Reserve vs resource

Both the term resource and reserve refer to some amount of mineral or fuel, however the ideas are fundamentally different. Primary fuels such as coal, oil, natural gas, and uranium are material resources and have associated reserves. Flows in nature like wind, and hydro are also resources however they do not have associated reserves as there is no "stockpile" of them. Thus, reserves are generally fossil fuel reserves.

The term resource refers to the total amount of a material or primary energy flow that exists. This includes fuel that is both discovered and undiscovered, economically recoverable or not economically recoverable. Conversely, reserves are deposits of fossil fuels that are known to exist with a reasonable level of certainty based on geological and engineering studies. These reserves are also recoverable economically with the technologies that already exist. This means that the amount of fossil fuel in a reserve will be less than the total amount of that fossil fuel resource as the resource encompasses all of the fuel that could exist, regardless of whether it is recoverable or known to exist. Essentially, reserves represent the amount of fuel that is a "safe bet" and can be reasonably extracted.

Figure 1. The definition of resource and reserve lead to the idea that while all reserves are part of the resource, not all of the resources are in known reserves that can be mined.

Since resources include undiscovered fuel deposits, there is a varying level of uncertainty of how much of a resource there actually is, while the size of reserves can be estimated to a fairly certain degree. This does not mean that there is no way to estimate the size of these resources, the total amount of a resource can be described and estimated based on information obtained from surveys.

It's important to recognize that when reserves go up (and they do! See the reserve page) that's because improved technology, higher prices or newly found deposits are making a portion of the resource possible and economical to mine. The difference between a resource and a reserve can be explored using a McKelvey diagram. McKelvey diagrams portray information about how a resource can turn into a reserve over time with effort and represent how varying levels of knowledge about a deposit and ability to access a deposit makes it a resource or a reserve.