DEFINITION of Reserves to Production Ratio
The reserves to production ratio indicates the remaining lifespan of a natural resource, given a production rate. This ratio is expressed in terms of years, and is used in forecasting project life, income, employment, etc. While applicable to all natural resources, it is primarily used in the oil and gas industry.
RPR = amount of known resource
amount produced per year
BREAKING DOWN Reserves to Production Ratio
Often this ratio is used to estimate how many years' worth of oil a country may have. If a country has 10 million barrels of proven oil reserves, for example, and it is producing 250,000 barrels a year, then the RPR, or life of the reserves, is 10,000,000/250,000 = 40 years.
The reserves to production ratio for a resource can change as new technology emerges. New technology that enables extraction of oil, for example, that was previously not extractable can extend the life of a reserve and create new reserves. In the oil and gas industry, hydraulic fracturing and horizontal drilling have opened up many oil reserves that were not previously recoverable.