CERA: SEC should use SPE reserves definitions

Paula Dittrick
Senior Staff Writer

HOUSTON, Feb. 8 -- Cambridge Energy Research Associates recommends that the US Securities and Exchange Commission rely on Society of Petroleum Engineers (SPE) methods for oil and gas reserves definitions.

The SEC regulates reserves disclosures by companies whose shares trade in the US. Currently, the SEC applies standards for estimates of "proved reserves" that have changed little since 1978 (OGJ, June 20, 2005, p. 20).

The CERA report, "Beyond the Search for Reasonable Certainty," recommends that the SEC adopt SPE's oil and gas reserves definitions and rely on the SPE's Oil and Gas Reserves Committee (OGRC) to update reserves definitions and technical guidance.

The 43-page CERA report also suggested the SEC have representation on OGRC. CERA Chairman Daniel Yergin and David Hobbs, CERA managing director of oil and gas research, wrote the report, which was released during CERA's annual energy conference on Feb. 7.

They said the report built on CERA's 2005 special report on oil and gas reserves (OGJ, July 18, 2005, p. 20). Yergin said SEC officials had not had time to read the latest report, which took a year to compile.

In preparing the report, CERA researchers obtained comments from oil companies, accounting firms, and industry associations as well as input form institutional investors.

Hobbs called accurate, reliable reserves information "crucial to investors' confidence" in the industry.

"The ultimate objective is a modernized set of definitions and guidance that are complemented by a process for ensuring that they stay current and reflect best practices as they emerge, which would serve the needs of investors much better than the current system," he said.

Unconventional oil
Current SEC rules do not allow companies to publicly report all available data, Hobbs said. For example, SEC rules have prevented companies from counting Canadian oil sands in their publicly reported reserves numbers.

"Significant volumes of nontraditional resources, including mined oil sands, are expected to enter the global oil and gas markets over the coming years. The current SEC regulations—the 1978 System—do not properly cater to all of these volumes," the CERA report said.

Current SEC reserves disclosure rules "do not adequately provide forward visibility for likely levels of oil supply capacity at a time when anxiety about the sufficiency of these supplies is heightened," the report said.

Yergin and Hobbs advocate inclusion of all oil sands production and reserves to remove what they call "distortion from the reporting model."

"Activities that were once on the fringe of the supply mix are now entering the mainstream," the report said. "Many billions of dollars are being invested in bringing these volumes to market. Continuing ambiguity about the treatment of such volumes does not serve any stakeholder."

SPE response
Eve Sprunt, SPE president, issued a statement in response to CERA's recommendation.

"Our goal is to provide a common language that is suitable for adoption by international financial, regulatory, and reporting bodies, as well as by the oil and gas industry," Sprunt said. "Creating a universal standard will result in a more accurate global picture of current prospects and future energy supplies for the public."

Forming the foundation for this common language are the petroleum reserves definitions jointly developed in 1997 by SPE and the World Petroleum Council (WPC) and the resources definitions jointly developed by SPE, WPC, and the American Association of Petroleum Geologists (AAPG) in 2000.

OGRC recently completed a comparison of classifications and definitions used in seven other systems worldwide to identify best practices that potentially could be incorporated into an updated set of definitions.

To facilitate global reserves standards, SPE is working with the International Accounting Standards Board (IASB) and the United Nations Economic Council of Europe's Ad Hoc Group of Experts on the Harmonization of Energy Reserves and Resources Terminology.

SPE also is pursuing the integration of SPE/WPC/AAPG definitions into the United Nations Framework Classification.

Contact Paula Dittrick at Paulad@ogjonline.com.

Related Articles

Western Australia taps Kimberley site for LNG hub

12/29/2008 Western Australia has chosen a site called James Price Point about 60 km north of Broome on the Kimberley coast to establish a proposed LNG hub for...

MMS chief hopes next president, Congress won't reinstate OCS bans

12/19/2008 US Minerals Management Service Director Randall B. Luthi said on Dec. 9 that he hopes the Obama administration and Congress seriously consider expa...

Pakistan plans $1 billion TAPI, IPI gas storage

12/17/2008 Pakistan says it will require $1 billion to build underground storage for gas to be imported from Iran and Turkmenistan, according to the country's...

MMS OCS Policy Committee plans first post-moratorium meeting

12/12/2008 The US Minerals Management Service's Outer Continental Shelf Policy Committee will hold its next meeting Dec. 9-10 at the Washington Dulles Crowne ...

BLM defends Utah lease sale as its state office defers more tracts

12/12/2008 The US Bureau of Land Management defended its scheduled Dec. 19 oil and gas lease sale in Utah on Dec. 2 as its state office deferred additional pa...

BLM Utah director defers lease parcels in response to Park Service concerns

12/12/2008 US Bureau of Land Management Utah State Director Selma Sierra agreed on Nov. 25 to defer from a Dec. 19 oil and gas lease sale all parcels of conce...

DOE appoints clean coal chief to lead fossil energy operations

11/28/2008 The US Department of Energy named Victor K. Der, a 35-year employee with DOE and its predecessors, as its new principal deputy assistant secretary ...

As BLM completes Utah resource plans, possible December lease sale draws fire

11/07/2008 New resource management plans for five of the US Bureau of Land Management's six Utah field offices received final approval on Oct. 31, while the s...

EPA diesel fuel emission reduction grants go to North, South Carolina

10/31/2008 The US Environmental Protection Agency presented grants of $295,320 each on Oct. 23 to North Carolina and South Carolina state agencies to establis...

White Papers

AVEVA NET Accesses and Manages the Digital Asset

Global demand for new process plants, power plants and infrastructure is increasing steadily with the ...
Sponsored by

AVEVA’s Approach for the Digital Asset

To meet the requirements for leaner project execution and more efficient operations while transferring...
Sponsored by

Diversification - the technology aspects

In tough times, businesses seek to diversify into adjacent markets or to apply their skills and resour...
Sponsored by

Engineering & Design for Lean Construction

Modern marketing rhetoric claims that, in order to cut out expensive costs and reduce risks during the...
Sponsored by

Object Lessons - Why control of engineering design at the object level is essential for efficient project execution

Whatever the task, there is usually only one way to do it right and many more to do it wrong. In the c...
Sponsored by

Plant Design for Lean Construction - at your fingertips

One area which can provide improvements to the adoption of Lean principles is the application of mobil...
Sponsored by

How to Keep Your Mud System Vibrator Hose from Getting Hammered to Death

To prevent the vibrating hoses on your oilfield mud circulation systems from failing, you must examine...
Sponsored by

Duty of Care

Good corporate social responsibility means implementing effective workplace health and safety measures...
Sponsored by

Available Webcasts

On Demand

Optimizing your asset management practices to mitigate the effects of a down market

Thu, Dec 11, 2014

The oil and gas market is in constant flux, and as the price of BOE (Barrel of Oil Equivalent) goes down it is increasingly important to optimize your asset management strategy to stay afloat.  Attend this webinar to learn how developing a solid asset management plan can help your company mitigate costs in any market.


Parylene Conformal Coatings for the Oil & Gas Industry

Thu, Nov 20, 2014

In this concise 30-minute webinar, participants have an opportunity to learn more about how Parylene coatings are applied, their features, and the value they add to devices and components.


Utilizing Predictive Analytics to Optimize Productivity in Oil & Gas Operations

Tue, Nov 18, 2014

Join IBM on Tuesday, November 18 @ 1pm CST to explore how Predictive Analytics can help your organization maximize productivity, operational performance & associated processes to drive enterprise wide productivity and profitability.



Fri, Nov 14, 2014

US LNG Exports, the third in a trilogy of webcasts focusing on the broad topic of US Hydrocarbon Exports.

A discussion of the problems and potential for the export of US-produced liquefied natural gas.

These and other topics will be discussed, with the latest thoughts on U.S. LNG export policy.


Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected