Reserves-to-production ratio
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The reserves-to-production ratio (RPR or R/P) is the remaining amount of a
non-renewable resource A non-renewable resource (also called a finite resource) is a natural resource that cannot be readily replaced by natural means at a pace quick enough to keep up with consumption. An example is carbon-based fossil fuels. The original organic mat ...
, expressed in time. While applicable to all
natural resource Natural resources are resources that are drawn from nature and used with few modifications. This includes the sources of valued characteristics such as commercial and industrial use, aesthetic value, scientific interest and cultural value. O ...
s, the RPR is most commonly applied to
fossil fuels A fossil fuel is a hydrocarbon-containing material formed naturally in the Earth's crust from the remains of dead plants and animals that is extracted and burned as a fuel. The main fossil fuels are coal, oil, and natural gas. Fossil fuels ...
, particularly
petroleum Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crud ...
and
natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbo ...
. The ''reserve'' portion (
numerator A fraction (from la, fractus, "broken") represents a part of a whole or, more generally, any number of equal parts. When spoken in everyday English, a fraction describes how many parts of a certain size there are, for example, one-half, eight ...
) of the ratio is the amount of a resource known to exist in an area and to be economically recoverable (
proven reserves Proven reserves (also called measured reserves, 1P, and reserves) is a measure of fossil fuel energy reserves, such as oil reserves, natural gas reserves, and coal reserves. It is defined as the " antity of energy sources estimated with reasonabl ...
). The ''production'' portion (
denominator A fraction (from la, fractus, "broken") represents a part of a whole or, more generally, any number of equal parts. When spoken in everyday English, a fraction describes how many parts of a certain size there are, for example, one-half, eight ...
) of the ratio is the amount of resource produced in one year at the current rate. ''RPR = (amount of known resource) / (amount used per year)'' This ratio is used by companies and government agencies in forecasting the future availability of a resource to determine project life, future income, employment, etc., and to determine whether more exploration must be undertaken to ensure continued supply of the resource. Annual production of a resource can usually be calculated to quite an accurate number. However, reserve quantities can only be estimated to varying degrees of accuracy, depending on the availability of information and on the methods used to evaluate them. A simplistic interpretation of the ratio has led to many false predictions of imminent "running out of oil" since the early years of the oil industry in the 1800s. This has been especially true in the United States, where the ratio of proved reserves-to-production has been between 8 years and 17 years since 1920. Many have mistakenly interpreted the result as the number of years before the oil supply is exhausted. Such analyses do not take into account future reserve growth.


Significance and interpretation

The reserves-to-production ratio is the most widely quoted of the key indicators used in the oil and gas industry. It has a certain strategic significance for companies, which try to keep the value reasonably constant at approximately 10 years. A ratio which falls too low indicates a company in poor health. For a country or region, a value which falls too low can be a warning of impending scarcity. Globally, the RPR for petroleum varies from 8 years in the North Sea to 80 years in the Middle East. The former is typical of a region undergoing a steep production decline, the latter a region which will be continuing to produce oil well into the future. The reserves-to-production ratio can be misleading to the average person, particularly since it is expressed in years. The fact that a region has a RPR of 40 years does not mean that it will continue to produce the resource for 40 years, at which point it will suddenly run out, and then production will decline to zero. More commonly, a resource will show an increase in production until it reaches a peak, and then production will plateau and enter a declining phase. In theoretical terms, this is more accurately described by the
Hubbert curve The Hubbert curve is an approximation of the production rate of a resource over time. It is a symmetric logistic distribution curve, often confused with the "normal" gaussian function. It first appeared in "Nuclear Energy and the Fossil Fuels ...
, a bell-shaped curve which is the mathematical
derivative In mathematics, the derivative of a function of a real variable measures the sensitivity to change of the function value (output value) with respect to a change in its argument (input value). Derivatives are a fundamental tool of calculus. F ...
of the
logistics function A logistic function or logistic curve is a common S-shaped curve (sigmoid curve) with equation f(x) = \frac, where For values of x in the domain of real numbers from -\infty to +\infty, the S-curve shown on the right is obtained, with the ...
. The magnitude of the RPR is inversely related to the annual rate of production, which may depend on
geological features Geology () is a branch of natural science concerned with Earth and other astronomical objects, the features or rocks of which it is composed, and the processes by which they change over time. Modern geology significantly overlaps all other Ear ...
. For example, a highly fractured oil reserve with water drive may have a RPR as low as 6 years. By contrast, a low permeability oil reserve may have a RPR as high as 50 or 100 years. Government policies may deliberately slow production, thereby increasing the RPR in the interests of prolonging reserve life, whereas a company may inject water and/or gases into a reservoir to increase production, thereby decreasing the RPR—the increased production comes at the expense of decreased reserve life. The RPR depends significantly on the stage of resource development. Typically, there is a high initial RPR during the early phases of development, then the RPR sharply declines toward the maximum level of production. Following to the production decline, the magnitude of the P/R ratio can either continue to decline, remain stable for some period of time, or increase, especially when a production slump occurs. New discoveries, changes in technology, or changes in economic conditions, can significantly alter the ratio in a short period of time, while misevaluation by involved parties can produce inaccurate and/or misleading results. Optimism or pessimism can influence reserve estimates. Further, reserves are resources that are ''economically'' recoverable under ''existing conditions''. Reserves may change as a result of political change, or by manipulation. Consumption of many resources is not constant, but typically increases as the population grows and becomes more prosperous. Non-constant values for both the numerator and denominator of the ratio implies it may either overestimate or underestimate the remaining life of the resource.


Fossil fuel reserve-to-production ratios

Reserve-to-production ratios may be calculated for individual countries or globally for specific resources.
Oil An oil is any nonpolar chemical substance that is composed primarily of hydrocarbons and is hydrophobic (does not mix with water) & lipophilic (mixes with other oils). Oils are usually flammable and surface active. Most oils are unsaturated ...
,
coal Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal is formed when dea ...
, and
gas Gas is one of the four fundamental states of matter (the others being solid, liquid, and plasma). A pure gas may be made up of individual atoms (e.g. a noble gas like neon), elemental molecules made from one type of atom (e.g. oxygen), or ...
are the three most important fuels for powering the modern world. These resources are not uniformly distributed over the earth, so some countries have larger reserves than others. Due to the uncertainty of the reserves numbers, estimates of RPR vary widely. Following table is from the data of the year 2015 by BP statistical review.


See also

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Decline curve analysis Decline curve analysis is a means of predicting future oil well or gas well production based on past production history. Production decline curve analysis is a traditional means of identifying well production problems and predicting well performan ...
*
List of countries by natural gas proven reserves This list is based on CIA The World Factbook (when no citation is given).List of countries by natural gas production This is a list of countries by natural gas production based on statistics from The World Factbook, and OECD members natural gas production by International Energy Agency (down) Countries by natural gas production The data in the following t ...
*
Peak gas Peak gas is the year in which the maximum global natural gas (fossil gas) production rate will be reached, after which the rate of production will enter its terminal decline. Although demand is peaking in the United States and Europe, it continu ...
*
Oil reserves An oil is any polarity (chemistry), nonpolar chemical substance that is composed primarily of Hydrocarbon, hydrocarbons and is hydrophobe, hydrophobic (does not mix with water) & lipophilicity, lipophilic (mixes with other oils). Oils are usu ...


References

{{DEFAULTSORT:Reserves-To-Production Ratio Non-renewable resources