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Subject: Comments to Draft Specifications for Application of UNFC-2009: from the Norwegian Petroleum Directorate (NPD)

20 December 2012

Norwegian Petroleum Directorate (NPD)

The NPD welcomes the specifications for application of UNFC-2009. We appreciate that the document allows for other classification systems to be mapped to and aligned with UNFC-2009 in the future, so that these can be used as a basis for UNFC-2009, when the Bridging Document has been endorsed by the Expert Group.

The NPD has the ambition to harmonize (align) the NPD classification system by preparing a mapping document (comparing definitions and specifications) for investigating which adjustments to our definitions and specifications we will need to do, in order to get the UNFC-Expert Group's endorsement of our proposed Bridging Document.

One reason for not mapping our Norwegian resources to the UNFC by first mapping it to SPE-PRMS, is that this will result in a loss of the fine granularity of both the Norwegian system and the UNFC.

The NPD has separate categories for increased oil recovery projects (where investments are planned to increase the recovery factor for a field). In the resource management activities that the NPD carries out, the portfolio of such projects must be traced over time. This should also be communicated to others by defining subclasses in UNFC.

Comments to the SPE-PRMS Bridging Document (Annex IV)
The PRMS-Bridging Document (Fig IV.2) indicates that the "On Production" recoverable reserves may also include extractable quantities that will not be available for sale E 3.1, F1.1. It is our understanding that this is incorrect according to the SPE-PRMS Specification (3.2.1, third section) and this also applies to "Approved for Development" and "Justified for Development".

The SPE-PRMS maturity classes shown in the Bridging Document Fig IV.2 show that projects categorized as contingent resources are split into 4 categories. This is not in accordance with the SPE-PRMS document of the approved system, but a sub-classification which is not mandatory but may be chosen (Application document page 20). As splitting into 4 categories is not required, the mapping to either the numeric key 11 or 5 cannot always be done. This will then make the alignment to E2 or E3.2 impossible without any further guidance being given, which should be provided in the bridging document. Projects in the class "Development unqualified or on hold" might be aligned to either E2 or E3.2.

Other comments to the bridging document:
The detail (or lack of detail) in already approved Bridging Documents indicates the level of accuracy in future mapping documents and future bridging documents to be endorsed for alternative direct applications to UNFC.

As commented to the STF in June 2012, the NPD expected that the Bridging Document for the SPE-PRMS clarified which are the mandatory (minimum) requirements of SPE-PRMS that a project classification has to comply with in order to be accepted as UNFC. The current SPE-PRMS Application document, which is sometimes referred to, is not suited for such clarification, as it is a mixture of requirements, guidelines and a tutorial for estimation techniques and classification. The consequence of the fact that the proposed bridging document does not clarify which requirements are mandatory, is that it makes it unclear which minimum requirements there are to classify a project in a SPE-PRMS class for thereafter to align it to a UNFC class by using the Fig IV.2 matrix. A consequence of this is that it also means that other bridging documents may not always have to be very specific when it comes to which requirements are mandatory.

The Norwegian pilot study presentation in Geneva in May 2012 showed that we are fully able both to map the aggregated Norwegian Resource Accounts from our NPD-system into the UNFC, and that we are able to classify all individual projects directly into the UNFC based on the approved Definitions, Supporting Explanations and relevant SPE-PRMS specifications that we consider mandatory.

Mapping the aggregated volumes to UNFC, however, will only be meaningful to us if we map it to UNFC sub-classes that we established to serve this purpose (which is fully acceptable according to the Official approved text of the UNFC-2009, chapter 5), without restricting the mapping to the "example classes" in fig 2 and fig 3 in the official approved text. We definitely appreciate that the specification document does not reduce the ability to utilize other UNFC-classes than the ones in fig 2 and 3 (which is similar to the SPE-PRMS).

Our effort in testing a direct classification of all individual Norwegian resource projects tells us that the UNFC may be very useful for government purposes, both in international comparison with other nations' resource bases but even more so in performing resource management functions. This potential, however, is significantly reduced, if the utilization of the system requires to first classify the projects to SPE-PRMS. SPE-PRMS lacks the possibility of considering the socio-economic status of project maturation, as the UNFC so eminently allows, as described in the official UNFC-2009.