Resources: Resources are the geologically proven stocks of an energy carrier which are not yet regarded as recoverable economically because recovery requires new and expensive technology. The distinction between reserves and resources is sometimes fluid. The oil sand industry in Canada is the latest example of a transition from resources to reserves. Only a few years ago, these deposits were not recoverable economically.
Fossil Fuels. Nuclear Fuels. Acid Rain. Climate Change. Climate Feedback. Ocean Acidification. Rising Sea Level. Reserve vs occurrence Both the terms occurrence and reserve refer to some amount of a resource , however, the ideas are fundamentally different.
June 2, Energy, Environment, and Climate , 2nd ed. New York, NY, U. A: May 29, However, it is primarily used in the oil and gas industry. The ratio is derived from two numbers:. Natural resources by definition are materials from the Earth that are useful but are available in finite quantities.
Finding them gets steadily more difficult and more expensive until they are tapped out completely. The natural process of restoring them takes eons. Meanwhile, we are relying on them to feed us, get us from point A to point B, and build many of the things that we have come to rely upon.
If a company that is in the business of producing resources has a low reserves-to-production ratio it generally signals that it is about to run out of the material it relies on to make money.
Unless it locates more of that resource, it will be out of business. Economists as well as investors calculate reserves-to-production ratios for whole nations. If Botswana was seen as having a low reserves-to-production ratio for its diamond industry, it would mean that the nation is running short on one of the natural resources that contribute most to its national economy.
The reserves-to-production ratio is commonly used to estimate how many years' worth of oil a company or a country has. In , British oil company bp plc estimated that the world had approximately 1. The reserves-to-production ratio is flawed. Estimates from 40 years ago showed the world as having 30 years of proven oil reserves left, meaning we should have run out by now.
Then, 20 years later, the revised ratio concluded that we had 40 years of this critical energy resource left to extract. The lack of long-term reliability of the reserves-to-production ratio can be attributed to several factors. Oil and gas explorers and other extractors are constantly identifying new natural resources to dig up. These discoveries dramatically change the ratio, prolonging the estimated time we have left before they run out.
New technology can throw the ratio out of whack. Newer tools allow the extraction of oil that was previously considered impossible to get at a practical cost. That effectively changed the global reserves number and the value of the ratio. Another example is 3D seismic imaging. This technology breakthrough helps scientists see miles below the seabed floor, identifying newly proven reserves at sea. Offshore drilling can reach a depth of 25, feet, a significant increase from the 5, feet limits of the s.
Another factor that the ratio fails to account for is the continually increasing demand for natural resources as the global population grows and new economic powerhouses emerge. As long as that trend continues, estimates of how much we have left in terms of years are likely to be overly generous. At the same time, concerns about the environment have led to an earnest effort to find and develop alternative fuel sources.
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