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Glossary of terms used in petroleum reserves or resources definitions
Equivalent to Proved Reserves
The Sum of Proved Reserves plus Probable Reserves
The Sum of Proved Reserves plus Probable Reserves plus Possible Reserves
An individual body of moveable petroleum.
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.
Associated Gas is a natural gas found in contact with or dissolved in crude oil in the reservoir. It can be further categorized as Gas-Cap Gas or Solution Gas.
Barrels of oil equivalent
See Crude Oil Equivalent
Behind-pipe reserves are expected to be recovered from zones in existing wells, which will require additional completion work or future recompletion prior to the start of production.
See Natural Bitumen
Buy back agreement
An agreement between a host government and a contractor under which the host pays the contractor an agreed price for all volumes of hydrocarbons produced by the contractor. Pricing mechanisms typically provide the contractor with an opportunity to recover investment at an agreed level of profit. These agreements may include financial incentives for more efficient, lower cost developments and production levels higher than the minimum level agreed. These agreements may give rights to oil volumes and generally carry a risk for the contractor. They may allow booking of reserves.
A carried interest is an agreement under which one party (the carrying party) agrees to pay for a portion or all of the pre-production costs of another party (the carried party) on a license in which both own a portion of the working interest. This arises when the carried party is either unwilling to bear the risk of exploration or is unable to fund the cost of exploration or development directly. Owners may enter into carried interest arrangements with existing or incoming joint venture partners at the exploration stage, the development stage, or both.
Natural gas contained in coal deposits, whether or not stored in gaseous phase. Coalbed methane, though usually mostly methane, may be produced with variable amounts of inert or even non-inert gases.
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.
Petroleum development projects are committed when firm commitments have been made for the expenditures and activities needed to bring a discovered accumulation to the production stage. Undeveloped projects are committed only when it can be clearly demonstrated that there is intent to develop them and bring them to production. Intent may be demonstrated with firm funding/financial plans, declarations of commerciality, regulatory approvals and satisfaction of other conditions that would otherwise prevent the project from being developed and brought to production. These commitments should be unconditional, except for timing that may be dependent on the development of prior committed projects. An example of this would be where production is dedicated to a long-term sales contract and will only be developed as and when the capacity is required to satisfy the contract.
Completion of a well. The process by which a well is brought to its final classification - basically dry hole, producer, or injector. A dry hole is completed by plugging and abandonment. A well deemed to be producible of petroleum, or used as an injector, is completed by establishing a connection between the reservoir(s) and the surface so that fluids can be produced from, or injected into the reservoir. Various methods are utilized to establish this connection, but they commonly involve the installation of some combination of borehole equipment, casing and tubing, and surface injection or production facilities.
The specific reservoir interval(s) that is (are) open to the borehole and connected to the surface facilities for production or injection.
A grant of access for a defined area and time period that transfers certain rights to hydrocarbons that may be discovered from the host country to an enterprise. The enterprise is generally responsible for exploration, development, production and sale of hydrocarbons that may be discovered. Typically granted under a legislated fiscal system where the host country collects taxes, fees and sometimes royalty on profits earned.
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.
Development and production of recoverable quantities has not been justified, due to conditions that may or may not be fulfilled.
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.
A petroleum accumulation that is pervasive throughout a large area and which is not significantly affected by hydrodynamic influences. Examples of such deposits include "basin-center" gas and gas hydrate accumulations.
Conventional crude oil
Petroleum found in liquid form, flowing naturally or capable of being pumped without further processing or dilution (see Crude Oil).
A discrete accumulation related to a localized geological structural feature and/or stratigraphic condition, typically with each accumulation bounded by a down-dip contact with an aquifer, and which is significantly affected by hydrodynamic influences, such as the buoyancy of petroleum in water.
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.
Certain transactions that are in substance borrowings repayable in cash or its equivalent and shall be accounted for as borrowings and may not qualify for the recognition and reporting of oil and gas reserves. These include: 1) a) Cash advances to operators to finance exploration in return for the right to purchase oil or gas discovered. b) Funds advanced for exploration that is repayable by offset against purchases of oil or gas discovered, or in cash if insufficient oil or gas is produced by a specified date. 2) Funds advanced to an operator that are repayable in cash out of the proceeds from a specified share of future production of a producing property, until the amount advanced plus interest at a specified or determinable rate is paid in full, shall be accounted for as a borrowing and do not qualify for the recognition of reserves. The advance is a payable for the recipient of the cash and receivable for the party making the advance. Such transactions fall into a category commonly referred to as production payments.
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.
Crude Oil is the portion of petroleum that exists in the liquid phase in natural underground reservoirs and remains liquid at atmospheric conditions of pressure and temperature. Crude Oil may include small amounts of non-hydrocarbons produced with the liquids. Crude Oil has a viscosity of less than or equal to 10,000 centipoises at original reservoir temperature and atmospheric pressure, on a gas free basis.
Crude oil equivalent
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.
Production of oil and gas to date.
Current economic conditions
Establishment of current economic conditions should include relevant historical petroleum prices and associated costs and may involve an averaging period that is consistent with the purpose of the reserve estimate, appropriate contract obligations, corporate procedures, and government regulations involved in reporting these reserves.
The method of estimation of reserves or resources is called deterministic if a single best estimate is made based on known geological, engineering, and economic data.
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.
Development not viable
Of significant size, but awaiting development of a market or removal of other constraints to development, which may be technical, environmental, or political, for example.
Development on hold
No current plans to develop or to acquire additional data at this time.
Requires further data acquisition and/or evaluation in order to confirm commerciality.
The term applied to a petroleum accumulation/reservoir whose existence has been determined by its actual penetration by a well, which has also clearly demonstrated the existence of moveable petroleum by flow to the surface or at least some recovery of a sample of petroleum. Log and/or core data may suffice for proof of existence of moveable petroleum if an analogous reservoir is available for comparison. (See also “Known Accumulation”: Petroleum quantities that are discovered are in “known accumulations” or “known reservoirs”).
Discovered petroleum initially in place
That quantity of petroleum which is estimated, on a given date, to be contained in known accumulations, plus those quantities already produced therefrom. 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.
Dry Gas is a natural gas containing insufficient 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. (Also called Lean Gas)
A well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.
In relation to petroleum reserves and resources, economic refers to the situation where the income an operation exceeds the expenses involved in, or attributable to, that operation.
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.
Reserves consistent with the cost recovery plus profit hydrocarbons that are recoverable under the terms of the contract or lease are typically reported by the upstream contractor.
Estimated ultimate recovery
Those quantities of petroleum which are estimated, on a given date, to be potentially recoverable from an accumulation, plus those quantities already produced therefrom.
Prospecting for undiscovered petroleum.
An area consisting of a single reservoir or multiple reservoirs all grouped on, or related to, the same individual geological structural feature and/or stratigraphic condition. There may be two or more reservoirs in a field that are separated vertically by intervening impermeable rock, laterally by local geologic barriers, or both. It could be defined differently by regulatory authorities.
Total volume of vented or flared gas.
An operation on a well designed to demonstrate the existence of moveable petroleum in a reservoir by establishing flow to the surface and/or to provide an indication of the potential productivity of that reservoir. Some flow tests, such as drill stem tests (DSTs), are performed in the open hole. A DST is used to obtain reservoir fluid samples, static bottomhole pressure measurements, indications of productivity and short-term flow and pressure buildup tests to estimate permeability and damage extent. Other flow tests, such as single-point tests and multi-point tests, are performed after the well has been cased. Single-point tests typically involve a measurement or estimate of initial or average reservoir pressure and a flow rate and flowing bottomhole pressure measurement. Multi-point tests are used to establish gas well deliverability and absolute open flow potential.
Typically defined as Oil/Water Contact or Gas/Oil Contact
There are a variety of forms of transactions that involve the advance of funds to the owner of an interest in an oil and gas property in exchange for the right to receive the cash proceeds of production, or the production itself, arising from the future operation of the property. In such transactions, the owner almost invariably has a future performance obligation, the outcome of which is uncertain to some degree. Determination as to whether the transaction represents a sale or financing rests on the particular circumstances of each case.
Gas used for field and plant operations. Substantial savings can be achieved to the operating cost of a project by avoiding the purchase of alternative supplies of gas or refined fuels such as diesel. SPE guidance allows the option to include fuel gas as part of the reserves estimate as long as an appropriate expense for the gas is included in the cash flow analysis.
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 cap gas
Gas-Cap Gas is a free natural gas which overlies and is in contact with crude oil in the reservoir. It is a subset of Associated Gas.
Gas plant products
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 modeling and potential prediction of various aspects of performance. Examples of such processes include: Monte Carlo simulation, 2D gridding and modeling 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 modeling. New applications include fuzzy mathematics, fast flow simulation, well intervention, and lithology and fluid prediction.
Hydrocarbons are chemical compounds consisting wholly of hydrogen and carbon.
Improved Recovery is the extraction of additional petroleum, beyond Primary Recovery, from naturally occurring reservoirs by supplementing the natural forces in the reservoir. It includes water-flooding, secondary processes, tertiary processes and any other means of supplementing natural reservoir recovery processes. (also called Enhanced Recovery)
The forcing or pumping of substances into a porous and permeable subsurface rock formation. Examples of injected substances can include either gases or liquids.
The term accumulation is used to identify an individual body of moveable petroleum. The key requirement to consider an accumulation as known, and hence contain reserves or contingent resources, is that each accumulation/reservoir must have been penetrated by a well. In general, the well must have clearly demonstrated the existence of moveable petroleum in that reservoir by flow to surface or at least some recovery of a sample of petroleum from the well. However, where log and/or core data exist, this may suffice, provided there is a good analogy to a nearby and geologically comparable known accumulation.
Potential area where one or more accumulations are currently poorly defined and require more data acquisition and/or evaluation in order to be classified as a prospect. A lead will occur within a play.
Lease Condensate is natural gas liquids recovered from produced gas (associated and non-associated), in gas-liquid separators or field facilities.
A loan agreement is typically used by a bank, other financial investor, or partner to finance all or part of an oil and gas project. Compensation for funds advanced is limited to a specified interest rate. The lender does not participate in profits earned by the project above this interest rate. There is normally a fixed repayment schedule for the amount advanced, and repayment of the obligation is made before any return to equity investors. Risk is limited to default of the borrower or failure of the project. Variations in production, market prices, and sales do not normally affect compensation. Reserves are not recognized under this type of agreement.
Low or best or high estimates
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 (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.
The deepest observed occurrence of a producible hydrocarbon accumulation as demonstrated by well log, flow test or core data.
Mineral Interests in Properties Including (I) a fee ownership or lease, concession or other interest representing the right to extract oil, or gas subject to such terms as may be imposed by the conveyance of that interest,(ii) royalty interests, production payments payable in oil or gas, and other nonoperating interests in properties operated by others; and (iii) those agreements with foreign governments or authorities under which a reporting entity participates in the operation of the related properties or otherwise serves as producer of the underlying reserves (as opposed to being an independent purchaser, broker, dealer or importer). Properties do not include other supply agreements or contracts that represent the right to purchase, rather than extract, oil and gas.
Monte Carlo simulation
A type of stochastic mathematical simulation which randomly and repeatedly samples input distributions (e.g. reservoir properties) to generate a results distribution (e.g. recoverable petroleum volumes).
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 is the portion of petroleum that exists either in the gaseous phase or is in solution in crude oil in natural underground reservoirs, and which is gaseous at atmospheric conditions of pressure and temperature. Natural Gas may include amounts of non-hydrocarbons.
Natural gas liquids
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.
Natural gas liquids to gas ratio
Net profits interest
Net working interest
Non hydrocarbon gas
Offset well location
Overlift or Underlift
Planned for development
Production sharing contract
Proved developed reserves
Proved undeveloped reserves
Range of uncertainty of recoverable hydrocarbon quantities
Raw natural gas
Resource uncertainty categories
Revenue sharing contract
Risk and reward
Risk service contract
Sour natural gas
Sweet natural gas
Total petroleum initially-in-place
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