Productivity Ratio: Formula, Calculation & Analysis Video & Lesson Transcript

production ratio

That effectively changed the global reserves number and the value of the ratio. The production ratio is simply the estimated amount of kWh/year a solar array will produce, divided by the total wattage of the solar array. A higher production ratio usually indicates a higher percent efficiency.

Kerry is an expert in all things solar – she’s worked in the industry for over seven years, initially as an Energy Advisor dedicated to helping people compare their solar options and make well-informed energy decisions. She graduated from Boston University with a degree in Environmental Analysis and Policy. Now, that doesn’t mean that solar is only a good investment for the sunnier states. You’ll benefit the most from solar energy if you have high electricity rates, spend a good amount on your monthly electric bill, and live in a state with good incentive programs. Press the division sign on the calculator and then enter the amount you produced in the prior period. For example, if you produced 250 crates of apples the previous quarter, type “250” into the calculator.

  • Biofuel potential is defined as the capacity to produce bioenergy and/or liquid transportation fuels (ethanol/biodiesel) from available biomass.
  • Output is the amount produced by a person, machine, business, or industry.
  • Installers use different tools while generating these production estimates.
  • That effectively changed the global reserves number and the value of the ratio.
  • Finding them gets steadily more difficult and more expensive until they are tapped out completely.

One cannot use PUD or TRR classified reserves in R/P estimates; PDP reserves is what Americans need to focus on. PDP is the gold standard for America’s future hydrocarbon health. The business case below is designed for you to demonstrate your ability to (1) calculate and (2) interpret the Productivity Ratio in a real-life context.

Why isn’t the production estimate the same as the system size? Wouldn’t it make sense for a 6 kW system to produce 6,000 kWh?

Similarly, Venezuela’s proven reserves jumped in the late 2000s when the heavy oil of the Orinoco was judged economic. When the United States made great advances in recovering unconventional oil and gas in 2008, the US reserve increased significantly. Environmental concerns add to those uncertainties, particularly because those concerns are also a part of the political decisions. Using 42G BO and current production rates of 11MM BOPD, after recent shale oil decline, that leaves the United States with a PDP reserve to production ratio of 10 years. Ten years is essentially all the proven oil reserves America has left. The reserves-to-production ratio may be flawed as it requires estimates that may not prove to be fact.

production ratio

For example, pretend an estimate from 40 years ago showed the world as having 30 years of proven oil reserves left (meaning we should have run out by now). Then, 20 years later, a revised ratio could conclude that we had 40 years of this critical energy resource left to extract. Because the estimated number of barrels is simply a guess, the reverses-to-production ratio is subject to broad swings. The reserves-to-production ratio is a measurement of how many years of natural resources are left in reserves. Investors can use this information to better understand the long-term implications of what assets are on hand for a company.

One of the most common applications of the productivity ratio is using hours worked as the input and money made as the output, although there are other numerical values that can be used for input and output. Some of the more popular design tools installers utilize are Helioscope, Aurora, and Solargraf. Even without the use of design tools that draw up design images at the same time, there are also solar production estimate calculators that use the factors listed above to generate an estimate. One example is PVWatts, which was developed by National Renewable Energy Laboratory (NREL).

Fossil fuel reserve-to-production ratios

Different studies also tried to measure biomass potential to highlight their likely contribution in global/regional energy consumption. But they end up calculating different levels of potential for the same region because of, difference in potential mapping parameters (Table 2) (Haug & Difiglio, 2004). Large numbers of uncontrollable variables lay down the upper utilization limit of biomass potential. Larger the limitations accepted means lower the estimates of biomass potentials (Hoogwijk et al., 2003). For example, for year 2050 different biofuel potential is calculated by two different studies which considered different sustainability dimensions.

Hoogwijk’s estimation of potential from energy crops have range of 0–161.5 giga bbl/year (Hughes & Qureshi, 2014). Comparatively lower estimates calculated by the Doornbasch ∼ 18 giga bbl/year for the energy crops. The limiting criteria of water stress and inclusion of land limitation because of food production needs are the reason for this (Johansson et al., 1992).

The countries that fall under this line represent excessive production compared to their reserve. Among them, Saudi Arabia represents the fastest depleting oil fields. Curiously, Canada, Iraq and Iran have been maintaining modest R/P ratios despite having midsize reserve. United Kingdom (not listed above) has an R/P value of 6.3 with a reserve of 2.3 billion (BP, 2018). This is the lowest among “oil rich countries.” The United States represents the lowest R/P for countries possessing a reserve 50 billion or more. At par with the United States, Russia has also maintained low R/P (of 25), signaling the fact its reserve is depleted fast.

Production Ratio definition

Few people understand it and even more people dismiss it because they are pretty sure crude oil grows on trees, like goats appear to grow on trees, and America will NEVER run out of oil. Another factor that the ratio fails to account for is the continually increasing demand for natural resources as the global population grows and new economic powerhouses emerge. As long as that trend continues, estimates of how much we have left in terms of years are likely to be overly generous. Oil and gas explorers and other extractors are constantly identifying new natural resources to dig up. These discoveries dramatically change the ratio, prolonging the estimated time we have left before they run out.

Note that the EOR need does not imply suitability nor does it mean that other countries would not benefit from an EOR scheme (Fig. 4.62). It turns out that the R/P ratios are very similar for gas reserves and far less than coal reserve. As pointed out by Zatzman (2012), before oil, the most hysterical line of the energy industry was that we would run out of coal. Table 4.18 shows total oil reserve as well as reserve/production ratio of top oil producing countries. Note that the need does not imply suitability nor does it mean that other countries would not benefit from an EOR scheme. Newer tools allow the extraction of oil that was previously considered impossible to get at a practical cost.

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4.57 shows R/P ratios for top 20 petroleum reserve holding countries. Note that there is an overall trend of higher R/P with higher reserve values. The straight line represents the standard, which is drawn from Venezuela and the origin.

With EOR implementations, it has the capacity to double the daily output or total recoverable reserve. Table 4.22 shows the variation in R/P ratio for certain countries of interest. Uncertainty in reserve calculations comes from the fact the technology is evolving, both in recovery techniques and delineation of reservoirs.

Understanding the Reserves-to-Production Ratio

Installers use different tools while generating these production estimates. Some installers are going to be more generous in their production estimates, while others are more conservative. If your estimates are dramatically different, your installer may be trying to push a system that’s way too large for your energy needs, or one that’s not generating enough electricity for your needs. Even with the exact same system design, and same equipment, installers are likely to come up with different production estimates.

Crafty Hats has performed very well in recent years and just signed a large contract to supply an internally renowned circus with 500 hats for their next show. This is the biggest order that Crafty Hats has ever received. When meeting with the president, he was clearly concerned with filling the order on time.

A detailed description on the potential from energy crops produced on degraded lands by combination of different spatial data sets was calculated as 24.5 giga bbl/year from grasses and 33 giga bbl/year from woody energy crops. The energy potential from remaining land covers are estimated in the range of 4–5 giga bbl/year (Khan et al., 2016). Productivity ratios are important in evaluating the efficiency, effectiveness, and health of a person, company, industry, or business. Output is the amount produced by a person, machine, business, or industry. Input is what is put into a process, system, or business, usually to produce a profit. When you use the formula output/input for the productivity ratio, you must use numerical values for output and input.

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