Do you know what is peak oil? And how the decline in oil production is affecting companies and countries across the globe?

The term peak oil refers to the maximum rate of the production of oil in any area under consideration, recognising that it is a finite natural resource, subject to depletion.

• How long will India's petroleum reserves last?

Here are some common jargons used in describing peak oil:

Cumulative production
The cumulative production is the sum of all oil that has ever been produced until a specific date. Cumulative production can be given for a field, oil basin, country or the world.

Decline rate
The decline rate refers to production only. It is defined as the negative relative change of production over a time period. Often a period of a year is used. The decline rate can be expressed as a fraction or as percent.

Assume a production of 1 Gb in year 2007 and 0.95 Gb in year 2008. The decline rate for year 2008 would then be (1 - 0.95)/1 = 0.05 = 5%. If the production is rising, the decline rate becomes negative.

Depletion rate
The depletion differs from the decline rate in that it takes into account the amount of oil that is left. The depletion rate is defined as this year's production divided by the amount of oil that is left.

Depletion rate = This year's production / Oil left at start of this year

The amount of oil left is calculated by taking the URR minus last year's cumulative production. The depletion rate depends on the estimated amount of oil left. As more oil is produced, less oil is left. At a constant production the depletion rate grows while the decline rate is zero. The depletion rate can never become negative.

Geological basin
A large geological area in which sedimentation is occurring or has occurred. Certain parts of the basin might therefore have the required geological conditions to trap oil. It consists of many oil fields.

Oil
In context of oil production, the definition from BP Statistical Review (B.4) is used: crude oil, shale oil, oil sands and NGLs (natural gas liquids - the liquid content of natural gas where this is recovered separately).

In context of oil consumption, the definition from World Energy Outlook (A.6) is used: crude oil, condensates, natural gas liquids, refinery feedstocks and additives, other hydrocarbons and petroleum products (refinery gas, ethane, LPG, aviation gasoline, motor gasoline, jet fuels, kerosene, gas/diesel oil, heavy fuel oil, naphtha, white spirit, lubricants, bitumen, paraffin waxes, petroleum coke and other petroleum products).

Oil-in-place / Recovery factor
Oil-in-place is the estimated total amount of oil that is in the ground before production has started. For various reasons far from all of this oil can be recovered. Oil-in-place is usually calculated on a field basis and in an early stage.

The oil-in-place value is multiplied by a value called recovery factor and results in an estimated URR for a single field. Later in a field's production phase the URR is usually calculated with other techniques.

Oil reservoir
A subsurface porous and permeable rock body that contains oil, gas or both.

Oil field
An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature or stratigraphic condition.

Production
Production refers to the amount of oil that is produced during a certain time period (most often a day or a year). The following units are common in literature:
kb/d (1,000 barrels per day)
Mb/d (1,000,000 barrels per day)
Gb/y (1,000,000,000 barrels per year)
1 Mb/d = 365/1000 = 0.365 Gb/y
1 Gb/y = 1000/365 = 2.74 Mb/d

Recoverable reserves (estimated future production from known fields)
The recoverable reserves are an estimate of how much recoverable oil is still left in the already found oil fields. It can only be an estimate since it's impossible to know exactly how much oil is still in the ground.

Because of this uncertainty, reserves are calculated with a certain probability. A reserve estimate followed with, for instance, 'P90' means that there is a 90% chance that there is at least as much recoverable oil as the reserve estimate claims.