Figure 1-1: Resources Classification Framework.
Table of Contents
Preamble 1
1.0 Basic Principles and Definitions
2
1.1 Petroleum Resources Classification Framework 2
1.2 Project-Based Resources Evaluations 4
2.0 Classification and Categorization Guidelines 5
2.1 Resources Classification 6
2.1.1 Determination of Discovery Status
2.1.2 Determination of Commerciality
2.1.3 Project Status and Commercial Risk
2.1.3.1 Project Maturity Sub-Classes
2.1.3.2 Reserves Status
2.1.3.3 Economic Status
2.2 Resources Categorization 9
2.2.1 Range of Uncertainty
2.2.2 Category Definitions and Guidelines
2.3 Incremental Projects 11
2.3.1 Workovers, Treatments, and Changes of Equipment
2.3.2 Compression
2.3.3 Infill Drilling
2.3.4 Improved Recovery
2.4 Unconventional Resources 12
3.0 Evaluation and Reporting Guidelines 13
3.1 Commercial Evaluations 13
3.1.1 Cash Flow-Based Resources Evaluations
3.1.2 Economic Criteria
3.1.3 Economic Limit
3.2 Production Measurement 15
3.2.1 Reference Point
3.2.2 Lease Fuel
3.2.3 Wet or Dry Natural Gas
3.2.4 Associated Non-Hydrocarbon Components
3.2.5 Natural Gas Re-Injection
3.2.6 Underground Natural Gas Storage
3.2.7 Production Balancing
3.3 Resources Entitlement and Recognition 17
3.3.1 Royalty
3.3.2 Production-Sharing Contract Reserves
3.3.3 Contract Extensions or Renewals
4.0 Estimating Recoverable Quantities 19
4.1 Analytical Procedures 19
4.1.1 Analogs
4.1.2 Volumetric Estimate
4.1.3 Material Balance
4.1.4 Production Performance Analysis
4.2 Deterministic and Probabilistic Methods 21
4.2.1 Aggregation Methods
4.2.1.1 Aggregating Resources Classes
Table 1: Recoverable Resources Classes and Sub-Classes
24
Table 2: Reserves Status Definitions and Guidelines 27
Table 3: Reserves Category Definitions and Guidelines 28
Appendix A: Glossary of Terms Used in Resources Evaluations
30
Petroleum resources are the estimated quantities of hydrocarbons
naturally occurring on or within the Earth’s crust. Resource assessments
estimate total quantities in known and yet-to-bediscovered accumulations;
resources evaluations are focused on those quantities that can
potentially be recovered and marketed by commercial projects.
A petroleum resources management system provides a consistent
approach to estimating petroleum quantities, evaluating development
projects, and presenting results within a comprehensive classification
framework.
International efforts to standardize the definitions of petroleum
resources and how they are estimated began in the 1930s. Early
guidance focused on Proved Reserves. Building on work initiated
by the Society of Petroleum Evaluation Engineers (SPEE), SPE published
definitions for all Reserves categories in 1987. In the same year,
the World Petroleum Council (WPC, then known as the World Petroleum
Congress), working independently, published Reserves definitions
that were strikingly similar. In 1997, the two organizations jointly
released a single set of definitions for Reserves that could be
used worldwide. In 2000, the American Association of Petroleum
Geologists (AAPG), SPE, and WPC jointly developed a classification
system for all petroleum resources. This was followed by additional
supporting documents: supplemental application evaluation guidelines
(2001) and a glossary of terms utilized in resources definitions
(2005). SPE also published standards for estimating and auditing
reserves information (revised
2007).
These definitions and the related classification system are now
in common use internationally within the petroleum industry. They
provide a measure of comparability and reduce the subjective nature
of resources estimation. However, the technologies employed in
petroleum exploration,
development, production, and processing continue to evolve and
improve. The SPE Oil and Gas Reserves Committee works closely
with other organizations to maintain the definitions and issues
periodic revisions to keep current with evolving technologies
and changing commercial
opportunities.
This document consolidates, builds on, and replaces guidance previously
contained in the 1997 Petroleum Reserves Definitions, the 2000
Petroleum Resources Classification and Definitions publications,
and the 2001 “Guidelines for the Evaluation of Petroleum Reserves
and Resources”; the latter document remains a valuable source
of more detailed background information, and specific chapters
are referenced herein. Appendix A is a consolidated glossary of
terms used in resources evaluations and replaces those published
in 2005.
These definitions and guidelines are designed to provide a common
reference for the international petroleum industry, including
national reporting and regulatory disclosure agencies, and to
support petroleum project and portfolio management requirements.
They are intended to improve clarity in global communications
regarding petroleum resources. It is expected that this document
will be supplemented with industry education programs and application
guides addressing their implementation in a wide spectrum of technical
and/or commercial settings.
It is understood that these definitions and guidelines allow flexibility
for users and agencies to tailor application for their particular
needs; however, any modifications to the guidance contained herein
should be clearly identified. The definitions and guidelines contained
in this document must not be construed as modifying the interpretation
or application of any existing regulatory reporting requirements.
This SPE/WPC/AAPG/SPEE Petroleum Resources Management System document,
including its Appendix, may be referred to by the abbreviated
term “SPE-PRMS” with the caveat that the full title, including
clear recognition of the co-sponsoring organizations, has been
initially stated.
1.0 Basic Principles and Definitions
The estimation of petroleum resource quantities involves the
interpretation of volumes and values that have an inherent degree
of uncertainty. These quantities are associated with development
projects at various stages of design and implementation. Use of
a consistent classification system enhances comparisons between
projects, groups of projects, and total company portfolios according
to forecast production profiles and recoveries. Such a system
must consider both technical and commercial factors that impact
the project’s economic feasibility, its productive life,
and its related cash flows.
1.1 Petroleum Resources Classification Framework
Petroleum is defined as a naturally occurring mixture consisting
of hydrocarbons in the gaseous, liquid, or solid phase. Petroleum
may also contain non-hydrocarbons, common examples of which are
carbon dioxide, nitrogen, hydrogen sulfide and sulfur. In rare
cases, non-hydrocarbon content could be greater than 50%.
The term “resources” as used herein is intended to encompass all
quantities of petroleum naturally occurring on or within the Earth’s
crust, discovered and undiscovered (recoverable and unrecoverable),
plus those quantities already produced. Further, it includes all
types of petroleum
whether currently considered “conventional” or “unconventional.”
Figure 1-1 is a graphical representation of the SPE/WPC/AAPG/SPEE
resources classification system. The system defines the major
recoverable resources classes: Production, Reserves, Contingent
Resources, and Prospective Resources, as well as Unrecoverable
petroleum.
|
Figure 1-1: Resources Classification Framework. |
The “Range of Uncertainty” reflects a range of estimated quantities
potentially recoverable from an accumulation by a project, while
the vertical axis represents the “Chance of Commerciality, that
is, the chance that the project that will be developed and reach
commercial producing status.
The following definitions apply to the major subdivisions within
the resources classification:
TOTAL PETROLEUM INITIALLY-IN-PLACE is that quantity of
petroleum that is estimated to exist originally in naturally occurring
accumulations. It includes that quantity of petroleum that is
estimated, as of a given date, to be contained in known accumulations
prior to production plus those estimated quantities in accumulations
yet to be discovered (equivalent to “total resources”).
DISCOVERED PETROLEUM INITIALLY-IN-PLACE is that quantity
of petroleum that is estimated, as of a given date, to be contained
in known accumulations prior to production.
PRODUCTION is the cumulative quantity of petroleum that
has been recovered at a given date. While all recoverable resources
are estimated and production is measured in terms of the sales
product specifications, raw production (sales plus non-sales)
quantities are also measured and required to support engineering
analyses based on reservoir voidage (see Production Measurement,
section 3.2).
Multiple development projects may be applied to each known accumulation,
and each project will recover an estimated portion of the initially-in-place
quantities. The projects shall be subdivided into Commercial and
Sub-Commercial, with the estimated recoverable quantities being
classified as Reserves and Contingent Resources respectively,
as defined below.
RESERVES are those quantities of petroleum anticipated
to be commercially recoverable by application of development projects
to known accumulations from a given date forward under defined
conditions. Reserves must further satisfy four criteria: they
must be discovered, recoverable, commercial, and remaining (as
of the evaluation date) based on the development project(s) applied.
Reserves are further categorized in accordance with the level
of certainty associated with the estimates and may be sub-classified
based on project maturity and/or characterized by development
and production status.
CONTINGENT RESOURCES are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations, but the applied project(s) are not yet considered
mature enough for commercial development due to one or more contingencies.
Contingent Resources may include, for example, projects for which
there are currently no viable markets, or where commercial recovery
is dependent on technology under development, or where evaluation
of the accumulation is insufficient to clearly assess commerciality.
Contingent Resources are further categorized in accordance with
the level of certainty associated with the estimates and may be
subclassified based on project maturity and/or characterized by
their economic status.
UNDISCOVERED PETROLEUM INITIALLY-IN-PLACE is that quantity
of petroleum estimated, as of a given date, to be contained within
accumulations yet to be discovered.
PROSPECTIVE RESOURCES are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
undiscovered accumulations by application of future development
projects. Prospective Resources have both an associated chance
of discovery and a chance of development. Prospective Resources
are further subdivided in accordance with the level of certainty
associated with recoverable estimates assuming their discovery
and development and may be sub-classified based on project maturity.
UNRECOVERABLE is that portion of Discovered or Undiscovered
Petroleum Initially-in-Place quantities which is estimated, as
of a given date, not to be recoverable by future development projects.
A portion of these quantities may become recoverable in the future
as commercial circumstances change or technological developments
occur; the remaining portion may never be recovered due to physical/chemical
constraints represented by subsurface interaction of fluids and
reservoir rocks.
Estimated Ultimate Recovery (EUR) is not a resources category,
but a term that may be applied to any accumulation or group of
accumulations (discovered or undiscovered) to define those quantities
of petroleum estimated, as of a given date, to be potentially
recoverable under defined
technical and commercial conditions plus those quantities already
produced (total of recoverable resources).
In specialized areas, such as basin potential studies, alternative
terminology has been used; the total resources may be referred
to as Total Resource Base or Hydrocarbon Endowment. Total recoverable
or EUR may be termed Basin Potential. The sum of Reserves, Contingent
Resources, and Prospective Resources may be referred to as “remaining
recoverable resources.” When such terms are used, it is important
that each classification component of the summation also be provided.
Moreover, these quantities should not be aggregated without due
consideration of the varying degrees of technical and commercial
risk involved with their classification.
1.2 Project-Based Resources Evaluations
The resources evaluation process consists of identifying a recovery
project, or projects, associated with a petroleum accumulation(s),
estimating the quantities of Petroleum Initially-in-Place, estimating
that portion of those in-place quantities that can be recovered
by each project, and classifying the project(s) based on its maturity
status or chance of commerciality.
This concept of a project-based classification system is further
clarified by examining the primary data sources contributing to
an evaluation of net recoverable resources (see Figure 1-2) that
may be described as follows:
 Figure 1-2: Resources Evaluation Data Sources. |
In context of this data relationship, “project” is the primary
element considered in this resources classification, and net recoverable
resources are the incremental quantities derived from each project.
Project represents the link between the petroleum accumulation
and the decision-making
process. A project may, for example, constitute the development
of a single reservoir or field, or an incremental development
for a producing field, or the integrated development of several
fields and associated facilities with a common ownership. In general,
an individual project will represent
the level at which a decision is made whether or not to proceed
(i.e., spend more money) and there should be an associated range
of estimated recoverable quantities for that project.
An accumulation or potential accumulation of petroleum may be
subject to several separate and distinct projects that are at
different stages of exploration or development. Thus, an accumulation
may have recoverable quantities in several resource classes simultaneously.
In order to assign recoverable resources of any class, a development
plan needs to be defined consisting of one or more projects. Even
for Prospective Resources, the estimates of recoverable quantities
must be stated in terms of the sales products derived from a development
program assuming successful discovery and commercial development.
Given the major uncertainties involved at this early stage, the
development program will not be of the detail expected in later
stages of maturity. In most cases, recovery efficiency may be
largely based on analogous
projects. In-place quantities for which a feasible project cannot
be defined using current, or reasonably forecast improvements
in, technology are classified as Unrecoverable.
Not all technically feasible development plans will be commercial.
The commercial viability of a development project is dependent
on a forecast of the conditions that will exist during the time
period encompassed by the project’s activities (see Commercial
Evaluations, section 3.1).
“Conditions” include technological, economic, legal, environmental,
social, and governmental factors. While economic factors can be
summarized as forecast costs and product prices, the underlying
influences include, but are not limited to, market conditions,
transportation and processing infrastructure, fiscal terms, and
taxes.
The resource quantities being estimated are those volumes producible
from a project as measured according to delivery specifications
at the point of sale or custody transfer (see Reference Point,
section 3.2.1). The cumulative production from the evaluation
date forward to cessation of production is the remaining recoverable
quantity. The sum of the associated annual net cash flows yields
the estimated future net revenue. When the cash flows are discounted
according to a defined discount rate and time period, the summation
of the discounted cash flows is termed net present value (NPV)
of the project (see Evaluation and Reporting Guidelines, section
3.0).
The supporting data, analytical processes, and assumptions used
in an evaluation should be documented in sufficient detail to
allow an independent evaluator or auditor to clearly understand
the basis for estimation and categorization of recoverable quantities
and their classification.