The cost of optimism

Petroleum engineers and financial regulators have never spoken the same language,as the recent Royal Dutch/Shell debacle has shown. And this has led to confusionover state oil reserves. By Maria Kielmas

It’s all because accountants can’t understand risk. As the reverberationsfrom Royal Dutch/Shell’s January announcement of a 20% cut in its estimateof proven oil reserves amplify into a broader debate about the financial probityof the oil industry as a whole, petroleum engineers – the people who estimatehow much oil and gas could be produced from any individual field – saythey have seen it all before.

“Nothing has changed at all,” says Gary Swindell, a Dallas-based petroleumengineering

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