Replies to post #51383 on Treaty Energy Corp. (fka TECO)

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Disregarding economics, the proper engineering term for the total technologically extractable amount is the Producible fraction, which is easily confused with the business/political term proven reserves. However, the purely engineering term is also misleading in that squeezing the last bits of fossil fuel out follows the diminishing returns and at some point is so costly that it becomes highly impractical, as seen on a bell curve, which is why measures like P90 and P95 were created. The term proven reserves is further subdivided into proved developed reserves and proved undeveloped reserves. Note that it DOES NOT include Unproven reserves, which is broken down into probable reserves as well as possible reserves - which are those reserves that only have a 10% likelihood of being recoverable.



These reserve categories are totalled up by the measures 1P, 2P, and 3P, which are inclusive, so include the previous safer measures as:

"1P reserves" = proven reserves (both proved developed reserves + proved undeveloped reserves).
"2P reserves" = 1P (proven reserves) + probable reserves, hence "proved AND probable.
"3P reserves" = the sum of 2P (proven reserves + probable reserves) + possible reserves, all 3Ps "proven AND probable AND possible.

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Reserves growth may also occur due to technological changes, economic changes, and even geological changes and the passage of time (decades) as settling occurs.
Reserve evaluations, valuations and certifications

Oil companies employ specialist reserve valuation consultants - such as DeGolyer and MacNaughton, Ryder Scott, Netherland, Sewell & Associates Inc. (NSAI) and others - to provide third party reports as part of Securities and Exchange Commission (SEC) SEC filings. On December 30 2009, recognising advances in exploration and valuation technology, the SEC allowed 2P probable and 3P possible reserves to be reported, along with 1P proved reserves, though oil companies also have to verify the independence of third party consultants. Since investors view 1P reserves with much greater importance than 2P or 3P reserves, oil companies seek to convert 2P and 3P reserves into 1P reserves.