Upstream Oil & Gas Overview

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Upstream Oil & Gas Overview Steve Bedford C.Eng, FIMMM, Pet & Drill Div. Chairman Well Functional Manager North Sea Region BP Aberdeen, Scotland Dr Frank Gordon Kirkwood C.Eng, FIMMM, Eur.Ing Independent Oil Industry Advisor (BP Retiree) Belize City, Belize CA Iain Morgan Performance Analyst North Sea Drilling & Completions KELTEC / BP Aberdeen, Scotland April 2012

Contents What is Needed to Have An Oilfield? How Do We Find Oilfields? Seismic Types of Wells Well Drilling Types of Rigs Casing and Cementing Well Control Evaluation Oil in Place and Reserves Oil Field Development Economics Environment Employment

What is Needed to Have an Oilfield? Source Rock (to Create the Oil) Late-moving salt Structure and Seal (to Trap the Oil) SEAL TRAP RESERVOIR Good Reservoir Rock (to Allow us to Produce) MIGRATION Post migration trap SOURCE

Source Rock Preservation of Organic matter Needs Burial / Heat Oil 110 130 C 2.5 3.5km Gas >150 C >4 km Common Source Rocks Coal, limestone and shale 4

Types of Rocks What Are Rocks? A rock is defined as an aggregate of mineral grains, which means that rocks are a bunch of mineral grains all stuck together. The Three Rock Types: Igneous Sedimentary Metamorphic Igneous rock is any of various crystalline or glassy, noncrystalline rocks formed by the cooling and solidification of molten earth material (magma). Examples: Basalt, Granite and Pumice Sedimentary rock is a type of rock that is formed by sedimentation of material at the Earth's surface and within bodies of water. Examples: Sandstones, Limestone and Shale [main rock type for oilfields] Metamorphic rock is the result of the transformation of an existing rock type, when subjected to heat and pressure. Examples: Marble, Quartzite and Slate

Seal and Reservoir Seal (Cap Rock) Very Small Pores Strength Mud Stones / Evaporites Reservoir Porosity Permeability Sandstone or Limestone are Most Common 6

How Do We Find Oilfields? Oil Source Find Natural Seeps Study Other Wells Understand the Geology [Geological Time = millions of years] Seal Seismic Surveys Reservoir Drill a Well 7

Seismic Surveying Offshore Seismic Data Recorded [Shows rock structure Underground] 8

Seismic Surveys Transition Zone/Onshore Transition Zone Seismic [Between Offshore and Onshore very difficult] Onshore Seismic

Types of Wells Exploration - sometimes called a wildcat well, are drilled to probe the earth to determined whether oil or gas are present Appraisal - are drilled to determine the extent of a field or the amount of area it covers, once that field has been discovered Development wells/production - are drilled in a discovered and appraised field to exploit the hydrocarbons.

Parts of a Drilling Rig

Mud is important as it is used to: Control the well pressure Cool the drill bit Carry cuttings out of the hole The Mud System

Types of Rigs Offshore Mobile Rigs (1) Drilling Barge [10 30 ft water] Jack up Rig [30 200 ft water]

Types of Rigs Offshore Mobile Rigs (2) Semi submersible [200 5000 ft water] Drillship [1000 8000 ft water]

Types of Rigs Offshore Fixed Rigs Offshore Platform Rig

Types of Rigs Land rigs Truck Mounted Modular / Containerised Hydraulic Hoist

Hole Section Types and Casing Conductor: structural loads Surface Casing: isolation of surface formations, section typically drilled with diverter on platform Intermediate Casing: Isolation of pressure/problem zones above reservoir Production Casing: Will see production loads; completion will be run inside this string Completion: Run across reservoir, typically lower and upper sections to carry hydrocarbons to surface 17

Cementing 18

Well Control Pressure Ratings 5,000 psi 10,000 psi 15,000 psi Accumulator Bank Blow Out Preventer BOP stack 19

No Well Control Blow Out 10 th August 2004 - GSF Adriatic IV Jack-Up ENI Operated - Temsah Gas field, Mediterranean Sea, Egypt 20

Evaluation Mud Logging and LWD/MWD Coring Electric logging Drill Stem Testing (DST) 21

Oilfield Development First - Some Terms Oil in Place (million barrels) - How much oil is in the ground and where it is Recovery Factor (%) - How much of the oil in the ground we expect to recover Production Rate (Barrels per day) - How much oil we produce on any given day Reserves (million barrels) How much oil we expect to recover over fieldlife Field Development -Development wells -Production facilities -Pipelines -Oil Storage Terminals and Tanker Shipment

Different Types of Field Development Land Rig Fixed Platform Jack up Semi Submersible FPSO Tension Leg 23

Directional Drilling On Land: Surface constraint due to land owner, natural event, topography Horizontal Offshore: Save development cost Horizontal Extended Reach Multi Lateral 24

Completions Xmas Trees Onshore / Platform Tree Subsea Tree 25

Onshore Production 26

Offshore Production Floating Production Storage Offloading Vessel (FPSO) Floating Production Unit (FPU) Fixed Platform Production 27

Offshore Production Subsea Systems 28

Oilfield Production Profiles Offshore profile has a rapid build up as wells are often pre-drilled and a plateau of several years to optimise the usage of the facilities capacity Onshore profile has a slower build up As well are drilled and put on production immediately. It also has a higher peak and a shorter plateau period as onshore facilities cost less And are more flexible

Oilfield Economics Cashflow + Revenue Oil Sales Operating Costs Field Operating Costs Transportation Costs Capital Expenditure Government Take (Royalty and Taxes) = Cashflow

Oilfield Economics Government Take Different Tax Structures: Tax and Royalty Production Sharing Service Agreement Government Participation Extract from an Article Higher Prices Lower Government Take? By Daniel Johnston Adapted (and updated) from his column for the Petroleum Accounting and Financial Management Journal, Fall/Winter 2004, Vol. 23, No.3, pp. 98 104.

Oil Environmental Impact Seismic Surveys: Loud Noises / Explosions / Air guns: Potential Damage to Animals, Fish, Marine Mammals and Scuba Divers Exploration Well Drilling: Risk of Contamination of Acquifers Underground Risk of Loss of Well Control and Oil Spills Industrial Discharges to Land or Sea Drilling Mud and Cuttings Disposal Oil Development and Production: Dredging Pipelines Building Facilities Well Drilling (with Risks as Above) Long Term Industrial Discharges Pipeline Leaks Tanker Oil Spills

Oilfield Employment Impact Skilled Positions Petroleum Engineer Geologist Geophysicist Chemist Mudlogger Electric Logger Seismic Acquisition Specialist Surveyor Tool pusher Marine Superintedent Driller Derrickman Roustabout Consultant Accountant & Bookkeeper Land Agent Managers & Supervisors Computer Programmer & Technician HSE Engineer Electrical, Instrumentation and Mechanical Engineer Project Engineer Pipeline Fabricator / Welder Semi Skilled Positions Roughneck Crane Operator Wireline Operator Well Test Operator Production Operator Driver Seismic Operator Welder Draftspeople Logistics Coordinator Catering and housekeeping staff Storeman and Materials Coordinator Medics / nurses Firecrew and Emergency Response Personnel Security Guards

Thank You for Listening Any Questions?