Happy Birthday, Oil
In order to take advantage of the high prices of illumination, a group of investors hired a railroad conductor named Edwin Drake to head to a location close to where traces of crude oil had been observed on the surface. After a nervous few weeks in rural Pennsylvania, Drake struck oil on August 27, 1859. The 69 foot deep well on a salt dome rock formation yielded around 15 barrels a day.
The petroleum that flowed from this well in what became known as Oil Creek, near Titusville, Pennsylvania, started the modern oil industry we know today (oil had been produced in other parts of the world, but the Titusville well kicked off industry on a large scale).
The new industry was gradually consolidated and monopolized by the Standard Oil Company. In 1911, Standard Oil was split by anti-monopoly legislation into several competing firms. Esso (“S. O.” for Standard Oil), which later became Exxon and then ExxonMobil, remains the most well known of the Standard Oil children and the largest company in the S&P 500.
A few statistics:
Global oil production reached its highest figure in 2006.
Two companies, Exxon and Petrochina, control more oil and gas reserves than the entire rest of the quoted oil and utility companies.
OPEC and Russia control 77% of global oil reserves (including oil sands).
In 1991 global years of demand covered by proven reserves was 15 years. In 2009 it is roughly 12.
In 2009, c$198 billion will be invested in E&P to produce c81,820kbpd (oil). The highest figure (inflation adjusted) ever spent.
In 2008 global proven reserves fell 0.2% despite the addition of Tupi to proven status. Global reserve replacement ratio has been below 100% since 2004.
Global oil discoveries have declined steadily since the early 1960s despite periods of high prices and advances in exploration and production technology. The deficit has grown such that around the world we are now consuming roughly three times the amount of oil we are discovering each year.
The discovery deficit is now so large that the IEA estimates an equivalent of six additional Saudi Arabias need to be found and developed, requiring cumulative investments of US$26 trillion, to meet its expected 2030 global oil demand.