1. Oil Peak – A Geologist’s View Francis Harper, BP plc Energy Institute, November 2004

2. How long will current reserves last? 1000 bn bbl 25 bn bbl p.a. Reserve Adds: Exploration Reserves Growth Nonconventionals A 40 year supply?

3. Exploration Exploration Potential – Discovery Trend Data based on those of IHS Energy Decreasing trend in volumes found from the early 60’s (peak) to the early ’90’s. Slight increasing trend over the last decade. Production exceeds discoveries for last ca. 20 years Are these numbers consistent?

4. Failure Uneconomic Success Economic Success Exploration Deepwater Basins – Success and Failure Lwr. Congo Niger Delta Campos GoM Ca. 1500 Exploration wells Ca. 120 basins tested Ca. 30 with discoveries Ca. 20 w. economic disc. Deepwater = >500m Data based on those of IHS Energy

5. Exploration Oil and Gas Fields >= 10 bn bbl oil equiv. Ca. 50 Fields with >10 bnboe ultimate Potential Kashagan is the only new supergiant oil field found in the last 25 years Volumes overviewed for field growth potential Data based on those of IHS Energy

6. Exploration Oil and Gas Basins >= 10 bn bbl oil equiv. Volumes overviewed for growth and YTF Data based on those of IHS Energy Ca. 50 Basins with >10 bnboe ultimate Potential of which ca.5 discovered pre- 1900 No major new oil province found since the North Sea other than as deepwater extensions of known basins

7. Exploration Field Sizes and Success Rates Success rates from new-field wildcats has increased from ca 1 in 6 to ca 1 in 3 over the last 50 years Average discovery sizes have tracked total discovery volumes declining to about 50 mmbbl by 1980. Data from IHS Energy

8. Exploration Exploration Potential Summary Discovered volumes have been declining since the end of the ’60s The deepwater theme of the ’90s has helped to reverse this trend but this will not last indefinitely The number of supergiant oil fields and the number of giant oil provinces have fallen off markedly in recent years Maximum and average field sizes are declining BUT Drilling success rates are rising, driven by advances in the technology of imaging

9. Reserves growth Discovery estimates grow with time Ca. 200 billion bbl added to discovery estimates (’50-’96) between ’97 and ‘03 Growth applies primarily to the bigger, older fields Data from IHS Energy annual reports

10. Reserves Growth Growth in IHS Reserves – World Data from IHS Energy annual reports

11. Reserves Growth Sources of Field Reserves Growth Extension (Stratigraphic) Extension (Structural) Addition (Shallower Pool) Addition (Deeper Pool) Addition (Satellite) Fields grow either by increases in Hydrocarbons-In-Place (extensions, additions) or by increases in Recovery actor (revisions, improved recovery) Revisions/ Improved Recovery

12. Data from IHS Energy database The average global oil recovery factor is about 30-35% Original Discovered Reserves are about 1950-2200 billion bbl Original Discovered In-place volumes are about 5500-7000 billion bbl Every 1% increase in average global recovery factor adds about 55-70 billion bbl reserves, almost equivalent to a UK North Sea Reserves Growth Growth by Improved Recovery Plots below based on ca. 9000 fields worldwide with recovery factors - containing ca. 1400 bbo with average RF of 30%

13. All fields with >100 mmbbl and >7 years data Reserves Growth Reserves Changes in UK Oil Fields Data from DTI Brown Book reports Average Individual field reserves changes may be positive or negative and can easily half or double the size of a field. On average, however, fields tend to grow.

14. Reserves estimates are uncertain and will change with time – these can go up or down but on average will be positive. Reserves growth is primarily a function of big, old fields. Growth occurs both by increasing hydrocarbons in-place and by increasing recovery factor. Most of discovered oil remains in the ground – this is potentially an enormous prize with a 1% increase in global recovery adding about 55-70 bn bbls. BUT Increasing recovery is difficult and expensive and most of reserves growth adds may not affect global peak production Reserves Growth Reserves Growth Potential Summary

15. Canada 36% Canada 36% Venezuela 19% Venezuela 19% Others 9% Others 9% MidEast 1% MidEast 1% Africa 3% Africa 3% USA 32% USA 32% Nonconventional Oil Resource Type and Distribution Data from IEA 2004 (WEO) 7 trillion bbl Oil-in-Place

16. Nonconventional Oil Production Potential IEA projects nonconventional production growing at ca. 8% p.a. to about 10 mmbpd by 2030 in 2030, 23% of this is expected to be GTLs (+CTL, Biofuel?)

17. Nonconventional Oil sources include – Heavy oil – Bitumen – Oil shale – Fractured source rock – Gas-to-liquids – Biofuels Heavy oil and bitumen are the most important in resource terms and are dominated by Venezuela and Canada respectively The resource base is very large and it will become an important part of future supply BUT There are large monetary and environmental costs involved and the rate of growth relative to the demand is limited Nonconventional Oil Summary of Nonconventional Potential

18. N.America 360 bnbl N.America 360 bnbl S.America 200 bnbl S.America 200 bnbl FSU 330 bnbl FSU 330 bnbl MidEast 810 bnbl MidEast 810 bnbl AsiaPacific 130 bnbl AsiaPacific 130 bnbl Africa 190 bnbl Africa 190 bnbl Europe 80 bnbl Europe 80 bnbl World 2100 bnbl 2 Distribution, Maturity of Conventional Oil Most regions of the world are either at or past the mid-point of depletion MidEast (and FSU and Africa) have produced <50% of their known resource

19. Existing discovered reserves are unlikely to sustain demand for more than about 15 years Exploration cannot be expected to replace production and its contribution may continue to decline Reserves Growth is likely to continue as the dominant form of reserve adds but much of it will only slow post- peak production decline Nonconventional oil will become increasingly important – there is a very large resource but converting it into reserves has significant financial and environmental costs Non-OPEC is likely to reach a resource-constrained production peak from conventional oil in the next 10 years – thereafter production capacity will be concentrated in progressively fewer countries Summary