World oil supply in the 21st century : A bottom-up perspective

Sammanfattning: Oil-fuelled progress was a defining feature of the 20th century, and still today, oil remains the world’s largest primary energy source. Yet, oil is a non-renewable and carbon-intensive resource, either depletion or resulting carbon emissions will ultimately limit its use. This thesis investigates the potential and dynamics of world oil supply in order to increase the understanding of this defining dilemma of the 21st century. Specifically, it focusses on the different characteristics of conventional oil and the recently emerged unconventional tight oil, and their associated implications. It does so from a bottom-up perspective by combining physical and economic dynamics on the individual field and well levels.               The thesis is based on six papers. The first examines the usefulness of bottom-up modelling by a retrospective analysis of past oil projections. The second investigates how unconventional tight oil can be modelled on the well level using decline curve analysis. The third derives typical production parameters for conventional offshore oil fields. The fourth compares the production dynamics of conventional oil and tight oil and discusses possible oil market and climate policy implications. The fifth employs a fully calibrated bottom-up model to explore potential future world oil supply and derives implied estimates of price elasticity of supply for different segments. The sixth paper analyses past global projections of all energy sources to quantify the impact of policy, including the impact on future oil demand. The results show that conventional oil supply is inelastic in the short term, and its upside production potential resource-constrained in the long term. However, the rise of tight oil has made world oil supply more elastic, both in time and in scale. Its faster dynamics will likely shorten periods of under and over-supply, reducing induced price volatility. The size of the tight oil resource base is uncertain but large, according to the assumptions made here, large enough to underpin a continued expansion of world oil supply in line with current demand trends for at least 15 years. Within this time span, however, consumption of oil needs to begin to fall to be in line with climate goals. It is therefore possible, and perhaps even likely, that global oil production will peak due to reduced demand, before an ultimate peak driven by constrained supply. The changing nature of world oil supply has far-reaching economic, political and environmental implications that need consideration to assure a more sustainable development in the 21st century.