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

By N. Gagnon, C. Hall, Lysle Brinker. 2009

211 citations recorded by the source corpus.

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.

Subfields: Economics and Econometrics, Renewable Energy, Sustainability and the Environment

View Paper: https://www.semanticscholar.org/paper/1d8c8dba5f3f054ef2217878fdcdb6b476f7df5b

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Economics and Econometrics

In Renewable Energy, Sustainability and the Environment

Citations in the corpus

EROI of different fuels and the implications for society (2014, unknown): “Gagnon et al. (2009) estimated global oil and gas EROI from 1992 to 2006 using data from most publicly-traded oil companies summarized by John Herold Company.”
A New Long Term Assessment of Energy Return on Investment (EROI) for U.S. Oil and Gas Discovery and Production (2011, unknown): “Indirect (offsite) energy costs were derived by multiplying inflation-corrected expenditures for capital goods and materials bought by the oil and gas industry by a factor approximating the energy intensity of the oil and gas industry expenditures (14 MJ/$ per 2005 dollar [6]) with a sensitivity ana”
Specific Energy Consumption/Use (SEC) in Energy Management for Improving Energy Efficiency in Industry: Meaning, Usage and Differences (2019, background): “Some of the challenges regarding SEC are also faced by other energy use related ﬁelds, e.g., when calculating energy returned on energy invested (EROI) (e.g., [22–27]).”
Order from Chaos: A Preliminary Protocol for Determining the EROI of Fuels (2011, background): “Gagnon et al. (2009) estimated that the energy intensity for oil and gas exploration was 20 MJ/dollar in 2008 [12].”
The carbon curse: Are fuel rich countries doomed to high CO2 intensities? (2013, background): “The literature on energy return on energy invested (EROI) shows that the extraction of fuel and the production of power always require an energy input, and while the input is generally smaller than the output it can be quite significant (Gagnon et al., 2009; Gupta and Hall, 2011; Guilford et al., 20”
Decoupling natural resource use and environmental impacts from economic growth (2011, background): “An additional concern is that it is requiring increasing amounts of energy to find, extract, refine and deliver oil to markets (Gagnon et al., 2009).”
Dynamic Energy Return on Energy Investment (EROI) and material requirements in scenarios of global transition to renewable energies (2019, background): “Given that in the long term the EROI of these fuels will tend to decrease due to geological depletion (as recent analyses are pointing out that it is already the case for fuels such as oil and gas, trends exacerbated by the growing exploitation share of unconventional fuels characterized by lower ER”
On the History and Future of 100% Renewable Energy Systems Research (2022, background): “Furthermore, a substantial decline of fossil oil and gas EROI is projected [252], [253], [255] for the decades to come [251], [252].”
Depletion of fossil fuels and anthropogenic climate change—A review (2013, background): “This has already been seen in history (Gagnon et al., 2009; Murphy and Hall, 2010; Grandell et al., 2011).”
Relating Financial and Energy Return on Investment (2011, background): “For a firm to make a profit, it has to have some value of positive EROI because the energy flows associated with its costs (roughly 14–20 MJ per $2005 for the US oil and gas extraction industry, including direct and indirect costs [17,18]) are much less than the energy associated with a dollar’s wor”