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UKERC Review of Evidence on Global Oil Depletion - Technical Report 2: Definition and interpretation of reserve estimates


Citation Thompson. E., Sorrell. S., and Speirs. J UKERC Review of Evidence on Global Oil Depletion - Technical Report 2: Definition and interpretation of reserve estimates. UKERC. 2009.
Author(s) Thompson. E., Sorrell. S., and Speirs. J
Publisher UKERC
Download UKERC_Review_of_Evidence_on_Global_Oil_Depletion-Technical_Report_2-Definition_and_interpretation_of_reserve_estimates.pdf
UKERC Report Number UKERC/WP/TPA/2009/017
Abstract

The major inconsistency between reserve definitions is the choice of either a deterministic or probabilistic methodology. Within the class of deterministic definitions, the terms proved, probable and possible are widely used, but the use of this language is not standardised. Various descriptive terms are used which have very subjective interpretations. Within the class of probabilistic definitions there is wide agreement that 90%, 50% and 10% probability levels are appropriate to specify when reporting reserve estimates. Where deterministic terms such as “proved” are specified in a way allowing retrospective evaluation of estimates, the actual use of the term may not match the corresponding probabilistic definition.

There is a large physical uncertainty in our estimate of the oil originally in place due to the impossibility of measuring physicaland geological characteristics of the reservoir sufficiently accurately. Further uncertainty is introduced in estimating how much is both technically feasible and economically viable to extract, and again when aggregating results for individual fields to large areas.

Probabilistic estimates are therefore the most appropriate, because the definitions themselves include an acknowledgement of uncertainty. Probabilistic definitions do not lessen the intrinsic physical uncertainty in making an estimate but they can eliminate the possibility of deliberate or accidental bias. Because probabilistic definitions allow retrospective evaluation of the accuracy of reserve estimates, errors in estimation can be identified. This level of accountability is not achievable with deterministic definitions.