Summary
The United States Securities and Exchange Commission (SEC), on 29 December
2008, adopted new rules for disclosing oil and gas reserves. The definitions
contained within these rules are broadly consistent with the SPE Petroleum
Resources Management System (PRMS); the definitions in the previous rules
differed from PRMS in a number of specific instances (SPE 2007). A notable
difference in the new rules is inclusion of more nontraditional resources as
potential oil and gas reserves rather than as mining reserves. With new
disclosure rules, new questions arise about the manner in which reserves in
nontraditional resources are to be reported.
Introduction
On 29 December 2008, the United States SEC adopted modernized rules for
reporting oil and gas reserves in filings with the Commission. The Commission
posted the full text of these rules and commentary on its web site (SEC 2008b).
The new rules will be in effect for documents filed with the SEC for fiscal
years ending on or after 31 December, 2009.
These new rules are the culmination of an effort by the SEC to review the
oil and gas reporting requirements announced publicly in May 2007, when the
Commission published a notice that it intended to appoint an "Academic
Engineering Fellow" to examine reserves reporting requirements, an
appointment for which I was chosen. Following an effort that began with my
arrival at the SEC in October 2007, the Commission issued a "Concept
Release" in December 2007 (SEC 2007) in which it asked for public comments
on the need for revisions of the oil and gas reporting requirements and
suggestions for what revisions, if any, should include. Eighty comments from
the public were received through February 2008. The Commission staff studied
these comments, and, in June 2008, issued proposed rules that would modernize
oil and gas reserves definitions and reporting requirements (SEC 2008a).
Sixty-eight comments from the public were received through September 2008, and
analysis of these comments led to the final rules adopted in December 2008.
Major features of the new rules adopted include the following:
- Annual average prices, calculated using prices on the first day of each
month during the filer's fiscal year, will replace fiscal year-end prices in
reserves estimation procedures (such as determination of the economic limit for
a property).
- Recovery of non-traditional resources will be considered to be oil and gas
activities, and these resources will potentially be classified as oil and gas
reserves instead of mining reserves. Nontraditional resources include bitumen,
oil shales, some coal, gas hydrates, and other non-renewable natural resources
from which synthetic oil or gas can be extracted.
- Filers can disclose probable and possible reserves on an optional
basis.
- Unspecified technologies, including proprietary techniques, that have
demonstrated reasonable certainty in applications will replace rigidly
specified tests as the basis for establishing "reasonable certainty" in
estimating proved reserves.
- A "reasonable certainty" criterion for estimating proved
undeveloped reserves will replace the "certainty" criterion, thus
aligning the criterion for proved undeveloped reserves with that for proved
developed reserves.
- The "one offset" limit rule for proved undeveloped reserves will be
removed and replaced with a reasonable certainty criterion.
- The definitions are largely consistent with the SPE PRMS (Petroleum
Resources Management System. 2009) definitions.
© 2009. Society of Petroleum Engineers
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History
- Original manuscript received:
26 2009
- Meeting paper published:
24 2009
- Revised manuscript received:
7 2009
- Manuscript approved:
30 2009
- Published online:
28 October 2009
- Version of record:
28 October 2009
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