Undiscovered Oil and Gas Resources An Evaluation of the Department of the Interior's 1989 Assessment Procedures (1991) / Chapter Skim
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Executive Summary
Executive Summary
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These events have once again forced policymakers to consider seriously how domestic production can be boosted to decrease reliance on petroleum from the unstable Middle East. The DOI's resource assessments provide policymakers with a key tool for evaluating ways to increase domestic production: a projection- based on scientific methods—of the quantity of oil and gas that could be developed from domestic sources.
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Instead, the committee focused on evaluating the procedures used to produce the estimates. Much of the committee's review centered on the way in which the DOI implemented a resource assessment procedure called "play analysis." The 1989 assessment was the first comprehensive national assessment in which the DOI applied play analysis, which requires a much higher level of geologic information than methods used in previous assessments.
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Some of the uncertainty associated with resource estimates is inherent in play analysis. Though methods based on play analysis are widely regarded as the best way to assess petroleum resources, play analysis necessarily incorporates the subjective judgments of the resource analysts.
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Likewise, changing petroleum prices and production costs may move a reservoir that is judged uneconomic in one assessment into the category of profitable resources in a future assessment. In summary, some of the major causes of uncertainty in resource assessments are the subjective judgments that are necessarily a part of assessment methods, the data bases employed in the assessments, the continual evolution of extraction technology, and the fluctuation of production costs and petroleum prices.
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The USGS, in areas such as the Permian Basin, combined into plays prospective petroleum fields containing mixtures of carbonate and sandstone lithologies, suggesting that diverse depositional systems were mixed in the plays. To determine how the grouping of unlike reservoirs within a play might affect the overall resource assessment, the committee examined ten USGS Permian Basin plays in detail (see Appendix C)
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Also, when explicit economic screens are applied to technically recoverable resource volumes that were calculated with implicit economic assumptions, the result may be unintended double discounting and a reduction of the economically recoverable resource estimates. In addition to finding that these four methodological limitations may have biased the estimates toward low values, the committee found that by confining the assessment to "conventional" resources, the DOI overlooked a significant portion of the potential domestic energy supply.
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At the USGS, a permanent group of employees devoted to conducting resource assessments could help implement a statistical training program. (The MMS, unlike the USGS, maintains a permanent resource assessment staff, because it is required by Congress to perform resource assessments biennially.)
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Without adequate geologic data, defining plays correctly and identifying conceptual plays is difficult. The committee found that the USGS assessment was limited in particular by a lack of seismic data for the lower 48 states and also for portions of Alaskals North Slope.
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in future resource assessments. · The DOI should include estimates of in-place resources in future assessments.
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The USGS should use objective models based on the discovery process in place of subjective extrapolations in areas with sufficient discovery data. · To avoid unintended double discounting, the MMS should develop methods for separating technically recoverable resource calculations from those that determine the volume of economically recoverable resources.
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The agencies should explain and emphasize the undiscovered resource base's relative share as a source of reserve additions. Incorporating the committee's recommendations in future resource assessments is likely to result in significant changes in the estimates of undiscovered oil and gas.
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