This paper presents a methodology that provides the upstream oil and gas industry with a robust approach to petroleum inventory management. More specifically, we describe the proper order of movements of resources from Prospective Resources to Contingent Resources, to Reserves (and back). Our methodology describes the "causes of change in classification" and what these changes mean when classifying Reserves as well as "resources other than reserves" (ROTR).
We begin with the updated PRMS and COGEH documents (2018). We then define the three steps that are necessary to move through Prospective Resources before we can begin moving into the sub-classes of Contingent Resources. We define the movement for Prospective Resources to become discovered, making these Prospective Resources become Contingent Resources. We define the progression, following discovery, in chance of development and commerciality in the project maturity sub-classes within the Contingent Resources classification. We define the criteria for a technology to become "established" and explain that these technologies must be technically reliable and economic before they can be used for development decisions. Lastly, we define the contingencies and the movement through each contingency for the volumes to become Reserves.
The main results we provide in this work are that the movement from Prospective Resources to Contingent Resources to Reserves cannot be defined by straight movements from one class to another. This means that there is no direct path that can be used to define the movement from Prospective to Contingent Resources, though there are certain criteria that must be met regardless of the project. We also show that certain contingencies, such as price of oil and available technologies, dominate the movement of resource volumes.