1. document9
The SPE-PRMS System
One can describe the lack of certainty regarding the oil and gas resources in 2
different level: the lack of certainty regarding the volume of resources that will be
discovered and the lack of certainty regarding the chance of having a commercial
discovery.
The SPE-PRMS system provides a conceptual framework regarding the classification
of oil and gas resource and demonstrates the two different levels in its following
graph:
On the commercial front, one can distinguish between three main groups: reserves,
contingent resources and prospective resources. Whilst reserves and contingent
resource are resources that have been discovered, and have been proved through
drilling, the prospective resources are resources that have yet to be discovered (pre
drilling) but for which there is a certain degree of probability that they will be
discovered and produced commercially based on a number of parameters.
The second level of lack of certainty, relates to the amount of resources that can be
produced under each one of these above mentioned groups. The different forecasts
relate to the amounts of producible petroleum and are known as 1P, 2P, 3P under the
reserve category, 1C, 2C, 3C under the contingent resource category and
low/best/high estimate under the prospective resources category
2. document9
The international PRMS system defines reserves as those quantities that can expected
to be produced commercially….. and are due to meet 4 different accumulative
criteria:
1. After discovery
2. Producible
3. Commercial
4. Defined based on an existing development program (even if not actually yet
produced)
In addition for a field to be considered a one that contains reserves there is need to
have reasonable expectations that the internal and external permits will be received in
order to start with the existing development program as well as a firm intention to
start the development within a reasonable time frame with this usually set at about 5
years.
Regarding reserves, the PRMS system demands a high confidence level regarding the
commercial production potential in the field which is supported by actual production
or formation tests. In certain cases, reserves can be classified as such based on logging
while drilling and carrying out sample tests from the field to verify that hydrocarbons
indeed are present and based on analogous fields in the area where production
capacity has already been proven.
After the analysis in a different number of way has been completed, one receives a
distribution curve of the quantity of resources that can be classified as reserves. In
order to describe the different scenarios, the PRMS system classifies the reserves into
3 groups:
1P – the smallest and thus most conservative estimate. This s the quantity for which
there is a reasonable certainty that can be produced commercially under defined
conditions. When one uses the statistical method, there is a 90% reliability that the
quantities that will be produced in actual fact will be equal or greater to than this
forecast (also known as the P90).
2 P – The middle or what is known as the best estimate. For this there is a 50%
probability that the amounts that will be actually produced will be equal to or higher
than stated (also known as the P50)
3P – The most optimistic and the high estimate for which there is a 10% probability
that the quantities that will be produced will be equal to or higher than (known also as
the P10).
According to the accumulated definitions of the 1P, 2P and 3P we get also the
Proved reserves – this is the 1P
the Probable reserves – this is the difference between the 1P and the 2P (namely the
additional marginal difference for the transfer from the 1P to the 2P)
3. document9
Possible reserves – this is the difference between the 2P and the 3P (namely the
marginal difference for the transfer from the 2P to the 3P)
Thus total reserves are equal to Proved Reserves + Unproved Reserves.
Another division that stems from the PRMS regulations deals with the issues clo. All
these to a commercial development: on production reserves, reserves with have been
approved for development, and reserves which have been justified for development
All these groups are due to lead to the definition of reserves
