Energy Development: Oil & Gas from start to finish
Due to their position as the world’s principal fuel sources, oil and natural gas are important sectors in the energy industry and have a significant impact on the global economy. The processes and systems involved in the production and distribution of oil and gas are very complicated, capital-intensive, and reliant on cutting-edge technology to function properly. History has shown that natural gas is closely associated with oil, mostly due to the production process or the upstream part of the industry. Natural gas was seen as a nuisance throughout most of the industry’s history, and it continues to be flared in huge amounts in various regions of the globe, notably the United States, even now. Natural gas has risen to a more significant position in the world’s energy supply as a result of the shale gas production in the United States, as previously noted, as well as the fact that it emits less greenhouse gases when combusted as compared to other fuels such as oil and coal.
There are three main segments in the industry, which are as follows:
- Upstream – refers to the business of oil and gas exploration and production, as opposed to downstream.
- Midstream process – Transportation and storage
- Downstream – activities include refining and marketing.
With an estimated $3.3 trillion in revenue generated yearly, the oil and gas business is one of the world’s biggest industries in terms of monetary value, ranking second only to manufacturing. Oil is critical to the global economic framework, particularly for the world’s top producers, which include the United States, Saudi Arabia, Russia, Canada, and China, as well as other countries.
If you are an investor seeking to get into the oil and gas business, you may be intimidated by the intricate vocabulary and specific measurements that are utilized across the industry. This introduction is intended to assist anybody interested in learning about the foundations of organizations operating in the oil and gas industry by introducing essential ideas and measurement standards used in the industry.
Crude oil and natural gas are made up of hydrocarbons, which are naturally occurring compounds found in the earth’s crust and rock formations. They are formed by the compression of plant and animal remnants in sedimentary rocks such as sandstone, limestone, and schist. These organic raw materials are used in the production of plastics and other manufactured products.
As a result of sedimentary rock formation in ancient seas and other bodies of water, the sedimentary rock itself may be described as follows: The rotting carcasses of plants and animals were incorporated into the developing rock when layers of silt were formed on the ocean bottom. After being subjected to appropriate temperatures and pressure ranges deep under the earth’s crust, the organic material finally converts into oil and gas.
Being lighter in weight than water, oil and gas move more quickly through permeable sedimentary rock toward the earth’s surface than water. The formation of an oil and gas reservoir occurs when hydrocarbons are trapped behind less-permeable cap rock. We get our crude oil and natural gas from these oil and natural gas resources.
Drilling through the cap rock and into the reservoir is used to bring hydrocarbons to the surface. A profitable oil or gas well may be created after the drill bit has reached the reservoir and the hydrocarbons can be brought to the surface by pumping them up to the surface. The well is classed as a dry hole if the drilling effort does not result in the discovery of economically viable amounts of hydrocarbons. A dry hole is normally closed and abandoned.
Methods of Exploration
The presence of visible surface characteristics such as oil seeps, natural gas seeps, and pockmarks (underwater craters formed by escaping gas) serve as the most fundamental evidence of hydrocarbon formation in the environment (be it shallow or deep in the Earth). The majority of exploration, on the other hand, is dependent on very advanced equipment to discover and estimate the extent of these deposits, which is done via the use of exploratory geophysics. Localized gravity surveys, magnetic surveys, passive seismic surveys, and regional seismic reflection surveys are used to discover large-scale characteristics of the sub-surface geology in areas suspected of containing hydrocarbons in the first instance. Features of interest (known as leads) are subjected to more detailed seismic surveys, which are based on the principle of the time it takes for reflected sound waves to travel through matter (rock) of varying densities, and which use the process of depth conversion to create a profile of a substructure’s structure. Finally, when a prospect has been found and analyzed, and if it meets the oil company’s selection criteria, an exploratory well is drilled in an effort to ascertain definitely whether or not there is oil or gas there. The use of electromagnetic technologies may help to lessen the danger of accidents on the ocean floor.
Oil exploration is a costly and high-risk process that requires extensive capital investment. Offshore and remote region exploration are often only performed by major enterprises or national governments with significant financial resources. Deep sea oil wells may cost up to US$100 million or more, whereas shallow shelf oil wells (such as those in the North Sea) can cost as little as US$10 million. The hunt for onshore hydrocarbon reserves is carried out by hundreds of smaller firms throughout the globe, with some wells costing as little as US$100,000.
Aspects of a petroleum exploration potential
A prospect is a prospective trap that geologists feel may contain hydrocarbons and so should be explored. First and foremost, a large amount of geological, structural, and seismic study must be conducted in order to transform the probable hydrocarbon drill site from a lead to an actual prospect. For a prospect to be successful, four geological elements must be present, and if any of these factors are absent, neither oil nor gas will be present.
- Source rock – When organic-rich rock such as oil shale or coal is subjected to high pressure and temperature over an extended period of time, hydrocarbons form.
- Migration – The hydrocarbons are expelled from source rock by three density-related mechanisms: the newly matured hydrocarbons are less dense than their precursors, which causes over-pressure; the hydrocarbons are lighter, and so migrate upwards due to buoyancy, and the fluids expand as further burial causes increased heating. Most hydrocarbons migrate to the surface as oil seeps, but some will get trapped.
- Reservoir – The hydrocarbons are contained in a reservoir rock. This is commonly a porous sandstone or limestone. The oil collects in the pores within the rock although open fractures within non-porous rocks (e.g., fractured granite) may also store hydrocarbons. The reservoir must also be permeable so that the hydrocarbons will flow to surface during production.
- Trap – The hydrocarbons are buoyant and have to be trapped within a structural (e.g., Anticline, fault block) or stratigraphic trap. The hydrocarbon trap has to be covered by an impermeable rock known as a seal or cap-rock in order to prevent hydrocarbons escaping to the surface
Exploration carries a risk
Because hydrocarbon exploration is a high-risk venture, conducting a thorough risk assessment is essential for effective project portfolio management. It is difficult to quantify exploration risk, but it is often characterized as the degree of trust that can be placed in the existence of the critical geological elements, which were addressed above. Based on data and/or models, this level of confidence is often shown on Common Risk Segment Maps (CRSM) (CRS Maps). High confidence in the existence of critical geological causes is often represented by the color green, whereas low confidence is represented by the color red. The maps are also known as Traffic Light Maps, and the whole method is referred to as Play Fairway Analysis in certain instances (PFA). The purpose of such processes is to compel the geologist to conduct an objective evaluation of all relevant geological parameters. Furthermore, it produces straightforward maps that can be understood by non-geologists and managers, which may be used to inform exploration choices.