3. Significant classification systems
Oil and gas: SPE classification system
With minor variations, one standard has taken hold around the world in terms of classifying oil and gas resources in recent years – that of the Society of Petroleum Engineers (SPE) in the United States.
All “petroleum” classification systems cover both oil and gas, since the two are products of the same essential resource – hydrocarbons. In contractual terms natural gas may be classified as “associated”, meaning it has been found together with oil, or unassociated, meaning it exists as a potential gas field in its own right. Associated gas reserves might typically not be considered material until they were declared commercial in their own right.
Although the SPE is technically a non-profit organisation, it issues a widely supported industry standard. In 2007, it issued the Petroleum Reserves Management System (PRMS) but that was an update to earlier versions which were published in the 1980s and 1990s. In 2011, mindful of the growing currency of the standard, it issued guidance on how to apply the system.
Figure: the SPE 2007 chart
The SPE classifications are required by companies reporting to the US financial regulator, the Securities and Exchange Commission (SEC), which remains the largest financial market for oil and gas stocks. In 2005, the SPE also conducted a mapping of how a previous version of the PRMS related to reporting requirements that had already been established elsewhere, including by Canada, the UK, Norway and the United Nations, and found that they were broadly compatible, and used the same core concepts of resources and reserves, and three different degrees of confidence outlined above. Standardisation across different jurisdictions and markets has only grown since then.
Minerals: CRIRSCO and JORC
For minerals, several classifications systems exist in different jurisdictions but are operated on similar principles, including the division between reserves and resources, and varying degrees of confidence. In the 1980s geologists from several countries founded a common attempt to define reserves standards called the Committee for International Reserves Reporting Standards (CRIRSCO). The committee agreed common principles and standards which are then embedded in national reporting standards in countries such as Australia, Canada, the USA, the European Union, South Africa, Mongolia, Brazil and elsewhere.
The most widely used national standard in mining is the JORC standard from Australia, the latest version of which is published in 2012.