Reserves
Fuel
Losses Gas
Market Gas Liquids
Plant Oil
Reserves
The volume of
petroleum expected
to be sold from assets
Reservoir
in which the entity has
an entitlement
HYDROCARBON
RESERVE
ESTIMATES
Reserves are defined as remaining
quantities of hydrocarbons that can
be commercially produced from a
known accumulation as of a given
date under stated definitions and
economic conditions.
Key tests for reserves
• Are the hydrocarbons discovered?
• What entitlement do you have to
hydrocarbons?
• Is the project commercial?
• What commitment is there to develop infrastructure?
• What is the market for the hydrocarbons.
• NONE of these tests (directly) mention
volume!!!!
Tests are more about “Project Maturity”
What are resources ?
Contract limit?
100
• Resources are…
90 – The summation of the
80 future saleable production
70
– From a given date forward
Daily Rate
60
50 – Up to the economic or
40 contract limit
30
20
– NOT just a volume!
10
0 Economic limit?
1 3 5 7 9 11 13 15 17 (price and cost
dependent)
Years
Reserves – A sub-set of resources
Prospective Resources – Exploration Potential
Exploration Discovery
Contingent Resources– Sub-Commercial
Commercialised
Reserves – Commercial
Developed
Production – Sales
Reserves are functions of technology
The Story of an Oil
Reserve has indicated
that there is increase in
reserves with the
passage of time .
The increase in initial
reserves is attributed to
technological growth .
Reserves uncertainties
1. Production forecast uncertainties
2. Price uncertainty
3. Cost uncertainty (both Capex & Opex)
4. Commercial/legal/political uncertainty
Risk and uncertainty
There is a RISK that some
one is going to fall off this
cliff.
He is UNCERTAIN how far it
is to the bottom!
Oil industry
Consistent approach to assessment of
risk and uncertainty is essential for all
assets
RISK … project maturity
Will the project go ahead?
UNCERTAINTY…
What is the range of
estimated recoverable
volumes if the project does go
ahead?
From volumetric considerations
production forecasts of the reserves
Sum of existing plus behind pipe production
+
Sum of production from future development
to
Technical or economic or contract or legal limit
whichever is first
Production forecasts – uncertainties
1. Reservoir consistency/continuity
7. Mechanical- integrity
2.Drive mechanism
3.Water/gas break- through
8.Fluid composition
9.Metering accuracy
4. Damage/damage removal
10.Vertical lift
11. IOR impact
5.Suction pressure profile
12. Market
6. Impact & timing of development
13. Weather
How do we ever get it right?
The answer is -
The work flow – Key elements:
•Production actuals & forecasts
•Geo/engineering analysis
•Development opportunity inventory
• Economic analysis
HYDROCARBON SCENARIO
Production
DISCOVERED INITIALLY IN-PLACE
TOTAL PETROLEUM INITIALLY IN PLACE
COMMERCIAL
3P
2P PROVED
1P PROVED + Reserves
PROVED + PROBABLE
PROBABLE +
POSSIBLE BOOKING
SUB-COMMERCIAL
Contingent
1C 2C 3C
Resources
Unrecoverable
UNDISCOVERED
LOW BEST HIGH Prospective
INITIALLY
IN-PLACE
ESTIMATE ESTIMATE ESTIMATE Resources
(P90) (P50) (P10)
Unrecoverable
Range of Uncertainty
1
2
3
THANKS
