Oil and gas that have been discovered, but not yet produced, cannot be readily measured. Trapped in the pore spaces of rock, thousands of feet below the surface, the amount of oil or gas in a reservoir cannot be measured with precision. But it is very important to have a good estimate of the amount of oil or gas that may lie in the reservoir.
Resources encompass all quantities of crude oil and natural gas 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 hydrocarbons whether currently considered “conventional” or “unconventional”.
Reserves are an estimate of the volume of crude oil and natural gas of a discovery that is viewed as commercially recoverable under present economical 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 divided into two groups, proven and unproven reserves. In turn, the unproven reserves are divided into probable and possible reserves.
Proved Reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. Often referred to as 1P, also as “Proven.”
Probable Reserves are those additional Reserves which, as the analysis of geoscience and engineering data indicate, are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.
Possible Reserves are those additional reserves which, as the analysis of geoscience and engineering data suggest, are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of Proved plus Probable plus Possible (3P) Reserves, which is equivalent to the high estimate scenario. In this context, when probabilistic methods are used, there should be at least a 10% probability that the actual quantities recovered will equal or exceed the 3P estimate.
Contingent Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations using established technology or technology under development, but which are not currently considered to be commercially recoverable due to one or more contingencies.
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.
Unrisked prospective resources are estimated ranges of recoverable oil and gas volumes assuming that a petroleum discovery is made.
Best Estimate is a term used to describe an uncertainty category for resource estimates referring to the best estimate of the quantity that will actually be recovered. It is equally likely that the actual remaining quantities recovered will be greater or less than the “best estimate”. The best estimate of the Contingent and Prospective Resources is prepared independent of the risks associated with achieving commercial production.