3esi-Enersight presentation on reliable technology and software

SEC’s ‘reliable technology’ reporting rules open a route to increased reported reserves.

3esi-Enersight has just published a position paper on the use of ‘Reliable technology in SEC reserves reporting’ authored by John Lee (Texas A&M). Lee is in a good position to explain the niceties of the SEC’s regulations since his stint as an ‘academic engineering fellow’ at the SEC where he was principal architect of the modernized reporting rules.

Reliable technology ‘must be based on sound scientific and engineering principles, and must ‘lead to the correct conclusion the vast majority of the time.’ Lee’s thesis is that reserves estimation techniques, including software, can meet the criteria for reliable technology providing a developer can back it up with ‘extensive field evidence.’

Most operators don’t have the resources to pioneer reliable technology and should let vendors do the heavy lifting and propose novel technologies that enhance accuracy. While tried-and-true methods may meet current reporting rules, new software-based reporting ‘can increase PUD estimates in unconventional resources, by expanding proved area well beyond immediate offsets and increasing reserves with more favorable aggregation of individual well EURs.’ Smart companies will take advantage of reliable technology to increase reported reserves using software that others have developed and validated as meeting the SEC’s rules.

Lee’s approach is curious in that it equates ‘reliable’ with larger. One might have thought that using ‘reliable technology’ could occasionally prove disappointing! More from 3esi-Enersight and our October 2009 editorial on the ‘perfect storm’ of reliable technology and shale reserves.

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