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Reserves Reporting Rules Explored

American Association of Petroleum Geologists (AAPG)

A recent Geosciences Technology Workshop (GTW) in Houston, “Geological Aspects of Estimating Petroleum Resources and Reserves,” examined the contributions, challenges and responsibilities of geoscientists in estimating resources and reserves.

The 2½-day session, chaired by AAPG members John Sneider and Creties Jenkins, addressed practical issues regarding the application of definitions, guidelines and rules provided by the Petroleum Resources Management System (PRMS) and the U.S. Securities and Exchange Commission (SEC) for the reporting of resources and reserves.

Ten different technical sessions focused on the geologists’ role, work process and interactions with other disciplines, highlighted by John Lee’s keynote address (“Where Are We Headed in Reserves Reporting?”), which encouraged AAPG members to take an active role in developing guidance for the application of SEC and PRMS standards. See Commentary

The GTW concluded with eight breakout sessions that addressed key issues raised during the technical sessions.

The 10 technical sessions were:

  • Reporting Standards (chaired by John Etherington), which focused on the three standards widely applied in estimating resources and reserves: the PRMS classification, SEC disclosure requirements and the SPE auditing process.
  • Ethical Issues (Pete Rose) reviewed ethical principles, considered the consequences of ethical failures, discussed the influence of bias on decision-making and concluded with an examination of ethical conflicts in organizations.
  • Role of the Geoscientist (John Ritter) concentrated on the geologists’ responsibility to understand risk and uncertainty, provide input to the estimation process, quantify upside potential and set appropriate policy direction for assessments conducted by governmental organizations.
  • Quantifying Uncertainty (Gary Citron) focused on incorporating risk and uncertainty in valuing acquisitions, and examining the results of probabilistic aggregation versus arithmetic summation for various projects.
  • Petrophysical Aspects (William Price) explored the use of net pay cutoffs, the application of well test data, the impact of new technologies and the role of uncertainty and ethics in making assumptions and calculations.
  • Geophysical Aspects (Bob Hardage) addressed questions regarding the value and limitations of seismic data, the constraints that should be applied during interpretation, and practices and pitfalls in the use of attributes.
  • Geological Mapping (Dan Tearpock) presented three ways to contour the same net isochore data (by hand, computer mapping, geocellular modeling) and discussed the impact of the differences between the resulting maps.
  • Geocellular Modeling (Jeffrey Yarus) presented the key uncertainties in the model building process, the mechanics of model building and its effect on recovery factors, and a case study showing how combining stochastic and deterministic techniques can improve reserves estimates.
  • Engineering Perspectives (Ron Harrell) included three reservoir engineers who discussed best practices in reserves evaluation and reporting, common geological issues that affect reserves assessments and a technique that combines well performance and pressure data to quantify reserves.
  • Unconventional Reservoirs (Creties Jenkins) focused on evaluation issues unique to tight gas sands, shale gas, heavy oil, oil shale and the quantification of risk versus reward in these types of reservoirs.

The breakout sessions that followed concentrated on eight key questions raised during the technical sessions:

  • What recommendations can be made regarding clarifications/updates to the 2007 PRMS definitions and the 2009 SEC modernized rules?
  • How do we establish reliable technology for estimating SEC proven undeveloped reserves?
  • How do we conduct credible look-backs of project performance?
  • How can we reconcile deterministic and probabilistic methods?
  • What are the unique aspects of unconventional reservoirs that need to be considered?
  • What are the ethical implications of reporting under the modernized SEC rules?
  • How do we achieve full integration of engineering and geoscience technologies?
  • Should the AAPG consider developing geological reserves and resources estimating and auditing standards?

Presentations from both the technical and breakout sessions are available on the AAPG Search and Discovery Web site at

Based on GTW’s popularity and the many ideas that were generated, additional GTWs focused on similar topics are being planned.

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This report was provided by John Sneider and Creties Jenkins.


This report was provided by John Sneider and Creties Jenkins.

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