His prediction proved correct and Hubbert became very famous. In 1973 the Organization of Arab Petroleum Exporting Countries ceased shipments of petroleum to the United States, because of the U.S. giving relief to Israel, in 1979 revolution in Iran aggravated the oil crises. It resulted in slump; the recovery became possible due to serious reforms made by Ronald Reagan in the United States and by Margaret Thatcher in Great Britain and the collapse of the Soviet Union.
However the following events revealed errors in Hubbert’s judgments as he did not consider scientific and technological progress: since 90s US oil production started to grow due to new technologies of shelf deep water and then shale gas extraction and also Canadian hydrocarbons. Today US oil production is well in the way to its second peak and the day when US becomes oil exporter is not far off. Possibility of such second peak makes optimists believe in third and forth and so on peaks so the problem of oil depletion looks a far-fetched issue.
Oil is produced from oil fields. Around 45 – 70 thousand of such fields are known today. Herewith, 25 giant fields provide one quarter of the global oil production (the biggest field Gavar is located in Saudi Arabia and provides 7%). Another quarter is covered by a few hundred fields with total reserves of 500 million barrels. Apparently all giant fields on the planet have been found already, only if such are available in the Arctic and Antarctic where geological exploration conditions are much worse than in Texas or on the Arab Peninsula. It means that new pool discoveries provide fewer surpluses to the proven reserves over the years and the proven reserves are gradually reducing. The essential part of the reserves becomes nonrecoverable under current price level and technologies.
When oil gusher appears from exploration well and oil pipelines are pulled up, commercial drilling starts which provides quick production growth.
It lasts from three to ten years. Then the extraction reaches its peak and can remain at the same level for two-three years — the duration depends on the rate of pressure drop in the reservoir. When it falls to a critical level, the production starts to decline but slower than the growth for 10–15% per year from peak production. Such primary depletion provides 10–30% oil reserves in the formation. The next stage is water injection, which creates pressure to increase oil production. It helps to extract about 30–50% of the reserves. The third stage requires additional costs: to add surfactant species, to inject gas in place or use bacteria, to heat oil. Sometimes it helps to increase extraction up to 70–80%, but these methods are not popular due to profitability issues: today such methods provide only 1,5% of the global production. Usually such fields are shut down with 65% of reserved oil.
The situation with shale oil is even worse: its production does not grow and reaches its peak from the start. That is why its depletion is faster and the hydraulic fracture significantly impedes access to the remained reserves. As it is not the absence of reservoir pressure but the formation failure; remained reserves can hardly be extracted. Rapid depletion of shale oil leads to cost increase — drilling of more wells and construction of extended pipelines and less extraction.
Similar scenario — rapid growth, peak, slow decline — can be applied to any well, oilfields or global production so it is used for reserves estimation.