Is it Time to Develop a Certification Program for Petroleum Reserves Evaluators?

Daniel J. Tearpock
SCA, Houston, TX

For nearly two years now there has been a lot of publicity regarding internal problems in energy companies, reserves writedown and concerns about the reliability of reserves disclosures. From the view of oil and gas companies and their investors, to Wall Street and the SEC, reserves are a major factor in the valuation of energy companies. From evaluating fields to buy, to determining whether or not to participate in a certain prospect; from estimating reserves of a new discovery to determining the proved reserves for a company, the bottom line is how much oil or gas can be placed on the books and produced with an acceptable return on investment. In the post-Enron environment, the recent reserves writedowns and the passing of the Sarbanes-Oxley Act by The U. S. Congress in 2002, not to mention investor confidence in our oil and gas industry, the SEC is aggressively examining oil and gas reserves reporting. There are challenges in reporting reserves such as which set of definitions to use for specific reserves reports, proved undeveloped reserves, probable reserves, and pricing. On September 29, 2004 the American Association of Petroleum Geologists (AAPG) and the Society of Petroleum Evaluation Engineers (SPEE) held their first intersociety exploration committee meeting on the Certification of Petroleum Reserves Evaluators. Worldwide oil and gas reserves are estimated to have a value over $600 trillion. It is vital that private and public companies, as well as governments, have reliable reserves estimates. With the complexities involved and the integration of significant amounts of data, accurate reserves evaluations require the integration of both geoscience and engineering.

AAPG Search and Discovery Article #90039©2005 AAPG Calgary, Alberta, June 16-19, 2005