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Quantifying Uncertainty Related to Aggregation

 

Mark A. McLane, Rose & Associates, LLP

Both the PRMS and the new SEC rules limit Probabilistic aggregation of reserves to the “Project” level.  Company proved reserves are then to be estimated by simple summation of the individual Project proved reserves.  It is well established that such summation is mathematically illegitimate and that it produces proved reserves that are increasingly conservative.  How conservative depends on how Projects are defined and the estimated ultimate recovery (EUR) distribution type and variance.

PRMS guidelines and SEC rules both allow a probabilistic definition of proved reserves as the 90% confidence (or having at least that proved amount) or P90 of the EUR distribution. 

This talk will present a number of examples illustrating the impact of probabilistic aggregation versus simple addition for a series of projects.  We will discuss the relevance and importance of how Projects are defined and the potential impact on proved undeveloped (PUD) reserves for conventional reservoirs and continuous accumulations (unconventional resources).

 

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

 

 

 

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