The pitfalls of oil and gas assessments

The dramatic drop from 10.5 billion to 896 million barrels in the U.S. Geological Survey’s assessment of undiscovered oil in the National Petroleum Reserve-Alaska underlines a sometimes overlooked aspect of any resource assessment: An assessment is an estimate of how much oil and gas may exist in a region, not a definitive specification of how much oil and gas is actually there.

An assessment applies statistical techniques to whatever relevant information is available about an oil and gas province, to estimate the probabilities of ranges of possible resource volumes, and to calculate average or mean volumes within those ranges. And the results of the statistical analysis entirely depend on the assumptions behind the data used for the statistics. Assumptions typically include theories about how a particular petroleum system operates.

Unfortunately, people sometimes tend to refer to the single, mean volume estimates as if they are specifications of actual oil in place. Instead, they are perhaps better viewed as general indications of how prospective a particular region may be.

In fact, no one will ever know exactly how much undiscovered oil or gas remains in any oil and gas province. But, as more seismic data are acquired and more wells are drilled, more and more information becomes available, so that estimates of undiscovered resources can be refined. Often as new information becomes available, estimates of oil and gas resources rise. Unfortunately, in the case of NPR-A, the new information has pointed to the likelihood of less oil rather than more oil in the reserve.

—Alan Bailey