AN INTEGRATED APPROACH TO PETROLEUM

RESOURCES DEFINITIONS,
CLASSIFICATION AND REPORTING
Rosly Mohd Nor
PETRONAS CARIGALI
Overview

Definitions & Classification

Estimation & Reconciliation

Reporting

Conclusion
Presentation Outline
To share some of the industrys practices
in resources / reserves definitions,
classifications , issues and challenges.

To share PETRONASs experiences in
developing and application of its resources
definitions ,classification and reporting in
its international ventures.

Objectives
The Mckelvey Box (1972 )
Proved Probable
Identified
Possible
Undiscovered
RESERVES
RESOURCES
Degree of certainty
Petroleum Society of Canadian Institute of Mining (1994)
Resources
Undiscovered Resources
or
Future Initial Volumes in Place
Unrecoverable
Volumes
Initial
Reserves
Future Unrecoverable
Volumes
Proved Developed
Producing
Non Producing

Proved Undeveloped
Undiscovered Resources
or
Initial Volumes in Place
Currently Uneconomic Volumes
Residual Unrecoverable Volumes

Remaining
Proved
Reserves

Probable
Reserves
Possible
Reserves
Future Initial
Reserves
Remaining
Reserves
Cumulative
Production
Sales
Probable
Developed

Probable
Undeveloped
Possible
Developed

Possible
Undeveloped
Inventory
Caldwell & Heather, The Scotia Group , JPT (1995)
DISCOVERED UNDISCOVERED
RESERVES
PROVED PROBABLE POSSIBLE
ECONOMIC






SUB
ECONOMIC




TECHNICAL CERTAINTY OF EXISTANCE
ECONOMIC
FEASIBILITY
OF RECOVERY
Discovered but not
economically recoverable
resources
Low Price

Medium Price

High Price
Undiscovered,
economically
recoverable resources
Undiscovered,
not economically
recoverable resources
Patricelli & McMichael, Mobil, JPT (1995)
Discovered Undiscovered
Reserves Contingent
(Economic, currently Resources
Producible) (Uneconomic, not
currently producible)
Proved Probable Possible Proved Probable Possible
P1 P2 P3 P4 P5 P6
Speculative
Potential






Geological Risk
Pg
Associated Confidence Factors
PETRONAS (1997)
RESOURCES
DISCOVERED
RESERVES
UNPROVED
UNDISCOVERED
POTENTIAL
RECOVERY (PR)
ULTIMATE
RECOVERY (UR)
CUMULATIVE
PRODUCTION
SPECULATIVE
RECOVERY (SR)
PROVED
(P1)
PROBABLE
(P2)
POSSIBLE
(P3)
EXPECTED HIGH LOW PROVED
(P4)
UNPROVED
PROBABLE
(P5)
POSSIBLE
(P6)
PETROLEUM
RESOURCES
DISCOVERED
RESOURCES
UNDISCOVERED
RESOURCES
RESERVES
POTENTIAL
RESOURCES
HYPOTHETICAL
RESOURCES
SPECULATIVE
RESOURCES
PROVED
RESERVES
UNPROVED
RESERVES
DEVELOPED
RESERVES
UNDEVEL.
RESERVES
PROBABLE
RESERVES
POSSIBLE
RESERVES
LOW LOW EXP. EXP. HIGH HIGH
CCOP (1999)
Committee for Coastal and Offshore Geoscience Programmes
CCOP Members : Cambodia , China, Indonesia, Japan, Malaysia, Papua New Guinea,
The Philippines, Republic of Korea, Singapore, Thailand, Vietnam

RANGE OF UNCERTAINTY
PRODUCTION
RESERVES
CONTINGENT
RESOURCES
PROSPECTIVE
RESOURCES
PROVED
PROVED
PLUS
PROBABLE
PROVED
PLUS
PROBABLE
PLUS
POSSIBLE
LOW
ESTIMATE
BEST
ESTIMATE
HIGH
ESTIMATE
LOW
ESTIMATE
BEST
ESTIMATE
HIGH
ESTIMATE
UNRECOVERABLE
UNRECOVERABLE
SPE (2000)
Resource Uncertainty Categories
Society of Petroleum
Engineers (SPE )
World Petroleum
Congress ( WPC )
Former Soviet Union
DETRMINISTIC
PROBABILISTIC CATEGORY
Proved

Probable

Possible
P1 ( 90% confidence )

P1 + P2 ( 50 % confidence )

P1 + P2 + P3 (10 % confidence )
Class A and B

Class C1

Class C2


Presentation Outline
Overview

Definitions & Classification

Estimation & Reconciliation

Reporting

Conclusion
Society of Petroleum Engineers (SPE)
Society of Petroleum Evaluation Engineers (SPEE)
World Petroleum Congress (WPC)
Petroleum Society of Canadian Institute of Mining)
Security and Exchange Commission (SEC) US
Resources Evaluation Consultants
PSC Contractors
Technical Journals
Key Reference
PETRONAS (1997)
RESOURCES
DISCOVERED
RESERVES
UNPROVED
UNDISCOVERED
POTENTIAL
RECOVERY (PR)
ULTIMATE
RECOVERY (UR)
CUMULATIVE
PRODUCTION
SPECULATIVE
RECOVERY (SR)
PROVED
(P1)
PROBABLE
(P2)
POSSIBLE
(P3)
EXPECTED HIGH LOW PROVED
(P4)
UNPROVED
PROBABLE
(P5)
POSSIBLE
(P6)
International standards and practices
Business & technical applications
Total resources / Field life cycle
Risk & uncertainty quantification
Reporting consistency & transparent
Flexible & Robust
Key Principles
Applications of Petroleum Resources Estimate
Technical
Prospect Evaluation
Block Assessment
Work Program & Budget
Project Identification
Field Development Plan
Facility Design
Appraisal Plan
Improve Oil Recovery (IOR) Project
Research & Development
Applications of Petroleum Resources Estimate
Business
Corporate Worth
Fund Raising (credit rating)
Stock Exchange Reporting
Sales Contracts (LNG )
Earning Basis
Investment Decision (FDP)
Corporate Financial Outlook
Equity Determination
Petroleum Arrangement
Definition : Resources

Resources are defined as the total
estimated quantities of petroleum at a
specific date to be contained in, or that
have been produced from known
accumulations, plus those estimated
quantities in accumulations yet to be
discovered.
Definition : Undiscovered Resources

Undiscovered Resources are defined
as the the total estimated in-place of
petroleum at a specific date to be
contained in accumulations yet to be
discovered.



Definition : Discovered Resources

Discovered Resources is defined as
the total estimated in-place quantities of
petroleum at a specific date to be
contained in known accumulations that
have been penetrated by a wellbore.
Definition : Speculative Recovery ( SR )

Speculative Recovery is defined as
the undiscovered resources at a specific
date to be contained in unproven traps,
undrilled provinces, structures or deeper
reservoirs underlying productive fields
where geological conditions are believed
to be favourable for the accumulation of
petroleum which if present, may
eventually be recovered.
Definition : Potential Recovery ( PR )

Potential Recovery is defined as the
discovered resources that are recoverable
but not producible at a specific date due to
economic, political, environmental or
technological reasons.
Potential Recovery Category

Economic
- Production Sharing Contract (PSC)
- Development concept

Technology
- Hydrocarbon quality (API, CO2, H2S etc)
- Small fields
- Reservoir with inconclusive data
- Location
- Adverse parameters
- Geological complexity

Environment
- HSE regulation

Political
- Under unitization


Definition : Ultimate Recovery ( UR )

Ultimate Recovery is defined as the
discovered resources anticipate to be
commercially recoverable from known
accumulations at a specific date, under
existing economic condition, by
established operating practices and under
current government regulations.
Definition : Reserves

Reserves is defined as the total
estimated remaining quantities of
petroleum anticipated to be commercially
recoverable from known accumulations at
a specific date, under existing economic
conditions, by establishes operating
practices and under current government
regulations.
Definition : Reserves


PROVED RESERVES

- reasonable certainty means a probability (confidence) of at least 85%
that the estimated quantities will be recovered.

PROBABLE RESERVES

- sufficient degree of certainty means a probability (confidence) for
proved+probable of at least 50% that the estimated quantities will be
recovered.

POSIBBLE RESERVES

- low degree of certainty means a probability (confidence) for proved+
probable+possible of at least 15% that the estimated quantities will be
recovered.
ULTIMATE RECOVERY

- Discovered
- UR = Np + Reserves
- Commercial
- Producing fields
- Firm development
POTENTIAL RECOVERY

- Discovered
- Not producible due :
Economic,Political,
Environmental or Technological
reasons
- Insufficient /inconclusive data

SPECULATIVE RECOVERY

- Undiscovered
- Unproven trap
- Deeper reservoir
in producing
field
P1
P2
P3
ODT
EOWC
SPILL
P1 P4
P4
P6
P5
O
W
C
G
D
T
P4 P5 P6
?
E
O
W
C
?
S
P
I
L
L
?
LOW
EXPECTED
HIGH
BLOCK 1 BLOCK 2 BLOCK 3
BLOCK 1 BLOCK 2
BLOCK 3
Recovery Category
Presentation Outline
Overview

Definitions & Classification

Estimation & Reconciliation

Reporting

Conclusion
Rules on Reserves Estimation


Reserves estimation is an imprecise science

No right way to estimate reserves

Dependent data quality, quantity and experiences

Risk and uncertainty

Right answer at the end of field life
Resource Estimation Approaches

Deterministic method

Probabilistic method

Integrated method
- P1 (proved), P2 (probable) : deterministic
- P3 (possible) : probabilistic

- C1, C2, C3 : confidence factor
- Expected value ( EV ) = P1*C1 + P2*C2 + P3*C3

Reserves Estimation
Proved 85%


Proved + Probable 50%


Proved + Probable + Possible 15%
DETERMINISTIC
OUTPUT
PROVED = P1

PROBABLE = P2

POSSIBLE = P3
EXPECTED VALUE (EV)

= P1XC1 + P2XC2 + P3XC3 or
= P1+ 2/3 P2 + 1/3 P3
( If Log Normal Distribution )
1P > 85%

2P > 50%

3P > 15%
ASSOCIATED
CONFIDENCE OF
RECOVERY
PROBABILISTIC
OUTPUT
PROVED

EXPECTED

HIGH
> 85%

> 50%

> 15%
ASSOCIATED
CONFIDENCE OF
RECOVERY
EV
NOTE : P1 ARE SUMMED ARITHMETICALLY (ACCEPTED INDUSTRY PRACTISE)
EV ARE SUMMED ARITMETICALLY

Reconciliation
Presentation Outline
Overview

Definitions & Classification

Estimation & Reconciliation

Reporting

Conclusion
Reporting Principles

Consistent with definitions & classification

Transparent & auditable ( input / output )

Total resources / field life cycle

Multiple business and technical applications

Expected Value (EV)
- Planning
- Booked number
- Summation,
- Reconciliation
RESOURCE MIGRATION
CERTAIN
(Produced)
COMMERCIAL
(Discovered)
NON-
COMMERCIAL
(Discovered)
SPECULATIVE
(Undiscovered)
DEVELOPMENT
RECOVERABLE
PETROLEUM IN-PLACE
PRODUCTION
VOLUMETRIC
HIERACHY
Dynamic Reporting System
SUMMATION
DETERMINISTIC
PROBABILISTIC
INTEGRATED
Proved
EV
Proved
EV
Proved
Probable
Possible
EV

Proved
Expectation
High
Proved
Expectation
High
Proved
Probable
Possible
EV
RESERVES STATUS
Developed
Undeveloped
Proved
EV

Resources Reporting
METHODS
REPORTING
Proved
EV
Standard Legend for Fluid Types
BLACK / WHITE COLOUR HYDROCARBON CATEGORY
UNDISCOVERED - LEAD
PROBABLE GAS / POSSIBLE OIL
UNDISCOVERED - PROSPECT
PROVED GAS
PROBABLE GAS
PROVED OIL
DISCOVERED - HYDROCARBON
POSSIBLE GAS
PROBABLE OIL
PROBABLE OIL / POSSIBLE GAS
POSSIBLE OIL
PROVED WATER
Map
The categories and halfway concept
may be over ridden by some other
geological, geophysical and
engineering data or which the basis
and assumptions must be clearly
stated
Fluid Contacts : The Half - Way Concept
Discovered Crude Oil Resources Summary :
Potential Recovery ( PR ) Category
FIELD : Mala
UNIT : MILLION STOCK TANK BARRELS (MMSTB)
Remarks : Economic , Technology , Environment, Political
RESERVOIR
Reservoir 1
Reservoir 2
Reservoir 3
Reservoir 1
Reservoir 2
Reservoir 3
BLOCK 1
BLOCK 2
Sub-Total
Sub-Total
FIELD TOTAL
PROVED POSSIBLE PROBABLE EV RF PROVED POSSIBLE PROBABLE EV
STOIIP POTENTIAL RECOVERY REMARKS
0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
Presentation Outline
Overview

Definitions & Classification

Estimation & Reconciliation

Reporting

Conclusion
Conclusion
The definitions , classification and
reporting should cover the full range of
petroleum resources inventory in meeting
various business and technical
applications.