Oil! A Primer on Petroleum Exploration & Production

[hill]

Originally Posted by ewhanley

Okay, sorry it has taken me so long to get rolling on this, but here goes...

Chapter 1 - Petroleum Geology and Prospecting

. . . . . snip

Although, a great deal of uncertainty can be eliminated with a 3D seismic survey, ultimately, it still cannot answer the most important question: Are hydrocarbons present? The only way we can answer that question is to drill an exploration well, which, assuming our information gathered thus far indicates potential, is our next step in the exploration process and the focus of my next installment.

Notes:
*It is extremely rare that all of these conditions are met - on the order of 2-3% of potential reservoirs ever come to be.

. . . . . snip

Cost to put a hole on the bottom of the ocean, miles down - type of info would have been cool. Reason being, is that every red neck, SUV driving numb-nut LOVES to emotionally rant, "oh, those oil companies, you just KNOW they're cheating us". But they won't put up a nickle for Exon et al to drill the next dry hole.

[MarinJohn]

Highly informative. Like reading a serial in the newspaper, you can't wait for tomorrow's read.

[tleonhar]

Originally Posted by MarinJohn

Highly informative. Like reading a serial in the newspaper, you can't wait for tomorrow's read.

I'll 2nd that! Waiting for episode 2

[ewhanley]

Thanks for all the feedback so far, and I am glad that you are all enjoying the read. I will try to get the next installment posted sometime tonight.

Evan, I had not considered turning this into a wiki, but it is certainly a possibility.

Hill, I will try to address some of the extraordinary costs associated with exploration drilling in the next episode. In the meantime, consider that deepwater offshore daily rig rates are on the order of $250,000+/day, and that just scratches the surface of total expenditures.

And now, back to work...

[efusco]

I moved this to the environmental forum...maybe not ideal, but best fit I could think of. Also made it sticky at least until it's complete, but probably permanantly.

[icarus]

Keep it going,

Icarus

[ewhanley]

Sorry it is taking so long to continue this story. Work and home have been busy lately. Anyhow, last time we left off, we had completed our 3D seismic survey. For the sake of discussion, let's assume we found promising structural features and we have all permitting in place to proceed with exploration drilling. I would also like to add that the process described in my first installment is typically years in duration, but all oil companies keep a sizable stable of identified prospects so that they can be "high-graded" when exploration money is budgeted. So, enough of that, let's drill a well.

Chapter 2 - Exploration Drilling
So, at this point we have completed our seismic survey, and we have found what looks to be a promising structure. For instance, let's say that we found an anticlinal/domal structure like the cross section shown in Chapter 1. Virtually all petroleum reservoirs contain both oil and water (almost always saline), and quite often they contain gas. These fluids have migrated upslope (updip in geological parlance) into the reservoir and separated out by density. We will assume that our reservoir contains oil, water, and gas. The fluids (gas is a fluid [note: not liquid]) are stratified, that is, water is on the bottom of the structure, oil in the middle further up the structure, and gas is at the crest of the anticline (i.e. a "gas cap"). We have a contour map of the structure from our seismic survey but we have no idea where the oil/water contact (OWC) is or where the gas cap begins or, indeed, whether there is oil present at all. The only way we can find out is to actually drill a well. But where do we drill? We don't want to drill so far down that we penetrate the reservoir below the OWC and find only water, as this could end our exploration. On the other hand, we don't want to drill right at the crest of the structure because, while this may reveal the presence of a gas cap to us, it will not tell us whether or not oil is present in the reservoir. We will choose a location, say halfway up the structure (this is actually quite a bit more exact, but falls much more in the realm of geology/geophysics than petroleum engineering). Remember, our first exploration hole is drilled strictly to determine if oil is present as well as provide some other key reservoir parameters (more on that later).

We have selected the location for our first well, secured all pertinent permitting, and either contracted a drilling rig or ramped up our own rig and crew. In the interest of limiting exposure to risk, we will likely choose to drill a vertical well with a conventional rotary rig (this link contains more than you would probably ever want to know about conventional rotary drilling rigs). The first thing we must do is design our well based on what limited information we have. We know with a fair degree of certainty (say, +/- 10m) where the top of our target formation is and how thick it is based on our seismic data. However, we are lacking a very key piece of information that can have devastating consequences: Pressure in the reservoir. To get some idea of what to expect, we will consult very experienced geologists who have much experience in estimating pressure in formations based on analogous fields that have already been drilled and prior drilling experience. Wow, how many times can I use experience in one sentence? Probably not enough to emphasize the importance of these geologists. Also, less dangerous but equally likely to ruin the well we are drilling, are zones with low pressure, which will result in lost circulation (i.e. the fluid used for drilling goes into the formation never to return to surface - no returns, no drilling). With our compiled data and estimates, we set out to "spud" our well. "Spudding" a well is the term given to the act of the start of drilling. As an aside, I had no idea where this term came from until I read Upton Sinclair's Oil!. It is actually an onomatopoeia describing the sound that the early blade bits made as they first broke ground (spud, spud, spud). The first thing we must do is set a surface conductor. This is a large piece of casing (say, 42+") that is set shallowly (typically <100') into the ground. This "string" (name given to lengths of pipe, be it a casing string, or a drilling string, or a tubing string) serves as a structural component to the well. It keeps the shallow, unconsolidated (non-rock) sediment from caving into the well bore when drilling begins, but it is typically not cemented in place. Having set our conductor, we will begin drilling through the shallow subsurface and aquifers. After we have drilled through freshwater aquifers to a depth largely determined by the regulations set by the EPA and DEQ for the area being drilled, we run surface casing. This could go anywhere from, say 500-2000', depending on aquifers present, and it serves to protect said aquifers. This casing also serves as a place to mount the blowout preventer (BOP) and directs return fluid up the wellbore. Once this casing is run in the hole, cement is pumped down it and displaced up the backside (annular space between the drilled hole and the outside diameter of the surface casing). Ideally this cement would be pumped all the way back to surface. The volume of cement needed is calculated such that we only leave the bottom of the surface casing filled after it is displaced behind the pipe. The cement cures, and a pressure test is performed to make sure an adequate seal was achieved prior to continuing drilling. Now we mount the BOP stack. This equipment is used in the case of a well control event (i.e. blowout). Normally, downhole pressure is balanced by the weight of the drilling fluid (mud) in the drill string. The density of the mud is managed by a mud engineer, who is continually monitoring the density and viscosity of the mud and adding components as necessary to weight up or weight down fluid. If a formation is encountered that has a higher pressure than the column of drilling fluid in the drill pipe, a blowout can occur. In the case of a blowout, the formation pressure forces the mud up and out of the hole. Without the BOP, the mud and reservoir fluids would blow out at the surface and continue to do so until the pressure is equalized. Think of the old pictures of "gushers" in Texas. These are avoided at all cost today as they result in massive environmental damage, injuries and fatalities to rig workers, and often the loss of the entire rig as blowouts usually ending up igniting and burning everything down. To combat all this we have the BOP stack. The first line of defense is the hydril, which is basically an inflatable rubber donut that seals around the outside of the drillstring hopefully holding back the pressure. If that doesn't work, above the hydril is a set of pipe rams which are hydraulically actuated rams that seal steal plates around the drillstring. If these fail, your last option is the shear rams. These are like the pipe rams but rather than fitting around the drillstring, they actually cut it off and form a blind seal across the BOP stack. This equipment is tested at the least every few days as it could mean life or death for the workers on the rig.

So, as we continue drilling, a geologist (mud-logger) is continually monitoring the cuttings returning with the drilling mud. Sorry, I should clarify that the drilling mud is pumped down the drillstring, where it cools and lubricates the bit, and returns up the annulus between the drillsting and surface casing carrying with it the finely pulverized rock. Drilling operations go on 24/7 usually with trips into and out of the hole with the drillstring to change bits. If any zones of lost circulation (drilling mud does not return) are encountered, the mud engineer will mix additives into the mud (walnut shells, wheat hulls, other fibers) to try to plug the offending zone. If the zone cannot be plugged, an intermediate casing string will be run and cemented to cover the "thief" zone. This can also be done for overpressured zones. The danger here is that each subsequent casing string must fit inside the previous one, so the internal diameter is shrinking with each additional string of casing that is run; as such, a smaller diameter bit must be run with each additional casing string. Typically this is not a problem, however in the Gulf of Mexico, many overpressured zones are encountered, resulting in numerous casing strings. There have been incidences of wells never reaching the planned depth because so many casing strings were run, that the internal diameter became too small to continue drilling. This is a very, very costly mistake. Okay, sorry to keep side-tracking, but this topic could be a thread unto itself. So we are drilling, and the geologist is watching the cutting, looking for a particular formation (probably a sandstone) that is our target reservoir. When the geologist thinks we are nearing the top of our target formation, he will tell the driller to slow down the rate of penetration (ROP). He will begin to watch the drilling mud returns for "shows" of oil as we enter the target zone. If oil is present, we are (potentially) rich, if not, we perhaps just wasted $20-200 million. Let's assume we hit oil. We continue drilling until we are through the entire thickness of the target formation, and drill a "rat hole," which leaves enough length for the tools in the subsequent logging run to pass by our entire reservoir formation. Our next step will be to log our exploration well, perform well testing, and, maybe, drill a couple of appraisal wells. All these topics and (maybe) more shall be covered in the next installment.

A few notes:
There are far better resources available on the web than my clunky explanation of drilling. For a much better explanation try this primer.
Diagram of things that can go wrong, such as lost circulation, blowouts, etc.
Wellbore Diagram (note: our well is not cased to the bottom, so that we can run open hole logs)
Also, here is a diagram showing the sequential casing runs.


Wow, sorry this one is such a rambling mess. As always, I will be happy to answer any questions that anyone might have, and I will, in the future, try to have my updates more regularly and expeditiously posted.

[tripp]

ewhanley, brilliant stuff mate. I have a degree in Geology (that I've never used professionally) and reading your comments is quite fascinating! It's interesting to see how the geology and engineering elements fit together to make it all work (some of the time at least )

I've got a couple of questions. First, in the most generic case, what's the typically rate of descent (i.e how many metres are drilled down in a 24 hour period)? What's the typical cost and what's a typical radius of the well bore?

There's been lots of talk lately about opening up the offshore areas to drilling because this will lower prices at the pump. I've read guesstimates of 86 bbl in these fields. Of course, the real issue is production rates. Are there lots of small fields are fewer, bigger fields? How long would it take to develop these resources (roughly speaking of course, each one will be different). Seems to me that we wouldn't see a drop of oil from these fields for years and thus they won't really solve anything. By the time they reach production our existing fields will have declined that much more and global demand will be that much higher. What are your thoughts on this?

Thanks again for taking the time to give us a primer on this important subject!

[dogfriend]

Does the mud engineer actually have a business card that reads "Mud Engineer" ?

[FL_Prius_Driver]

How is a casing installed at all? I understand the drilling, but what is done with the drill string while installing a casing?