||Proved reserves of natural gas as of December 31 of the report year are the estimated
quantities which analysis of geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs under existing
economic and operating conditions.
Reservoirs are considered proved if economic producibility is supported by actual production
or conclusive formation test (drill stem or wire line), or if economic producibility is
supported by core analyses and/or electric or other log interpretations.
The area of a gas reservoir considered proved includes: (1) that portion delineated by
drilling and defined by gas -- oil and/or gas -- water contacts, if any; and (2) the
immediately adjoining portions not yet drilled, but which can be reasonably judged as
economically productive on the basis of available geological and engineering data. In the
absence of information on fluid contacts, the lowest known structural occurrence of
hydrocarbons is considered to be the lower proved limit of the reservoir.
Volumes of natural gas placed in underground storage are not to be considered proved
For natural gas, wet after lease seperation, an appropriate reduction in the reservoir gas
volume has been made to cover the removal of the liquefiable portions of the gas in lease and/or
field separation facilities and the exclusion of nonhydrocarbon gases where they occur in
sufficient quantity to reder the gas unmarketable.
For dry natural gas, an appropriate reduction in the gas volume has been made to cover the
removal of the liquefiable portions of the gas in lease and/or field separation facilities,
and in natural gas processing plants, and the exclusion of nonhydrocarbon gases where they
occur in sufficient quantity to render the gas unmarketable.
It is not necessary that production, gathering, or transportation facilities be installed or
operative for a reservoir to be considered proved. It is to be assumed that compression
will be initiated if and when economically justified.