UNFC–2009 –Purpose of Resource Classification

David MacDonaldHouston21 November 2013

A Couple of Anecdotes

• A famous company misrepresents its reserves with collusion of the board of directors

• Application of revised rules significantly alters management’s previous estimate

• Risk mitigation not in-place results in revision of field reserves

• Management found to be trading shares prior to release of revised reserves estimates

Institute of Mining and MetallurgyLondon, 1911

Stakeholders of our Resources

3

External user

External Influencers

Internal users

Governance and Assurance

Internal StakeholdersInternal

preparers

Principles for Resource Classification

• Project based– Project management

• Classification of total volume• Clear boundaries between categories

– Discovered– Commercial (economic and social license)

4

Resources are measured against …

Economic to extract (commercially feasible)

Technically feasible to extract

Uncertainty well defined (with high confidence)

Sustainable Mining and the UNFC, India, 29-30 October 2013 5

Typical Deepwater Facility Design

6

Floating Facility

Export Facility

Well count and management

Riser towers

Gas injection

Water injection

Maximum Rate Design

• Subsurface

– Static

– Dynamic

• Gathering

• Processing

• Transport

• Commercial

Sources of Uncertainty

Successful development plans include contingencies and mitigations for possible outcomes.

Reservoir Technical Limits

7

• Options– Doable now (or almost)

• Possibilities– Potentially economic– May require incremental

technology development– <5 & >5 yr timescales

• Barrier opportunities– Technical or commercial

barrier– Not currently doable or

uneconomic– Requires step change

0Base Options Possibilities Barrier

Reco

very

Fac

tor

Reservoir Technical limit

Barrier RF

1

Resource Progression

8

ExplorationProspect

Access Appraise Select Define Execute Operate

Approved for Development

ProductionOn Production

Development Pending

Justified for Development

Exploration Commercial

Potentially Commercial

KeyNon-Commercial

Resource Progression

9

ExplorationProspect

Access Appraise Select Define Execute Operate

Approved for Development

ProductionOn Production

Development Pending

Justified for Development

Remaining Prospectivity

Development on Hold

Development Unclarified

Exploration Commercial

Potentially Commercial

KeyNon-Commercial

Role of Technology

10

coil tubing drilling unitsidetracks

hydraulic fracturesstimulationsworkoversnon-rig workovers

incre

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The improvement of hydrocarbon recovery and investment efficiency is demonstrably linked with advances in

technology.

The right linkage between depletion and technology plans is vital to

maximising value from our assets.

UNFC – 2D representation

ExtractedSales Production

Non-sales Production

ClassCategories

E F G

Future recovery by commercial development projects or mining

operations

CommercialProjects

1 1 1, 2, 3

Potential future recovery by contingent development projects

or mining operations

Potentially CommercialProjects

2 2 1, 2, 3

Non-CommercialProjects

3 2 1, 2, 3

Additional quantities in place associated with known deposits 3 4 1, 2, 3

Potential future recovery by successful exploration activities

ExplorationProjects

3 3 4

Additional quantities in place associated with potential deposits 3 4 4

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ity in

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ce

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Resource Identification

• Aids business planning• Investment decisions for individuals and corporations• Allows efficient resource utilisation

• Principally an aid to efficient development

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Sales Production

Non-sales Production

Class

CommercialProjects

Potentially CommercialProjects

Non-CommercialProjects

Additional quantities in place

ExplorationProjects

Additional quantities in place

Tota

l com

mod

ity in

itial

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Production

Class

Reserves

Contingent Resources

Unrecoverable

Prospective Resources

Unrecoverable

UNFC-2009 PRMS CRIRSCO

Extracted

Class

Mineral Reserves

Mineral Resources

Not reported

Not reported

ExplorationResults

Not reported

Alignment of systems (schematic)

Sustainable Mining and the UNFC, India, 29-30 October 2013 13

Sustainable Development for All

• Definition must include entire resource base– Maintain competitive advantage– Recognise the total potential

• Over-conservatism may lead to lost opportunity• Uncertainty analysis must identify the components

– Technical– Project– Commerciality and Social License

UNFC-2009 with its focus on economic viability, technical feasibility and uncertainty is well placed to

meet all of these needs.

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Resource Classification is not finished!

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