Regardless of whether the peak has or has not been reached, oil and natural gas are an indispensable source of the world’s energy and petrochemical feedstocks and will be for many years to come. The difficulty in determining oil and gas reserves is that “true reserves” are a complex combination of technology, price, and politics. While technical change continues to reveal new sources of oil and gas, prices have demonstrated more volatility than ever, and governments have sought more control over resource information and access than ever.
As prices rise, reserves once considered noneconomic to develop may become feasible. Discovering new oil and gas reserves is the lifeblood of the industry. Without new reserves to replace oil and gas production, the industry would die. However, measuring and valuing reserves is a scientific and business challenge because reserves can only be measured if they have value in the marketplace. The oil sands of Alberta, Canada are a good illustration of how difficult it is to accurately measure oil and gas reserves.
Oil sands are deposits of bitumen, a molasses-like viscous oil that will not flow unless heated or diluted with lighter hydrocarbons. Although the Alberta oil sands are now considered second only to the Saudi Arabia reserves in the potential amount of recoverable oil, for many years these were not viewed as real reserves because they were not economical to develop.