Oil! A Primer on Petroleum Exploration & Production

[tleonhar]

I would like to nominate ewhanley as the official Priuschat "Teacher of the Year"

[ewhanley]

Originally Posted by tripp

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!

In the most generic case, you can expect to drill at, say, 100 ft/hr. Sorry about the non-SI units, but unfortunately the oilfield will likely never make the switch. In reality, rate of penetration (ROP) varies greatly depending on rock type, bit type, mud properties, etc. The cost of a single well varies greatly depending on size, depth, deviation, etc. The radius of a wellbore varies greatly depending on expected production and a few other things. On shore, the production casing is probably around 4.5"-7" in diameter. I have assembled perforating guns, which fit inside the production casing of deepwater offshore wells that were themselvers 13 5/8" in diameter. A modern, directionally drilled well in a land based field probably costs on the order of 10's of millions of $'s, while a deepwater offshore well costs on the order of 100's of millions of $'s. A small operation with vertical wells probably cost on the order of millions of $'s, say, less the $5 million.

There is indeed much clamor to begin drilling in offshore areas to lower the prices at the pump, but I don't think drilling will cause any immediate, aside from a short-lived emotional one, market response in the price of gasoline. A typical on shore oil field takes around 5ish years to bring on line, and an offshore field probably takes twice that. These numbers assume nearby shipping infrastructure is already in place. Starting a new field with the intention of lowering gasoline prices is futile, but this is not the point. The point, as you noted, is to arrest (actually only lessen) the current decline to a manageable rate. Global demand is forecast to outstrip supply within a few years without any added production. My thoughts are that both extreme arguments aren't quite right, which is usually the case. The folks who think that drilling will immediately, if ever, lower the price of fuel are probably wrong, and the people who think the effort to drill is futile due to the lag in time to production are also wrong. Adding production serves only to flatten the decline curve.

[ewhanley]

Originally Posted by dogfriend

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

He/she sure does.

[ewhanley]

Originally Posted by 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?

The drillstring is brought out of the hole ("tripping out") and disassembled into "joints" (30' sections) or "stands" (2 or 3 connected joints) and stacked in the pipe rack. "Tripping" in and out is done routinely for things like changing bits, "fishing" broken "tools", etc. The casing is run in in threaded sections just like the drillstring. It is lowered into the hole using the same draw-works as for drilling. Additional joints are added in as the string is lowered, while the length in the hole hangs from the rig floor on "slips", which are basically gravity activated gripping wedge devices.

[ewhanley]

Well, unfortunately, it has been nearly a month since my last installment, and, for that, I apologize, no end. My excuses are as follows: work, my wife and I are expecting a baby girl very soon, and I just got a new roadbike, which has fueled my bicycling addiction even further. Enough excuses, though, so here goes:

In the last installment, we had finished drilling our first exploration well, and it is currently an open-hole (sans casing) completion in preparation for our logging efforts. Logging is a key component to the exploration process. In it earliest form, logging consisted basically of measuring the electrical resistance in rock that was determined to have porosity during the drilling process. Rock is generally a poor conductor, but if the pore space is filled with a good conductor, such as saline water, it will conduct electricity. If the same rock had pore space filled with hydrocarbons, a poor conductor, it would not conduct electricity very well. So, the basic premise was that poorly conducting rock that was known to have porosity was likely filled with oil. Today, resistance is still a very important, perhaps the most important, logging tool in use. The resistance log is typically accompanied by a neutron density log (porosity), gamma ray log (a little abstract), and perhaps a sonic log (sound based rock density log). Rock density can be calibrated to give a good estimate of porosity. So these basic tools give a good estimate of porosity, presence of hydrocarbons, and interval thickness.

The process of running the logging tools is fairly straight forward. The tools are threaded together and typically run in the hole on via a "wireline truck." The wire is a braided strand of conducting wires that both suspend the tool and transmit the signal back to the surface for interpretation. The tool is lowered in and travels down the hole via gravity at a measured pace. The interval is typically logged down the hole and back up. The process is usually conducted rather quickly, around 150'-250' per minute, in an attempt to avoid getting the tools stuck in the hole as a result of things like shale sloughing into the open hole. After the logs are completed they are printed and interpreted by various engineers and geoscientists. We will assume that our logs revealed a promising oil bearing sandstone interval.

The next step in the process is to conduct well tests. This is a rather dangerous process that is not always conducted depending on how well the reservoir structure and properties are defined during the seismic survey. Flow testing a well is exactly as the name implies, flowing the well into tanks to estimate its production potential. The rate of decline and pressure witnessed during the flowback process can also be used to estimate a permeability of the reservoir as well as its volume. This process is very dangerous because the hydrocarbons, rather than being held in the reservoir by a column of heavy drilling mud are allowed to flow to the surface, which can lead to problems such as blowouts. Also, much permitting is required, as any gas brought to surface must be flared. During flaring the produced oil is sampled for laboratory analysis to determine properties such as API gravity, mol fractions of various hydrocarbon chains, viscosity, trace elements, etc. The rest of the oil is likely to be pumped back down the hole an back into the reservoir as there is probably no avenue to sell it (no pipelines, etc.). Also, regulations typically disallow oil from an exploration project to be sold. So, we will assume that our flow test was problem free and we have since shut the well in. The results of the test indicate that we have found a sizeable oil producing reservoir, and we have obtained permitting to continue with exploration and appraisal (the topic of my next installment).

Before we can move off of our first exploration well though, we must plug and abandon it per regulations. The plug and abandon process is in place to prevent the well from blowing out at the surface or even in the subsurface. Blowouts in the subsurface would consist of the high pressure oil producing interval blowing out into a shallower, low pressure fresh water aquifer. The plugging process typically consists of cementing off the producing zone and setting plugs to isolate any aquifers. The plugs also have cement spotted on top of and between them to ensure the wellbore is secure. This process is highly regulated and typically oversight is provided by government agencies. Finally, if the well is on shore, the casing is cut to at least flush with the ground surface, and the drill pad is reclaimed to eliminate any damage. This last step depends a lot on where the drilling takes place. On the north slope of Alaska, this process is extremely important.

So, we now have drilled a successful exploration well (something that actually happens perhaps 15% of the time), and have thus far spent on the order of $10-30+ million. In the next installment, we will drill appraisal wells in the same formation in an attempt to better delineate our reservoir and firm up our estimates of volume and recoverable volume.

[Bill Merchant]

Thank you once again for an excellent post. We use the benefits of oil every day, though most of us have little idea of what it takes to bring those benefits to us.

[tripp]

thanks again. these thing are great. Keep 'em coming!

[jayman]

Originally Posted by ewhanley

my wife and I are expecting a baby girl very soon

Congrats!

As a grumpy single guy, I wouldn't have the guts to deal with that

[tripp]

It can be the best of time or the worst. Depends on how you do in the infant temperament lottery. Either way, the first 6 months or so are the hardest, then it starts to get easier. You've got things sorted by then and the gremlin has developed to be point where you don't have to work quite as hard. Congrats and best of luck.

[jayman]

Originally Posted by tripp

It can be the best of time or the worst.

Um ... thanks. I think I'll stick with my cats. They both appeared to automatically housetrain themselves to use the litter boxes. They're just as affectionate as most dogs are, with that streak of independance like a real human