Reserves and Decline

curve analysis (DCA)

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Reserves and resources are classified according
to its risk and uncertainty
TOTAL
RESOURCES

Relates to DCA
DISCOVERED UNDISCOVERED
RESOURCES RESOURCES

ULTIMATE
RECOVERY

CUMULATIVE CONTINGENT PROSPECTIVE

PRODUCTION RESERVES
RESOURCES RESOURCES

PROVED PROVED PROVED

+ +
PROBABLE PROBABLE LOW BEST HIGH LOW BEST HIGH
+ ESTIMATE ESTIMATE ESTIMATE ESTIMATE ESTIMATE ESTIMATE
POSSIBLE
(1P) (2P) (3P)

DEVELOPED UNDEVELOPED

Figure 1: Reserves and resources classification

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 Figure 1 in terms of risk and uncertainty and
project maturity
•-•IN•-•PLACE PETRONAS
•PRODUCTION
IN-PLACE
PRODUCTION PROJECT STATUS
•COMMERCIAL
STATUS
COMMERCIAL
INITIALLY

CATEGORIES
TOTAL PETROLEUM INITIALLY IN-PLACE

On

LOWER RISK
RESERVES Productio
INITIALLY

n
PROVED Under
+ Development Project
PETROLEUM

PROVED PROBABLE
PROVED +
PROBABLE
+ Planned for Development
sanctioned
PETROLEUM

POSSIBLE
Decreasing risk

••-COMMERCIAL

Development Category #1
SUB-COMMERCIAL

PROJECT MATURITY
Pending Category #2
CONTINGENT Category #3
•DISCOVERED

RESOURCES Development Category #4

DISCOVERED

•LOW on Hold Category #5

•ESTIMATE
•SUB

Category #6
LOW BEST HIGH
Category #7
ESTIMATE ESTIMATE ESTIMATE Development Not Viable
Category #8

UNRECOVERABLE
Viable + Committed
•-•IN•-•PLACE
•UNDISCOVERED

Viable + Non-committed
PROSPECTIVE Prospect
UNDISCOVERED
•PETROLEUM

Non-viable
IN-
PETROLEUM

HIGHER RISK
RESOURCES
PLACE

Lead
INITIALLY
•INITIALLY

LOW BEST HIGH

ESTIMATE ESTIMATE Play
ESTIMATE

UNRECOVERABLE

 RANGE OF UNCERTAINTY 
Higher uncertainty
Figure 2: Reserves and resources classification and project maturity
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 What are Reserves?

• Reserves are the summation of the future production, from a given date
forward (up to the economic or contract limit)

Contract Limit – extensions?

120

100
Rate, bbl/day

80

Production Rate (MB/D) 60

40

20

Economic Limit
0

1 3 5 7 9 11 13 15 17
- Price and cost
Time, t
Time (years)
dependent

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 Basics …
• Reserves are … (by definition)

 Discovered
 Recoverable And they are estimated, not determined,
because a degree of uncertainty inherently
 Commercial exists

 Remaining
• Definition of Reserves (SPE and World of Petroleum Congress 1987):
“those quantities of petroleum which are anticipated to be
commercially recovered & marketable from known accumulations
from a given date forward”.
• And they are estimated, not determined, because a degree of uncertainty
inherently exists
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Decline Curve Example

GAS FIELD
8000

history
Model Prediction
7000
Historical Trend 1
Trend 1 extrapolation
Historical Trend 2
6000
Trend 2 Extrapolation
Linear (Historical Trend 1)
5000 Linear (Historical Trend 2)
Gas Rate kcm/d

4000

3000

2000

1000

0
0 5000 10000 15000 20000 25000

Cum gas Mcm

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Reserves are like fish…(an analogy)
• Proved Developed
• The fish is in your boat.
• You have weighed it, you can smell it and you will eat it.
• Proved Undeveloped
• The fish is on your hook in the water by your boat and you are ready to net it.
• You can tell how big it looks (they always look bigger in the water).
• Probable
• There are fish in the lake and you may have caught some yesterday.
• You may even be able to see them, but you have not caught any today (yet).
• Possible
• There is water in the lake and someone may have told you that there are fish in the lake.
• You have your boat on the trailer but you may go golfing instead.
• Contingent resources are also like fish
• Has all the same physical certainty categories as Reserves but can’t catch, sell, or eat the fish because:
• Market/ Infrastructure: The whole country is totally vegetarian. There are no refrigerated trucks to get
the fish to market.
• Political: You don’t have a fishing license.
• Environmental:The fish is an endangered species.
• Technological: The fish is poisonous and processing is dangerous, difficult, and very costly.The fish has so
many bones that filleting is technically difficult

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