Industry Education

Oil and Gas Production: A Beginner’s Guide

Upstream Sector Guide:

Oil and gas production is a key cornerstone of the global economy. The world consumes nearly 100 million barrels of crude oil every day and the number is supposed to continue to grow despite expanding renewable energy. In short, oil will remain the main source of essential energy for the foreseeable future. This is how energy companies find and mine it.

Seismic exploration

Oil and gas are formed when hydrogen and carbon atoms in plant and animal remains connect in geological formations. It occurs under increasing pressure of sand and other sediments that accumulate on the remnants over millions of years. Over time, these accumulations hardened and became rock.

That rock, in layers of varying densities, or strata, has moved over these millions of years driven by the tectonic movement. This move created pockets of oil and gas trapped in permeable rocks coated between harder layers. The first step in oil exploration is to identify sandwich-like structures that contain so-called oil traps. The second is to conduct seismic surveys of the area.

Seismic sensing involves sending sound waves to the rock commonly using a seismic vibrator, for onshore exploration, or compressed air cannon, for offshore exploration. In the past, dynamite was popular as a tool for seismic detection. It is sometimes used today for places where it is essential to limit the impact of vibrations on the surrounding area.

As sound waves penetrate rock formations, some of their energy is reflected by the harder layers of rock, while the rest remains deeper into the other layers. The reflected energy goes back and is recorded and then interpreted.

The industry distinguishes between 2D and 3D seismic surveying. The difference between the two comes down to the number of seismic lines used to derive data on potential reservoirs. The seismic lines are the lines of the geophones – the devices that receive the sound signal reflected by the rock layers – arranged in the surveyed area. The more geophones there are, the better the data. Also, in 3D surveying, the geophones are closer together to acquire more detailed data.

Based on how much energy from the sound waves is reflected (and where), explorers identify possible layers of oil and gas. The next step is exploratory drilling. Time to spit the feral cats out as the diggers call these springs.

Exploratory drilling

Drilling exploration wells is the only way to confirm the presence of oil and gas at the location identified as a potential field by the seismic surveys. From exploration wells, E&P collects data not only on the presence of oil and gas in the soil, but also whether there is enough to move on to development wells.

If the drillers hit oil at the well, the next step is to measure the flow rates and pressures, which would tell the company if the well is viable and worth the extra investment for the evaluation wells .

Evaluation wells are drilled around the first exploration well in case the oil flow from the first well suggests that there are enough hydrocarbons to justify the development of the field. The purpose of the estimation wells is to quantify oilfield reserves. They also allow the drilling team to examine the quality of the hydrocarbons it contains.

Another thing grading wells tell drillers is how much oil they can reasonably expect to produce from the field. This information would inform other decisions later, primarily on how best to approach extraction to recover most of the identified and quantified reserves. The number of production wells, their location in the field, the drilling program and launch are all deterministic thanks to the data collected and analyzed during the drilling survey.

Onshore and offshore oil and gas production

Drilling an exploration or estimating well and transforming it into a production well is fairly straightforward on land. After the well has been drilled and the presence of oil and gas confirmed, the drillers remove the drill bit, add the production pipes, and the oil begins to flow. The implant has been uninstalled and moved to another location.

Offshore, however, it all depends on the depth. For shallow water exploration, a yacht with a drilling rig is adequately attached. At depths of up to 500 feet, drillers use lifting platforms, which are a type of portable offshore drilling unit (MODU). The lifting platforms are mounted on the sea floor and the drilling platform is “raised” above the surface.

Further offshore, at depths of up to 10,000 feet, E&P uses semi-submersible platforms. These are floating MODUs that have “legs” similar to an underwater pontoon, and that’s what it’s called. These stems make semi-submersibles more stable than drilling vessels, the vessels used in deep sea exploration.

Another type of vessel used in deep and ultra deep offshore exploration and production is the floating production, storage and offloading vessel, or FPSO. FPSOs look like shipping and house processing equipment and storage space. Oil and gas that are extracted on site and processed on the FPSO are loaded onto smaller boats to be brought ashore or piped.

After the rig is up and running, commercial production begins. On land, the process of exploration into production takes much less time than offshore. Getting shale oil far into production takes a few months, making the shale the fastest growing field, at least in the United States. On the other hand, offshore projects still take years from discovery to production. This slow process is due to the much more challenging maritime environment and to safety concerns. These intensified after the Horizon Deepwater disaster and have remained high ever since.

Conventional oil

Oil and gas production has traditionally been from conventional wells, onshore or offshore, at the underground pressure of the hydrocarbon field, which pushes up oil and gas. Primary production is called free flow.

The underground pressure of oil and gas deposits is decreasing rapidly and E&P must help the oil continue to flow by injecting gas or water into the well to increase the pressure of the field. Increasingly, gas, steam and water injection are being brought back to the beginning of a production life well to maximize initial recovery.

Free flow, primary production, can restore a relatively small proportion of well reserves. Several sources place it between 5% and 25%. Secondary recovery, commonly known as advanced oil recovery, involves the injection of water, steam and gas. It can significantly increase recovery rates, bringing the total to 40% of the oil in the field. The main disadvantages of EOR are that it is expensive and uncertain. There is no guarantee that liquid or gas injection will increase recovery sufficiently to justify the cost.

Tar beach

Tar sands are a special kind of oil deposits. They are so special that they require unique technologies to restore solid state bitumen. About 80% of the tar sands are removed on the spot, on site. The most common technique for the recovery of bitumen is called steam-assisted gravity drainage and involves drilling two parallel horizontal wells in the bituminous layer. Manufacturers then inject steam into the top volume to dissolve the bitumen around it. Gravity causes this bitumen to flow to and from the bottom well.

Shale oil

Shale oil is different from conventional oil in that there is no oil reservoir that drillers take advantage of. The oil in the shale formations is trapped in the rock and the E&P companies drill directly into it. The initial bore is vertical, as in a conventional field. The horizontal sides are drilled from this well to maximize the oil recovered.

After the well has been drilled, E&P injects water to release oil from the rock – the famous hydraulic fracturing or fracturing. In addition to water, the drillers also inject chemicals into the rock and sand, to keep the pores of the rock containing the oil open longer and to recover more oil. Shale oil wells are much faster to start production, and depletion also happens faster than conventional oil wells.

Leave and deactivate

Any well that has stopped producing enough oil and gas must be plugged in to make economic sense so that it does not contaminate underground aquifers or leak out of the ground. First, there are tests to make sure there are no cracks in the well liner that could cause leaks. The well operator then interferes it with concrete and removes the surface structures used in production.

In the open sea, as well as plugging tired springs, E&P needs to dismantle the platforms that housed the production and storage equipment. Dismantling involves dismantling the equipment and associated infrastructure (pipelines) and moving the platform, or at least most of it, from its location.

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