Abstract
Transparent, objective, and repeatable resource assessments should be the goal of companies, investors, and regulators. Different types of resources, however, may require different approaches for their quantification. In particular, coal can be treated both as a solid resource (and thus be mined) as well as a reservoir for gas (which is extracted). In coal mining, investment decisions are made based on a high level of data and establishment of seam continuity and character. The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code) allows deposits to be characterised based on the level of geological and commercial certainty. Similarly, the guidelines of the Petroleum Resource Management System (PRMS) can be applied to coal seam gas (CSG) deposits to define the uncertainty and chance of commercialisation. Although coal and CSG represent two very different states of resources (i.e., solid vs. gaseous), their categorisation in the JORC Code and PRMS is remarkably similar at a high level. Both classifications have two major divisions: resource vs. reserve. Generally, in either system, resources are considered to have potential for eventual commercial production, but this has not yet been confirmed. Reserves in either system are considered commercial, but uncertainty is still denoted through different subdivisions. Other classification systems that can be applied to CSG also exist, for example the Canadian Oil and Gas Evaluation Handbook (COGEH) and the Chinese Standard (DZ/T 0216-2020) and both have similar high-level divisions to the JORC Code and PRMS. A hypothetical case study of a single area using the JORC Code to classify the coal and PRMS for the gas showed that the two methodologies will have overlapping, though not necessarily aligned, resource and reserve categories.
Highlights
When hydrocarbon resources are referred to as either conventional or unconventional what is really being referenced is the maturity of knowledge on how to develop those reservoirs
The biggest difference between the two is that the Canadian Oil and Gas Evaluation Handbook (COGEH) is more specific in its requirements and less flexible in data types needed for various levels of resource assessment
The Chinese Standard is more different from the Petroleum Resource Management System (PRMS) and the COGEH than those two are to each other
Summary
When hydrocarbon resources are referred to as either conventional or unconventional what is really being referenced is the maturity of knowledge on how to develop those reservoirs. The techniques and standards for the estimation of mineral resources and reserves, including coal, are different from those for estimation of oil and gas volumes. Minerals resource estimation standards have fairly stringent criteria, mandating that, before the point of a final investment decision to develop a mine, volumes and quality be determined to a high level of confidence. A mining project must typically operate throughout one or more price cycles, which often includes a sustained period of low prices. Mining companies and their investors are relatively risk-averse and historically have probably had lower tolerance for uncertainties than, say, petroleum companies, and this is reflected in the resource and reserve estimation standards for minerals, hereinafter referred to as codes. Profit margins of successful conventional oil and gas projects are typically larger than those of mining projects
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