Reporting and Estimation of Global Reserves for the Upstream Oil Industry
A growing population and booming industrial nations in South America and Asia mean it appears that the global appetite for oil is not likely to be abated any time soon.
Therefore, the discovery of new reserves, the sustainable extraction of existing reserves and the use of unconventional reserves are all extremely important for the upstream oil industry.
Economically, the level of investment which must go into the discovery and utilisation of new reserves means accurate estimates are essential to ensure that economic viability can be established and the upstream oil industry can grow.
Reserve Reporting Standards for the Upstream Oil Industry
In 2007 the Society of Petroleum Engineers (SPE) announced the introduction of the Petroleum Resources Management System for the upstream oil industry, which builds on guidance previously issued in the 1990s.
However, work on developing an international standard for the definition and estimation of petroleum resources has been underway since the 1930s, before initial guidance in relation to reserves definitions was first published by two separate organisations in 1987.
Upon announcing the system, John Ritter, chairman of the Oil and Gas Reserves Committee at the SPE said: "By late 2004, it became increasingly clear to many users that the current guidance was not sufficiently rigorous or encompassing to meet the requirements of industry stakeholders due to advancements in technology, the international expansion of the industry and the increasing role of unconventional resources."
Some 120 companies, as well as upstream oil industry stakeholders, were involved in the creation of the guidelines, which are endorsed by the World Petroleum Council, the American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers.
The adoption of the guidelines has increased further since 2007, with the FGU State Commission on Mineral Reserves of Russia signing a memorandum of understanding to integrate the country's reserves classification with international standards, which will provide greater consistency in the upstream oil industry.
Behrooz Fattahi, 2010 SPE president, said: "We believe that this is an important step in developing a global understanding of international classification and categorisation systems with the active participation of Russia."
In 2009, the United Nations Framework Classification for Fossil Energy and Mineral Reserves and Resources (UNFC-2009) was introduced, which has been designed to assist in the corporate business processes and financial reporting standards of the energy and minerals sector.
The UN said that in recent years the developments of the financial markets and commodity trading has increased the need for a consistent system of classification.
Guidance in the UNFC-2009 is in line with that issued by SPE and the Committee for Mineral Reserves International Reporting Standards, and is the only document in the world to address both sectors with the same definitions.
Poland, which is one of the countries thought to be rich with shale gas reserves, recently announced that it would be publishing its Mineral Resources of Poland report for 2010 in line with the UNFC-2009.
Professor Marek Graniczny, deputy director of the Polish Geological Institute-National Research Institute (PGI-NRI), said that this "demonstrates the confidence of our Ministry of the Environment and the PGI-NRI in this global classification system and its ability to facilitate international communication and understanding in the area of energy reserves and resources."
The economic potential of oil reserves means that some countries are going to greater lengths to ensure they reap the benefits, making accurate reserve reporting extremely important.
State-owned Brazilian upstream oil industry company Petrobas is currently addressing the challenge of tapping into pre-salt oil reserves, located at depths of more than four miles below sea level.
This is two miles deeper than the company has previously drilled and presents a logistical challenge in that the reserves are located 150 miles off the Brazilian coast.
To do this it will have to enlist the help of other players within the upstream oil industry; however, Brazil is concerned with keeping much of the revenue from the reserve within the country and is already taking steps for when it believes it will become a major player in the global energy industry.
Baker Hughes is also looking at creating optimum recovery and returns from these pre-salt reserves with improved drilling techniques and production rates.
"We can change flow characteristics while minimising intervention and associated cost, risk, and production downtime. This approach can add millions of dollars to a well's net present value through accelerated production and ultimate recovery," the company said.