Petroleum Resources Management System (PRMS)
John Etherington, PRA International Ltd.
Over the last 50 years, the Society of Petroleum Engineers (SPE), through its Oil and Gas Reserves Committee (OGRC), has published standards regards the assessment of petroleum reserves and resources. The standards document has been periodically updated to accommodate new technologies and incorporate evolving industry best practices in assessment methods. The most recent documentation of these standards is contained in the Petroleum Resources Management System (PRMS) co-sponsored by the World Petroleum Council (WPC), the American Association of Petroleum Geologists (AAPG), and the Society of Petroleum Evaluation Engineers (SPEE). PRMS is also endorsed by the Society of Exploration Geophysicists (SEG). These organizations in combination represent the majority of the technical professionals within the international petroleum industry involved in resources assessments.
PRMS was designed around a “project-based” model that aligns with the assessment approach utilized by oil and gas companies. The total in-place hydrocarbons of each reservoir are estimated based on available geoscience and engineering information. By applying a series of development projects to one or groups of reservoirs under defined social and economic conditions, multiple disciplines collaborate to forecast production and associated cash flow schedules. The time integration of these schedules taken to the project’s technical, economic, or contractual limit defines the estimated recoverable resources and associated future net revenue.
It all starts with establishing the presence and estimated extent of in-place hydrocarbons at the reservoir level; however, it is only by combining reservoir information with the development projects (wells and facilities) that one can estimate the sales volumes. It is at the project level that technical and commercial uncertainties are combined with economic criteria. It is at the project level that investment decisions are made and cash flows are tracked to assess economic value by associating the sales volumes with the sales price received at the custody transfer point.
PRMS provides common framework and a series of guidelines that allow consistency in assessing and reporting estimations of recoverable quantities based on technical and commercial risk and uncertainty. While focused on internal processes to support project and portfolio management, this same framework provides a basis for external reporting that allows investors to compare the future performance of companies.
AAPG Search and Discovery Article #90098©2009 AAPG Education Department, Houston, Texas 9-11 September 2009