Oil reserves

Oil reserves denote the amount of crude oil that can be technically recovered at a cost that is financially feasible at the present price of oil. Hence reserves will change with the price, unlike oil resources, which include all oil that can be technically recovered at any price. Reserves may be for a well, a reservoir, a field, a nation, or the world. Different classifications of reserves are related to their degree of certainty. Oil reserves denote the amount of crude oil that can be technically recovered at a cost that is financially feasible at the present price of oil. Hence reserves will change with the price, unlike oil resources, which include all oil that can be technically recovered at any price. Reserves may be for a well, a reservoir, a field, a nation, or the world. Different classifications of reserves are related to their degree of certainty. The total estimated amount of oil in an oil reservoir, including both producible and non-producible oil, is called oil in place. However, because of reservoir characteristics and limitations in petroleum extraction technologies, only a fraction of this oil can be brought to the surface, and it is only this producible fraction that is considered to be reserves. The ratio of reserves to the total amount of oil in a particular reservoir is called the recovery factor. Determining a recovery factor for a given field depends on several features of the operation, including method of oil recovery used and technological developments. Based on data from OPEC at the beginning of 2013 the highest proved oil reserves including non-conventional oil deposits are in Venezuela (20% of global reserves), Saudi Arabia (18% of global reserves), Canada (13% of global reserves), and Iran (9%). Because the geology of the subsurface cannot be examined directly, indirect techniques must be used to estimate the size and recoverability of the resource. While new technologies have increased the accuracy of these techniques, significant uncertainties still remain. In general, most early estimates of the reserves of an oil field are conservative and tend to grow with time. This phenomenon is called reserves growth. Many oil-producing nations do not reveal their reservoir engineering field data and instead provide unaudited claims for their oil reserves. The numbers disclosed by some national governments are suspected of being manipulated for political reasons. All reserve estimates involve uncertainty, depending on the amount of reliable geologic and engineering data available and the interpretation of that data. The relative degree of uncertainty can be expressed by dividing reserves into two principal classifications—'proven' (or 'proved') and 'unproven' (or 'unproved'). Unproven reserves can further be divided into two subcategories—'probable' and 'possible'—to indicate the relative degree of uncertainty about their existence. The most commonly accepted definitions of these are based on those approved by the Society of Petroleum Engineers (SPE) and the World Petroleum Council (WPC) in 1997. Proven reserves are those reserves claimed to have a reasonable certainty (normally at least 90% confidence) of being recoverable under existing economic and political conditions, with existing technology. Industry specialists refer to this as 'P90' (that is, having a 90% certainty of being produced). Proven reserves are also known in the industry as '1P'. Proven reserves are further subdivided into 'proven developed' (PD) and 'proven undeveloped' (PUD). PD reserves are reserves that can be produced with existing wells and perforations, or from additional reservoirs where minimal additional investment (operating expense) is required. PUD reserves require additional capital investment (e.g., drilling new wells) to bring the oil to the surface. Until December 2009 '1P' proven reserves were the only type the U.S. Securities and Exchange Commission allowed oil companies to report to investors. Companies listed on U.S. stock exchanges must substantiate their claims, but many governments and national oil companies do not disclose verifying data to support their claims. Since January 2010 the SEC now allows companies to also provide additional optional information declaring 2P (both proven and probable) and 3P (proven plus probable plus possible) provided the evaluation is verified by qualified third party consultants, though many companies choose to use 2P and 3P estimates only for internal purposes.