Property evaluations are key inputs for decision-making. Reserve category definitions-guidelines to petroleum property evaluation practice-intentionally produce conservative reserve valuations. Additional biases, actually errors, are introduced inadvertently. Many evaluation engineers are unaware of fundamental statistical processes that apply.
This paper describes two issues arising with the application of probabilistic techniques in reserve estimations. The first is aggregation of properties. This topic is identified, though without guidance, in the new SPE/WPT reserve definitions. Can we obtain proved reserves from a portfolio of probable reserves? Does a property's acquisition affect its reserves? Can we get proved reserves by aggregating probable or possible reserves? Professionals asked about these issues have admitted mixed levels of understanding and had diverse opinions as to best practice.
A second, companion issue is that monetary values are more important for deeision-making than reserve volumes. Therefore, prices and other economic assumptions are critical. In probabilistic reserve assessments, probability distributions express judgments about uncertainties. Forecast calculated with probabilities lead to more complete and more accurate evaluations.
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