Industry groups mull certification program for evaluators of reserves

Oct. 5, 2004
The American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers recently formed a joint committee to consider a voluntary certification program aimed at giving investors more confidence in industry estimates of oil and gas reserves.

By OGJ editors

HOUSTON, Oct. 5 -- The American Association of Petroleum Geologists and the Society of Petroleum Evaluation Engineers recently formed a joint committee to consider a voluntary certification program aimed at giving investors more confidence in industry estimates of oil and gas reserves.

The move is an outgrowth of recent corporate scandals and the resulting emphasis on corporate governance.

"During the past year there has been a lot of publicity regarding reserves write-downs and concerns about the reliability of reserves disclosures," said Daniel J. Tearpock, chairman and CEO of Subsurface Consultants & Associates LLC, Houston, who is the AAPG representative on the management team for the intersociety exploratory committee.

"We now have a business environment that demands higher standards throughout the energy industry and particularly the oil and gas sector. The investor deserves the assurance that a company's reserves estimates have been prepared by qualified individuals who are trained to meet international industry standards," said Ron Harrell, CEO of Ryder Scott Co. Petroleum Consultants, Houston, and at-large representative on the management team.

He identified several vital components of a potential certification program, including recommended geoscience and engineering practices, reserves definitions, better standards, testing, continuing education, and ethics. This initiative is oriented toward individual professionals, he said, not companies or corporations.

"Our mission is to evaluate the importance and feasibility of such an initiative and to define the requirements for the certification of geoscience and engineering petroleum reserves evaluators," said Richard Miller, CEO of Richard J. Miller & Associates Inc. and member of the committee management team. "If the committee sees merit in moving forward with this initiative, the committee will recommend such action to our respective societies."

Worldwide oil and gas reserves have an estimated value in excess of $600 trillion. Therefore, it is vital that private and public companies, as well as governments, have reliable reserves estimates, said committee members. Accurate reserves evaluations require the integration of geoscience and engineering, they said, and the committee is composed of members from both disciplines.

In coming weeks, the committee expects to more clearly define its mission, goals, and milestones and to establish a timetable for future action. The effort also is encouraged by the Society of Petroleum Engineers.