114 PETROLEUM TECHNOLOGY, ECONOMICS, AND POLITICS
4.2.1 SPE Standards
The standards developed by the Society of Petroleum Engineers
take into account not only the probability that hydrocarbons are
physically present in a given geological formation, but also the
economic viability of recovering the reserves. This includes many
factors, such as exploration and drilling costs, ongoing production
costs, transportation costs, taxes, prevailing prices for the products,
and other factors that influence the economic viability of a given
deposit.
Within these standards, reserves are classified as proved, probable
and possible, based on both geological and commercial factors.
All reserve estimates involve uncertainty, depending on the
amount of reliable geologic and engineering data available and the
interpretation of those data. The relative degree of uncertainty can be
expressed by dividing reserves into two principal classifications —
proven (proved) and unproven (unproved). Unproven reserves
can further be divided into two subcategories — probable and possible — to indicate the relative degree of uncertainty about their
existence.
Proved reserves are reserves of petroleum that are confirmed
with a high degree of certainty, and are actually found by drilling
operations and are recoverable by means of current technology.
They have a high degree of accuracy and are frequently updated as
the recovery operation proceeds. Proven reserves have a reasonable
certainty (normally at least 90% confidence) of being recoverable
under existing economic and political conditions, and using existing technology. Industry specialists refer to this as P90 (i.e. having a
90% certainty of being produced). Proved reserves are also known
in the industry as IP. They may be updated by means of reservoir
characteristics, such as production data, pressure transient analysis, and reservoir modeling.
Probable reserves are those reserves of petroleum that are nearly
certain but about which a slight doubt exists. Possible reserves are
those reserves of petroleum with an even greater degree of uncertainty about recovery, but about which there is some information.
An additional term, potential reserves, is also used on occasion;
these reserves are based upon geological information about the
types of sediments where such resources are likely to occur and
they are considered to represent an educated guess. Then, there
are the so-called undiscovered reserves, which are little more than
4.2.1 SPE Standards
The standards developed by the Society of Petroleum Engineers
take into account not only the probability that hydrocarbons are
physically present in a given geological formation, but also the
economic viability of recovering the reserves. This includes many
factors, such as exploration and drilling costs, ongoing production
costs, transportation costs, taxes, prevailing prices for the products,
and other factors that influence the economic viability of a given
deposit.
Within these standards, reserves are classified as proved, probable
and possible, based on both geological and commercial factors.
All reserve estimates involve uncertainty, depending on the
amount of reliable geologic and engineering data available and the
interpretation of those data. The relative degree of uncertainty can be
expressed by dividing reserves into two principal classifications —
proven (proved) and unproven (unproved). Unproven reserves
can further be divided into two subcategories — probable and possible — to indicate the relative degree of uncertainty about their
existence.
Proved reserves are reserves of petroleum that are confirmed
with a high degree of certainty, and are actually found by drilling
operations and are recoverable by means of current technology.
They have a high degree of accuracy and are frequently updated as
the recovery operation proceeds. Proven reserves have a reasonable
certainty (normally at least 90% confidence) of being recoverable
under existing economic and political conditions, and using existing technology. Industry specialists refer to this as P90 (i.e. having a
90% certainty of being produced). Proved reserves are also known
in the industry as IP. They may be updated by means of reservoir
characteristics, such as production data, pressure transient analysis, and reservoir modeling.
Probable reserves are those reserves of petroleum that are nearly
certain but about which a slight doubt exists. Possible reserves are
those reserves of petroleum with an even greater degree of uncertainty about recovery, but about which there is some information.
An additional term, potential reserves, is also used on occasion;
these reserves are based upon geological information about the
types of sediments where such resources are likely to occur and
they are considered to represent an educated guess. Then, there
are the so-called undiscovered reserves, which are little more than