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Reserves_White_Paper - 27 February 2006 Society of...

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27 February 2006 Society of Petroleum Engineers: Why a Universal Language for Evaluating Reserves Is Needed Recent press coverage has implied that the Society of Petroleum Engineers’ reserves definitions are less strict, and therefore more favorable to the oil and gas industry, than the definitions used by the US Securities and Exchange Commission (SEC) since 1978. Clearly, this is not the case. SPE has been a leader in developing and maintaining technical petroleum reserves and resources definitions that provide a common language for estimating and classifying into three categories of technical uncertainty the quantities of oil and gas that have been discovered in a reservoir, but not yet produced. The only category of reserves recognized by the SEC is proved reserves – that being the quantity of petroleum that can be estimated to a level of “reasonable certainty.” By nature, the process for estimating reserves is complex, requiring both scientific methodologies and expert interpretations. Yet, investors, regulators, governments and consumers all require a reliable estimate of petroleum reserves for determining the outlook for the world’s energy supply as well as for the consistent assessment of one measure of the value of individual companies. In the absence of a comprehensive and current code, individual countries and companies are using their own reserves evaluation systems, making global comparisons difficult.
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