U.S. and World Oil Reserves
Discussions about the quantities of oil (or other natural resources) frequently confuse the crucial difference between proved reserves and the total resource base. Proved (or proven) reserves are not the total amount of oil in the earth. Proved reserves are the estimated amount of oil that, with reasonable certainty, are recoverable under existing economic and technological conditions.
According to government estimates, the United States has proved oil reserves of about 19 billion barrels of oil. Global proved oil reserves are now at 1.35 trillion barrels, the largest in history. In fact, global proved oil reserves have more than doubled from 1980 to 2010. In the U.S., proved reserves have slightly declined since 1980, but that doesn’t tell the whole story. In 1980, the U.S. had oil reserves of 29.81 billion barrels. From 1980 through 2010, we produced 77.37 billion barrels of oil. In other words, over the last 30 years, we produced over 250 percent of the proved reserves we had in 1980.
As the price of oil increases and technology improves, other oil resources become financially viable and are added to the “proved reserves” category. Technological changes, such as horizontal drilling and directional drilling, have increased access to oil resources and have made existing wells more efficient, further increasing reserves.
In the United States, oil production increased 7.4 percent in 2009 as a result of drilling investment made during high oil prices in 2008. Oil production increased from 4.95 million barrels per day in 2008 to 5.36 million barrels per day in 2009, with production from offshore Gulf of Mexico and in North Dakota offsetting declines elsewhere.
Oil production increased to 5.51 million barrels per day in 2010, but that amount is less than what was forecasted before the Deepwater Horizon accident. Due to the moratorium on offshore drilling imposed by the Obama administration and the resulting slowdown in permit applications, oil production in 2011 is expected to decline by 110,000 barrels per day. Although large increases are expected from onshore oil production, those increases are not expected to compensate for the huge losses in the offshore Gulf of Mexico and the declines in Alaskan production.