Review of field reserves from different parts of the world reveals that reliability of reserves estimates is rather poor. Many fields show wide fluctuations in reserves estimates through time, both at pre- and post-production stage, with a tendency toward underestimation. Accompanying this trend, uncertainty attached to the "best" reserve estimate does not shrink with additional data, defying intuition. Reasons for such phenomena are varied, but one fundamental reason is the approach the industry generally takes toward reserves estimation. Reserves variations, whether in upward or downward direction, adversely affect project economics.

Factors that affect reserves evaluation include reservoir aspects, development scheme, operations and technology, economic and regulatory aspects, and "intangibles" that relate directly to human input and conduct. In the last-named category, proclivity to ignore statistical rules leads to distortion in reserves and associated uncertainty estimates.

The vision toward improving reserves reliability involves a multi-prong approach that tackles all these root causes. An optimal appraisal strategy that addresses the key subsurface uncertainty, due regard to statistical rules, and use of volumetric methods that consider different scenarios and put the evaluator in contact with "real" data, are viewed, among others, as providing tangible improvements.


Reserves make up major assets of oil and gas companies. The companies - on the upstream side - make development and production plans based on reserves, and investors and the public value oil and gas companies largely based on reserves held. Reliability and consistency of reserves, therefore, is a major issue in the oil industry. Revisions made by a number of oil companies last year to proved reserves already booked with the U.S. Securities and Exchange Commission (SEC) have heightened public and regulatory concern on reliability of reserves.

This paper deals with reliability and uncertainty of reserves estimates. The topic will be addressed from a broad perspective, without a particular focus on SEC bookings. It will be shown, through a review of field reserves histories from the North Sea, the Gulf of Mexico (GOM) and other areas, that the industry's record of accurately estimating reserves is, generally speaking, unsatisfactory. While there are exceptions, the record starts to be poor at the pre-production phase and continues to be so for years after production. The economic impact and causes of the problem are investigated and some remedies proposed.

"Reserves Accuracy": A Misnomer

While it may seem trite, it is well to clarify at the outset that the commonly used term "reserves accuracy" - also used in this paper for reasons of convenience - is a misnomer. Accuracy refers to the degree to which an estimated quantity represents the true value. Accuracy is assessed by comparison with the true value. In the case of reserves, however, the true value will be known when the last barrel of oil or the last cubic foot of gas is produced, and that means many years later. Because there is no standard with which to compare an estimate before and during production, accuracy becomes an immeasurable and illusory target until field abandonment. A less ambitious term, ‘reliability,’ seems better suited for reserves.

Reserves reliability is inherently poor if reserves are inconsistent and change significantly over time.

It is further clarified that the term "reserves," as herein used, refers to total recoverable volumes, including production if applicable. It is thus distinguished from "remaining reserves."

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