United Nations Framework Classification for Fossil Energy and Mineral Reserves and

Resources (UNFC-2009) - how the system works and current status

Presented on behalf of the Expert Group on Resource Classification by Simplicio CALUYONG

Bangkok, Thailand

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UNFC-2009 United Nations Framework Classification for Fossil

Energy and Mineral Reserves and Resources 2009 Global, generic, principles-based system

Applicable to: ‒ solid minerals and fluids

(for both energy production and non-energy applications) ‒ renewable energy (generically) ‒ geothermal energy ‒ injection projects for geological storage (of CO2 & natural gas)

Significant progress on application to bioenergy and solar Wind and hydro work streams to start soon

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UNFC-2009 continued Based on three criteria

‒ Economic and social viability

‒ Field project status and feasibility

‒ Geological knowledge

Developed by Expert Group on Resource Classification at UN Economic Commission for Europe, Geneva – with a global mandate (ECOSOC Decision 2004/233)

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Why three criteria?

Proved reserves must be …

Economic to extract (commercially feasible)

Technically feasible to extract

Geologically well defined (with high confidence)

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Criteria and Categories Numerical coding system based on the three criteria, sub-divided by categories:

E1

E2

E3

Economic and social viability

F1 F2 F3 F4

Field project status and feasibility

G1 G2 G3 G4

Geological knowledge

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UNFC – How it works

F axis categories

E axis categories

G axis categories

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E axis category definitions

Category Definition

E1 Extraction and sale has been confirmed to be economically viable.

E2 Extraction and sale is expected to become economically viable in the foreseeable future.

E3 Extraction and sale is not expected to become economically viable in the foreseeable future or evaluation is at too early a stage to determine economic viability.

The phrase “economically viable” encompasses economic (in the narrow sense) plus other relevant “market conditions”, and includes consideration of prices, costs, legal/fiscal framework, environmental, social and all other non-technical factors that could directly impact the viability of a development project.

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UNFC – How it works

• The category definitions are the building blocks of the system: – Select the correct category for each of the three criteria

• These are combined (E, F, G) in the form of classes

• Class 111 means that the reported quantities have satisfied the definitions for: – E1, F1 and G1

• There are no constraints on combinations, but not

all will be meaningful

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UNFC – How it works

Category Definition

E1 Extraction and sale has been confirmed to be economically viable.

Category Definition F1 Feasibility of extraction by

a defined development project or mining operation has been confirmed.

Category Definition G1 Quantities associated

with a known deposit that can be estimated with a high level of confidence.

UNFC Class: 111

UNFC – Examples of classes

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UNFC – 2D representation

Each class is uniquely defined by its code

Extracted Sales Production

Non-sales Production

Class Categories

E F G

Future recovery by commercial development projects or mining

operations

Commercial Projects 1 1 1, 2, 3

Potential future recovery by contingent development projects

or mining operations

Potentially Commercial Projects 2 2 1, 2, 3

Non-Commercial Projects 3 2 1, 2, 3

Additional quantities in place associated with known deposits 3 4 1, 2, 3

Potential future recovery by successful exploration activities

Exploration Projects 3 3 4

Additional quantities in place associated with potential deposits 3 4 4

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Alignment of systems (schematic)

Sales Production

Non-sales Production

Class

Commercial Projects

Potentially Commercial Projects

Non-Commercial Projects

Additional quantities in place

Exploration Projects

Additional quantities in place

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Production

Class

Reserves

Contingent Resources

Unrecoverable

Prospective Resources

Unrecoverable

UNFC-2009 PRMS CRIRSCO

Extracted

Class

Mineral Reserves

Mineral Resources

Not reported

Not reported

Exploration Results

Not reported

Note: UNFC is aligned with the CRIRSCO Template and hence full family of CRIRSCO Codes eg JORC Code, SAMREC Code etc

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Structure of system

Definitions

Specifications

Guidelines

Classification Framework

Application Rules

Non- Mandatory Guidance

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UNFC Classification Framework and Category Definitions

Generic Specifications

Bridging Document

Petroleum Specifications

PRMS

Solid Mineral Specifications CRIRSCO codes

Bridging Document

Bridging Document

Other Aligned Systems

Red Book RF Oil & Gas Bridging Chinese solid minerals and oil & gas in progress Link

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How can we use alignment?

• Quantities can be estimated using current well-established commodity-specific systems

• Reporting under these systems can continue unchanged

• But the same quantities can also be reported under UNFC using the appropriate numerical codes

• The reporting is then independent of commodity type, extraction methodology and ambiguous terminology (e.g. “reserves”)

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Competent Person for resource management • All major international resource classification schemes mention role of

a Competent Person(s) • These are usually meant for listed companies for the purpose of public

reporting • Competent Persons in most cases are self-declared • Some countries have self-declaration and a due process for verification

(e.g Indonesia) • Government (Ministries and organizations) do not have Competent

Person requirements (e.g Geoscience Australia and USGS) • Non-listed companies do not need a Competent Person to sign off

reports • Company internal resource management functions do not need a

Competent Person • Competency is essential for everyone engaged in resource

management functions

Competent Person Requirements • UNFC:

– UNFC-2009 Generic Specification (M) “Evaluators must possess an appropriate level of expertise and relevant experience in the estimation of quantities associated with the type of deposit under evaluation. More detailed specifications can be found in relevant commodity-specific systems that have been aligned with UNFC-2009.”

– Regulatory bodies may explicitly mandate the use of a “competent person”, as defined by regulation, with respect to corporate reporting.

• SPE: The person or group of persons responsible for performing an evaluation of a project. These may be employees of the entities that have an economic interest in the project or independent consultants contracted for reviews and audits. In all cases, the entity accepting the evaluation takes responsibility for the results, including Reserves and Resources and attributed value estimates.

• CRIRSCO: A Public Report concerning a company’s Exploration Results, Mineral Resources and/or Mineral Reserves is the responsibility of the company acting through its Board of Directors. Any such report must be based on, and fairly reflect the information and supporting documentation prepared by a Competent Person or Persons.

• SEC: Disclose the qualifications of the technical person primarily responsible for overseeing the preparation of the reserves estimates

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Competent Person and UNFC • Competency is key • UNFC meets the needs of multiple stakeholders

– Businesses – Governments – Financial applications

• Responsibility of each user/requestor to determine what competency means

• UNFC recognizes that regulators may (and should) demand some disclosure of this competency – SEC and CRIRSCO Template are disclosure documents, so address

this explicitly – UNFC and PRMS are classification systems, so leave it to regulatory

body • Short guidance note on CP for UNFC being produced. EGRC to produce

a second more expansive guidance note detailing issues around defining a competent person.

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Delivering on Sustainable Development Goals and SE4ALL

• Securing affordable and sustainable energy for the future requires a common standard for:

‒ Global communications about energy

‒ Recognition of environmental and social considerations

‒ Developing long-sighted policies for global markets

‒ Government resources management for security and efficiency

‒ Cost effective allocation of financial resources

‒ Industry processes to ensure common understanding of impact of new technologies and optimization of project management decisions

UNFC

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• UNFC-2009 incorporating Specifications (ECE Energy Series No. 42)

2015

• Red Book and UNFC Bridging Document published

• Application to renewables started

• Guidelines for application to nuclear fuels and case studies

2013

2014

2014

UNFC Development

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• Injection Project Specifications approved

2016

• Generic Renewable Specifications approved

• Geothermal Specifcations approved

• Bridging Document to Russian Federation Oil & Gas Classification approved

2016

2016

2016

UNFC Development

2016 • Bridging Documents

to Chinese Solid Minerals and Oil & Gas Classifications under development

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In summary … UNFC-2009 is a generic, principles-based system

‒ Applicable to solid minerals, fluids, geothermal energy and injection projects

‒ Uses a numerical coding system Based on three fundamental criteria

‒ Economic and social viability ‒ Field project status and feasibility ‒ Geological knowledge

Each criterion is sub-divided into 3 or 4 defined categories – Optional use of sub-categories for more granularity

Classes are defined by a combination of a single category or sub-category for each of the three criteria

– Numerical category or sub-category for E, for F and for G – Always quoted in same sequence: E – F – G – Axis letters can be dropped: e.g. Class 221

Join the next meeting of the Expert Group on Resource Classification:

Palais des Nations, Geneva, Switzerland 25–28 April 2017

Thank you for your attention!

reserves.energy@unece.org www.unece.org/energy/se/reserves.html

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Any questions?