Professional Documents
Culture Documents
System (PRMS)
Sponsored by SPE/WPC/AAPG/SPEE
Approved March 2007
An Industry Presentation
www.gaffney-cline.com
Project No. D105
Technical and Management Advisers to the
Petroleum Industry Internationally since 1962
Representative Office 3
D105
Gas: LNG - GTL
Geological
Modeling
Reserves Training
GCA provides a two-day reserves training course covering all aspects of
reserve estimation and reporting
Technical bases
Understanding of and compliance with definitions
Now includes detailed review of the new SPE/WPC/AAPG/SPEE Petroleum
Resources Management System (PRMS) as well as regulatory requirements
such as reporting to the US Securities and Exchange Commission (SEC)
“The course far exceeded my expectations, excellent instructors”
S. P. Singh, Director – Occidental Reserves and Reservoir Engineering
Reserves Process
GCA provides independent audit of companies internal reserves estimation,
recording and reporting processes and procedures
Preparation and revision of reserve management guidelines to meet
companies unique requirements
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D105
SPE Petroleum Resources Management
System (PRMS)
Sponsored by SPE/WPC/AAPG/SPEE
Approved March 2007
An Industry Presentation
www.gaffney-cline.com
Project No. D105
Disclaimer
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Topics for Discussion
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SPE PRMS Key Features - 1
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SPE PRMS Key Features - 2
There are several other issues for which a position has now been clarified
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What are Reserves - 1?
Volumes expected to be sold from assets in which the entity has an entitlement by the
application of development projects
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What are Reserves - 2?
The summation of future production from a given date forward to the economic,
contract or lease limit
100
80
60
40
20
Economic Limit
0
Price and cost
1 3 5 7 9 11 13 15 17
dependent
Time (years)
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Resources Classification
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Resources Classification
Reserves
Discovered, recoverable, commercial,
remaining
Proved, Probable, Possible
1P, 2P, 3P (now formalized)
Contingent Resources
Discovered, potentially recoverable,
Classification
not yet commercial, remaining
1C, 2C, 3C (new terms)
Equivalent to Low, Best and High
Estimates
Prospective Resources
Undiscovered, potentially
recoverable, potentially commercial,
remaining
Low, Best and High Estimates
Unrecoverable
Discovered or undiscovered, not
recoverable Categorization
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Project-Based Classification
The Reservoir assessment determines the petroleum initially in place, and fluid and
rock properties that affect petroleum recovery
The Project is applied to a specific reservoir volume to generate production and cash
flow schedule
One project may develop many reservoirs or many projects may develop one reservoir
The Property incorporates contractual rights and obligations, and fiscal terms, defining
the entitlement share of investments, production and revenue
One property may encompass many reservoirs or one reservoir may span many
properties
Net
RESERVOIR PROJECT
Recoverable
(in-place volumes) (production/cash flow)
Resources
Entitlement
PROPERTY
(ownership/contract terms)
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Resources Classification
Discovery Status
Commerciality Status
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Discovery Status
The PRMS intentionally does not require a flow test in order to establish a
discovery
In some instances it may nevertheless be considered that logging alone would
not be considered sufficient to identify a discovery since some indication of
fluid type and producibility will normally be required to comply with the following
requirement:
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Determination of Commerciality
With some minor differences, these criteria were typically applied to Proved
reserves under prior guidelines
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What Determines Commerciality?
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Project Maturity Linked to Decision Gates
(can be quantified if desired)
Chance of commerciality
Chance of discovery
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Reserves
Classification
Reasonable timeframe for
development (5 years suggested)
Categorization
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Reserves - Producibility
In certain cases, Reserves may be assigned on the basis of well logs and/or
core analysis that indicate that the subject reservoir is hydrocarbon-bearing
and is analogous to reservoirs in the same area that are producing or have
demonstrated the ability to produce on formation tests
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Project Maturity - Reserves
On Production
The development project is currently
producing and selling petroleum to
market
Approved for Development
All necessary approvals have been
obtained, capital funds have been
committed, and implementation of the
development project is under way
Justified for Development
Implementation of the development
project is justified on the basis of
reasonable forecast commercial
conditions at the time of reporting,
and there are reasonable
expectations that all necessary
approvals/contracts will be obtained
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Project Maturity – Contingent Resources
Development Pending
A discovered accumulation where
project activities are ongoing to justify
commercial development in the
foreseeable future
Development Unclarified or on Hold
A discovered accumulation where
project activities are on hold and/or
where justification as a commercial
development may be subject to
significant delay
Development Not Viable
A discovered accumulation for which
there are no current plans to develop
or to acquire additional data at the
time due to limited production
potential
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Project Maturity – Prospective Resources
Prospect
A project associated with a potential
accumulation that is sufficiently well
defined to represent a viable drilling
target
Lead
A project associated with a potential
accumulation that is currently poorly
defined and requires more data
acquisition and/or evaluation in order
to be classified as a prospect
Play
A project associated with a
prospective trend of potential
prospects, but which requires more
data acquisition and/or evaluation in
order to define specific leads or
prospects
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Developed and Undeveloped Reserves
Thus these subdivisions are applied to all Reserves categories, not just
Proved
Regarding the distinction between DNP and UD, the PRMS says:
“Undeveloped Reserves [are] ... where a relatively large expenditure (e.g.
when compared to the cost of drilling a new well) is required to (a) recomplete
an existing well or (b) install production or transportation facilities for primary or
improved recovery projects
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Project Maturity – Economic Status
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Resources Volume Categorization
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SPE Illustration of Uncertainty
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Proved Reserves Comparison
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Proved Reserves Comparison
SEC and SPE
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Reasonable Certainty – SEC Guidance
If the area in question is new to exploration and there is little supporting data
for decline rates, recovery factors, reservoir drive mechanisms etc., a
conservative approach is appropriate until there is enough supporting data to
justify the use of more liberal parameters for the estimation of proved
reserves
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Probable Reserves Comparison
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Probable Reserves
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Possible Reserves Comparison
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Possible Reserves
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Contingent Resources Comparison
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Contingent Resources
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Prospective Resources Comparison
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Prospective Resources
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Unrecoverable
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Additional Comments on Reserves
Reserves
To qualify for allocation of volumes as Reserves, a project must be shown to
have passed the relevant commerciality confidence
For both primary and enhanced recovery projects, the requirements are now
similar to those that were previously applied to Proved Reserves only
No Proved
It is permissible to report Probable and/or Possible Reserves even if the low
estimate fails to qualify as Proved Reserves (for instance, it does not pass the
economic test)
It is not necessary or appropriate to relegate all volumes to Contingent
Resources in such cases
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Unconventional Resources
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Standards Pertaining to the Estimating
and Auditing of Oil and Gas Reserve
Information
The original version was published in 1977 and last updated in 2001
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Conclusions
There is clear recognition of the different ways that reserves and resources
can be estimated and these are all embraced within the system
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SPE Petroleum Resources Management
System (PRMS)
Sponsored by SPE/WPC/AAPG/SPEE
Approved March 2007
An Industry Presentation
www.gaffney-cline.com