I have a question about the various classifications (proven, probable and possible) of reserves. I understand that the international oil companies are very conservative about what they call proven reserves because of SEC regulations which often leads to reserve growth.

I'm curious, how accurate is the probable reserves at predicting what the actual reserve are after reserve growth? Or, to put it another way, how much of the probable reserves typically end up being reclassified as proven reserves as time passes?

Alan - I am unable to answer your question specifically but the general points you raise about SEC regulations, 1P, 2P and 3P reserves all in relation to ME OPEC reporting standards, is a vital issue to understand.

There is no doubt that overly conservative SEC reporting standards contributes to the phenomenon of reserves growth and that initial 2P/3P estimates will lie closer to ultimate recoverable reserves (URR) than will 1P estimates.

My belief is that ME OPEC countries have in a way estimated 3P reserves back in the 80s - related to production quota negotiations. There is really nothing wrong with that. The problem arises when these are quoted as 1P, giving rise to the expectation that they really have a lot more oil - when they don't. As detailed above, the other problem is the fact that these initial (3P?) estimates have never been declined for production.

Last year I did an article on the reporting methodology of IHS Energy (IHS Data Suggest Kuwaiti and Global Proved Oil Reserves Significantly Lower Than BP Estimates) where they stress that they report 2P and not 1P reserves. IHS reserves estimates, therefore, are significantly lower than BP - especially for Kuwait. I'm pretty disappointed that BP have continued reporting ME OPEC reserves as 1P, on equal footing with the much more conservative definition of 1P used throughout the OECD and I intend to pursue this matter directly with BP in the coming months. IMO the first and most vital step in international preparation for energy decline is to gain acceptance throughout the policy makers within the OECD that a serious problem exists.

1P = proved
2P= probable
3p= possible

In some ways it would make sense that OPEC countries would do just sufficient exploration and research each year to ensure that they could make up for the oil that is pumped. So, if they chose, they could spend more each year on exploration and technological upgrades to upgrade their proved reserves, but they know that doing so would only cause their oil to run out faster at a lower price.
On top of this, they may very well have a significant buffer of "proven-to-themselves" reserves, but choose to report slightly less than this, which allows them to maintain a steady "proven-to-the-outside-world" level.
Is there actually any "official" explanation from OPEC countries as to how they have managed to keep their "proven" reserves remaining steady for so long?

Is there actually any "official" explanation from OPEC countries as to how they have managed to keep their "proven" reserves remaining steady for so long?

Not that I'm aware of. But I see that as less than 50% of the problem. The core issue is the way that OECD institutions reproduce the OPEC statistics without question. Those inflated reserves numbers are then quoted by political leaders from around the world and provide an excuse for inaction.

We are 100% certain that this flat line reserves reporting is wrong - and it is pretty unacceptable to have a Global energy strategy that is based on numbers which are known with 100% certainty to be false (and that is not pre-judging if they are too low or too high).

In some ways it would make sense that OPEC countries would do just sufficient exploration and research each year to ensure that they could make up for the oil that is pumped.

It might make sense but it would be an incredible trick to just discover enough oil, or to just tweak technology enough, to replace production.

Not if they maintained a buffer that they weren't telling us about.

In principle 1P reserves in the USA are 90% probability, although sometimes 95% probability is used. 2P reserves are 50% probability or "most likely". 3P are 10% probability. Pre 1989 the FSU seemed to report 3P as if it were 2P. The SEC requires reporting of 1P, so USA reserves must grow over time toward 2P. Laherrere has analyzed the actual growth of a number of fields in the USA and concluded that the "proven " reserves reported are closer to 60-65% probability, ie somewhere between 1P and 2P. The rest of the world is thought to report 2P reserves. In their 2000 report the USGS applied USA reserve growth history to world reserves, coming up with a 1995-2025 growth estimate that is simply nonsense.
A few years back, in reporting Caspian 3P reserves, the USGS arithmetically added 3P reserves of several individual fields to get a region total 3P. Any first year statistics student would know that the arithmetic sum of several 10% probability values moves toward a vanishingly small probability. Caspian resreves are now taken to be near 1/10th of the initial USGS 3P report.
Campbell seems to have accepted SA URR as 260 Gb. As it was in the interest of oil companies to underreport reserves when they ahd way more than they needed, so they could please shareholders by adding some even in years with no discovery, it could be that SA simply revealed the underreported reserves when they had that big reporting jump. (It could be untrue too).
About 11/2 years ago I did a similar analysis to what Euan describes and came up with cumulative production for SA of 106 Gb. That would make 120 about right for now. Murray