Achieving Global Acceptance of and Compliance With a Universal Set of Petroleum Resources and Reserves Definitions - Are We There Yet?
- D. Ronald Harrell (Ryder Scott Company)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- October 2008
- Document Type
- Journal Paper
- 34 - 39
- 2008. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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SPE has long been a leader together with several other cooperative industry organizations in establishing petroleum 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 the industry and the public about the applicability and significance of the Petroleum Resources Management System (PRMS) approved by the SPE Board of Directors in March 2007. This article is a condensation of SPE 114162 and the reader is directed to the full paper for more details about the PRMS, the sponsoring societies, and the historical sequence of events leading to the current state of PRMS adoption and acceptance. The creation of the PRMS was, in every measure, a global effort as the mandate for the OGRC and its observers was strengthened by having representation from 10 countries: Australia, Canada, Hungary, Italy, Norway, Saudi Arabia, South Africa, the UK, the US, 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.
The more challenging part of this process clearly lies ahead as the sponsoring organizations work together to “sell” these definitions and principles to upstream petroleum industry management, the financial community, the accounting world, governments, certain mining interests, and regulators.
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 article attempts to address this very important question.
Who Are the Players?
The petroleum value chain begins with exploration and production companies—large and small, public and private—who incur the financial risks and manage other uncertainties endemic to their businesses. Adoption of the PRMS by all or most producing companies will clearly not eliminate the risky nature of the industry but a common understood nomenclature removes a part of the uncertainty and helps eliminate many of the avoidable problems associated with inconsistent, and sometimes conflicting, terminology. How many oil and gas producers are there? Even though most of the world’s petroleum reserves and resources are controlled by fewer than 50 or so companies, there are more than 900 companies who registered securities for sale in 2006 through stock exchanges in the US, the UK, and Canada. This number excludes several hundred more tiny-to-large privately owned companies that do not fall under the jurisdiction of any securities reporting agency.
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