Historical Context
The concept of possible reserves originated within the petroleum and mining industries where understanding the availability of resources is crucial. The classification helps businesses and governments assess the feasibility and potential profitability of resource extraction, guiding investment and policy decisions.
Types/Categories
Possible reserves are part of a broader classification scheme used to quantify resource potential:
- Proved Reserves: High certainty (90% or more) of recovery.
- Probable Reserves: Medium certainty (50-90%) of recovery.
- Possible Reserves: Lower certainty (10-50%) of recovery.
Key Events
- 1970s Oil Crisis: Increased focus on accurately estimating reserves.
- 2000s Technological Advancements: Improved techniques for evaluating and classifying reserves, such as 3D seismic imaging and enhanced oil recovery (EOR) methods.
Detailed Explanation
Possible reserves refer to estimates of natural resources that have a low but significant probability (at least 10%) of being recovered economically with current technologies and prices. They are less certain compared to proved and probable reserves and often require further exploration and analysis.
Mathematical Models
Possible reserves are often quantified using probabilistic models. The volumetric method can be expressed as:
Where:
- \( P_{pos} \) = Possible reserves
- \( P_{est} \) = Estimated total resource volume
- \( P_{pr} \) = Probability of proved reserves
- \( P_{pb} \) = Probability of probable reserves
Charts and Diagrams
pie title Reserves Classification
"Proved Reserves": 40
"Probable Reserves": 30
"Possible Reserves": 30
Importance and Applicability
Understanding possible reserves is vital for:
- Investment Decisions: Influencing capital allocation.
- Strategic Planning: Assisting companies in long-term planning.
- Government Policy: Guiding energy policies and national resource management.
Examples
- Oil and Gas Industry: Companies reporting possible reserves to investors and regulatory bodies.
- Mining Sector: Assessing the potential of mineral deposits for future extraction.
Considerations
- Technological Advancements: Potential to convert possible reserves to probable or proved.
- Economic Conditions: Fluctuations in commodity prices affecting the viability of resource recovery.
- Regulatory Changes: Impacting the classification and reporting requirements.
Related Terms with Definitions
- Contingent Resources: Resources potentially recoverable but not currently considered commercial.
- Prospective Resources: Resources estimated to be potentially recoverable from undiscovered accumulations.
Comparisons
- Possible vs. Proved Reserves: Proved reserves have a higher certainty and are more likely to be extracted.
- Possible vs. Probable Reserves: Probable reserves have a higher probability of recovery than possible reserves.
Interesting Facts
- Some companies factor possible reserves into their long-term strategic plans even though they are not certain.
- The discovery of new extraction technologies can significantly increase the probability of recovery for possible reserves.
Inspirational Stories
- Shale Gas Revolution: Many possible reserves became commercially viable with the advent of hydraulic fracturing and horizontal drilling, drastically changing the U.S. energy landscape.
Famous Quotes
- “In the oil business, possibility is as good as certainty when it comes to reserves.” – Anonymous Industry Executive
Proverbs and Clichés
- “Hope for the best, prepare for the worst.”
- “A bird in the hand is worth two in the bush.”
Expressions
- “Playing the long game”: Referring to companies investing in possible reserves with a long-term perspective.
- “Betting on potential”: The risky yet potentially rewarding nature of investing in possible reserves.
Jargon and Slang
- [“Wildcatting”](https://financedictionarypro.com/definitions/w/wildcatting/ ““Wildcatting””): Drilling in unexplored or under-explored areas based on possible reserve estimates.
- “Striking it rich”: Successfully converting possible reserves into commercially viable resources.
FAQs
Q: What determines if a reserve is classified as possible? A: The classification is based on geological evidence and engineering analysis indicating at least a 10% probability of commercial recovery.
Q: Can possible reserves become proved reserves? A: Yes, with further exploration, technological advancements, and favorable economic conditions, possible reserves can be reclassified as proved reserves.
References
- Society of Petroleum Engineers (SPE): PRMS - Petroleum Resources Management System.
- United States Geological Survey (USGS): Resource and Reserve Classification for Minerals.
- International Energy Agency (IEA): Understanding Oil and Gas Reserves.
Summary
Possible reserves represent a critical aspect of resource evaluation, characterized by at least a 10% probability of commercial recovery. They play a significant role in strategic planning, investment decisions, and policy formulation. While inherently uncertain, advancements in technology and favorable economic conditions can enhance the probability and value of these resources.
Understanding possible reserves helps companies and governments make informed decisions, balancing potential opportunities with inherent risks.
