A Preliminary Investigation of Energy Return on Energy Investment for Global Oil and Gas Production

Nathan Gagnon, Charles A.S. Hall and Lysle Brinker
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Nathan Gagnon: Program in Environmental Science, State University of New York – College of Environmental Science and Forestry, Syracuse NY, 13210, USA
Charles A.S. Hall: Program in Environmental Science, State University of New York – College of Environmental Science and Forestry, Syracuse NY, 13210, USA
Lysle Brinker: John S. Herold, Inc., Norwalk CT, 06851, USA

Energies, 2009, vol. 2, issue 3, 1-14

Abstract: Economies are fueled by energy produced in excess of the amount required to drive the energy production process. Therefore any successful society’s energy resources must be both abundant and exploitable with a high ratio of energy return on energy invested (EROI). Unfortunately most of the data kept on costs of oil and gas operations are in monetary, not energy, terms. Fortunately we can convert monetary values into approximate energy values by deriving energy intensities for monetary transactions from those few nations that keep both sets of data. We provide a preliminary assessment of EROI for the world’s most important fuels, oil and gas, based on time series of global production and estimates of energy inputs derived from monetary expenditures for all publicly traded oil and gas companies and estimates of energy intensities of those expenditures. We estimate that EROI at the wellhead was roughly 26:1 in 1992, increased to 35:1 in 1999, and then decreased to 18:1 in 2006. These trends imply that global supplies of petroleum available to do economic work are considerably less than estimates of gross reserves and that EROI is declining over time and with increased annual drilling levels. Our global estimates of EROI have a pattern similar to, but somewhat higher than, the United States, which has better data on energy costs but a more depleted resource base.

Keywords: EROI; oil; natural gas (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (83)

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