Slide 7 of 20
1. The graph shows proved reserves and production of conventional oil for the lower-48 States and the continental shelf.
2. M. King Hubbert, in his famous 1956 paper “Nuclear Energy and the Fossil Fuels” (Drilling and Production Practices, American Petroleum Institute, Washington, DC, 1956), predicted that Lower-48 States oil production would peak in 1965 if the assumed ultimate cumulative production were 150 billion barrels or in 1970 if the assumed ultimate cumulative production were 200 billion barrels.
3 For the United States, actual production peaked in 1970.
4. Hubbert also predicted that proved reserves of oil would peak before production peaked, and U.S. proved reserves did so in 1959. These U.S. reserves and production peaks still look like they will be the all-time peaks.
5. The United States experience conforms to the expected nature of the production cycle of a finite resource - and conventional oil is a finite resource.
6. Although market mechanisms such as higher prices and/or the application of new discovery, production, or end-use technologies might delay the peak and/or slow the decline, eventually production will peak and then fall for any finite resource.
7. If one can estimate the ultimate cumulative production (ultimate recovery) and the rates of production increase up to the peak and decline after the peak, then it is straightforward to predict when the production peak will occur. We’ll demonstrate this later in the presentation.