Why can in-place fossil fuel resource statistics be misleading?

Answer 1

You have asked a good question. The public may be mislead because they do not understand the definitions of resource estimates and reserve estimates. There is also confusion or misleading statements when reserve estimates are cited. Government agencies have helped in many countries to regulate reserves estimates of large oil companies in their financial statements.

Fossil fuels include oil, natural gas and coal. The quantity which can be commercially produced or mined may be significantly below the volumes estimated to be in place.

When oil and natural gas are first discovered, the company responsible for the discovery may develop estimates of the total volume discovered. These estimates are correctly called a "resource estimate."

As more information is obtained on a particular field and plans are made to develop the field commercially, the company will generally estimate the quantity of hydrocarbons which can be produced and sold. This is called reserves. A large field, may contain millions of barrels in terms of resources, but the reserves can be zero, because of the development cost is too high.

I have included two links, and you can find many more. In the Wikipedia webpage, you will see the following: "Although the IEA insists on Canada's Reserves as being listed as 178 billion barrels, many experts[citation needed] estimate it to actually be between 1 and 3 Trillion barrels. " Unfortunately, this is an example of a misleading statement of reserves. If you do a Google search for Canadian reserves, you will not find estimates of this magnitude as proved reserves.

You may want to study Canadian reserves more closely, to find more examples of misleading reserves/ resource estimates.

This is a quote from Sadad I. Al Husseini, former VP of Aramco, October 2007.

"World reserves are confused and in fact inflated. Many of the so-called reserves are in fact resources. They're not delineated, they're not accessible, they're not available for production."

See attached links.