Reserves in the Petroleum – Term Paper

The 2 P include the successful operations of the program that is installed in the reservoir or the evidence of reservoir simulations. Reserves can be considered to be commercially producible if the management has the intention of developing and also producing them. The proven and probable reserves are defined as costs and prices as the estimates date is made (Odo, Ani, Obialor, & Ugwunta, 2016). The reserves can be based upon an assessment that is reasonable due to the future productions and also the economy. The source estimates should be made public by description to be used in the net quantities.

According to the Canadian Security Administrators (CSA-2002), the recognized definitions of the reserves in petroleum are only those that published by the Society of the Canadian Institute of Petroleum, Mining and Metallurgy (Forbes & Zampelli, 2012). The CSA 2002 terms these definitions as CIM definitions. Even though the CSA definitions of reserves in petroleum are very similar to those of the Society of Petroleum Engineers (SPE), there are some notable differences.

CIM Definition

According to the CIM definitions, both the Individual Reserve Entities and Reported Reserves signify the sum total of the entity level approximates in the disclosure. CIM applies probability hurdles such as P10, P50 and P90 at the reporting level contrary to the SPE, which uses them at the entry level (Forbes & Zampelli, 2012).

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While using the CIM classification, it is acceptable to have developed and underdeveloped reserves at all certainty levels.  Further, the developed levels are subdivided into developed producing and developed non-producing levels. The CIM classification is slightly different to the SPE one because SPE only uses the mentioned definitions to proved reserves only. 

Another notable aspect of CIM definitions is that of the fiscal conditions under which the reserve estimates ought to be prepared. It states that the conditions should have a sensible outlook on the future. Other agencies among them the security regulators may use that fiscal condition constant or costs and prices to determine the value of the petroleum reserve (Forbes & Zampelli, 2012). Regardless of the preparation of the reserve estimates, all the fiscal conditions and assumptions used ought to be disclosed.

Russian Oil Reserves

The Russian Ministry of Natural Resources (RF 2005) uses boundaries to set the definitions of the reserves in the petroleum. According to this institution, the undiscovered reserves can be classified into three categories namely, prospect category (D1), Leads category (D2) and Plays category (D3) (Ahlbrandt & Klett, 2005). The RF 2005 approach is different as compared to other bodies such as NDP and SPE which uses maturity axis instead of alignment boundaries. Regarding the recoverable volume, the RF 2005 uses the in-place volumes for the D1, D2 and D3 categories besides the economical category of Contingent Recoverable Reserves (Ahlbrandt & Klett, 2005).  

The Contingent Recoverable Reserves category that is used by the RF 2005 works in a similar manner to the Contingent Resources that is used in the SPE. Both terms refer to the petroleum reserves that cannot be exploited even though they have been discovered due to due to technological or economic constraints. Other factors that may hinder the exploitation of such petroleum reserves include the location of the reserves under the environmentally protected zones, location under water, location under cities or even lack of sufficient technology and infrastructure to exploit the reserves (Purewal, 2012).

According to the RF2005, the term reserve comprises all types of the discovered sub-economic, economic and in-place volumes. The definition is slightly different with that of the SPE which used the term reserve to refer to the commercially recoverable and remaining volumes of the discovered petroleum. Another significant different that arise in the definition of reserve while using the RF2005 is that the institution does not mention the treatment of the unconventional hydrocarbons such as coal, tight gas, bitumen and methane. Instead, RF 2005 classifies the heavy oils as complicated accumulations (Purewal, 2012).  

Additionally, the RF2005 does not offer conservative commercial criteria for proved and unproved reserves.  Instead, the institution uses the mechanism that evaluates all the reserves using the commercially recoverable with the help of equipment and technology for treatment and recovery to ensure that the subsoil and the environment, in general, are rationally used (Purewal, 2012). It also places a lot of emphasis on volumetric analysis in probable and proved estimates contrary to the SPE and NPD which focuses on the production and performance-based estimations.

China Oil Reserves

The China Petroleum Reserves Office (PRO 2005) is another important body when it comes to the definition of reserves in petroleum. According to this body, the term reserve refers to both the technically recoverable petroleum; in-place recovered petroleum volumes and the economically recoverable petroleum. Before comparing the PRO 2005 reserves to the SPE reserves, it is important to reduce the recoverable reserves (both the proved and subset proved developed estimates) because the certainty criteria are assigned to both ultimate recoverable and in-place recoverable petroleum volumes (Denney, 2005).

The PRO 2005 also adopts some mechanism that is slightly different from other petroleum related bodies. For instance, PRO 2005 subdivides the discovered petroleum into Unmapped Petroleum Initially-in-place (depending on the reconnaissance of mapping) and the Petroleum Initially-in-place in Prospect based on the stages of exploration. The classification utilized in Chinese hardly uses the probabilistic analyses as employed by the SPE. Instead, the body uses phrases such as the “The geological reserves are estimations with a moderate level of confidence with a relative error that is less than +/- 50% (Denney, 2005).” The Chinese classification is seen to provide a higher degree of uncertainty as compared to the SPE probability estimations; focusing all the assessments on analog recovery factor and geological uncertainty.

For the non-conventional hydrocarbons, PRO 2005 uses similar classification criteria to Bed Methane reserves and Coal. However, the body has not designed the regulations for the oil sands and bitumen.

UNFC Classification of Reserve

The United Nations Framework Classification (UNFC 2004) was established on the existing petroleum bodies for worldwide implementation of petroleum reserve classification based on the Geological (G), Economic E and Field Project Status and Feasibility (F) (Denney, 2007). The UNFC 2004 brought about the principle of non-sale quantities to ensure that economic resources that are not used commercially are well managed and material balance is completely maintained. To separate the contingent and the reserves, the UNFC 2004 uses the field status categories through the use of justified projects concepts as a way of defining the petroleum reserves. Also, the UNFC body introduced the concept of Exceptional Economic (E1.2) to incorporate the petroleum projects that supported by the government even though they are not economic. The E1.2 was introduced because such projects are supported through government subsidies and require strategic planning (Denney, 2007).

Although set o very high oil reserves standards and definitions, UNFC does not have adequate application guidelines for the implementation of the proposed system. However, the institution has assigned the Ad Hoc Group of Experts the role of developing the application guidelines. The Ad Hoc Group is working in conjunction with the Gas Reserves Committee and SPE OIL.  It is possible that the SPE group was included in the designing and development of application guidelines for UNFC system due to its technical uncertainty classes that comprise of high and best estimates for pre to post discovery (Denney, 2007). The UNFC needed the SPE team because currently, it is using the undrilled resources as G4 and subdivision by technical uncertainty which are set by non-numeric figures.

The SPE/WPC/AAPG/SPEE Resources Classification System (SPE-PRMS 2007) encompasses the entire petroleum reserves concepts that are covered by other bodies. It offers the definition for the reserves, production, prospective resources, contingent resources and unrecoverable petroleum.  According to SPE-PRMS 2007 reserves are petroleum quantities that are expected to be commercially recoverable through the use of development projects. A reserve must satisfy four conditions that are set by SPE-PRMS 2007. These conditions include recoverability, the reserve must be discovered, and remaining based on the projects production status and must be commercial.

Regarding the concept of contingent resources, SPE-PRMS 2007 identifies them as quantities of petroleum that can be potentially recovered from known accumulations as per the set dates (Chan, Etherington, & Aguilera, 2012). However, such projects are not considered to be mature enough to be exploited commercially due to some inhibiting factors such as lack of potential market, inadequate exploitation technology, or lack of enough equipment to evaluate the level of petroleum accumulation.

SPE-PRMS 2007 used well-designed guidelines to ensure consistent estimation of the evaluation of petroleum quantities and development projects. The designed applications guidelines provide reserve and resources definitions that are used in both unconventional and conventional petroleum accumulations irrespective of their extraction technique, in-place features and the level of processing that is used to provide the marketable product (Chan, Etherington, & Aguilera, 2012).


Since most of the reserve in petroleum estimation techniques uses probability hurdles such as P90, P50 and P10, I believe that this measure is more accurate as it has been adopted by many petroleum-linked bodies. Regardless of the agencies and their location in the globe, I feel that they should share a central goal of preserving the environment even as they use different techniques of exploiting the petroleum and its products. It is the responsibilities of thee agencies to emphasize on conserving the natural environment. As such, a global body should be established to monitor the activities of all the agencies to ensure that the methodologies adopted are not harmful to the environment. Also, such an international body should set rules, regulations and policies to which all the agencies should comply with failure to which they ought to be banned. The establishment of an international body can also be important because it can bring about the uniformity among the agencies allowing them to borrow more beneficial mechanism from each other.

In conclusion, the observations made from the analysis of the reserves and the resource definitions through the ten agencies have been a description of the quantities of the hydrocarbons that were recovered and developed in the industries. The analysis of the resource and the reserves in petroleum provide the increase of clarity and the better alignment of the business process. The utilization of the concept that helps to separate what have been discovered from what have not been discovered has been achieved by the agencies without having to give an ultimate for commerciality.


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Odo, C., Ani, W., Obialor, P., & Ugwunta, D. (2016). To What Extent do United Kingdom Companies Provide Oil and Gas Reserves Information Sufficient to Satisfy Statement of Recommended Practice Requirements?. Australian Accounting Review, 26(1), 34-44. Parshall, J. (2009). SEC Revises Reserves Rules on the Basis of SPE System. Journal Of Petroleum Technology, 61(03), 86-86.

Parshall, J. (2009). SEC Revises Reserves Rules on the Basis of SPE System. Journal Of Petroleum Technology, 61(03), 86-86.

Purewal, S. (2012). New Reserves and Resources Guidelines Document Available. Journal Of Petroleum Technology, 64(02), 48-48.