Reserves in Petroleum

Paper Type:  Essay
Pages:  7
Wordcount:  1799 Words
Date:  2021-05-20

For over a period of 60 years and above some of the technical organizations, government agencies, and regulatory bodies have introduced the nomenclature for the definition of the reserves in petroleum. The organizations later gained acceptance, and they became the standards for the reserves classification across more industries. The definitions of reserves in petroleum will be discussed with relevant to different agencies since they will have an impact on the industry, affecting changes that would bring about the industries acceptance.

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According to the U.S. Securities and Exchange Commission (SEC), 1978 agency, the reserves are defined according to the intended purpose which according to the agency is reporting securities. The other parameter used is a qualitative description which is commercially recoverable (Parshall, 2009). It makes no proved reserves that are below the lowest known hydrocarbon as it makes positive revisions should the performance history indicates the need for more. They are usually limited to directly offsetting the DSU. The reservoirs are supported by seismic wire line that conveys sampling, logs, and cores. Its classification to enhance recovery exists in the poorer analogous quality reservoir (Parshall, 2009). It contains both the developed and undeveloped reserves where the reserves are obtained through the wells that exist.

The additional gas and oil are supposed to be fetched by the injection of fluid or other recovery techniques. An increased recovery is set so as to notify when the pilot project is done, and the program is allowed in the context of increase in production. The agency considers the reserves that are recovered from wells that are new on the undrilled acreage to be a significant expenditure for completion (Harrell & Gardner, 2005). The estimates of the reserves can be done using the deterministic methodologies. To them, treatment of unconventional hydrocarbons includes the conventional hydrocarbons. The mined bitumen is also a mining reserve and not a petroleum reserve. Reserves should have limits to quantities and are expected to be produced during concessions and leases. The assumption to carry out a renewal should only be made if the registrant has a history demonstration of getting them.

According to SPE/WPC Reserve Definitions : 1997 the definition of the reserves with the economic conditions that were current at that time (Harrell & Gardner, 2005). The agency allowed coal bed methane to be classified as proved reserve if the recovery was to be economical. Their definitions were to be used for the determination of quantities of oil and gas reserves. The agency believes that there should be probabilistic analyses, and the disclosed quantities should be defined in the deterministic data. For the agency reserves served a general application and not a country specific. It reasonably curtailed to a commercially recoverable since its qualitative description was not proven.

There seemed to be no proven reserves that were below the lowest known hydrocarbon. Reserves were to be obtained from the wells similar to the ones behind the pipe. They were to be improved from intervals that were estimated since the improved recuperation reserves are considered developed as the enhanced project becomes operational (Harrell & Gardner, 2005). The reserves that are not produced rather they can be taken from the different reservoir or where a significant expenditure is required so that installation of a well or transportation can occur, additional drilling, deepening existing wells. The reserves approximation is being prepared using the deterministic or probabilistic methods. The proved reserves are based on the existing economic conditions while the unproven are based on the price and cost forecast.

About the United States Geological Survey (USGS), 1980, the definition of reserves of petroleum lies on various factors. The agency is responsible for the assessment of the US and world resources like petroleum (Greene, 2003). The agency states that the resources include reserves and all the accumulation that can eventually be available with those that are not recoverable under the economic situations.

The identified resources are however considered to have a specific geologic timeline and information. The classification is done depending on the feasibility of the recovery made by the economy and also due to the marginally economic and sub-economic. Marginal reserves are considered to be a part of the reserve base which on the borders of being economically producible and a perfect time for determination, it can give essential characteristic to the economic uncertainty (Greene, 2003). Uncertainty is only registered because of the discovered and undiscovered potential of recoverable resources. Resources that are discoverable are classified according to either being inferred, measured or being indicated.

The estimates made of the total crude gas, natural gas liquids and natural gas to be recovered in the reservoirs and also the field to increase the development and production also increases. As a result, the additions will be commonly the reserves (Greene, 2003). The growth of a reserve is the part of the resource that is identified over and above all the measured reserves that are estimated to be added to the existing fields and also in the defined time frame that was defined. The growth of the reserves occurs due to the delineation of hydrocarbons, new reservoirs, improved recovery, and recalculations. The agency had classified the reserves according to three types of technically recoverable resources which are the oil and natural gasses from the untested cells of continuous accumulations, undiscovered conventional accumulations and natural gas and potential future additional reserves.

According to Norwegian Petroleum Directorate (NPD), 2001, reserves in petroleum does not depend on the definitions made of commercial or sub-commercial factors, but it depends on the status of the categories although no regard for decisions was made. Contingent resources are considered as the resources of petroleum that have been discovered without any decisions being made (Denney, 2007). The reserves with license include the projects that are yet to be approved by the authorities or the plan that need to be granted exemption after that. The differentiation from the contingent resources depends on the approval of the internal committee so that the development can be continued.

The government gives approval of the plan development occasion that aligns the interest and the way that development takes place. The primary principle that is used in the definition system of NPD is that the original recoverable resources can be found in the field or discovery according to their position in the development chain and up to the identification stage until the completion of production (Denney, 2007). The NPD reflects the current understanding of the extension, the characteristic of the recovery made and the estimation of the stochastic method. It uses the quantification of probabilistic just like the SPE. There is no precision in consideration of the economic and the technical criteria that define the reserves.

The U.K. Statement of Recommended Practices (SORP), 2001 approaches the definition of reserves in providing recommended evaluation practices. The reserves can be disclosed at the choice of the company according to this agency. The developed and undeveloped oil and gas reserves are mutually exclusive (Odo, Ani, Obialor, & Ugwunta, 2016). It concentrates however on the fact that the quantity of the recoverable reserves will be more than the amount estimated as proven should be 50% (Odo, Ani, Obialor, & Ugwunta, 2016). Reserves can be considered to be either proven or probable if the producibility is supported by the actual production or the conclusive formation test.

The 2 P include the successful operations of the program that is installed in the reservoir or the evidence of reservoir simulations. Reserves can be considered to be commercially producible if the management has the intention of developing and also producing them. The proven and probable reserves are defined as costs and prices as the estimates date is made (Odo, Ani, Obialor, & Ugwunta, 2016). The reserves can be based upon an assessment that is reasonable due to the future productions and also the economy. The source estimates should be made public by description to be used in the net quantities.

According to the Canadian Security Administrators (CSA-2002), the recognized definitions of the reserves in petroleum are only those that published by the Society of the Canadian Institute of Petroleum, Mining and Metallurgy (Forbes & Zampelli, 2012). The CSA 2002 terms these definitions as CIM definitions. Even though the CSA definitions of reserves in petroleum are very similar to those of the Society of Petroleum Engineers (SPE), there are some notable differences.

According to the CIM definitions, both the Individual Reserve Entities and Reported Reserves signify the sum total of the entity level approximates in the disclosure. CIM applies probability hurdles such as P10, P50 and P90 at the reporting level contrary to the SPE, which uses them at the entry level (Forbes & Zampelli, 2012).

While using the CIM classification, it is acceptable to have developed and underdeveloped reserves at all certainty levels. Further, the developed levels are subdivided into developed producing and developed non-producing levels. The CIM classification is slightly different to the SPE one because SPE only uses the mentioned definitions to proved reserves only.

Another notable aspect of CIM definitions is that of the fiscal conditions under which the reserve estimates ought to be prepared. It states that the conditions should have a sensible outlook on the future. Other agencies among them the security regulators may use that fiscal condition constant or costs and prices to determine the value of the petroleum reserve (Forbes & Zampelli, 2012). Regardless of the preparation of the reserve estimates, all the fiscal conditions and assumptions used ought to be disclosed.

The Russian Ministry of Natural Resources (RF 2005) uses boundaries to set the definitions of the reserves in the petroleum. According to this institution, the undiscovered reserves can be classified into three categories namely, prospect category (D1), Leads category (D2) and Plays category (D3) (Ahlbrandt & Klett, 2005). The RF 2005 approach is different as compared to other bodies such as NDP and SPE which uses maturity axis instead of alignment boundaries. Regarding the recoverable volume, the RF 2005 uses the in-place volumes for the D1, D2 and D3 categories besides the economical category of Contingent Recoverable Reserves (Ahlbrandt & Klett, 2005).

The Contingent Recoverable Reserves category that is used by the RF 2005 works in a similar manner to the Contingent Resources that is used in the SPE. Both terms refer to the petroleum reserves that cannot be exploited even though they have been discovered due to due to technological or economic constraints. Other factors that may hinder the exploitation of such petroleum reserves include the location of the reserves under the environmentally protected zones, location under water, location under cities or even lack of sufficient technology and infrastructure to exploit the reserves (Purewal, 2012).

According to the RF2005, the term reserve comprises all types of the discovered sub-economic, economic and in-place volumes. The definition is slightly different with that of the SPE which used the term reserve to refer to the commercially recoverable and remaining volumes of the discovered petroleum. Another significant different that arise in the definit...

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Reserves in Petroleum. (2021, May 20). Retrieved from

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