An Iraqi worker operates valves at the Nahran Omar oil refinery near Basra, Iraq.
AP Photo/Nabil al-Jurani, File
"Oil: The Next Revolution"
The Unprecedented Upsurge of Oil Production Capacity and What It Means for the World
Discussion Paper 2012-10, Belfer Center for Science and International Affairs, Harvard Kennedy School
Author: Leonardo Maugeri, Senior Fellow, Geopolitics of Energy Project
Belfer Center Programs or Projects: The Geopolitics of Energy Project
EXECUTIVE SUMMARY (Excerpt)
Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.
Based on original, bottom-up, field-by-field analysis of most oil exploration and development projects in the world, this paper suggests that an unrestricted, additional production (the level of production targeted by each single project, according to its schedule, unadjusted for risk) of more than 49 million barrels per day of oil (crude oil and natural gas liquids, or NGLs) is targeted for 2020, the equivalent of more than half the current world production capacity of 93 mbd.
After adjusting this substantial figure considering the risk factors affecting the actual accomplishment of the projects on a country-by-country basis, the additional production that could come by 2020 is about 29 mbd. Factoring in depletion rates of currently producing oilfields and their “reserve growth” (the estimated increases in crude oil, natural gas, and natural gas liquids that could be added to existing reserves through extension, revision, improved recovery efficiency, and the discovery of new pools or reservoirs), the net additional production capacity by 2020 could be 17.6 mbd, yielding a world oil production capacity of 110.6 mbd by that date – as shown in Figure 1. This would represent the most significant increase in any decade since the 1980s.
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