In This Scenario, Global Reserves Fall 9%, Climate Goals Are Met, and Industry Profits Still Exist

A new report finds that, as many nations lost billions in recoverable reserves last year, the smaller footprint may put the industry on course to align with the world's climate targets.

Oil derricks and financial data

Total recoverable oil resources around the globe fell to 1,725 billion bbl, according to a newly published estimate from Rystad Energy on Tuesday. The figure represents a drop of 9% on a year-over-year basis from 2020’s estimate of 1,903 billion recoverable bbl.

  • Rystad describes the near-decimation as “a major blow” to global reserves, but said the upshot is that commercial oil production and consumption now has a better chance to align with the world’s climate goals.
  • The Oslo-based consultancy predicts 1,300 billion bbl of the new estimate can be profitably produced by 2100 at a Brent crude price point of $50/bbl.

The trendlines Rystad has drawn point toward oil and natural gas liquids production falling below 50 million B/D by 2050—or about 50% off the peak seen prior to the COVID-19 pandemic. This spells bad news for the outlook of many oil companies, but for those still pumping in 2050 it may signal that the industry has succeeded in striking a balance between meeting the world’s energy needs and its climate concerns.

Per Magnus Nysveen, Rystad’s head of analysis: “Exploring, developing, processing, and consuming this amount of commercially extractable oil will lead to gross greenhouse-gas emissions of less than 450 gigatons of CO2 from now until 2100. This is compliant with [the Intergovernmental Panel on Climate Change’s] carbon budget for global warming limited to 1.8°C by 2100.”

The Recount

Rystad said this years’ analysis is more bearish than previous attempts because it is based on well-level results that show more aggressive decline rates than do fieldwide reviews.

Combing through this data, analysts found that OPEC member nations took a combined reduction of 53 billion bbl to 741 billion bbl. However, the biggest losers in Rystad’s scenario are the US, China, and Mexico. The lower figures from these three nations are tied to lower expectations from shale resources, technology gaps to improve shale completions, and diminished exploration programs.

  • Saudi Arabia’s recoverable resources dropped by 11 billion bbl to 288 billion, still the world’s largest volume.
  • Iran saw a similar 11-billion bbl drop with recoverable resources now estimated at 101 billion bbl.
  • Russia’s drop of 10 billion bbl leaves it with the world’s third-highest reserves of 149 billion bbl.
  • Iraq’s recoverable estimate fell by 8 billion bbl to 110 billion bbl.
  • US recoverable resources fell by 30 billion bbl to an estimated total of 214 billion bbl, the second-highest reserves base behind Saudi.
  • Canada’s loss of 10 billion bbl has brought its reserves estimate down to 138 billion bbl.
  • China was downgraded by 26 billion bbl to 50 billion bbl.
  • Mexico’s recoverable estimates represent the third biggest loss of 12 billion bbl. to 26 billion bbl.
  • Norwegian recoverable reserves fell by only 1 billion bbl to settle at 19 billion bbl.
  • Brazil saw a drop of 2 billion bbl but retains South America’s brightest outlook with 83 billion bbl recoverable.
  • Nigeria was downgraded by 6 billion bbl to an estimated 20 billion bbl.
  • Australia bucked the trend by increasing its reserves 2 billion bbl to a total of 26 billion bbl.