57 comments on Solving the "Enigma" of Reserve Growth
Comments can no longer be added to this story.
57 comments on Solving the "Enigma" of Reserve Growth
Comments can no longer be added to this story.
Search The Oil Drum with Google
Recently on TOD:World
TOD:Local
- Home Buyers Demand Short Commutes, Efficient Homes (with Backyards, Parking, lots of Square Feet)
- Streets: Utilitarian Corridors or Livable Public Space
- Summer Streets a Success!
TOD:Europe
- IEA WEO 2008 - NGLs to the Rescue?
- IEA WEO 2008 - Fossil Fuel Ultimates and CO2 Emissions Scenarios
- The IEA WEO 2008: Will coal usage be phased out?
TOD:Canada
- The Round-Up: October 24, 2008
- Compressed Air Energy Storage - How viable is it?
- Oil Megaproject Update (July 2008)
TOD:ANZ
Blogroll
Energy Sites
- The Coming Global Oil Crisis
- Die Off
- Dry Dipstick
- Energy Bulletin
- From the Wilderness
- Life After the Oil Crash
- Peak Oil Crisis
- Peak Oil News and Message Boards
- Powerswitch
- Rigzone
- Matthew Simmons
- Wolf at the Door
Environment & Sustainability Sites
- The Daily Green
- EcoGeek
- Eco Street
- Green Car Congress
- Green Options
- green.alltop.com
- Gristmill
- RealClimate
- Sustainablog
- Treehugger
- WorldChanging
Blogs
- The Big Picture
- Casaubon's Book
- Cleantech Blog
- Clusterf
k Nation (Jim Kunstler) - The Cost of Energy
- David Strahan
- The Energy Blog
- Entropy Production
- European Tribune
- GraphOilology
- jeffvail.net
- Mobjectivist
- Peak Energy (Australia)
- Peak Energy (USA)
- R-Squared
- Resource Insights
Finance & Economics Blogs
- Calculated Risk
- Ecological Economics
- Econbrowser
- Environmental Economics
- Infectious Greed
- The Mess That Greenspan Made
- Mish's Global Economic Trend Analysis
Organizations
“Any coward can fight a battle when he's sure of winning, but give me the man who has pluck to fight when he's sure of losing. That's my way, sir; and there are many victories worse than a defeat.”
—George Eliot
User login
Contact
- Content: editors at theoildrum dot com
- Tech support: support at theoildrum dot com
Personnel
- Editors: Prof. Goose, Heading Out, Stuart Staniford, Nate Hagens
- DrumBeat Editor: Leanan
- Contributors: ace, Engineer-Poet, Gail the Actuary, jeffvail, JoulesBurn, Khebab, Robert Rapier
- TOD:Local: Glenn
- TOD:Europe: Chris Vernon, Euan Mearns, Francois Cellier, Jerome a Paris, Luís de Sousa, Rembrandt, Rune Likvern, Ugo Bardi
- TOD:Canada: benk, Libelle
- TOD:ANZ: Big Gav, Phil Hart, aeldric
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.





GAIA Host Collective
Thank you Rockman, your post was extremely enlightening.
May I ask a personal opinion from you on this:
Do you think it might be possible that the executives in IOCs (or even NOCs) and might not fully be aware of these reserve game shenanigans and the ramifications they bring along to the numbers they themselves use in their decision making? How about the board level members? Those are usually way out of the loop already.
I'm asking because I know from experience that unless the people at executive positions are really hardcore numbers people (and I don't mean the way economists are, but the way physicists or engineers can be) and unless they possess strong hand on experience from the lower ranks in the company, then the higher level abstracted numbers can easily deceive them.
That is, they don't know how the numbers get cooked, why they get cooked, how much they are skewed and which way. They may not even suspect anything. They deal with high level decisions, so this kind of 'measurement stuff' is details to them and they expect the guys below them to 'get it right'.
Do you think this kind of 'reserve numbers folly' could be prevalent in the oil industry, barring the few smaller exceptions where there's been a real astrophysicist running the company with a fairly small amount of reserves.
SamuM,
When I began my career in 1975 most management came out of the engineering side. Many still do. And they all know exactly how the books can be cooked. In the last 20 years more financial guys have risen to the top management and some of them could be clueless. The typical motivation for cooking numbers is to make the board/shareholders happy (many of whom have no O&G background and are easily fooled). Happy board/shareholders make for good promotions and bonuses. But just like musical chairs, sooner or later someone's left holder the bag. A few years ago Shell Oil's cooked numbers got so far from reality they made a 20% or so downgrade in their booked reserves in one quarter. This was a huge number and an even bigger embarrassment. I suspect they had been warned by the SEC to come clean before they went after them with a meat clever.
With the public attention and shareholder scrutiny after the Enron fiasco I'm sure a lot of companies are playing straight. I'm currently consulting for a big independent and if they caught someone intentionally misrepresenting reserves (just on an internal basis) they would be fired on the spot. But you still need to be careful with the very small public companies. The payoff for misrepresenting assets is huge these days. And human nature is what it is.