Understanding Oil & Gas Business

Understanding Oil & Gas Business

Upstream and DownstreamOilfield ProcessingTransportation of oil and gasGas ProcessingRefineryPetrochemicalsPower Plants and other gas based industries

UPSTREAM

DOWNSTREAM

Formation of Oil TrapsIt is important to have an elementary understanding on how hydrocarbon is formed and trapped in the rocks below the earth.Formation of Traps- Migration of the oil and gas stopped at traps which were formed due to various reasons like sedimentation and convulsions that took place on earth's strata. Traps are formed by deformation of the rocks, deposition of rocks or by creation of faults due to movement of rock strata.

Types of Structural Traps

Exploration for Oil and GasA commonly used terminology in oil companies, Exploration & Production (E&P), comprises of search, discovery and production of oil and gas by undertaking the following activities:Licensing and agreement from the governments concerned.Geological surveys including aerial photography, satellite images to examine nature of rocks and soil strata and interpretation of such data.Geophysical surveys such as seismic surveys.Interpretation of data and geological modeling.Identifying hydrocarbon resources and their location based on the interpreted data.

Economic evaluation of the located reserves.Exploratory drilling to establish commercially viability.Preparation of field development plan.Commercially exploiting them by setting up necessary drilling and production infrastructure.

Licensing and Agreement:The first step in exploration of oil obviously is entering into contract, lease agreement or obtaining licenses from the governments. Normally the government of the country carries out a lot of surveys (see next item) to define a block for exploration and invites bids. The selected bidder then enters into agreement with the government. There are two types of arrangements:Licenses to the exploring company to explore and produce oil and gas with license fees, royalties (per unit production) and taxes payable to the state.Production sharing contracts, in which the state or a state owned company, is made a partner in the venture. Normally the initial exploration costs are borne by the licensee. Revenues earned on production are first set-off against the costs incurred by the licensee and the balance amount is shared in an agreed percentage.Once the agreement is reached, the exploration starts.

Geological and Geophysical Surveys:Geologists try to develop a model or a map where hydrocarbon might occur, based on geological principles.The map is based on a wide variety of geological information. They try to locate anticlines and domes by mapping rock layers coming out of earth's surface. They use very conventional tools like hand-held compass, telescope etc. to determine the orientation of the rock layers. With these instruments geologists generate drawings and maps of the position and size of the rock protrusions.

When exploratory wells are drilled, geologists examine the rock samples and other well data to make subsurface maps of the reservoir rocks. Matching up rock layers between wells allows geologists to draw cross sections in order to find petroleum traps.Geophysicists measure the properties and patterns of sub-surface rock strata by three types of surveysMagnetic Survey - to determine the strength of the Earth's magnetic field at a specific location.Gravity Survey - to determine the strength of the Earth's gravity at a location.Seismic Survey - to draw subsurface maps using sound waves. In seismic survey explosive charges are detonated in holes drilled by truck mounted rigs at specific points in the survey area. This rig is called Thumper Truck.