The Oil Drum

12 comments on So, if I grow a crack under my neighbors fence, is it still my oil?

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step back on November 6, 2005 - 1:35pm

the definition of "proven reserves". It is the amount of oil which has actually been located, and which can be extracted from the ground economically. This is a very useful definition for an oil company -- it tells them how much oil they know they have available to sell. Of course there is oil which has not yet been discovered, but no one knows how much or whether your company will be the ones to find it or when. Also note the key word "economically". Much oil has been discovered which is in very small pockets, or very deep underground, or under the oceans, or in remote places. Such oil is sometimes not practical to extract from the ground because it would cost more to get it out than one could get by selling it. What can be extracted economically depends on technology and market conditions.

from http://www.pregnantpause.org/overpop/oil.htm

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step back on November 6, 2005 - 1:46pm

More definitions of "proven reserves":

There are, Mark Twain famously said, three types of lies: "lies, damned lies, and ... [proven reserves]
Most journalists wouldn't know a proven reserve from Shinola.
By definition, a proven reserve is one that can be developed economically. But many oil reserves fall somewhat below a standard index of affordability

from: http://www.radford.edu/~wkovarik/misc/blog/3oil.html

[OPEC defintion of] Proven Reserves:
an estimated quantity of all hydrocarbons statistically defined as crude oil or natural gas, which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Reservoirs are considered proven if economic producibility is supported by either actual production or conclusive formation testing. The area of an oil reservoir considered proven includes those portions delineated by drilling and defined by gas-oil or oil-water contacts, if any, and the immediately adjoining portions not yet drilled, but which can be reasonably judged as economically productive on the basis of available geological and engineering data. In the absence of information on fluid contacts, the lowest known structural occurrence of hydrocarbons controls the lower proven limit of the reservoir.
Crude oil: estimates include oil that can be produced economically through application of improved recovery techniques following successful completion of pilot testing. Estimates do not include:
*
oil that may become available from known reservoirs but is reported separately as "indicated additional reserves";
*
oil, the recovery of which is subject to reasonable doubt because of uncertainty as to geology, reservoir characteristics or economic factors;
*
oil that may occur in untested prospects; and
*
oil that may be recovered from oil shales, coal, gilsonite and other such sources.

from: http://www.opec.org/library/Annual%20Statistical%20Bulletin/interactive/2004/FileZ/definition.htm

When speaking of oil reserves, your readers may not have recognized the flexibility inherent in the reserve definition itself. Typically, oil-producing countries and oil companies report "proven reserves" which are estimated amounts thought reasonably certain to be recoverable from known reservoirs under current economic and operating conditions (my emphasis).

from: http://economics.about.com/od/theoilsupply/a/oil_reserves.htm