The Future of Petroleum: 

Optimism, Pessimism, or Something Else?

By Ronald R. Charpentier

This report is preliminary and has not been reviewed for conformity with the U. S. Geological Survey editorial 

standards or with the North American Stratigraphic Code. Any use of trade names is for descriptive purposes only

and does not imply endorsement by the U. S. government.

USGS Open-File Report 03-137 

2003 

U.S. Department of the Interior 

U.S. Geological Survey
Optimism, Pessimism,

or Something Else?

Ronald R. Charpentier

U.S. Geological Survey

This report is derived from a presentation at a meeting of the Energy Modeling Forum at 

Stanford University on January 29, 2003. The figures are the slides presented on that occasion, 

with a few additions. A short text has been added to explain the slides and give additional 

comments. 

2
3

• Optimists vs Pessimists

• Cornucopians vs Catastrophists

Much has been discussed about the future of oil, and to a lesser degree natural gas, in 

relation to world energy use. Two groups are often contrasted. These are known as the optimists 

and the pessimists, or sometimes as the cornucopians and the catastrophists. The term 

“Malthusians” is also sometimes used for the pessimists. 
WORLD'S OIL (& LIQUIDS) AND GAS ULTIMATES

Ultimate Oil in Trillion Barrels, Gas in Trillion Cubic Feet/10,000

Modified from Laherrère, 2001

Estimates of resources of oil and gas range widely, but some groups that are considered 

optimists in some situations and by some people are considered pessimists in other situations and 

by others. As an example, the U.S. Geological Survey (USGS) is considered by some pessimists 

to be optimistic for its world-scale assessments, but as will be shown later, the USGS is 

considered by some optimists to be pessimistic for its assessments of gas in western Canada. 

4
Non-Trendologists

vs Trendologists

• Many prominent pessimists are

trendologists, but some optimists are

trendologists also.

• Trendology is easy, fast, cheap, and not

labor intensive.

Perhaps a more fundamental difference among resource assessors, however, is what can 

be termed the non-trendologists versus the trendologists. “Trendology” is here considered to be

the use of fairly simple statistical extrapolation without consideration of many complicating

factors. Many prominent pessimists are trendologists, but that approach is by no means confined 

to pessimists. 

The use of simple statistical extrapolation methods has the advantages of being easy, fast, 

and cheap. These extrapolation methods generally have modest data requirements and can be 

performed quickly by one or a few persons. More detailed geological assessments, on the other 

hand, have much larger data and effort requirements. The 1995 USGS assessment of U.S. 

petroleum resources (Gautier and others, 1995) and the 2000 USGS assessment of non-U.S. 

petroleum resources (U.S. Geological Survey World Energy Assessment Team, 2000) each 

required about 100 person-years of work over several years to complete. As many of the 

prominent trendologists are retired from industry or academia or both, these levels of effort are 

just not available to them. 

5
The disadvantages of trendology are easily demonstrated, however. Consider the 

discovery history of part of the Trias-Ghadames basin of Algeria. If trendology had been used 

for an assessment in 1980, the assessment would have given little chance for undiscovered fields 

larger than 10 million barrels and the resulting estimate would have been low. The largest field 

in the assessment unit would have been missed. 

6
A creaming curve based on the same data is also shown. The creaming curve levels off 

to about 2 billion barrels in the 1970’s, but later data show that at least 2 billion addition barrels 

were subsequently discovered. 

7
Trends

• Trends provide important information

because the discovery process is not random

• Trends are generally controlled by several

factors - but trendologists commonly use

only one explanatory variable (like time)

– Why should production necessarily decrease

when 50% of the ultimate production has been

reached?

Discovery trends, however, are a very useful part of resource assessment. The 

exploratory history for conventional oil and gas fields is non-random and that very nonrandomness offers significant information that can be used in discovery process models. Trends 

in resource discovery are affected by many factors, and trends in production even more so. 

Trendologists, however, use simple models that assume that the controlling factors of trends can 

be represented by a single factor, such as time. The unstated assumption is that other factors are

of minimal importance. As an example, Hubbert-type analyses of production generally assume 

that production declines when 50 percent of the resource has been produced, even though the 

actual production volumes are controlled by many complex factors of supply and demand. 

8
Trends By Play

• Larger fields tend to be found earlier in the

discovery history

• IF

– No restrictions to exploration (technologic,

leasing, economic, etc.)

• Larger plays not always developed earlier

– Often shallower, easier to develop plays first

The often-recognized trend of the larger fields generally being found first is a play-level 

trend. Arps and Roberts (1958), in their classic paper, showed that within a play the larger

conventional fields tend to be found early, even if drilling is random. This can be complicated, 

however, where part of a play is left unexplored for political, technologic, or economic reasons. 

9
Michigan Basin Discoveries per Year

0

50

100

150

200

250

1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995

Millions of Barrels Equivalent

Middle Ordovician

Trenton/Black River

Silurian

Devonian/Mississippian

1 barrel equivalent = 6000 cubic feet of gas

The finding of larger fields early in exploration is not necessarily true at scales other than 

the play level because larger plays are not necessarily developed earlier. The factors that tend to 

make larger fields within a play be found earlier do not make the larger plays be developed first. 

On the contrary, plays tend to be developed in order of ease of exploration and development—

often those with shallow reservoirs or easily detectable structural traps are developed first. Some 

large plays may not be developed until technologic improvements can make them viable. 

The Michigan basin shows a multi-cycle exploration history. Hubbert (1959) and 

LaHerrère (1999), both known for their work with single-cycle trends, recognized that multicycle histories existed. Even a rough division of the Michigan basin discoveries into four plays 

greatly improves the ability to interpret (and draw inference from) the discovery history. 

10
Are there more undeveloped

plays out there?

• Trendology alone ignores new plays or

assumes new ones will be small.

• Geologic studies can help indicate size and

number of additional plays

– But it’s a lot of work

– New plays may not mean a lot more resource.

• Ask if assessors have done their homework.

Assessing the resource potential for the Michigan basin requires answers to two major

questions. First, is there more potential in the previously explored plays? Second, are there new 

undeveloped (or barely developed) plays? Trendology can perhaps answer part of the first 

question, but can provide little information for the second. Although discovery rates for 

previously explored plays can be extrapolated statistically, trendology alone cannot evaluate 

what restrictions to exploration have affected these trends. This is important in the Michigan 

basin because some of the play areas extend into undrilled offshore parts of the basin. The 

potential for new plays cannot be evaluated by statistics alone, but requires more detailed 

geologic evaluation, which requires considerably more effort. New plays, if they exist, may or

may not be of large size. This cannot be evaluated from the basin’s exploration history because, 

as the previous figure shows, the plays were not developed in order of size. It is important when 

evaluating the quality of assessments, to ask if the assessors have invested the required effort 

needed to address these questions. 

11
Estimates for Undiscovered Recoverable Gas

in the Western Canada Sedimentary Basin

15.6

176

122

0 50 100 150 200

U.S. Geological

Survey, 2000

Canadian National

Energy Board, 1999

Canadian Gas

Potential Committee,

1997

Trillion Cubic Feet of Gas

Some of the recent assessments of conventional natural gas potential in the Western 

Canada Sedimentary Basin range over an order of magnitude. This prompted a study of the 

reasons for such differences (Henry and Charpentier, 2001). 

12
Reasons for Differences

• Different minimum pool size

• Different definition of conventional

• Different treatments of pool growth

• Different methodologies

Most of the differences came from differences in the definition of what was actually

assessed—the minimum pool size assessed, the definition of conventional, and whether pool 

growth was included or not. Methodological differences also seem to have had an effect. 

13
Insights Gained from Canadian

Comparison

• It’s not just how much resource is out there

• It’s how deliverable it is

– Depends on detail of assessment - pool sizes - and not

just the bottom line

– Not all parts of the resource volume are of similar

relevance

The insight gained from the comparison of Western Canada Sedimentary Basin 

assessments emphasized that resource volumes alone (the “bottom line”) do not give sufficient 

information to draw conclusions of societal relevance. For assessments to be useful they need 

appropriate detail, such as pool size, to allow understanding of how relevant various parts of 

those volumes may be to actual supply and on what time scales. This appropriate detail cannot 

be gained by merely extrapolating trends. 

14
Conclusions

• Don’t extend trends without considering

what actually controls the trends.

• Check if assessors have done their

homework.

• It’s not just the bottom line - look at the

finer detail.

In conclusion, the debate between petroleum resource optimists and pessimists obscures a 

more fundamental difference in assessment between statistical extrapolation versus geological 

assessment that takes many more relevant factors into account. Assessors need to seriously

consider the controls on those trends they extrapolate and whether other factors have serious 

effect on their results. Users of assessments need to keep the assessors honest by insisting that 

the assessors pay sufficient attention to such factors and document them. Finally, both assessors 

and users of assessments need to have a better appreciation that the utility comes from the fine

detail of the assessments. It’s not just the bottom line.

15
References Cited 

Arps, J.J., and Roberts, T.G., 1958, Economics of drilling for Cretaceous oil on east flank of 

Denver-Julesburg Basin: American Association of Petroleum Geologists Bulletin, v. 42, 

no. 11, p. 2549–2566. 

Gautier, D.L., Dolton, G.L., Takahashi, K.I., and Varnes, K.L., eds., 1995 National assessment 

of United States oil and gas resources—Results, methodology, and supporting data: U.S. 

Geological Survey Digital Data Series 30, one CD-ROM. 

Henry, M.E., and R.R. Charpentier, 2001, Comparison of recent natural gas estimates for the 

western Canada sedimentary basin [abs.]: American Association of Petroleum Geologists 

Annual Meeting, Denver, Colo., June 3–6, 2001, Official Program Book, p. A85. 

Hubbert, M.K., 1959, Techniques of prediction with application to the petroleum industry: 

Houston, Texas, Shell Development Co. Publication Preprint no. 204, 42 p. 

LaHerrère, J.H., 1999, World oil supply—what goes up must come down, but when will it 

peak?: Oil and Gas Journal, February 1, p. 57–58, 60–62, 64. 

———, 2001, Comments on the new Shell scenarios: Available at 

www.hubbertpeak.com/LAHERRERE/shell2001/ 

U.S. Geological Survey World Energy Assessment Team, 2000, U.S. Geological Survey World 

Petroleum Assessment 2000—Description and Results: U.S. Geological Survey Digital 

Data Series 60, four CD-ROMs. 

16