RESERVE CLASSIFICATION AND NOMENCLATURE

The need for one universal classification and nomenclature system for petroleum
reservoirs has long been recognized by the various technical societies, professional
organizations, governmental agencies, and the petroleum industry. In this chapter
three approaches will be introduced: McKelvey box(1), SPE deterministic definitions(2)
and the 1983 World Petroleum Congress (WPC) probabilistic definitions(3).
McKelvey Box(1): This concept was developed by McKelvey in 1972(1). The box
represents the total volume of unproduced mineral resources and classifies such
volumes with reference to a horizontal axis representing degree of geologic and
engineering certainty and a vertical axis representing the range of economic feasibility
of mineral recovery (Figure1).

Figure 1. The McKelvey box(1)

The economic and geologic axes each have two principal divisions. On the geologic
axis, the logical division is between discovered mineral deposits and those that are
postulated with varying certainty but remain undiscovered. This line moves right as
more resources are discovered and converted to reserves. On the economic axis, the
division is between volumes that have technical characteristics and a combination of
costs and prices that make them profitable to recover and volumes that do not. This
line moves down as technological advances increase the fraction of the resource base
that is economically extractable and moves down in response to changing prices and
costs.
The upper left sector of the McKelvey box contains reserves. The horizontal, or
geologic, axis includes the oil and gas volumes for which there is the greatest
confidence in their existence and characteristics. They have been discovered and
characterized by information obtained through drilling. The vertical, or economic,
axis includes only those volumes of discovered minerals for which there is the highest
certainty about the economic feasibility of recovery.

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Resources fill the rest of the McKelvey box. These resources are minerals that are
undiscovered or have been discovered but for which economic recovery is uncertain.
SPE definitions(2): SPE definitions are deterministic: that is, a single figure is
calculated for each reservoir category. The reserves categories represent different
confidence levels, with proved reserves representing those that can be recovered with
reasonable certainty under prevailing economic conditions. The reasonable certainty
test is not quantified, but is left to the evaluator’s professional judgment.
Probable and possible reserves are defined by SPE, but such definitions are so vague,
they are of little consistent quantitative value. Probable reserves are defined as being
less certain than proved but likely to be recovered, and possible reserves are less
certain than probable reserves. A fundamentalist approach to these statements would
imply that 50 % certainty separates probable from possible reserves and that proved
reserves (reasonable certainty) are bounded by 100 % certainty at the top end, but
with the boundary between proved and probable not formally quantified by a certainty
level of probability.
WPC definitions(3): WPC definitions are probabilistic: the range of potential reserves
in a reservoir is determined as a distribution and that distribution is sampled at defined
levels of cumulative probability (certainty) to become the defined reserves values.
Monte Carlo techniques are used to construct the initial distribution of potential
reserves in a reservoir. Although definitions and use vary, general use is that proven
reserves (1P) represents a 90 % certainty level; proven + probable (2P), a 50 %
certainty level; and proven + probable + possible (3P), a 10 % certainty level (Figure
2).

Figure2. WPC reserves definitions(3,4).

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The area of a reservoir considered proved includes(5):
1. that portion delineated by drilling and defined by fluid contacts, if any, and
2. the adjoining portions not yet drilled that reasonably can be judged
economically productive on the basis of available geological and engineering
data (frequently limited to direct offset locations).
Probable reserves include(5):
1. reserves that appear to exist a reasonable distance beyond the proved limits of
productive reservoirs, where water contacts have not been determined, and
proved limits are established only by the lowest known structural occurrence
of hydrocarbons,
2. reserves in formations that appear to be productive from log characteristics
only but lack definitive tests or core analyses data,
3. reserves in a portion of a formation that has been proved productive in other
areas in a field but is separated from the proved area by sealing faults,
provided that the geologic interpretation indicates the probable area is related
favorably to the proved portion of the formation,
4. reserves obtainable by improved recovery where an improved recovery
program, which has yet to be established through repeated economically
successful operations, is planned but is not yet in operation and a successful
pilot test has not been performed, but reservoir and formation characteristics
appear favorable for its success,
5. reserves in the same reservoir as proved reserves that would be recoverable if
a more efficient recovery mechanism develops than was assumed in estimating
the proved reserves, and
6. reserves that depend on a successful workover, treatment, retreatment, change
of equipment, or other mechanical procedures for recovery, unless such
procedures have been proven successful in wells exhibiting similar behavior in
the same reservoir.
Possible reserves include(5):
1. reserves that might be found if certain geologic conditions exist that are
indicated by structural extrapolation from developed areas,
2. reserves that might be found if reasonably definitive geophysical
interpretations indicate a productive area larger than could be included within
the proved and probable limits,
3. reserves that might be found in formations that have somewhat favorable log
characteristics but leave a reasonable doubt as to their certainty,
4. reserves that might exist in untested fault segments adjacent to proved
reservoirs where a reasonable doubt exists as to whether such fault segment
contains recoverable hydrocarbons,
5. reserves that might result from a planned improved recovery program that is
not in operation and that is in a field in which formation fluid or reservoir
characteristics are such that a reasonable doubt exist as to its success.

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In the example sketched in Figure 3, the central block has been proved oil productive
by three wells and the structure and the position of the WOC have been established
with fair reliability. The amount that would be estimated for this block would be
estimated for this block would come in the proved category.
The west and north blocks have been brought into the probable category. In both
blocks one well has been drilled and has proved the presence of producible oil.
However, in the west block the depth of the WOC has not yet been established; for a
reserve estimate the same depth as in the central block would be assumed but this is
by no means certain. If the WOC is higher than assumed, the reserve estimate would
be too high. In the north block the structure on both sides, away from the central well,
is still known only poorly and this leaves a considerable margin of uncertainty.
The east block, which no wells has yet penetrated, represents the possible category.
This case demonstrates the fundamental difficulty in attempting to define the
uncertainties involves in the reserves estimating; in fact, two types of uncertainty have
to be considered. First, there is the question whether or not any producible oil is
present in the block at all. In this case the chance that the answer to the question is
positive seems fairly good: oil has already been proved on the three other blocks on
the structure. Secondly, there is the possibility of inaccuracies in the volumetric
estimates, because on insufficiency of the database. This uncertainty, of course, also
exists in the probable category and, to a lesser extent in the proven category.

Figure 3. Proved-Probable-Possible definitions

REFERENCES
1. McKelvey, V.E., “Concepts of Reserves and Resources”, Methods of
Estimating the Volume of Undiscovered Oil and Gas Resources, Ed. John D.
Haun, AAPG, Tulsa, (1975), 11.
2. “Proved Reserves Definitions”, JPT, (Nov. 1981), 2113-2114.
3. “Classification and Nomenclature Systems for Petroleum and Petroleum
Reserves”, 1933 and 1983 Study Group report, 11th World Petroleum
Congress, London (1984).

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4. Grace, J.D., Caldwell, R.H., Heather, D.I., “Comparative Reserves
Definitions: U.S.A., Europe, and the Former Soviet Union”, JPT, (September,
1993), 866-872.
5. Garb, F.A., “Oil and Gas Reserves Classification, Estimation and Evaluation”,
JPT, (March, 1985), 373-390.