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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: energyplay who wrote (31824)5/2/2004 2:08:33 AM
From: Elroy Jetson  Read Replies (1) of 206321
 
The bottom line is there's no FASB in accounting for oil reserves.

In fields which had been operating for ten years or so, and exhaustively mapped, our Chevron Production Geologists knew very well how much the total reserves were. But would you eventually be able to extract 55% or 85% of the total reserve?

Would that new carbon dioxide injection technology give you another recoverable 7% from this field, or would it prove to be a disappointment in the structure of this field. If you're already at 50% and you might be able to pull out only another 5% or as much as 40% - that's only a factor of eight-fold!

And I don't want to sound harsh, but the simple truth is Production Geologists are basically second string at best. The really bright Geologists are all in Exploration. The Exploration department was all English accents and Texas A&M grads. Production were boys from Louisiana and second string schools. So management at Chevron always applied a healthy discount to reserve numbers the Production Geologists developed.

I wouldn't doubt that that there were local pressures on Shell in some countries, but these reserve estimates are one step away from sheer fantasy. I'm sure at ChevronTexaco they're wildly below reality while they proved to be too high at other companies.
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