|

Resources and Reserves

AOS’s comprehensive technical evaluation at Clearwater has yielded high confidence in the quality of the Middle McMurray Formation bitumen resource. This led to the Company’s first official reserve assignments, effective March 31, 2010, following an independent evaluation by Ryder Scott Company Canada Petroleum Consultants. At year-end 2010, AOS’s independent evaluator estimated the company had probable plus possible reserves totalling 44.7 million barrels at Clearwater. Bitumen density or viscosity at Clearwater is 7-10° API. Other reservoir parameters can be found by clicking here.

It is important to distinguish between resources and reserves. A “resource” is crude oil or natural gas that is believed to be in place within a reservoir that has been mapped, but which has not been thoroughly delineated nor shown to be technically or economically viable through drilling and production. There is high technical and economic uncertainty inherent in a resource estimate. Many resources are never transformed into commercial production. That is why they are said to be “in place”, i.e., existing, but with no opinion as to their ability to be transformed into commercial production.

A “reserve” is a resource that has been more thoroughly evaluated and delineated through a combination of seismic, mapping, test drilling and, for proved reserves, commercial drilling and production. Depending on the classification of the reserve (possible, probable, established or proved), there is increasing estimated probability that the reserve can be economically produced using current technologies and prevailing commodity prices.

These varying degrees of confidence are why resource numbers are almost always much higher than reserve figures. This is true for the Alberta oil sands as a whole, which have estimated original-bitumen-in-place of 1.7 trillion barrels, with established reserves of 173 billion barrels recognized by the ERCB and major international agencies.

More information on understanding resources versus reserves can be found by clicking here.