The E&P industry is taking steps to educate, test and certify qualified petroleum geologists and engineers in the specialty practice of evaluating and estimating petroleum reserves. The primary benefit of the elective certification program would be to heighten understanding and upgrade competencies through a rigorous curriculum designed by experts in the field. A secondary benefit would be to help restore a loss of investor confidence in publicly reported reserves estimates. This loss occurred after several major reserves writedowns during the first quarter of 2004. Also, the self-administered program may head off current initiatives to make third-party reserves audits mandatory, creating an opportunity for industry to take the lead before government does.
For justification, one should look no further than the value of world proved reserves and lesser, yet very significant value of reserves reported to the U.S. Securities and Exchange Commission. At $35/bbl and $5/thousand cubic feet (Mcf), for example, which is significantly lower than fourth quarter 2004 prices, reserves owned by U.S. companies reported to the SEC and investors represent a total value of more than $2 trillion (U.S.). This is a mere 3 percent of worldwide reserves, which are reported in a variety of ways. Inarguably, these staggering values should be estimated in accordance with internationally accepted practices by highly competent evaluators. Evaluator certification is a step in that direction.
Engineers or geologists certified as specialists would be recognized by the administering organization as having advanced skill levels as well as substantial experience in accepted methods. Requirements for accreditation would include prescribed levels of education and special training, experience and job history, knowledge and scoring on certification exams.