In February 2000, three major international organizations, the SPE, WPC and AAPG jointly approved and published a significant document entitled Petroleum Resources Classification and Definitions1. This achievement represented a major step forward in the industry's attempts to improve the level of consistency in the documentation and description of resources that do not satisfy the criteria for reserves. The existing (1997) SPE/WPC reserves definitions2 were unaffected; the new definitions simply supplemented the 1997 definitions in order to cover the entire resource base. In addition to providing a single set of terminology for industry use, the document also provided a new classification system that was designed to facilitate the development of portfolio management systems by individual countries or companies.

The potential benefits of the SPE/WPC/AAPG classification system are twofold. Firstly, it provides the facility to expand the sub-division of project maturity, in order to classify projects on the basis of the work required (reflecting business decisions and budgeting) to move them towards commercial production and revenue. This ensures a continuous focus on the objectives of asset management, as well as providing the potential for a detailed classification of the resource base which illustrates clearly the balance of the portfolio and hence facilitates rational decisions on future acquisitions/divestitures.

The second benefit of the new system lies in the consistent approach to establishing a range of uncertainty, regardless of project maturity, which allows the very powerful tool of uncertainty tracking to be applied. Despite being first published by Arps3as long ago as 1956, this method is surprisingly little used. In practice, it is the only way to track estimates of recoverable volumes in a meaningful way, and to establish on an on-going basis the validity of the methods used to estimate those volumes.

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