UNDISCOVERED OIL AND GAS RESOURCES:

An Evaluation of the Department of the Interior's 1989 Assessment Procedures

Committee on Undiscovered Oil and Gas Resources

Board on Earth Sciences and Resources

Commission on Geosciences, Environment, and Resources

National Research Council

National Academy Press
Washington, D.C.
1991



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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures UNDISCOVERED OIL AND GAS RESOURCES: An Evaluation of the Department of the Interior's 1989 Assessment Procedures Committee on Undiscovered Oil and Gas Resources Board on Earth Sciences and Resources Commission on Geosciences, Environment, and Resources National Research Council National Academy Press Washington, D.C. 1991

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Frank Press is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Samuel O. Thier is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and of advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert M. White are chairman and vice chairman, respectively, of the National Research Council. Support for this study by the Committee on Undiscovered Oil and Gas Resources was provided by the U.S. Geological Survey and the Minerals Management Service, Department of the Interior under agreements 14-08-0001-A0636. Library of Congress Catalog Card No. 91-61496 International Standard Book Number 0-309-04533-9 S364 Additional copies of this report are available from the National Academy Press , 2101 Constitution Avenue , Washington, D.C. 20418 Printed in the United States of America

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures COMMITTEE ON UNDISCOVERED OIL AND GAS RESOURCES CHARLES J. MANKIN, Oklahoma Geological Survey, Chairman JOHN J. AMORUSO, Consultant, Houston, Texas GEOFFREY S. BAYLISS, GeoChem-Laboratories Inc. DORIS M. CURTIS, Curtis and Echols, Consultants RICHARD A. DAVIS, University of Southern Florida LLOYD E. ELKINS, Petroleum Consultant, Tulsa, Oklahoma ROBERT J. FINLEY, University of Texas at Austin JOHN D. HAUN, Barlow and Haun, Inc. HARRISON C. JAMISON, Consultant, Sunriver, Oregon GORDON KAUFMAN, Massachusetts Institute of Technology RICHARD D. NEHRING, NRG Associates STEVEN E. PLOTKIN, United States Congress, Energy and Materials Program MICHAEL PRATS, Michael Prats and Associates, Inc. RICHARD M. PROCTOR, Institute of Sedimentary and Petroleum Geology JOSEPH P. RIVA, Library of Congress, Congressional Research Service ENDERS A. ROBINSON, University of Tulsa PAUL SWITZER, Stanford University Liaison Members CHARLES G. GROAT, American Geological Institute HARRY C. KENT, Colorado School of Mines National Research Council Staff INA B. ALTERMAN, Senior Program Officer JACQUELINE A. MACDONALD, Editorial Consultant HUONG DANG, Project Secretary BARBARA WRIGHT, Administrative Secretary JUDITH ESTEP, Administrative Secretary

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures BOARD ON EARTH SCIENCES AND RESOURCES WILLIAM L. FISHER, University of Texas, Chairman SAMUEL S. ADAMS, Colorado School of Mines ALBERT W. BALLY, Rice University SANDRA L. BLACKSTONE, University of Denver DONALD J. DEPAOLO, University of California, Berkeley GORDON P. EATON, Lamont Doherty Geological Observatory W. GARY ERNST, Stanford University ROBERT N. GINSBURG, University of Miami PERRY HAGENSTEIN, Resource Issues, Inc. HARRISON C. JAMISON, Consultant, Sunriver, Oregon THOMAS H. JORDAN, Massachusetts Institute of Technology CHARLES J. MANKIN, Oklahoma Geological Survey CAREL OTTE, JR., Unocal Corporation FRANK M. RICHTER, University of Chicago STEVEN M. STANLEY, Case Western Reserve University IRVIN L. WHITE, New York State Energy Research and Development Authority Staff KEVIN C. BURKE, Staff Director THOMAS M. USSELMAN, Senior Staff Scientist LALLY A. ANDERSON, Staff Associate GAYLENE DUMOUCHEL, Administrative Assistant BARBARA WRIGHT, Administrative Secretary JUDITH ESTEP, Administrative Secretary

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures COMMISSION ON GEOSCIENCES, ENVIRONMENT, AND RESOURCES M. GORDON WOLMAN, The Johns Hopkins University, Chairman ROBERT C. BEARDSLEY, Woods Hole Oceanographic Institution B. CLARK BURCHFIEL, Massachusetts Institute of Technology RALPH J. CICERONE, University of California, Irvine PETER S. EAGLESON, Massachusetts Institute of Technology HELEN M. INGRAM, University of Arizona GENE E. LIKENS, New York Botanical Garden SYUKURO MANABE, NOAA Geophysical Fluid Dynamics Laboratory JACK E. OLIVER, Cornell University PHILIP A. PALMER, E.I. duPont de Nemours & Company FRANK L. PARKER, Vanderbilt University DUNCAN T. PATTEN, Arizona State University MAXINE L. SAVITZ, Allied Signal Aerospace Company LARRY L. SMARR, University of Illinois, Urbana-Champaign STEVEN M. STANLEY, Case Western Reserve University SIR CRISPIN TICKELL, Green College at the Radcliffe Observatory, Oxford KARL K. TUREKIAN, Yale University IRVIN L. WHITE, New York State Energy Research and Development Authority JAMES H. ZUMBERGE, University of Southern California STEPHEN RATTIEN, Executive Director STEPHEN D. PARKER, Associate Executive Director JANICE E. GREENE, Assistant Executive Director JEANETTE SPOON, Financial Officer CARLITA PERRY, Administrative Assistant ROBIN LEWIS, Senior Project Assistant

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures This page in the original is blank.

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures CONTENTS     EXECUTIVE SUMMARY   1      Questions About the DOI's 1989 Resource Assessment,   2      Limitations of Resource Assessments,   3      An Evaluation of the DOI's 1989 Resource Assessment,   4      Recommendations,   8  1   INTRODUCTION: QUESTIONS ABOUT THE DEPARTMENT OF THE INTERIOR'S 1989 RESOURCE ASSESSMENT   12      Why Resource Assessments Vary,   13      New Assessment Methods,   15      References,   16  2   LIMITATIONS OF RESOURCE ASSESSMENTS   17      Assessment Objectives,   17      Uncertainty in Assessments,   18      Assessment Boundaries,   20      Data Bases for Resource Assessments,   28      Estimating Reserve Growth,   30      Assessment Methodology,   32      Resource Assessments and Energy Policy,   40      References,   42  3   AN EVALUATION OF THE DEPARTMENT OF THE INTERIOR'S 1989 RESOURCE ASSESSMENT   44      Assessment Boundaries,   44      Detailed Evaluation of USGS Assessment Methods,   53      Detailed Evaluation of MMS Assessment Methods,   75      References,   96

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures  4   RECOMMENDATIONS   98      Assessment Boundaries,   99      USGS and MMS Management,   99      Geological Approaches In Data Base Use And Play Analysis,   101      Statistical Methods,   104      Assessment Results,   107     APPENDIXES   109     A  Evaluation of the Hydrocarbon Resource Estimates for the Offshore Areas of Northern and Southern California and Florida South of 26 ° Latitude       B  Adequacy of the Data Base for Hydrocarbon Estimates of the Georges Bank Area of the North Atlantic Outer Continental Shelf       C  The Effects of Play Mixing in the Permian Basin       D  Background: Key Components of the Petroleum Resource Base  

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures The members of the Committee on Undiscovered Oil and Gas Resources wish to dedicate this volume to the memory of their colleague, Harry C. Kent (1930-1991) of the Colorado School of Mines.

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UNDISCOVERED OIL AND GAS RESOURCES:: An Evaluation of the Department of the Interior's 1989 Assessment Procedures This page in the original is blank.