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The CCOP Petroleum Resource Classification System

Each country needs to have overview of their Petroleum Resources Necessary to have a classification system in order to: · Make a total overview and valuation of the resource base · Rank resources and accumulations according to a series of defined specifications · Monitor activities and decisions in all phases: exploration, development and production · Establish a national long-term planning of the petroleum activities · Evaluate impact of the petroleum activities on other industry-related activities.

Purpose of Petroleum resource classification • Needs of analyses for: – Government levels - Petroleum resource management – Corporate levels - Exploration and production business process management – Owners levels - Investment management – • • • •

Classification system must be understood by: Technical people Financial advisors Analysts Politicians

Petroleum resource management - Government levels • The government need to have a realistic view of the total petroleum resource base, the total activities over time and of the efficiency of exploration and exploitation activities – Open acreage for exploration and production – To regulate activities to maximise the economic recovery of the country in the long run

Exploration and production business process management – Corporate levels • Companies needs to manage the business processes related to the granted rights for exploration and production • Exploration and production decisions • Classify petroleum resources in a structured way, reflecting the business decisions.

Investment management – Owners levels • Companies, banks and finance institutions needs to have information about the value of the resources to be the same for different corporations. • Focus upon high value resources (proved and proved developed resources) • De-emphasise low value resources and exploration and production potential that can not be quantified. • SEC – rules widely used

United States Securities Exchange Commission (SEC): "Proved oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions, i.e. prices and costs as of the date the estimate is made. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions."

Basic principles for the CCOP classification system • the petroleum resources should be considered as a whole, • possess clear and consistent definitions of the terms, • general and flexible guidelines, • clear boundaries between different levels, and • be easy to be used as well for the governmental agencies as for the petroleum industry. Simple, Practical and readily understandable

Petroleum: Crude oil, condensate, natural gas and related sustances. Petroleum resources originally in-place: Resources that are mapped/unmapped by geological methods and estimated to be in place in a deposit. Recoverable resources: Total deliverable petroleum quantities from start of production to cease of production

E&P forecasts: ==> It is the sales volumes that count Fuel and flare

Oil, NG L gas fro and m installa the tion

Royalty in kind

Oil ,N

Production share

Reservoir

GL

and

Other agreem. that affect the volumes

gas

Sales point Proved Reserves to be booked

Undiscovered Resources Estimate made from geological, geophysical and geochemical data. Definition of hydrocarbon plays Quantities estimated by probabilistic approach using frequency distribution curves. Geological risk is the chance of the geological model being correct.

Speculative Resources

Hypothetical Resources

Unmapped prospects

Mapped prospects, but not discovered

Volume estimated by play assesment methods Unmapped Resources + Mapped Resources & Discovered Resources = Total resources

Volume estimate by probability of discovery Total hypotetical resources are given by statistical aggregation of the riskweighted resource estimate of each prospect in the play

Discovered Petroleum Resources Potential Resources Discovered resources that are recoverable, but not economically producable

Reserves •Proved

Unproved •Probable •Possible

•Marginal fields •Under evaluation •Too small, too distant •IOR that will change char. of fluid •Poor reservoir •Poor HC quality •High non-HC content

SPE/WPC reserve classification from 1997 3 P: Proved, Probable, Possible

SPE/WPC/AAPG Resource classification

Resource Classification showing Project status categories

Reserves Proved: Comercially recoverable volumes from known reservoirs under current economic conditions Probable: Reserves more likely than not to be recovered (at least 50% probability) Possible: Reserves less likely to be recovered (10 % probability)

New resource classification system 2001 Undiscovered resources

Contingent resources

8

9

Prospects

Plays and leads

7F

Reserves

Not yet evaluated

6 Developement not very likely

5F Developement likely but not planned

5A

4F

3F

Resources in planning phase

Committed for development

4A

3A

7A Possible future measures to increase the recovery factor

Sold

2F Approved development by authority

2A

1

0

On production

Sold and delivered