Summary
Modernized United States Securities and Exchange Commission (SEC) rules for
reporting oil and gas reserves are now broadly consistent with the SPE
definitions and generally reflect public requests for specific changes in the
previous rules. Disclosure requirements based on the revised definitions
feature use of annual average prices; wider use of reliable technologies;
broader recognition of nontraditional resources, including those from oil
sands, shales, and coal; optional disclosure of probable and possible reserves;
and replacement of the “certainty” criterion for some reserves by a
“reasonably certain” criterion. Official clarification of some of the new terms
may be forthcoming; here, I provide my opinion of their intent.
Introduction
The US SEC’s oil and gas reserves reporting requirements in effect until the
end of 2009 were adopted in 1978, with some associated requirements adopted
through 1982. In the three decades since adoption of these requirements, the
petroleum industry has seen numerous changes. As examples, technology
associated with recovery and characterization of petroleum accumulations has
advanced dramatically; spot markets and transportation of sales products to
market have grown and improved substantially; and economic production of
nontraditional resources, such as bitumen from oil sands, has been established.
These developments, and others, caused the SEC’s reporting requirements to
increasingly lag behind the capabilities of the petroleum industry.
In 2007, the SEC created the position of “Academic Engineering Fellow” to
help the Commission’s staff examine the need for modernization of its rules and
to help the staff coordinate a project to propose any modifications that
appeared to be needed. In October 2007, I was retained to fill this position on
a full-time basis, living in Washington, DC, and working with the staff there.
The public saw its first concrete evidence of this modernization effort when
the SEC issued a “Concept Release” in December 2007 (US SEC 2007b). In this
release, the SEC asked for public comment on whether changes in the oil and gas
disclosure rules would be beneficial and, if so, what specific changes should
be made. A 60-day public comment period followed.
The SEC staff analyzed the comments it received (US SEC 2007a) and,
partially on the basis of those comments, released proposed rules for public
comment in June 2008 (US SEC 2008c). The Commission reviewed comments on the
proposed rules for 60 days (US SEC 2008a) and in late December 2008 approved
and released final rules (US SEC 2008b). These rules were published in the
Federal Register of the National Archives and Records Administration (NARA) in
January 2009 and will be effective for all filings with the Commission on or
after 1 January 2010.
© 2009. Society of Petroleum Engineers
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History
- Original manuscript received:
26 June 2009
- Meeting paper published:
4 October 2009
- Manuscript approved:
22 September 2009
- Published online:
28 October 2009
- Version of record:
28 October 2009
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