That’s the issue to me.

By: Robert Marston

Robert Marston — Tue, 17 Jun 2008 19:35:29 +0000

Undiscovered reserves are simply an estimate of oil that may be available. These are not real reserves or proven reserves. Also, only a fraction of reserves, once discovered, are extractable.

In essence, these reserves you mention are a fantasy. They aren’t available now. They haven’t even been discovered. And even if they are discovered it would take ten years or more to produce them.

What matters most is not ‘Undiscovered Reserves’ but ‘Ultimately Recoverable Reserves.’ For example, the Bakken Shale reserve in the US is thought to hold more than 100 billion barrels of oil. But of that only a small fraction — about 4.3 billion barrels of oil — is currently recoverable.

The figures posted by Iran, Venezuala and others you mention above are their estimates of ‘Ultimately Recoverable Reserves.’ So to make a comparison between recoverable reserves and undiscovered reserves is like comparing the money in your bank account today to the money you hope to have in savings twenty years from now. You can hope for it, you can plan for it, but until you earn it you can’t spend it. In other words — it’s not there yet.

Direct comparison of the two figures is a fallacious at best. Overall, very poor and misleading information used to serve a political agenda.