Concept of new UNFC guidelines for Petroleum...Concept of new UNFC guidelines for Petroleum IBC Working Committee Energy Meeting, Landau, Oct 18 18 1 OLAF KLARNER Coordinator of the

Concept of new UNFC guidelines for Petroleum

1IBC Working Committee Energy Meeting, Landau, Oct 18 18

OLAF KLARNERCoordinator of the Panel of Experts at European Federation of Geologists

Chair of the work group “New Guidelines UNFC on Petroleum” at EGRC/UNECE


UNFC`s integrated resource management

UNFC is currently applicable to all energy and raw material resources. Groundwater

resources are being considered.


Resources Redefined Resource progression is the key in UNFC

UNFC is different from the resource classification and management tools in being responsive to requirements of the Global Agenda 2030, the aspiration of the society

and the modern outlook of the industry.

• UNFC is a project maturitybased, resourceprogression oriented toolfor the management ofresources.

• UNFC provides a balancedview of socio‐economicfactors, technology anduncertainties involved inthe classification ofresources and provides aprogression pathway forprojects.

• UNFC emphasis on figuringin social and environmentalconsiderations at thecentre of resourcemanagement.


17 SustainableDevelopmentGoals until 2030


Total Resource Management SystemChallenges or Opportunities?

Technical Feasibility

Socio‐Economics

E F

Geological Knowledge

G

Value addingNon‐exploitativeRegenerative

EfficiencyFlexibility

Hybrid products

Variability Hybrid sources

National Potential6

IBC Working Committee Energy Meeting, Landau, Oct 18 18

• UNFC Social and Environmental Guidelines finalized

• Bridging documents between UNFC and National Minerals and Petroleum Systems of China finalized

• UNFC Anthropogenic Specifications to support circular economy finalized

• Progress on UNFC Solar Specifications• “UNFC for Europe” supported by European Commission and “UNFC for Africa” supported by African Union Commission in progress

• Other major national initiatives in Russian Federation and Mexico

Implementation of Work Plan 2018-2019Key Highlights

7

Committee on Sustainable Energy, 27th Session, Geneva, 26‐27 September 2018


• UNFC has now emerged as unifying international standard for classification and reporting of all resources

• UNFC principles are aligned to needs of 2030 Agenda for Sustainable Development; acceptable to all stakeholders

• Challenge: to ensure resources are managed properly for benefit of country, company and society to foster acceptability and attract investments

• Additional specifications, guidelines and best practices for UNFC proposed to support innovation, economic resilience and social and environmental considerations

• Core UNFC and additional guidelines will be developed as United Nations Resource Management System (UNRMS)

• RECOMMENDATION: Request approval to change name to “Expert Group on Resource Management”

UNFC-based Resource ManagementTowards a new Sustainable Development Paradigm

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SDGs

Resource Management System

UNFC principles


• To meet objectives of 2030 Agenda, resources need to be available in an affordable and timely manner

• Terms of Reference of Expert Group modified to reflect current focus of governments and companies to seek an optimum resource progression pathway that will be beneficial in an economic, technological and social and environmental manner

• Proposed UN Resource Management System tool‐kit will support:

• Policymaking• National resource management• Business process innovation• Capital allocation and financial reporting• Sustainable development implementation

Focus on Resource ProgressionResource projects have to progress in a timely manner

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UNFC-based UN Resource Management System (UNRMS)• Will assimilate knowledge available in

organizations, countries, companies & academiato create a standardized set of guidelines that helpprogress projects from a lower UNFC class to ahigher class.

• Will include quantitative and scientific data madeavailable through initiatives such as UNEnvironment International Resource Panel onmaterial flows and make it a guidance to manageresources on and below earth’s surface

• Includes renewable and non‐renewable energyand mineral resources

• Will help countries and companies ensure projectsare efficient, environmentally‐friendly and attractinvestments


Petroleum Work GroupDimensions


best

Guidance on how to use UNFC for internal resource management

Advice on how UNFC specifications could be used for more consistent resource classification

Advice on how to use UNFC guidelines

Leadership for implementation of specific UNFC applications

Guidance on building Competent Person’s capacity for external reporting

Petroleum Work GroupUNFC and Petroleum Resources


Effective resource management in a globalizing economy requires accurateassessments of petroleum resources. The recoverable quantities must be describedand categorized in a manner that is consistent with scientific and social/economicinformation describing the economy as well as with the information describing theprojects to recover them.

The United Nations Framework Classification for Resources (UNFC) aims to serve thefollowing four principal needs:1) The needs in international energy and mineral studies to formulate robust and

longsighted policies.2) The needs of governments in managing their resources accordingly, allowing

market prices to be transferred to the wellhead with as little loss as possible.3) The industries' needs for information while deploying technology, management and

finance to secure energy supplies and capture value efficiently within theestablished frameworks to serve its host countries, shareholders and stakeholders.

4) The financial community's need for information to allocate capital appropriately,providing reduced costs and improved long‐sightedness through the application oflower risk‐compensated discount factors.

Petroleum Work GroupOngoing Projects


1) UNFC Specifications and Guidelines for Petroleum

2) Comparison between PRMS, COGEH, UNFC and Other Classification Systems

3) Mapping of Updated PRMS to UNFC

4) Case studies – Chinese Classification System to UNFC

5) Case study – RF2013 to UNFC and PRMS to UNFC

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UNFC-2009 Classes and Sub-classes defined by Sub-categories

Dep

osit

UNFC Classes Defined by Categories and Sub-categories

Tota

l Com

mod

ity In

itial

ly in

Pla

ce

Extr

acte

d Sales Production

Non-sales Production

Class Sub-classCategories

E F GK

now

n D

epos

itCommercial

Projects

OnProduction 1 1.1 1, 2, 3Approved

for Development 1 1.2 1, 2, 3Justified

for Development 1 1.3 1, 2, 3

Potentially Commercial Projects

DevelopmentPending 2 2.1 1, 2, 3

DevelopmentOn Hold 2 2.2 1, 2, 3

Non-CommercialProjects

DevelopmentUnclarified 3.2 2.2 1, 2, 3

DevelopmentNot Viable 3.3 2.3

1, 2, 3

Additional Quantities in Place 3.3 4 1, 2, 3

Pote

ntia

l ExplorationProjects [No sub-classes defined] 3.2 3 4

Additional Quantities in Place 3.3 4 4


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Mapping of PRMS Range of Uncertainty Categories to UNFC-2009 E and F Axis.

• Note that the E and F Categories set minimum standards for the UNFC‐2009 Classes. For example, a Potentially Commercial Project must be atleast E2 and F2, but it could also be E1F2 or E2F1.

• PRMS Contingent Resources are always subdivided in UNFC‐2009 between Potentially Commercial Projects and Non‐commercial Projects based onthe distinction between E2 and E3 Categories.

• Non‐sales quantities are always classified as E3 in UNFC‐2009

a Additional quantities in place associated with known deposits (discovered) and with potential deposits

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The classification „RF 13“in comparison to UNFC 2009

Table 3 Comparison of classes and Sub‐classes in UNFC with RFС Categories

Class Sub-class Code RFС Category

Commercial Projects

On Production 1 A

Approved for Development 2 B1

Justified for Development 3 B2

Potentially Commercial

Projects

Development Pending

4 A*, B1*, B2*

C1, C2

Development on Hold

5 A*, B1*, B2* C1, C2

Non-Commercial

Projects

Development Unclarified 6 C1, C2

Development Not Viable 7 C1, C2

Additional Quantities in Place

11 A**, B1**, B2** C1**, C2**

Exploration Projects

Prospect 8 D0

Lead/High Risk Prospect 9 DL

Play 10 D1, D2

Additional Quantities in Place 11 D0**, DL**,D1**, D2**

Produced Not Sold 12

Note that Code 12 refers to quantities typically referred to as “fuel, flare and losses”. Fuel is that portion of production consumed in operations and thus not delivered to the sales reference point.

Petroleum Work GroupConcept of new guidelines


Specifications and Guidelines for Application of the United Nations Framework Classification a n d S u s t a i n a b l e

M a n a g e m e n t for Petroleum Resources


I. SPECIFICATIONS FOR APPLICATION OF UNFC TO PETROLEUM RESOURCES (SHALL, SHOULD and MAY STATEMENTS) ~30 Pages)

A. Introduction, a three-tier application procedureB. Definitions of petroleum projects,C. Milestones and decisions gatesD. Competent Person/AuditorE. Socio-economic viability

a. Definition of socio – economic viabilityb. Resources Recognitionc. Social Criteriad. Environmental Criteriae. Contingencies for E axisf. Additional guidelines

F. Project Feasibilitya. Project Status and Commercialityb. Project Maturity Sub-Classesc. Additional quantities in place (F4 volumes)d. Additional guidelines

G. Geological knowledge / Confidence in Estimatesa. Analytical Proceduresb. Resources Assessment Methodsc. Additional guidelines

H. Exploration ProjectsI. Unconventional ResourcesJ. Natural Gas, Condensate and other productsK. Treatment of “produced not sold” volumes L. Site decommissioning and remediation


Content

I. ADDITIONAL GUIDELINES ~10 pagesA. Policy, regulations and governance (license, royalty etc)B. Resource Management and Reporting (e.g. SEEA etc.)C. Respecting the rights of indigenous populations D. Resource progression, Zero Waste, Resilience, Innovations

Chapter III Chapter IV



Timing

Oct Nov Dec Jan Feb Mar Apr May

1st draft Chp 3

Final draft Chp 3

Chp 4 Preliminary Final

Presentation on the 10thEGRC Meeting in Geneva

Social and Environmental GuidelinesThe essential dimension

United Nations FrameworkResource Management System(UNRMS) will facilitate a newglobal model of transformativeresource management whichacknowledges the SGD`s as itsvery core.

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Acknowledgements

20


to:• the members of the petroleum working group• the Chairman of the PWG Dr. Satinder Purewal• the Economic Affairs Officer at UNECE Harikrishnan Tulsidas• the EGRC and UNECE

THANK YOU

Documents

Concept of new UNFC guidelines for Petroleum...Concept of new UNFC guidelines for Petroleum IBC Working Committee Energy Meeting, Landau, Oct 18 18 1 OLAF KLARNER Coordinator of the