Technology Focus: Reserves Management (December 2023)
Authors: Gurney David 
Published: December 2023

Time and time again, I meet industry specialists who should have a detailed knowledge of the Petroleum Resources Management System (PRMS) and handling uncertainty in the inputs for resource assessment or to the rest of the evaluation work flow. Often, however, the understanding of PRMS basics, application, or reporting seems to be lacking. This year’s Reserves Management papers are chosen to revisit some basics around both reserves delineation and asset management.
Paper SPE 210358 reminds evaluators to use multiple approaches (triangulation?) in the presence of uncertainty to derive the best estimates for Proved Reserves, but this should apply equally to all resource assessment. It also stresses the requirement, sometimes overlooked, to ensure that the approach/technology is proven and calibrated to work in the exact situation, both subsurface and surface. Uncertainty is inherent in our business, though difficult to communicate, and we should do all we can to incorporate it correctly.
Also looking at the effect of uncertainty, paper SPE 213385 focuses on Monte Carlo simulation for commercialization around well performance in unconventional settings, but its application can be to any technical or commercial uncertainty. Too many people overly focus on precision (the decimal places in the answer) but lose focus on accuracy or usefulness of the work. Uncertainty can lead to errors in the first, and certainly the second, significant figure, thus invalidating all the misleading precision. Analysis should model the parameters to include the true state of knowledge.
It seems ever more difficult to avoid discussions of carbon capture and storage (CCS), a major challenge facing the industry, especially when trying to monetize massive high-CO2 fields. Paper SPE 214359 discusses how the Malaysian authorities and Petronas seek to manage and incentivize CCS in their domain and achieve socially desirable goals with improved efficiency—specifically, centralizing the disposal of CO2 through an organization taking the separated gas from the producers. It creates efficiencies through scale and targeted regulatory incentives that do not need to be applied to the direct producers. It reminds me of how liquefied natural gas facilities often are commercially separated from the upstream to manage project financing and improve project feasibility.
The recommended additional reading papers delve further into PRMS disclosure details and implications; how allocating volumes (and costs) for incremental decisions can change the optimal outcome; some more around how volumes and costs flow through to economics and how this can be an issue in complex fields; and, lastly, an unusual proposal of uncertainty around the 1P, 2P, and 3P values. Certainly, they remind the reader to consider the effect of uncertainty on volumetrics and categorization.
Recommended additional reading at OnePetro: www.onepetro.org.
SPE 209695 Can Reasonable Certainty Be Assessed From Disclosed Proved Reserves Revisions? by Enrique Morales, ISVA Oil and Gas Consultancy, et al.
SPE 211458 An Algorithm for Calculating Incremental Production in an Integrated Asset Model by Peter Richard Paul Cunningham, Serafim, et al.
SPE 212826 Impact of Financial Assumptions on Economic Viability of Incremental Projects by M.A. Mian, O&G Knowledge Sharing Platform
SPE 209217 Probabilistic Reserves Categorization Using Percentiles of a Single Probability Distribution by M.A. Mian, O&G Knowledge Sharing Platform