Resources, Reserves Have Defining Moment

Definition: A statement of a meaning of a word or word group.

Definition: A statement of a meaning of a word or word group.

Sounds straight-forward enough. You find a word and define it. Period. 'Nuff said.

Well, sometimes it's easier said than done,

Take for instance, the definition of "resources" — and "reserves."

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Definition: A statement of a meaning of a word or word group.

Sounds straight-forward enough. You find a word and define it. Period. 'Nuff said.

Well, sometimes it's easier said than done,

Take for instance, the definition of "resources" — and "reserves."

As a July EXPLORER letter to the Readers' Forum noted, "There is too much confusion … as to what the term 'reserves' means."

The letter writer, AAPG member Ferruh Demirmen of Houston, correctly pointed out that it doesn't have to be that hard — just check the terminology of the "Petroleum Classification and Definitions," approved by AAPG, the Society of Petroleum Engineers and the World Petroleum Congress.

SPE and WPC had approved a set of petroleum "reserves" definitions in 1997, according to Ken Mallon, which was a major step forward to improve the level of consistency in reserves estimation and reporting on a worldwide basis.

As a development of the work on the reserve definitions, the organizations recognized the potential benefits to the industry in developing consistent definitions covering the entire resource base.

Work then began on "What is the definition of 'resource?"

AAPG's Committee on Resource Evaluation became involved in the defining of the terms through the AAPG liaison to the SPE Oil and Gas Reserves Committee. Those involved from AAPG included Mallon, Naresh Kumar, Claude McMichael, James G. Ross and Anibal Martinez.

"The establishment of an internationally accepted petroleum resource classification system is long overdue," Ross said in a paper presented at the SPE Hydrocarbon Economics and Evaluation Symposium held in Dallas in 2001. "Despite the obvious benefits of shared definitions of resource categories and related terminology, the industry has developed in such a way that individual countries and companies have been left to design their own systems which preclude easy comparisons between them.

"This has been a particular problem in the large corporate mergers seen in recent years," he continued, "but is also a significant limitation when considering and comparing the resource base of individual countries."

"Guildelines for the Evaluation of Petroleum Reserves and Resources" was published by SPE as a supplement to the previous definitions volume in October 2001, and is available on the SPE Web site.

"Guidelines" includes chapters on:

  • Petroleum Resources Classification and Definition.
  • Operational Issues.
  • Current Economic Conditions.
  • Probabilistic Estimation Procedures.
  • Aggregation of Reserves.
  • Application of Geostatistics in the Petroleum Industry.
  • Seismic Applications.
  • Reserves Reporting Under Production-Sharing and Risk-Based Contracts.

"Since publication of the definitions, industry response has been largely favorable," Mallon said. "Producing companies, consultant companies and various agencies have indicated their intention to follow the classification system as published."

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