SPE/WPC/AAPG/SPEE Petroleum Resources Management System (PRMS)

PRMS

Prepared by the SPE Oil & Gas Reserves Committee (OGRC)

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Who is the OGRC?

International representation
(USA, Canada, Australia, UK, Italy, Hungary, Saudi Arabia)

Focus on technical standards

Inter-organizational cooperation
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SPE Vision for Reserves/Resources

SPE/WPC/AAPG/SPEE definitions and classification system (and associated estimating guidelines) will continue to be maintained evergreen and enhanced to incorporate new best practices, and unconventional resources, and will be recognized as the premier classification standard. SPE will actively promote and facilitate in-depth understanding of the definitions and their universal adoption by the oil, gas, and related industries; international financial organizations; governments; regulatory agencies; and reporting bodies.
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Our Stakeholders
small independents

Oil & Gas Companies

Large IOCs and NOCs

Securities Regulators

Government Agencies

Investors Financial Organizations All stakeholders require complete, consistent and reliable information on future production and associated cash flow estimates through full life recovery.
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Scope of Projects
Align with the hydrocarbon finding, developing and producing business!
Prospect Generation Wildcat Drilling Discovery, Appraisal, Development

E& P

Field Optimization

Li fe

Cy

cl e

Enhanced Recovery Decline, Abandonment

+

We require a system that will support assessment processes throughout the asset lifecycle

+ +

Evolution of Petroleum Evaluation Guidelines

API 1936 API/AGA 1961 SPE/API 1964 SPEE 1985 WPC 1987 SPE 1987

1997 SPE/WPC Petroleum Reserves Definitions 2000 SPE/WPC/AAPG Petroleum Resources Classification and Definitions 2001 SPE/WPC/AAPG Guidelines for the Evaluation of Petroleum Reserves and Resources 2005 SPE/WPC/AAPG Glossary of Terms

2007 SPE/WPC/AAPG/SPEE Petroleum Resources Management System

(SPE-PRMS)

Consolidate, build on, update, and replace prior guidance

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SPE Mapping Project

Agencies Selected for Comparison
1.
Securities Disclosures

US Securities and Exchange Commission (SEC-1978) UK Statement of Recommended Practices (SORP-2001) Canadian Security Administrators (CSA -2002) Russian Ministry of Natural Resources (RF-2005) China Petroleum Reserves Office (PRO-2005) Norwegian Petroleum Directorate (NPD2001) United States Geological Survey (USGS-1980) United Nations Framework Classification (UNFC-2004)

2. 3. 4. 5.

Government Reporting International Standards

6. 7. 8.

(see final report December 2005 on SPE.org)

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PRMS - Major Principles

1. The System is ProjectBased. 2. Classification is based on projects chance of commerciality. Categorization is based on recoverable uncertainty. 3. Base case uses evaluators forecast of future conditions. 4. Applies to both conventional and unconventional resources

Project-Based System
project lease reservoir What is my entitlement using this project?

How much is there?

Reservoir
(in-place volumes)

net recoverable resource

Project
(production & cash flow schedules)

Property
(ownership/contract terms)
What is my share of costs and revenues?
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Separate Classification & Categorization

Production
Reserves

Commercial

classify by
Chance of Commerciality (Risk) of project applied

Discovered

Sub-commercial

Contingent Resources

Unrecoverable

Undiscovered

Prospective Resources

chance of development

chance of discovery
Unrecoverable

categorize estimates based on uncertainty of sales quantities associated with project

reservoir in-place uncertainty + project recovery efficiency

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Resources Classification System

PRODUCTION
COMMERCIAL

RESERVES
1P
Proved Probable

TOTAL PETROLEUM INITIALLY-IN-PLACE (PIIP)

Total Initially-in-Place (IIP)

DISCOVERED PIIP

2P
Possible

3P Increasing Chance of Commerciality

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SB-COMMERCIAL

Discovered IIP
Unrecoverable

Undiscovered IIP
Unrecoverable

CONTINGENT RESOURCES
1C 2C
UNRECOVERABLE

3C

Recoverable

Recoverable

UNDISCOVERED PIIP

SubCommercial Commercial

Potentially Commercial

PROSPECTIVE RESOURCES
Low Estimate Best Estimate High Estimate

UNRECOVERABLE

Range of Uncertainty
Not to scale

Resources Class Criteria

Discovered
Established through testing, sampling and/or logging the existence of a significant quantity of potentially moveable hydrocarbons.

Commercial
Meets evaluators economic criteria No significant contingencies that would prevent development Reasonable expectation that all internal/external approvals will be forthcoming Intent to initiate development within a reasonable time frame

reasonable time frame depends on the specific circumstances and varies according to the scope of the project.

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Sub-classify by Project Maturity

PRODUCTION
TOTAL PETROLEUM INITIALLY-IN-PLACE (PIIP)
COMMERCIAL

Project Maturity Sub-classes

On Production

DISCOVERED PIIP

RESERVES

Justified for Development Development Pending

Commercial Criteria

CONTINGENT RESOURCES

Development Unclarified or On Hold Development not Viable

UNRECOVERABLE UNDISCOVERED PIIP

Discovery Criteria

Prospect

PROSPECTIVE RESOURCES

Lead Play

UNRECOVERABLE

Range of Uncertainty

Not to scale
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Increasing Chance of Commerciality

Approved for Development

SUB-COMMERCIAL

Additional Classification Modifiers

Reserves Status
Recoverable quantities my be subdivided based on the funding and operational operational status of wells and associated facilities into:
Developed (Producing or Non-Producing) Undeveloped Reserves status may be applied to Proved, Probable and Possible

Economic Status
Projects may be further characterized by economics and commercial modifiers into:
Economic (Reserves) Marginal Economic (Contingent Resources) Sub-Marginal Economic (Contingent Resources) Reserves and Economic Status may be applied separately or in combination with Project Maturity Sub-classes
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Categorize by Uncertainty
The system accommodates multiple approaches to assessing uncertainty. Deterministic Methods
1P

Probabilistic Methods
100%
P90

scenario

incremental

2P 3P

% probability of value or more

reasonably certain

Proved

Less likely than Proved More Likely than Possible

Probable

Cum Prod

Proved Probable Possible EUR

P50

1P scenario high degree of confidence

2P scenario more likely than not

Less likely than Probable

Possible

P10

0%
cum prod

1P EUR

2P

3P

3P scenario - unlikely
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Based on Forecast Conditions

Project decisions are based on the evaluators view of Forecast Conditions = those assumed to exist during the projects implementation Conditions include:
Prices and costs Technology available Environmental standard Fiscal terms Regulatory constraints

forecast case
COMMERCIAL

1P
PROVED

RESERVES
PROBABLE

2P
POSSIBLE

3P

Alternate economic scenarios are typically considered in the decision process and, in some cases, to supplement reporting requirements.
For example, one sensitivity case may assume current conditions will remain constant throughout the life of the project (constant case).

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Unconventional Resources
Conventional Reservoirs

Heavy Oil Extra -Heavy Oil Bitumen Unconventional Reservoirs Oil Shale

Tight Gas Sands

Gas Shales Coalbed Methane

Gas Hydrates

Increasing In-Place Volume

Pervasive over large areas and not significantly affected by current hydrodynamic influences, i.e. buoyancy of petroleum on water! SPE classification still applies (but may require alternative assessment approaches).

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PRMS Development and Approval Process

Final Approval March 2007
Submit for SPE board and partner approval

OGRC Definitions Revision Project - Phase 1 Sept 2004 Oct 2006

100 Day Industry Review Period

(30 presentations global feedback)

OGRC reviews/incorporates feedback into a final PRMS

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Summary of Major Changes in 2007 SPE/WPC/AAPG/SPEE PRMS

Revision
Combines 4 previous documents into single "Petroleum Resources Management System": 1997 SPE/WPC Petroleum Reserves Guidelines 2000 SPE/WPC/AAPG Petroleum Resources Classification and Definitions 2001 SPE/WPC/AAPG Guidelines for the Evaluation of Petroleum Reserves & Resources 2005 SPE/WPC/AAPG Glossary of Terms

Comment

Separate documents combined, abbreviated and clarified

Base case uses forecast conditions but still permits option to use constant conditions

Most companies base decisions on forecast conditions; some regulators require constant conditions for consistent reporting PRMS applies to both conventional and unconventional resources Aligns with 1P, 2P & 3P Reserve uncertainty categories but constrained by commerciality barrier(s) Additional classification modifiers optional but may greatly assist in understanding and tracking reserves and resources
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Recognizes growing importance of unconventional resources

Low, mid and high categories of Contingent Resources relabeled to 1C, 2C & 3C respectively

Introduces classification modifiers: - Reserves status of developed and undeveloped can be applied to 1P, 2P & 3P Reserves - Reserves, Contingent Resources & Prospective Resources sub-classified by project maturity - Contingent Resources subdivided into 'marginal economic' & 'sub-marginal economic'

Total Resource System is Project-Based

PRODUCTION

The key is the

PROJECT
Commercial
classify by commercial certainty
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Proved

Probable

Possible

Contingent Resources
No Project No recoverable resource

Discovered
Undiscovered

Sub-commercial

Prospective Resources
categorize by recovery certainty

Whats Next?
Education Programs (ATWs, JCORET, )

Implementation Guides, Examples

Collaboration with Other Standards

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