An important component in the assessment of the economic risk of a prospect prior to development is the calculation of in-place and recoverable reserves and their associated uncertainty. This calculation requires the multiplication of the probability distributions of volume, porosity, net-pay to gross etc. to form the probability distribution of reserves. Two methods have been advocated for this calculation;
Parametric methods and
In (i) component distributions are combined analytically to give measures of average and confidence levels in reserves. whereas in (ii) the distribution of the components are randomly sampled to build-up the distribution of reserves. Although at present the Monte-Carlo approach has been widely advocated in the petroleum industry, due to their general applicability, the parametric methods have many adherents citing their ease and speed of use as principle reasons. However, there is a seeming lack of rigorous analysis in either method which would make the selection of the most appropriate method for a particular problem more objective. In this paper we address this area and show how the errors in both methods can. be reduced. Additionally, we suggest a new approach which combines the strengths of both methods into a flexible algorithm for reserves calculations.