Calculating oil reserves is not an exact science and too often reality disappoints. It depends not only on the nature of the well but also on the management of its production over time.
Geologists say there are five elements required for a successful oil well: sedimentary reservoir rock, a mature organic source (oil), migration of oil into reservoirs, a trap and a seal to keep the oil in place. If all five elements come together, you've got a producing oil well. Then the question becomes: How much oil is in the reservoir and how much can be extracted? These figures can change up or down with time.

An oil well is like a giant rigid sponge of porous rock under tremendous pressure. When the rock is drilled, the pressure is released, pushing the oil up through the bore hole and to the surface. The trick is to keep the pressure and the flow constant. A good reservoir has pore spaces that are all interconnected.
Seismic photographs, core samples and outcroppings (sedimentary rock that rises above the surface) help define the character of the well. Primarily, however, geologists rely on history and flow tests to tell them how productive a well might be. It can be a crap shoot that can easily overestimate reserves. They use the production figures from old wells that display similar geology to help calculate potential oil production of a new well.

"After a few years they will assemble the production data from the wells and see how that data actually matches the predictions and that's called history matching, how the history of the field actually matches what was predicted," Andrew Miall, a petroleum geology professor at the University of Toronto, said.
"And it is almost never good. And this is because there are so many uncertainties down there that the actual act of production will lead to anomalies and areas of low porosity that were not predicted."

Furthermore, not all oil is created equal -- a fact that also skewers the reserve figures. Matt Simmons, chairman and CEO of the private oil investment banker Simmons and Company International in Texas, points out that total world reserve figures rate every barrel of oil in the ground as having the same quality and quantity of useable oil. In fact, most of the oil reserves are not top quality and therefore will yield less usable oil per barrel.
Then there are what the World Energy Council refers to as "political reserves." In the OPEC countries, the greater the reserves they claim, the more oil they are allowed to produce, according to their quota system.
"There is some evidence to suggest that some of these countries started reporting 'original' not 'remaining reserves' during the1980s at a time of weak oil price, while others simply aimed to match or outshine the reports of their neighbours," the WEC reported in 2007.

Source: http://www.canada.com  /The Gazette