The world's oil reserves are still rising, thanks to technological advances and hot oil prices.
British energy giant BP Plc calculates the globe's oil reserves climbed nearly 2 per cent last year, reaching 1.65 trillion barrels at the end of 2011, up from its revised estimate of 1.62 trillion barrels for 2010. By way of comparison, BP estimates oil reserves in 2001 totalled 1.27 trillion barrels. BP released the data in its annual roundup of global energy statistics.
Rising oil reserves, coupled with healthy levels of oil in storage and a recent drop in prices, suggests fears about a growing global oil scarcity may be overblown, at least for the time being. Oil companies are developing new ways to extract oil from places where they previously knew it existed but were unable to access. Canada stands as a prime example, as recent breakthroughs have allowed companies to develop the untapped slices of oil sands, and previously depleted reservoirs have been revived by multistage hydraulic fracturing.
Oil companies have also been able to boost their reserves as they develop methods to extract crude from deepwater reservoirs and geological formations like shale rocks, which previously stumped engineers. Accessing these reserves, however, is expensive, which is why high oil prices in 2011 helped facilitate the growth. However, as oil prices fall around the world, these lucrative sources of energy may once again be out of reach.
BP believes today's reserves, which are pools of hydrocarbons companies believe they can recover under current operating and economic conditions, will feed consumers for decades.
"At today's consumption rates, the world has proved reserves sufficient to meet current production for 54 years of oil," Bob Dudley, BP's chief executive, said when he unveiled the report.
Venezuela tops the world in reserves, edging out Saudi Arabia, BP said. Canada took third place.
While there has been a shift from perceived shortage to surplus, BP believes oil production may not meet demand because of political factors. Production, for example, has been unstable out of the Middle East and chunks of Africa because of civil wars and uprisings.
BP also believes the world's natural gas reserves are rising. Its widely respected report says natural gas reserves reached 208.4 trillion cubic metres by the end of 2011, up 6 per cent from 196.1 trillion cubic metres at the end of 2010.
Oil sold on the global market trades at a premium to the North American benchmark because pipelines are clogged, causing a glut in local markets.
Executives, as well as outside observers, believe new oil sands projects could be shelved should oil dip below $85. Existing projects may have to slow production growth should prices continue to slide. Further pressure will hit the oil sands if Canada is unable to build new pipelines, both to the West Coast as well as to America's Gulf Coast.
Peter Tertzakian, chief economist at Calgary's ARC Financial, said he believes BP is correct in its assumption that the world hosts 54 years worth of oil, but only if global crude prices hover between $90 (U.S) per barrel and $100.