“3P oil reserves” refer to a classification of oil reserves in the oil and gas industry. The term is commonly used to describe the various categories of petroleum reserves based on their level of certainty and feasibility of recovery. The “3P” designation stands for “Proven,” “Probable,” and “Possible” reserves.

### 1. Proven (1P) Reserves:

– **Definition:** Proven reserves, also known as “1P reserves” or “proved reserves,” are oil and gas reserves that have a high degree of certainty and are considered economically recoverable with a high level of confidence, typically at a probability of 90% or more.

– **Criteria for Classification:**
– There is a high degree of certainty (90% or more) that the reserves can be technically and economically produced based on existing conditions, including current technology and economic factors.

– **Usage:**
– Proven reserves are the most certain and are often used by companies and investors to assess the financial value of an oil and gas asset. They form the basis for financial reporting and investment decisions.

### 2. Probable (2P) Reserves:

– **Definition:** Probable reserves, also known as “2P reserves,” are oil and gas reserves that are considered to have a lower degree of certainty compared to proven reserves. However, they are still believed to have a significant likelihood (typically at least 50%) of being technically and economically recoverable.

– **Criteria for Classification:**
– There is a likelihood of at least 50% that the reserves can be technically and economically produced based on existing conditions.

– **Usage:**
– Probable reserves add a level of contingency to proven reserves. They are considered in assessments of the overall resource potential and risk associated with an oil and gas project.

### 3. Possible (3P) Reserves:

– **Definition:** Possible reserves, also known as “3P reserves,” represent the lowest level of certainty among the three categories. These reserves are believed to have a chance of being technically and economically recoverable, but the likelihood is less than 50%.

– **Criteria for Classification:**
– There is a likelihood of less than 50% that the reserves can be technically and economically produced based on existing conditions.

– **Usage:**
– Possible reserves are considered as a speculative category, and they represent additional potential resources that may be developed with advances in technology, changes in economic conditions, or improved recovery methods.

### How it Works:

– **Estimation and Assessment:**
– Oil and gas reserves are estimated through geological and engineering studies. These studies involve assessing the geological characteristics of the reservoir, production performance, and economic factors.

– **Risk and Uncertainty:**
– The classification into proven, probable, and possible reserves reflects the level of risk and uncertainty associated with the recoverability of the resources. Proven reserves have the highest confidence, while possible reserves have the lowest.

– **Financial Reporting:**
– Companies in the oil and gas industry use these reserve categories for financial reporting and disclosure to investors. They play a crucial role in assessing the overall value and risk of a company’s asset portfolio.

It’s important to note that the classification of reserves can change over time as new information becomes available, technology advances, and economic conditions evolve. The terms and criteria may vary slightly among different regulatory bodies and industry practices. The Society of Petroleum Engineers (SPE) and the World Petroleum Council (WPC) provide guidelines for the classification and reporting of petroleum reserves.