Overview
	Estimating Reserves
	Reserves Information

All reserve estimates involve some degree of uncertainty. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability.

Proved reserves are those quantities of petroleum which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. Proved reserves can be categorized as developed or undeveloped. (SPE and WPC, 1997)

The relations between various categories of resources as classified by MMS can be better understood from Figure 1 (191.75 KB PDF).

Field naming and reserves accountability are dependent on the drilling and development phases of fields. When a lease is qualified as producible based on a new discovery well, the field limits associated with the new lease are defined through geophysical mapping using computer workstations and software. The new lease is either assigned to an existing field or becomes a new field discovery in the unproved category. When a field is in the unproved category, geophysical mapping and limited well data are the basis for defining reservoir limits and the associated reserve estimate. These estimates are reevaluated once a field is moved into the proved category and more data become available. Well logs, well field data, seismic data, and production data are continuously analyzed throughout the productive life of the field to improve the accuracy of the reserve estimate. As a producing field nears the end of its productive life (depletion), the proved reserve estimate approaches zero, but the field may have a resource estimates associated with undrilled and/or untested traps.

Figure 2 (327.77 KB PDF) shows the relationship between the evaluated reserves data and the hydrocarbon assurance or economic certainty. The data are progressively aggregated on a geologic and geographic basis at each step of the evaluation process- from the reservoir level through the region level. The most detailed studies of discovered resources are the MMS individual field studies.

Geologic maps and/or reserves estimates are prepared for active and depleted proved fields and unproved fields. Future workloads include:

	mapping and evaluating new fields;
	evaluating discoveries that have not yet qualified as fields;
	providing detailed analog field studies in support of lease sale prospect evaluations;
	placing new producible leases in fields and determining the field limit;
	maintaining the reserves inventory database by adding new completions to existing fields;
	enhancing the National Assessment as new pay sands in fields are identified.

The RE Program reserve estimates activity bring additional benefits. For example, the detailed geological, geophysical, and engineering information necessary in the reserves estimates are also used in performing other RE Program functions in areas with known fields — including tract evaluation, resource estimation, resource assessment, future production projections, and numerous specific field performance studies. Studies of unproven fields are continuing, especially in light of royalty reduction efforts, since any royalty rate reductions may help these fields become economically viable to develop and produce. The interim geologic information and engineering reviews supporting the reserves estimation function produce vital information for other OCS program activities as well as Royalty Management Program functions.

Geologic studies of proved and unproved fields continue at a consistent level attempting to reflect the discovery of new fields both in deep-water portions as well as the new discoveries on the shelf. The work associated with this effort is vital to the evaluation of exploration and production incentives and legislation considered by Congress and the Department.

The MMS continues various cooperative reserve studies of offshore proved fields. As development activities related to offshore projects in frontier areas progress, MMS will become more involved with detailed geologic modeling and reserves estimation for those projected fields.

Cooperative efforts with the Energy Information Administration (EIA) of the Department of Energy allows EIA to use MMS estimates to verify reporting standards and procedures by natural gas and oil companies and as critical input to their macroeconomic modeling efforts.