Papers - - Petroleum Economics - Proven Oil Reserves

It has been repeatedly questioned whether estimates of oil reserves are of any practical value, as the greater number of such calculations previously made have subsequently been proved to be grossly inaccurate. But even admitting partial justification for such statements, it must be evident that some idea, however approximate, of the available reserves of essential minerals—petroleum included—is of vital importance in mapping their development and the future trend of the related industries, particularly if it is kept constantly in mind that these estimates are not only never intended as a final word but must continually be subject to revision in accordance with the changes in their component factors. The value of these estimates, therefore, hinges on the clear understanding of what is meant by reserves and that the figures can only apply within the limited time when the controlling factors remain unchanged. It should be understood, further, that while estimates of possible and probable oil deposits are as a rule but idle conjectures, appraisals of proven oil reserves can undoubtedly be made with an ever-increasing degree of accuracy. And it is with this in mind that in the present study the endeavor has been to estimate only the world's proven oil reserves and to leave out of consideration the questionable volume of the probable and possible oil reserves. Such a survey presupposes further a clear distinction between the known amount of oil underground in proven fields at any one time, and the proven reserves: the portion that can be economically brought to the surface and made available for utilization. Only a fraction of the petroleum stored underground in proven fields— usually associated with natural gas—is or can be economically brought to the surface, and not all of the oik brought to the surface is economically utilized; also, although practically all the natural gas can be economically recovered and utilized, in actual practice a large part of the total volume that reaches the mouth of the well is wantonly blown into the air and wasted. It is thus estimated that in the United States only some 25 per cent of the petroleum stored underground in proven fields is actually brought to the surface; and in actual practice close to 25 per cent of the total gas produced is now absolutely wasted. And the dissipation of this