NRC: INTERIOR'S RESOURCE FIGURES ARE TOO LOW

A National Research Council panel says the Interior Department is too conservative in its estimates of undiscovered oil and gas resources. Charles Mankin, director of the Oklahoma State Geological Survey, Norman, Okla., chaired an NRC committee on undiscovered oil and gas resources, which reviewed Interior's assessments in the wake of industry complaints about low estimates in a 1989 report (OGJ, Sept. 4, 1989, p. 28). Last year NRC reported Interior's resource estimates were too

April 29, 1991

2 min read

A National Research Council panel says the Interior Department is too conservative in its estimates of undiscovered oil and gas resources.

Charles Mankin, director of the Oklahoma State Geological Survey, Norman, Okla., chaired an NRC committee on undiscovered oil and gas resources, which reviewed Interior's assessments in the wake of industry complaints about low estimates in a 1989 report (OGJ, Sept. 4, 1989, p. 28).

Last year NRC reported Interior's resource estimates were too conservative for Georges Bank off the New England coast (OGJ, Dec. 24, 1990, p. 35).

Mankin said Interior's assessment methods should be improved because the estimates are critical to energy policy decisions.

To calculate resources, the U.S. Geological Survey and Minerals Management Service use the "play analysis" assessment method, which groups fields with similar geological characteristics into "plays," then employ a statistical analysis to calculate the potential for undiscovered fields.

WHAT NRC FOUND

The NRC report said, "After a detailed examination of Interior's data bases, geological methods, and statistical methods, the committee judged there may have been a systematic bias toward overly conservative estimates."

It noted play analysis depends on subjective judgments, and "there are no hard and fast rules" to help geologists decide which reservoirs are enough alike to be grouped in a particular play.

NRC said the analyses suffer from limited data bases, and geological or production/drilling information in data bases is incomplete or nonexistent for some areas.

And it said estimates can quickly become obsolete due to changes in production technology and fluctuations in petroleum prices and production costs.

The committee said the 1989 resource estimates may have been overly conservative due to inappropriate definition of play groups, inadequate consideration of "conceptual plays" or promising areas that lack discovered reservoirs, a flawed mathematical approach to combining uncertain variables, and the unintentional imposition of economic factors on recoverable resource calculations.

And the committee said unconventional natural gas sources may have received too little recognition.

The committee urged MMS and USGS to establish a permanent group of specialists and improve data bases and statistical methods they use.