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GUEST EDITORIAL

The 2007 SPE/WPC/AAPG/SPEE Petroleum Resources Management System (PRMS)
J.R. ETHERINGTON
PRA International Ltd. Occidental Petroleum

J.E. RITTER

John Etherington is Managing Director of PRA International Ltd., a Calgarybased consulting firm advising industry on resources assessment, reserves disclosures and portfolio management processes. He holds B.Sc. and M.S. degreesin geology. He previously spent over 32 years with Mobil Oil in Canada, the USA and international exploration and producing assignments, including five years in Mobil’s central resources audit group. John has conducted resources assessment training for both multinational and state-owned oil and gas companies. John served on the SPE Oil and Gas Reserves Committee with primary responsibility forthe 2006 mapping of major international petroleum resources classification systems and the 2007 revised SPE resources definitions project termed the Petroleum Resources Management System (PRMS). He also coordinated SPE’s interface with the United Nations Framework Classification and the International Accounting Standards Board’s Extractive Activities projects. He is a member of the PetroleumSociety, SPE, AAPG and EAGE, and was a SPE Distinguished lecturer in 2005/2006. John Ritter is Senior Director, Worldwide Reserves and Reservoir Engineering for Occidental Petroleum Corporation. He has over 25 years of experience in the upstream sector of the exploration and production business, and has held various assignments in North America, Asia and Europe. He is Ex-Officio Chairperson of SPE’s Oiland Gas Reserves Committee, a member of the American Association of Petroleum Geologists’ (AAPG) Committee on Resource Evaluation and the Colorado School of Mines Potential Gas Committee. He is a member of the UNECE Ad Hoc Group of Experts on the Harmonization of Fossil Energy and Mineral Resources Terminology, an AAPG Certified Petroleum Geologist, a member of the Society of Petroleum EvaluationEngineers (SPEE) and a member of the Houston Geological Society. Ritter earned B.S. and M.S. degrees in geology from Emory University in Atlanta.

The task of creating and maintaining the framework and language to support such communication on a global basis has been assumed by a consortium of professional societies led by the Society of Petroleum Engineers (SPE). By late 2004, it becameincreasingly clear that the current guidance was not sufficient to meet evolving requirements due to advancements in technology, the international expansion of the industry and the increasing role of unconventional resources. The 2007 Petroleum Resources Management System(1) (hereinafter referred to as “PRMS”) consolidates and updates prior SPE Reserves and Resources reporting guidance to address thisneed. The proposed system was subjected to an extensive review process among international stakeholders; the result captures the current consensus of the petroleum industry. This document is cosponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE). It was subsequently also endorsed by theSociety of Exploration Geophysicists (SEG).

The Classification System
The quantities of interest are those that can be recovered from a reservoir by a specific project under defined conditions. One project may target several reservoirs and one reservoir can be targeted by several projects, often at different stages of maturity. Evaluations ultimately focus on recoverable quantities and theassociated future net revenues; thus, any classification system should be primarily project-based. All reserves and resources evaluations should be conducted in the context of the full classification system (Figure 1). A property evaluation that reports only reserves is typically incomplete; in almost all cases there will be additional quantities of Contingent and Prospective Resources. PRMS defines a...