HARCROSChemicals Inc.

Oilfield Business - 101

An overview of the Oilfield Industry

Anu Kuehn

08/10/2009

HARCROSChemicals Inc.

Fun facts US Oil industry – 75% natural gas and 25% Oil8,000 companies with $80B combined revenueHalf of these companies have <5 employeesFragmented industryOnshore and Offshore operations Long process, Long timeCapital inten$ive – Drilling 35% industry revenueEver changing Government Rules and RegulationsDemand driven activitiesTechnology plays major role

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Oilfield Sectors

Upstream Exploration Drilling Cementing Completion Production

Downstream Refining and Processing Distribution and Marketing

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Exploration

Surface geographical studiesData collections from public recordsGeophysical Surveys Magnetic, electromagnetic, gravity,, seismic

Reservoir Development tools Driller’s logs, cores and cuttings, wireline logs,

formation test data, and basin Modeling

Exploratory wellsMany uncertainties and costlyLack of success can cost from $5M to $20M

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Off shore Seismic Acquisition

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Cross section of a Reservoir

Gas

Oil

Water

FossilsMicroscopic view

Oil drops in grains of sandOil drops in grains of sand

yY

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Drilling

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Drilling Process Prepare the drill siteRigging up/moving the rig and related equipmentDrilling the surface holePump drilling mud/fluids Consists of water,

clay, special minerals and chemicals

Cools and lubricates the drill bit

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Drilling Process

Running surface casing (large steel pipe)CementingWell control Control

formation pressure

Prevent blow outs

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Spindle Top Blow out, 1901

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Drilling ProcessDrilling to final depthEvaluate formations/ decision makingSetting production casingAdditives

Corrosion control Filtrate control Lubricants Thinners Viscosifiers Surfactants

Deflocculants Dispersants Defoamers Shale stabilizers

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Cementing

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CementingPortland cement Objectives To seal the annulus after a casing string has

been run To seal a lost circulation zone To set a plug in an existing well To plug a well for abandonment

Cementing Additives Fluid loss and gas migration additives Cement retarders (increases thickening time) Cement extenders(to decrease the density) Accelarators, Dispersants and other special

chemicals

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Well CompletionMethod used is determined The characterstics of the reservoir Its economical potential

Methods Open-hole, perforated, tubingless

Drilling equipment is removedInstall the wellhead Seal off the well with safety valves and flow

control devices

Completion fluids Facilitates final operations before production Solids free Packer fluid inhibitors

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Production

Christmas treeChristmas treeOilwell head Pump Jacks

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Production MethodsInfluential factors

Underground pressure, oil/gas ratio, characteristics of rock, viscosity of oil

Primary Recovery Jed Clampett style Artificial lift (gas or pumps)

Secondary Recovery Acidizing

Corrosion Inhibitors, surfactants

Extenders, intensifiers, retarders

Hydraulic Fracturing Friction Reducers, gelling

agents, Proppants, breakers, biocides, clay control, surfactants

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Production Methods

Tertiary Recovery Chemical flooding

Polymer Surfactant-Polymer Alkaline

Gas injection CO2 Nitrogen Natural Gas

Water flooding Thermal Recovery

Steam drive Steam soak In situ combustion

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Production MethodsEnhanced Oil Recovery Original Oil In Place High water cut New investments Methods similar to tertiary recovery

Well servicing and Workover Part replacement Cleanout operations Well bore clean-up chemicals

Paraffin Inhibitors, Asphaltene Inhibitors Sand control

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Major Players in the Industry

Oil Companies (Operators) MNOCs – ExxonMobil, Shell NOCs – Petrobras, CNOC Independents – Anadarko, Devon

Service Companies Full service, Single service, global and

regional

Chemical CompaniesSpecialty and Commodity suppliers

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Supply Chain

S o lv en ts , e tc .. H u n tsm an , S te p an , B A S F

O ilfie ld C he m ica l C o m p an iesC lea rw a te r , C h am p ion , N a lco , a nd P e tro li te

Solvents, etc.

Huntsm an, Stepan

Niche Chem ical CompaniesSurfactants, Polymers, special processing

L a rg e C om m od it ie s S up p lie rsA c ids , S a nd

L a rg e d istr ib u to rs fo r V M I

O ilfield Service Com paniesBaker Hughes, BJ, HAL,SLB and W eatherford

S o lv en ts , e tc ..

H u n tsm a n , S tep an

O ilfie ld C he m ica l C o m p an iesC lea rw a te r , C h am p ion , N a lco , a nd P e tro li te

Solvents, etc.

Huntsm an, Stepan

Niche Chem ical CompaniesSurfactants, Polymers, special processing

Regional Service CompaniesSuperior W ell services, Cudd pum ping

O ilfie ld E q u ip m e nt com p a n ies

O il C o m p an iesM N O C s o r N O C s

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ConclusionOverview of Oilfield industryUpstream activitiesAdditivesMajor players and their suppliersQuestions/Comments Email: Akuehn@harcros.com Cell#: 281-705-9562