Achieving Global Acceptance of and Compliance With a Universal Set of Petroleum Resources and Reserves Definitions—Are We There Yet?

Abstract SPE has long been a leader together with several other cooperative industry organizations over time in establishing petroleum resources and reserves definitions. This began in 1962 with the appointment of the first SPE Oil and Gas Reserves Committee (OGRC) and continues through the most recent SPE programs and processes created to inform and educate industry and the public about the applicability and significance of the Petroleum Resources Management System (PRMS) approved in March 2007. The three other sponsors of the PRMS are the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE) who, along with SPE, effectively represent virtually every segment of the greater petroleum industry worldwide. Developing the PRMS required more than three years and the direct, hands-on participation of more than two dozen industry volunteers. The document was further subjected to a 100-day industry wide review period where comments were solicited and incorporated, as appropriate, into the final approved version. This was, in every measure, a global effort as the mandate for the OGRC and its observers was strengthened by having representation from 10 countries including Australia, Canada, Hungary, Italy, Norway, Saudi Arabia, South Africa, United Kingdom, United States and Venezuela. Employers of the OGRC members and those of its six observers included privately-owned, state-owned, independent and integrated producers plus large and small consulting firms, one government agency and an international accounting board. All of the individuals who participated in the creation of the PRMS fully recognize the dynamic nature of this exercise and the continuing need for periodic updating of the constituent PRMS documents in recognition of advancing technology and ongoing global discussions. The value of having a unified (and broadly understood) set of definitional standards for petroleum resources definitions will become more appreciated over time as many world leaders continue to express concern about the ability of the industry to meet its share of the energy demand of an expanding population and economy. Many would agree that the first concrete step in achieving international recognition of a single standard for petroleum reserves and resources definitions began with the efforts of the WPC and SPE in their joint 1997 publication of updated reserves definitions and the recognition of both deterministic and probabilistic assessment methodologies. Three years later, the AAPG joined SPE and WPC in developing and issuing petroleum resources definitions in 2000. These two significant steps plus the inclusion of the SPEE led to the March 2007 release of the PRMS. The more challenging part of this process clearly lies ahead as the sponsoring organizations work together to "sell" these definitions and principles to the upstream petroleum industry management, the financial community including investors and creditors, the accounting world, governments, certain mining interests and governmental regulators. Upstream investment decisions, including those arising from cooperative agreements between companies, are facilitated and optimized through reliance upon information generated through a uniform and modern set of resource definitions and classification standards. Investors, in particular, need to have a clear understanding of the meaning of terms in a reserves report, for example, before they can make judicious decisions about value and comparability. Is this achievable? Who are the key players and what incentives are there to bring universal acceptance and compliance? The good news is that this process has been ongoing for at least 10 years and has now being accelerated through the combined and concerted efforts of many individuals and organizations, all of whom have or are beginning to develop a clear vision of the benefits to be derived from a universal petroleum resources classification code to meet the needs of the greater petroleum industry and its investors. Has the SPE OGRC reached a sufficiently high level of consensus in crafting the PRMS for it to warrant recognition and acceptance by the companies, agencies, organizations and individuals who will ultimately make these decisions? This paper attempts to address this very important question.

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