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What is the difference between a natural resource and an economic reserve?

natural resource is any natural material that is either useful or valuable, this can include: natural gas, crude oil, metal ores and water (i.e. ground water). 

reserve is the amount of a resource that can be economically extracted using the existing technology. For a reserve to be economic, the company (BP, Shell ect.) must make more money selling the resource than they do spending money extracting it, in other words they must make a profit.

The amount of reserves can change due to many factors...

In the context of hydrocarbon exploration (crude oil and natural gas), reserves can go up due to:

 - Further exploration discovering more reserves 

 - An improvement or advance in exploration technology, leading to more of the current reserves becoming economic (for example, deep water reserves or unconventional sources)

 - A rise in the price of oil or gas can make (previously uneconomic) small oil or gas fields economic to extract from

Hydrocarbon reserves can go down due to:

 - Calculations of reserves being incorrect (companies may overestimate their reserves deliberately to boost share prices!)

 - As reserves are extracted from the Earth, the amount of resource left becomes depleted; the less resource there is, the harder it becomes to extract and therefore more money is needed to extract it, making the reserve less economic to recover. 

Erin S. A Level Geology tutor, GCSE Geology tutor, GCSE Chemistry tut...

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