Modernization of the SEC Oil and Gas Reserves Reporting Requirements Conference Paper uri icon

abstract

  • The opinions expressed in this paper are mine alone. They represent the opinions of neither the US Securities and Exchange Commission nor its staff members. Abstract Modernized US Securities and Exchange Commission (SEC) rules for reporting oil and gas reserves are now broadly consistent with the SPE definitions and generally reflect public requests for specific changes in the previous rules. Disclosure requirements based on the revised definitions feature use of annual average prices; wider use of reliable technologies; broader recognition of nontraditional resources, including those from oil sands, shales, and coal; optional disclosure of probable and possible reserves; and replacement of the "certainty" criterion for some reserves by a "reasonably certain" criterion. Official clarification of some of the new terms may be forthcoming; here, I provide my opinion of their intent. Introduction The US Securities and Exchange Commission's (SEC) oil and gas reserves reporting requirements in effect until the end of 2009 were adopted in 1978, with some associated requirements adopted through 1982. In the three decades since adoption of these requirements, the petroleum industry has seen numerous changes. As examples, technology associated with recovery and characterization of petroleum accumulations has advanced dramatically; spot markets and transportation of sales products to market have grown and improved substantially; and economic production of nontraditional resources, such as bitumen from oil sands, has been established. These developments, and others, caused the SEC's reporting requirements to increasingly lag behind the capabilities of the petroleum industry. In 2007, the SEC created the position of "Academic Engineering Fellow" to help the Commission's staff examine the need for modernization of its rules and to help the staff coordinate a project to propose any modifications that appeared to be needed. In October 2007, I was retained to fill this position on a full-time basis, living in Washington, DC, and working with the staff there. The public saw its first concrete evidence of this modernization effort when the SEC issued a "Concept Release" in December 2007 (US SEC 2007a). In this release, the SEC asked for public comment on whether changes in the oil and gas disclosure rules would be beneficial and, if so, what specific changes should be made. A 60-day public comment period followed. The SEC staff analyzed the comments it received (US SEC 2007b) and, partially on the basis of those comments, released proposed rules for public comment in June 2008 (US SEC 2008a). The Commission reviewed comments on the proposed rules for 60 days (US SEC 2008b) and in late December 2008 approved and released final rules (US SEC 2008c). These rules were published in the Federal Register of the National Archives and Records Administration (NARA) in January 2009 and will be effective for all filings with the Commission on or after 1 January 2010. Official guidance clarifying the intent of unclear phrases that appear in the rules may come eventually from the SEC. However, my experience positions me uniquely to comment on some possible interpretations of these guidelines and help the industry better prepare to implement them, although final interpretations lie only with the SEC.
  • Modernized US Securities and Exchange Commission (SEC) rules for reporting oil and gas reserves are now broadly consistent with the SPE definitions and generally reflect public requests for specific changes in the previous rules. Disclosure requirements based on the revised definitions feature use of annual average prices; wider use of reliable technologies; broader recognition of nontraditional resources, including those from oil sands, shales, and coal; optional disclosure of probable and possible reserves; and replacement of the "certainty" criterion for some reserves by a "reasonably certain" criterion. Official clarification of some of the new terms may be forthcoming; here, I provide my opinion of their intent. Copyright 2009, Society of Petroteum Engineers.

author list (cited authors)

  • Lee, W. J.

complete list of authors

  • Lee, W John

publication date

  • December 2009

publisher

  • SPE  Publisher