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Common Geologic Issues


Joe Magoto, Parkman Whaling, LLC

The Principles based New SEC guidelines allow a significant increased amount of Geologic interpretation to be incorporated into Proved Reserve estimates. The optional Disclosure of Probable / Possible reserves will also greatly increase the amount of exposure modern Geologic tools / interpretation will have on reserves disclosure.

This makes the following “Common Geologic Issues” that have always existed even more important to handle correctly. In the past, a number of these issues resulted in significant reserve write-downs, which in my opinion had a contribution in causing the SEC to very closely and strictly monitor all Oil companies Proved reserves.

Outline of specific Issues & Examples
1.         Use or lack thereof for Porosity & Sw cutoffs
a.         Porosity cutoffs
i.          Columbian example
ii.         North Sea example
iii.        Importance of documenting cut-off basis
iv.        Importance of refreshing cut-off basis
b.         Water Saturation cutoffs
i.          Very arbitrary
ii.         Calibration critical
1.         Gulf of Alaska example (rel-perm curves vs. Sw cutoff)
2.         Analogues critical

2.         Use of Geol-statistical Modeling for Reserves and simulation
a.         Calibration to well data still critical
b.         Gulf of Alaska – Petrel example

3.         Acquisitions and Divestures
a.         Stale PUDs
b.         Lack of Geology Model that fits Performance


AAPG Search and Discovery Article #90098©2009 AAPG Education Department, Houston, Texas 9-11 September 2009