Abstract

The reserve definitions and terminology being used by the petroleum industrytoday have evolved over several decades. During the last decade, there havebeen several attempts at standardization. In spite of these efforts, there aremany different reserve definitions and terminology in use today. Part of thereason for this situation relates to the use of the resulting reserveestimates. This paper will review the current situation and some of the factorsthat should be considered in future standardization discussions.

Introduction

Reserves data as of a certain date can provide a snapshot of the crude oil, natural gas and natural gas products inventory of an oil or gas pool, acompany, a nation or even the world. A time series of reserves data can provideinformation on progress performance and trends. Reserves data has many usessuch as a basis for security of loans, depreciation and plant exhaustioncalculations, evaluating potential mergers and acquisitions, oil and gasproperty rationalization, supply forecasting, planning exploration anddevelopment activities regulatory measures, security of supply, public policyand financial soundness, to name just a few. These are very diverse uses whichis one of the fundamental reasons for the diversity of reserve definitions andterminology.

During the last decade or so, several groups have worked on "standardizing"reserve definitions and terminology. However, there continues to be manydifferent definitions and terminology in use today. Many of these differentdefinitions use the term "proved" although they are not all intended for thesame use. This leads to confusion, even to those within the industry.

Oil and gas companies are faced with attempting to deal with this diversity. Itcan be a confusing, frustrating and even costly process. We need to"standardize" but we first should understand what definitions and terminologyare in use today and what the probable intended major uses of the resultingreserves data are.

CURRENT RESERVE DEFINITIONS

This review will focus on the reserve categories of proved,probable and established. There are other categories such aspossible and potential that would al so need consideration but it is the formercategories that there is the largest divergence in definition meaning, understanding and use.

The definitions will be reviewed for the most part in chronological order. Theygenerally fall within one of two general use groupings. This will be discussedfurther but one should consider the organization that created the definitionand their probable focus in regards to the use of the resulting data. The Appendix contains excerpts of all the definitions reviewed in this paper.

The first definition is that of the U.S. Department of Energy. Their "proved"reserves definition was first published in their 1977 Annual Report in whichthey began to take over the task of determining oil and natural gas reservesin the United States. Their definition is similar to that used by the APIduring the previous decade. The Energy Information Agency of the DOE whichcompiles these reserves does so to provide accurate estimates of U.S. reservesof crude oil, natural gas and natural gas liquids which are consideredessential to the development, implementation and evaluation of energy policyand legislation in the U.S.

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