The Green Grok's Oil Glossary
If you were to lay out a nomenclature line, at one end would be "proved (or proven) reserves" -- the stuff we are pretty sure is there and believe can be produced commercially. At the other end would be the undiscovered technically recoverable oil resource (UTRR) -- the stuff we think might be there and is probably recoverable but not necessarily economically viable to produce. In between lies a range of oil resource terminology that can be very confusing.
Think of this glossary as a jargon-deciphering tool. We will be updating this page periodically, so be sure to check back.
Oil Terms
Potential oil resource – Non-technical term that usually refers to undiscovered technically recoverable resources (see below).
Potentially recoverable oil – Non-technical term that usually refers to undiscovered technically recoverable resources (see below).
Proved reserves - Reserves that can be estimated, with reasonable certainty, to be commercially recoverable with existing technology from a given date forward. Also known as proven reserves, this is the category of oil that is most accurately quantified.
Reserves - Resources that have already been discovered and may be commercially recoverable under reasonably foreseeable economic scenarios. The term reserves includes both proved and unproved reserves. Unproved reserves are less certain than proved.
Reserves appreciation – This is a projection of a quantity of oil that has the potential to be added to a known field over a specified period of time. The projection is based on past observations of incremental gains in production from known fields. Incremental gains may be achieved through field extensions, new-pool discoveries, reserve revisions, and improved recovery efficiencies.
For example, say Field A has a proved reserve of 10 million barrels of oil in year one, but the field ultimately produces 12 million barrels of oil before it is abandoned. The excess quantity of oil (2 million barrels) is a result of better-than-expected recovery that has occurred throughout the field's life. Using historical data, incremental reserve increases from known fields can be used to estimate a future growth or ‘appreciation’ of oil in a field at various stages of its development life. Also known as reserves growth.
Resource endowment – A resource category that includes cumulative production, reserves, reserves appreciation, and undiscovered technically recoverable resources. In other words, it includes past production, as well as present reserves and potential future resources. For this reason the resource endowment cannot be used to project future oil production! Also known as endowment of technically recoverable oil.
Resources - General term referring to any naturally occurring hydrocarbon (including oil) in the Earth’s crust that can conceivably be discovered and recovered. (Note: reserves are a subcategory of resources.)
Undiscovered resources - Resources postulated, on the basis of geologic knowledge and theory, to exist primarily outside of known fields. This category can be further subdivided on the basis of economic and technological criteria.
Undiscovered technically recoverable resources (UTRR) - Resources postulated, on the basis of geologic knowledge and theory, to exist primarily outside of known fields that may be produced without any consideration of economic viability given current and reasonably foreseeable technology. Also know as potentially recoverable oil, potential oil resource.
TGG Posts on Oil
- Update: Wind, Oil Drilling and Politics, Sep 25, 2008
- Statistical Grok on Oil: A 'Crude' Awakening? Sep 19, 2008
- Is Drilling the Answer? Sep 17, 2008
- Statistical Grok: Gas Prices Impact Miles Driven ...Finally! Jun 20, 2008
- Big Oil 'Sneaks' onto the WSJ's Op-ed Pages, Jun 04, 2008
