This paper describes some of the results obtained in a large operating company after the implementation of new procedures for reserves calculations in development projects. A number of inconsistencies in historical trends of hydrocarbon-in-place volumes, together with an evolving business environment, justified the introduction of a new methodology where a more realistic assessment of geological uncertainties is emphasize. The experience gained so far indicates that, although the new approach is more manpower intensive, the benefits justify the extra effort. In particular, expectation reserves figures are positively affected, and the general quality of geological interpretations is enhanced. The economics of a few projects appear not to have taken sufficient account of geological risk. Finally, a worthwhile compromise between theory and practical use can be achieved without resorting to excessively sophisticated techniques.


In 1988, Garb remarked that "while the petroleum industry has written extensively on the risk associated with exploration, very little has been published addressing the risks associated with the published addressing the risks associated with the acquisition and operation of producing properties." This situation indeed reflected the general level of interest in this topic, a fact that has been rapidly changing during the past few years.

There are several reasons to this.

  • The most important one is probably the less favourable economics of oil and gas development projects after 1986, which brought a larger projects after 1986, which brought a larger proportion of investments into a greater risk proportion of investments into a greater risk category.

  • The relevant mathematical techniques and computing tools as well as the general understanding of the principles involved are now within easy access of most geologists.

  • The relatively poor definition capability of 2D seismic may also have played a role: past interpretations relied more heavily on a discontinuous set of data, which often left room for a number of alternative interpretations. These do not lend themselves easily to uncertainty quantification.

In SSB/SSPC, the above general change in environment was compounded by three additional factors:

  • An analysis of historic reserve trends showed that the phenomenon of 'reserves appreciation' with time was significant in most fields.

  • All the company's production projects are offshore developments with high initial investments.

  • The production sharing contract terms under which the projects are operated require many crucial decisions to be made at a relatively early stage of field development.

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