grieve 2p reserve classification

IMO, Ryder Scott have been re-engaged in order to obtain a 2P reserve classification for the Grieve EOR project.

Reserve definition for EOR states:

Reserves which are to be produced through the application of established improved recovery methods are included in the proved classification when

1) successful testing by a pilot project or favorable response of an installed program in the same OR an ANALOGOUS RESERVOIR with similar rock and fluid properties provides support for the analysis on which the project was based, and,

2) It is REASONABLY CERTAIN THAT THE PROJECT WILL PROCEED.

In one of the recent announcements, it was stated that:

"Ryder Scott has been engaged to re-visit their 2008 reserve certification and classification for Co2 flood of the Grieve Muddy reservoir. Their reassessment will take into consideration the completed simulation studies, the NEW SECURE Co2 SUPPLY CONTRACT and OTHER COMMERCIAL Co2 EOR PROJECTS IN WYOMING."

When Ryder Scott initially completed their 3P reserve classification for Grieve in early 2008, ELK :

1)did not have any 'ANALOGOUS RESERVOIR with similar rock and fluid properties' near Grieve. This has now changed as the successful Beaver Creek EOR project commenced Co2 injection in July 2008 and is located relatively close to the Grieve project. This would explain why Ryder Scott have been re-engaged to take into consideration 'other commercial Co2 EOR projects in Wyoming'.

2)did not have any Co2 secured so it would not, at the time, have been possible to meet the Reserve definition requirement that "it is reasonably certain that the project will proceed". With Co2 now secured, it could be argued that this criteria will be met. Securing funding would probably also further strengthen this argument.

Based on the above, I suspect that a 2P reserve classification will be announced for Grieve when Ryder Scott have completed their review.