Technology aids risk reduction and transforms resources into reserves

Abstract

Changes in technology can alter status-quo thinking about risk and reward and proved reserves drastically. These changes can be subtle or far reaching and can result in a whole new language to describe their impact; the emergence of paradigm shift is an example. Faced with these changes, the decision maker must determine how to evaluate their impact quantitatively. Intuitively, one thinks of reserves as relatively static quantities, although reserves do fluctuate with changes in price and operating cost (affecting the economic limit) and also with the magnitude of capital costs. Proved undeveloped reserves exist when the required capital investment generates an acceptable return. These reserves become resources when that return requirement is not met. The ability to reduce capital costs and/or risk opens up lower-quality resources to the prospect of economic recovery and the potential to become reserves. Study of the size distribution of such resources shows that small pools can contain successively greater quantities of reserves than pools in larger-size classes. As a result of new technology, development of such pools in a controlled cost and risk environment can represent as great a prize as a large-pool discovery. The ability to change the rules because of technology advances opensmore » a vast opportunity for energy self-sufficiency that has ramifications on a national scale.« less