February 15, 2008
I am involved in non-operated reserves preparation and asset valuation as consultant for various clients.
I would urge you ensure the regulations are (more?) explicit in two areas
1. Use of analogues for further development in mature fields, particularly analogue recovery factor, which is a touchstone for the overall reasonableness of the plan. The analogue field must be appropriate in development maturity: you cannot reasonably expect the same recovery from an area of a depleted field as in an otherwise analogous green field. An example I have seen is condensate yield from a partially depleted gas cap where (due to liquid drop out) there is a higher than original remaining condensate in place ratio to gas in place. In this case it would be erroneous to use condensate recovery factor from a 'normal' green field as that would greatly overestimate the yield.
2. Operators should be required to disclose the interpreted volumes in place derived from seismic and geological data. Experience shows that some operators only quote connected volumes, derived from well data, apparently on the basis that data is shared with partners but not interpretation (although in practice all data is heavily interpreted anyway). I dont know the position in law, but this does seem logical given partner costs in e.g. aquiring seismic, or perhaps fulfilment of a duty of care? In any case this tendency is a major obstruction to partners booking reserves (or authorising budget) for recompletions or infill wells which add so far non-connected regions. Without the static volumes interpretation of the operator partners cannot have a critical view on the project and associated reserves.