UNFC–2009 –
Purpose of Resource Classification
David MacDonald
Houston
21 November 2013
A Couple of Anecdotes
• A famous company misrepresents its reserves with
collusion of the board of directors
• Application of revised rules significantly alters
management’s previous estimate
• Risk mitigation not in-place results in revision of field
reserves
• Management found to be trading shares prior to
release of revised reserves estimates
Institute of Mining and Metallurgy
London, 1911
Stakeholders of our Resources
External Influencers
Internal
preparers
Internal Stakeholders
Internal
users
Governance and Assurance
External user
3
Principles for Resource Classification
• Project based
– Project management
• Classification of total volume
• Clear boundaries between categories
– Discovered
– Commercial (economic and social license)
4
Resources are measured against …
Uncertainty well defined
(with high confidence)
Economic to extract
(commercially feasible)
Technically feasible to
extract
Sustainable Mining and the UNFC, India, 29-30 October 2013
5
Typical Deepwater Facility Design
Floating Facility
Maximum
Rate Design
Export Facility
Sources of
Uncertainty
• Subsurface
Riser
towers
– Static
Gas
injection
– Dynamic
• Gathering
Water injection
• Processing
Well count and
management
• Transport
• Commercial
Successful development plans include contingencies and
mitigations for possible outcomes.
6
Reservoir Technical Limits
•
•
Options
– Doable now (or almost)
Possibilities
– Potentially economic
– May require incremental
technology development
– <5 & >5 yr timescales
Barrier opportunities
– Technical or commercial
barrier
– Not currently doable or
uneconomic
– Requires step change
1
Reservoir Technical limit
Recovery Factor
•
0
Barrier RF
Base
Options
Possibilities
Barrier
7
Resource Progression
Access
Appraise
Development
Pending
Select
Define
Execute
Justified for
Development
Approved for
Development
Operate
On Production
Production
Exploration
Prospect
Key
Exploration
Commercial
Non-Commercial
Potentially Commercial
8
Resource Progression
Access
Appraise
Select
Development
Pending
Define
Execute
Justified for
Development
Approved for
Development
Operate
On Production
Production
Development
on Hold
Exploration
Prospect
Development
Unclarified
Remaining
Prospectivity
Key
Exploration
Commercial
Non-Commercial
Potentially Commercial
9
incremental production mbd
Role of Technology
The improvement of hydrocarbon recovery
and investment efficiency is demonstrably
linked with advances in technology.
coil tubing drilling unit
sidetracks
hydraulic fractures
stimulations
workovers
non-rig workovers
The right linkage between depletion and
technology plans is vital to maximising value
from our assets.
10
UNFC – 2D representation
Sales Production
Extracted
Non-sales Production
Total commodity initially in place
Class
Future recovery by commercial
development projects or mining
operations
Potential future recovery by
contingent development projects
or mining operations
E
F
G
Commercial
Projects
1
1
1, 2, 3
Potentially Commercial
Projects
2
2
1, 2, 3
Non-Commercial
Projects
3
2
1, 2, 3
3
4
1, 2, 3
3
3
4
3
4
4
Additional quantities in place associated with known deposits
Potential future recovery by
successful exploration activities
Categories
Exploration
Projects
Additional quantities in place associated with potential deposits
11
Resource Identification
• Aids business planning
• Investment decisions for individuals and corporations
• Allows efficient resource utilisation
• Principally an aid to efficient development
12
Alignment of systems (schematic)
UNFC-2009
PRMS
CRIRSCO
Sales Production
Production
Extracted
Class
Class
Class
Commercial
Projects
Reserves
Mineral Reserves
Total commodity initially in place
Non-sales Production
Potentially Commercial
Projects
Non-Commercial
Projects
Mineral Resources
Contingent Resources
Not reported
Additional quantities in place
Unrecoverable
Not reported
Exploration
Projects
Prospective Resources
Exploration
Results
Additional quantities in place
Unrecoverable
Not reported
Sustainable Mining and the UNFC, India, 29-30 October 2013
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Sustainable Development for All
• Definition must include entire resource base
– Maintain competitive advantage
– Recognise the total potential
• Over-conservatism may lead to lost opportunity
• Uncertainty analysis must identify the components
– Technical
– Project
– Commerciality and Social License
UNFC-2009 with its focus on economic viability, technical
feasibility and uncertainty is well placed to meet all of
these needs.
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Resource Classification is not finished!
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