The Anatomy of Oil Reserves: Why Geology is Not Our Limit

In the global energy debate, there is a persistent confusion—even among leaders and decision-makers—that all "oil reserves" are created equal. Throughout my 32 years of experience in the industry, I have seen how this misinterpretation feeds flawed narratives, such as the imminent "peak oil" crisis.

Speaking of reserves without understanding their classification is, simply put, like talking about money without knowing if it is in cash, in promises, or in sheer expectations. To understand a country's true energy future, we must look below the surface and grasp how technology and economics transform what is underground into marketable energy.

The Alphabet of Reserves: 1P, 2P, and 3P 

The industry does not classify oil simply by its existence, but by the certainty of its extraction. Proven reserves (1P) are those with over a 90% probability of being commercially extracted using current technology and economic conditions. It is the oil that is practically ready to be produced.

Then we have probable reserves (2P), with a 50% to 90% certainty, which depend on operational improvements or new investments. Finally, possible reserves (3P) represent future potential, with a 10% to 50% probability, contingent upon new technologies or higher market prices.

The Best Kept Secret: The Recovery Factor and the Venezuela Case

There is a fundamental difference that is often ignored: a "resource" is all the oil that exists underground, but a "reserve" is only what can be commercially extracted. This introduces the "recovery factor". In conventional fields, this can range from 30% to 50%, but in complex fields, it can drop dramatically.

The case of Venezuela is the perfect example. Although the country is famous for its immense proven reserves, the recovery factor in the Orinoco Oil Belt has been only about 4% since its discovery 90 years ago. This means there is a massive ocean of oil that is not yet being produced. Studies by the US Geological Survey estimate that, with technological improvements, this recoverable potential could double, transforming what is "possible" today into "proven" tomorrow.

Reserves are Dynamic 

The theories that predicted the world was "running out" of oil failed because they treated reserves as static numbers. Reserves change constantly: when the price of a barrel rises or extraction technology improves, reserves automatically increase.

Rather than facing geological scarcity, the world often faces a lack of investment and development. A country is not rich because of what it hides underground, but because of its capacity to produce it. Understanding this is understanding that our energy future is defined by innovation and strategy, not just by geology.

---

About the author:

Jorge Miroslav Jara Salas is a global energy expert with over 30 years of experience leading complex operations in the petroleum industry. He is currently Chairman and CEO of Magnaccord Group SL, a company specialized in strategic investments in Latin America's energy sector. www.magnaccord.com www.jorgemiroslavjarasalas.com

---