Proved Reserves

Sum of Proved plus Probable Reserves

Sum of Proved plus Probable plus Possible Reserves

An analogous reservoir is one in the same geographic area that is formed by the same, or very similar geological processes as, a reservoir in question (or under study for reserves evaluation) as regards sedimentation, diagenesis, pressure, temperature, chemical and mechanical history, and structure. It also has the same or similar geologic age, geologic features, and reservoir rock and fluid properties. Analogous features and characteristics can include approximate depth, pressure, temperature, reservoir drive mechanism, original fluid content, oil gravity, reservoir size, gross thickness, pay thickness, net-to-gross ratio, lithology, heterogeneity, porosity and permeability. The development scheme for a reservoir (e.g. as reflected by well spacing) can also be important in establishing the relevance of the analogy.

Billion barrels

Barrels of condensate per day

See Natural Bitumen

Barrels of oil equivalent @xxx mcf/bbl

Blow Out Preventer

The pressure at the bottom of the well. In a producing well the BHP may be the bottom hole flowing pressure or the bottom hole shut-in pressure. In a drilling or workover environment, the BHP is exerted by the column of fluid in the hole.

Billion standard cubic feet

A measure of heat energy required to raise the temperature of one pound of water by one degree Fahrenheit.

Capital Expenditure

Compressed Natural Gas (see Natural Gas)

See Coalbed Methane

A project is commercial if the degree of commitment is such that the accumulation is expected to be developed and placed on production within a reasonable time frame. A reasonable time frame for the initiation of development depends on the specific circumstances but, in general, should be limited to around 5 years.

The specific reservoir interval(s) that is (are) open to the borehole and connected to the surface facilities for production or injection.

Condensates are a portion of natural gas of such composition that are in the gaseous phase at temperature and pressure of the reservoirs, but that, when produced, are in the liquid phase at surface pressure and temperature.

Those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from known accumulations but which are not currently considered to be commercially recoverable.

Petroleum found in liquid form, flowing naturally or capable of being pumped without further processing or dilution (see Crude Oil).

Conventional Gas is a natural gas occurring in a normal porous and per- meable reservoir rock, either in the gaseous phase or dissolved in crude oil, and which technically can be produced by normal production practices.

Under a typical production-sharing agreement, the contractor is responsible for the field development and all exploration and development expenses. In return, the contractor recovers costs (investments and operating expenses) out of the gross production stream. The contractor normally receives payment in oil production and is exposed to both technical and market risks.

Converting gas volumes to the oil equivalent is customarily done on the basis of the heating content or calorific value of the fuel. There are a number of methodologies in common use. Before aggregating, the gas volumes first must be converted to the same temperature and pressure. Common industry gas conversion factors usually range between 1.0 barrel of oil equivalent (boe) = 5.6 thousand standard cubic feet of gas (mscf) to 1.0 boe = 6.0 mscf.

Developed reserves are expected to be recovered from existing wells including reserves behind pipe. Improved recovery reserves are considered developed only after the necessary equipment has been installed, or when the costs to do so are relatively minor. Developed reserves may be sub-categorized as producing or non-producing.

No current plans to develop or to acquire additional data at this time.

Direct Hydrocarbon Indicator

That quantity of petroleum which is estimated, on a given date, to be contained in known accumulations, plus those quantities already produced there from. Discovered Petroleum-initially-in-place may be subdivided into Commercial and Sub-commercial categories, with the estimated potentially recoverable portion being classified as Reserves and Contingent Resources respectively.

A well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.

Exploration and Production

Earnings before Interest, Tax, Depreciation and Amortisation

U.S. Treasury Regulation Sec. 1. 611-1(6)(1): An economic Interest is possessed in every case in which the taxpayer has acquired by investment any Interest in mineral in place and secures, by any form of legal relationship, income derived from the extraction of the mineral … to which he must look for a return of his capital.

Expected Monetary Value

Enhances Oil Recovery

Recoverable volumes for an individual accumulation or a project. In the case of reserves, and where appropriate, this range of uncertainty can be reflected in estimates for proved reserves (1P), proved plus probable reserves (2P), and proved plus probable plus possible reserves (3P) scenarios. For other resource categories, the equivalent terms Low Estimate, Best Estimate, and High Estimate are recommended.

Front End Engineering and Design

Total volume of vented or flared gas.

Typically defined as Oil/Water Contact or Gas/Oil Contact

In gas production operations involving multiple working interest owners, an imbalance in gas deliveries can occur. These imbalances must be monitored over time and eventually balanced in accordance with accepted accounting procedures.

Gas Plant Products are natural gas liquids recovered from natural gas in gas processing plants and, in some situations, from field facilities. Gas Plant Products include ethane, propane, butanes, butanes-propane mixtures, natural gasoline and plant condensates, sulphur, carbon dioxide, nitrogen and helium.

A variety of mathematical techniques and processes dealing with the collection, analysis, interpretation and presentation of masses of geological, geophysical and engineering data to (mathematically) describe the variability and uncertainties within any reservoir unit or pool; specifically related here to resource and reserve estimates, including the definition of (all) well and reservoir parameters in 1, 2 and 3 dimensions and the resultant modelling and potential prediction of various aspects of performance. Examples of such processes include: Monte Carlo simulation, 2D gridding and modelling of the spatial variability of geological and petrophysical properties, simulated annealing, object-based simulation, multiple-point statistics, the use of (semi) variograms, and 3D stochastic modelling. New applications include fuzzy mathematics, fast flow simulation, well intervention, and lithology and fluid prediction.

Gigajoules (one billion joules)

Gas to Liquids

Hydrocarbons Down to

High Sulphur Fuel Oil

Improved Oil Recovery

Kelly Bushing

Kilolitres

Square Kilometres

Pascals are the metric unit for pressure. One kilopascal (kPa) is a thousand Pascals. One kPa is approximately equal to 0.145 pounds per square inch.

Kilowatt

Lease Condensate is natural gas liquids recovered from produced gas (associated and non-associated), in gas-liquid separators or field facilities.

Lowest Known Hydrocarbons

Liquefies Natural Gas

Liquefied Petroleum Gas

Thousand

Measured Depth

Arithmetic average for a set of numbers

Multi Formation Tester

Million

Thousand cubic metres per day

Million standard cubic feet

Value that exists most frequently in a set of values = most likely

Thousand standard cubic feet per day

Natural Bitumen is the portion of petroleum that exists in the semi-solid or solid phase in natural deposits. In its natural state it usually contains sulphur, metals and other non-hydrocarbons. Natural Bitumen has a viscosity greater than 10,000 centipoises measured at original temperature in the deposit and atmospheric pressure, on a gas free basis. In its natural viscous state, it is not normally recoverable at commercial rate through a well. Natural Bitumen generally requires upgrading prior to normal refining. (Also called Crude Bitumen).

Natural Gas Liquids are those portions of natural gas which are recovered as liquids in separators, field facilities or gas processing plants. Natural Gas Liquids include but are not limited to ethane, propane, butanes, pentanes, and natural gasoline. Condensate may or may not be included.

An interest that receives a portion of the net proceeds from a well, typically after all costs have been paid.

In the event that non-hydrocarbon gases are present, the reported volumes should reflect the condition of the gas at the point of sale. Correspondingly, the accounts will reflect the value of the gas product at the point of sale. Hence, if gas sold as produced includes a proportion of carbon dioxide, for example, the reserves and production should also include that CO2. In the case of the CO2 being extracted before sale and the sales gas containing only hydrocarbon gases, the reserves and production should reflect only the hydrocarbon gases that will be sold.

Non-Conventional Gas is a natural gas found in unusual underground situations such as very impermeable reservoirs, hydrates, and coal deposits.

Oil Down to

Currently producing and selling petroleum to market.

Operating Expenditure

10% Probability

90% Probability

Petroleum is a naturally occurring mixture consisting predominantly of hydrocarbons in the gaseous, liquid or solid phase.

Productivity Index

Petajoules (1015 joules)

Recognized prospective trend of potential prospects, but which requires more data acquisition and/or evaluation to define specific leads or prospects.

Possible reserves are those unproved reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves. In this context, when probabilistic methods are used, there should be at least a 10% probability that the quantities actually recovered will equal or exceed the sum of estimated proved, plus probable, plus possible reserves. In general, possible reserves may include (1) reserves which, based on geological interpretations, could possibly exist beyond areas classified as probable, (2) reserves in formations that appear to be petroleum bearing, based on log and core analysis but may not be productive at commercial rates, (3) incremental reserves attributed to infill drilling that are subject to technical uncertainty, (4) reserves attributed to improved recovery methods when (a) a project or pilot is planned, but not in operation and (b) rock, fluid, and reservoir characteristics are such that a reasonable doubt exists that the project will be commercial, and (5) reserves in an area of the formation that appears to be separated from the proved area by faulting and geological interpretation indicates the subject area is structurally lower than the proved area. Often referred to as P3.

Primary recovery is the extraction of petroleum from reservoirs utilizing only the natural energy available in the reservoirs to move fluids through the reservoir rock or other points of recovery.

Probable reserves are those unproved reserves which analysis of geological and engineering data suggests are more likely than not to be recoverable. In this context, when probabilistic methods are used, there should be at least a 50% probability that the quantities actually recovered will equal or exceed the sum of estimated proved plus probable reserves. In general, probable reserves may include (1) reserves anticipated to be proved by normal step-out drilling where sub-surface control is inadequate to classify these reserves as proved, (2) reserves in formations that appear to be productive, based on well log characteristics, but lack core data or definitive tests and which are not analogous to producing or proved reservoirs in the area, (3) incremental reserves attributable to infill drilling that could have been classified as proved if closer statutory spacing had been approved at the time of the estimate, (4) reserves attributable to improved recovery methods that have been established by repeated commercially successful applications when (a) a project or pilot is planned, but not in operation and (b) rock, fluid, and reservoir characteristics appear favourable for commercial application, (5) reserves in an area of the formation that appears to be separated from the proved area by faulting and the geologic interpretation indicates the subject area is structurally higher than the proved area, (6) reserves attributable to a future workover, treatment, re-treatment, change of equipment, or other mechanical procedures, where such procedure has not been proved successful in wells which exhibit similar behaviour in analogous reservoirs, and (7) incremental reserves in proved reservoirs where an alternative interpretation of performance or volumetric data indicates more reserves than can be classified as proved. Often referred to as P2.

The quantity of petroleum produced in a given period.

This represents the link between the petroleum accumulation and the decision-making process, including budget allocation. A project may, for example, constitute the development of a single reservoir or field, or an incremental development for a producing field, or the integrated development of a group of several fields. In general, an individual project will represent the level at which a decision is made on whether or not to proceed (i.e., spend money), and there should be an associated range of estimated recoverable volumes for that project.

Potential accumulation that is sufficiently well defined to represent a viable drilling target.

Proved Developed Reserves are those Proved Reserves that can be expected to be recovered through existing wells and facilities and by existing operating methods. Improved recovery reserves can be considered as Proved Developed Reserves only after an improved recovery project has been installed and favourable response has occurred or is expected with a reasonable degree of certainty. (See Developed Reserves) Developed reserves are expected to be recovered from existing wells, including reserves behind pipe. Improved recovery reserves are considered developed only after the necessary equipment has been installed, or when the costs to do so are relatively minor. Developed reserves may be sub-categorized as producing or non-producing. Producing: Reserves subcategorized as producing are expected to be recovered from completion intervals which are open and producing at the time of the estimate. Improved recovery reserves are considered producing only after the improved recovery project is in operation. Non-producing: Reserves subcategorized as non-producing include shut-in and behind-pipe reserves. Shut-in reserves are expected to be recovered from (1) completion intervals which are open at the time of the estimate, but which have not started producing, (2) wells which were shut-in for market conditions or pipeline connections, or (3) wells not capable of production for mechanical reasons. Behind-pipe Reserves are expected to be recovered from zones in existing wells, which will require additional completion work or future re-completion prior to the start of production.

Proved Undeveloped Reserves are those Proved Reserves that are expected to be recovered from future wells and facilities, including future improved recovery projects which are anticipated with a high degree of certainty in reservoirs which have previously shown favourable response to improved recovery projects. (See Undeveloped)

Pounds per square inch

Pounds per square inch gauge

Raw Natural Gas is natural gas as it is produced from the reservoir. It includes varying amounts of the heavier hydrocarbons which liquefy at atmospheric conditions, and water vapor; and may also contain sulphur compounds such as hydrogen sulphide, and other non-hydrocarbon gases such as carbon dioxide, nitrogen or helium, but which, nevertheless, is exploitable for its hydrocarbon content. Raw Natural Gas is often not suitable for direct utilization by most types of consumers.

Those quantities of hydrocarbons which are estimated to be producible from accumulations, either discovered or undiscovered.

Reserves are those quantities of hydrocarbons which are anticipated to be commercially recovered from known accumulations from a given date forward.

Any estimation of resource quantities for an accumulation or group of accumulations is subject to uncertainty and should, in general, be expressed as a range. The function of the three primary categories of reserves (proved, probable, possible) is to illustrate the range of uncertainty in the estimate of the potentially recoverable volume of petroleum from a known accumulation. Such estimates, which are done initially for each well or reservoir, may be made deterministically or probabilistically and are then aggregated for the accumulation/project as a whole. Provided a similar logic is applied for all volumetric estimates (including contingent and prospective resources), the estimate of uncertainty for each accumulation can be tracked over time from exploration through discovery, development, and production. This approach provides an extremely effective basis for evaluating the validity of the methodology used for the estimate of potentially recoverable volumes. The range of uncertainty reflects a reasonable range of estimated potentially recoverable volumes for an individual accumulation or a project. In the case of reserves, and where appropriate, this range of uncertainty can be reflected in estimates for proved reserves (IP), proved, plus probable reserves (2P), and proved, plus probable, plus possible reserves (3P) scenarios. For other resource categories, the equivalent terms low estimate, best estimate, and high estimate are recommended.

Revenue-sharing contracts are very similar to the production-sharing contracts described earlier, with the exception of contractor payment. With these contracts, the contractor usually receives a defined share of revenue rather than a share of the production. As in the production- sharing contract, the contractor provides the capital and technical expertise required for exploration and development. If exploration efforts are successful, the contractor can recover those costs from the sale revenues. A very similar type of agreement is commonly known as a risked-service contract. This type of agreement is also often used where the contracting party provides expertise and capital to rehabilitate or institute improved recovery operations in an existing field. Provided that the requirements for reserves recognition are satisfied, reported reserves are typically based on the economic interest held or the financial benefit received.

Recovery factor

The probability of loss or failure. As “risk” is generally associated with the negative outcome, the term “chance” is preferred for general usage to describe the probability of a discrete event occurring.

Royalty refers to payments that may be due to the host government, mineral owner, or landowner, in return for the producer having access to the petroleum. Many agreements allow for the producer to lift the royalty volumes, sell them on behalf of the royalty owner, and pay the proceeds to the owner. A few agreements provide for the royalty to be taken only in kind by the royalty owner

Standard cubic feet

Standard cubic feet per day

Oil Saturation

Sour Natural Gas is a natural gas that contains sulphur, sulphur compounds and/or carbon dioxide in quantities that may require removal for effective use.

Stock tank barrel

Stock tank oil initially in place

Water Saturation

Total Depth

Tubing Head pressure

Total Organic Carbon

The entire resource base (Total Petroleum-initially-in-place) is generally accepted to be all those estimated quantities of petroleum contained in the sub­surface, as well as those quantities already produced. This was defined previously by the WPC as “Petroleum-in-place” and has been termed “Resource Base” by others.

Trillion standard cubic feet

An umbrella term for oil and natural gas that is produced by means that do not meet the criteria for conventional production. What has qualified as unconventional at any particular time is a complex function of resource characteristics, the available exploration and production technologies, the economic environment, and the scale, frequency and duration of production from the resource. Perceptions of these factors inevitably change over time and often differ among users of the term. At present, the term is used in reference to oil and gas resources whose porosity, permeability, fluid trapping mechanism, or other characteristics differ from conventional sandstone and carbonate reservoirs. Coalbed methane, gas hydrates, shale gas, fractured reservoirs, and tight gas sands are considered unconventional resources.

Undeveloped reserves are expected to be recovered: (1) from new wells on undrilled acreage, (2) from deepening existing wells to a different reservoir, or (3) where a relatively large expenditure is required to (a) recomplete an existing well or (b) install production or transportation facilities for primary or improved recovery projects.

Unproved reserves are based on geologic and/or engineering data similar to that used in estimates of proved reserves; but technical, contractual, economic, or regulatory uncertainties preclude such reserves being classified as proved. Unproved reserves may be further classified as probable reserves and possible reserves. Unproved reserves may be estimated assuming future economic conditions different from those prevailing at the time of the estimate. The effect of possible future improvements in economic conditions and technological developments can be expressed by allocating appropriate quantities of reserves to the probable and possible classifications.

Wet (Rich) Gas is a natural gas containing sufficient quantities of hydrocarbons heavier than methane to allow their commercial extraction or to require their removal in order to render the gas suitable for fuel use.