To comprehend a catastrophic oil well blowout, we first need basic understanding of how petroleum collects in underground reservoirs and how exploration for those reservoirs works. For starters; oil, natural gas, and water collect in underground layers when their path to shallower layers is blocked by an impenetrable zone. Instead of collecting in “lakes” or “rivers” of oil, however, hydrocarbons accumulate in tiny pores within huge volumes of rock.
Being buried under miles of solid rock means that hydrocarbon reservoirs are under enormous pressure. The pressure increases, on average, by a factor of 0.433 psi/foot or 9.792 kPa/meter. This regular pressure gradient means that pressure at the bottom of a ten-thousand-foot well is more than 4300 pounds per square inch; compared to a pressure of about 30-35 psi for a car tire. Since liquids cannot be compressed, deeply-buried reservoir fluids seek any possible pressure relief.
Drilling a hole ten or fifteen inches in diameter from the surface to a deep reservoir provides just such relief. To keep oil and water from spurting out of a wellbore, drillers fill the hole with fluid of their own. Called “mud” or “drilling mud,” this fluid is carefully designed to carry out several different functions, one of which is to match the pressure in the underground layers and prevent the crude oil from rushing to the surface. Maintaining balance is relatively simple in areas of normal pressure, where pressure at depth can be predicted from the standard pressure gradient (above).
There are, however, subsurface layers in which the pressure is much higher than that predicted by the pressure gradient. Unexpected penetration of such an overpressured zone can result in a blowout, as can improper drilling practices or poor well design.
When a blowout occurs liquids in the reservoir stream into the wellbore, forcing tons of drilling mud and thousands of feet of steel pipe from the mouth of the well at the surface. The rising column of oil, water, and natural gas are under such vast pressure that they can reach supersonic speeds; more than 1100 feet per second. Crude oil and natural gas are both flammable, and are often ignited by the heat of friction in the moving column or by sparks as metal and chunks of rock smash against one another. In the early days of exploration, drill rigs often “burned to the ground” after a blowout; though such gushers were looked on favorably before scientists understood the environmental havoc wreaked by such a disaster.
A blowout is both an environmental and an economic disaster, for not only are large quantities of a valuable resource wasted, the infrastructure at the surface is destroyed. In the April, 2010, blowout in the Gulf of Mexico, the semi-submersible drillship Deepwater Horizon burned and sank at a cost of $600 million and eleven lives. Five thousand barrels of oil per day, valued at some $400,000, poured out of the breached drill pipe. Because of such costs, exploration companies take expensive measures to prevent blowouts.
The first line of defense against blowouts is the drilling mud, described above. Before drilling into potential overpressured zones, mud engineers “mud up” to increase the density of the fluid in the well. The second line of defense is casing, heavy-weight large-diameter pipe that is cemented in place to line the hole and isolate zones of different pressure. The final line of defense is a massive mechanical device called a blowout preventer or BOP.
Blowout preventers come in several designs depending on the manufacturer (leading makers include FMC, Hydrill, and Cameron). A BOP is placed at the ground surface or, for offshore work, at the seafloor; between the drill rig and the well head. BOPs are designed to trigger automatically upon detection of rapid uphole flow, or trigger remotely on command. Blowout preventers come in two types: the first is basically a giant rubber doughnut that can be activated to seal off the annulus – the space between the drill pipe and the casing. The second type consists of massive hydraulic rams that force hardened, edged surfaces inward to cut the drill string and seal the well with a thick metal wedge.
The worst-case scenario of a blowout is one in which reservoir fluids breach the cement holding the casing in place and reach the surface around the outside of the pipe – in this instance, even BOPs are of no use. There has been speculation that this is what happened at British Petroleum’s Macondo well off the Mississippi Delta (April, 2010).
If the BOPs fail and a blowout occurs, options for recovery of the well are few. One option is to collapse the wellhead with shaped charges (compare to John Wayne’s portrayal of Red Adair in the movie “Hellfighters”). A more likely scenario is to drill a relief well that intersects the blown well – a technological challenge, to be certain, but doable. The relief well is used to dump high density “kill fluids” – super-weight drilling mud – into the wellbore of the flowing well and, eventually, bring it under control. Drilling a relief well takes weeks or months, while the blowout continues to spew crude oil, and can cost tens of millions of dollars.
In spite of all the technology and wellfield expertise, blowouts still occur. The April 2010 is one of the largest ever, a list that includes the Pemex IXTOC I blowout, which poured 10,000 barrels of oil per day into the Gulf of Mexico in 1979-80; and the 1969 blowout of a Unocal well in the Santa Barbara Channel off southern California. The environmental damage caused by the Unocal blowout is responsible for California’s strict regulation of offshore drilling.
Glossary: http://www.glossary.oilfield.slb.com/search.cfm
more information: http://www.chron.com/disp/story.mpl/business/deepwaterhorizon/6973912.html
Showing posts with label exploration. Show all posts
Showing posts with label exploration. Show all posts
Sunday, May 2, 2010
Friday, September 18, 2009
The Economics of The Oil Industry
Basics of the Petroleum Industry IV: It costs a lot to produce oil
OK, so far, we’ve talked about how oil forms, how it accumulates in fields, and how scientists look for new oil fields. Everything we’ve looked at so far has been about science or technology, and how the nerdy guys and gals who work for oil companies use their high-tech toys to help find new fields. At one time, oil companies were the world’s leading users of technology; and they’re still close to the top. We’re talking about more than numbers of computers and amounts of memory and data storage; we’re also talking about software. One high-end software program widely used by large oil companies has a list price of a quarter of a million dollars – for every one-seat license – and the big multinationals have paid for hundreds of licenses and training so their staff can run these highly complex programs. And computers, software, and training are just a tiny part of the cost of finding new oil…
This time, let’s take a look at the economics of the petroleum industry. That gallon of gasoline you burned on your way to work this morning has had a long journey. Let’s ignore for now the minor miracle that had to happen for oil to accumulate in the first place and concentrate on what it costs along the way to get that stuff out of the ground and into your gas tank.
Step 1: Finding the oil
The business calls this “finding costs,” the expense of searching for oil fields. It might seem simpler to just take a drill and go out and stick a new hole in the ground every couple of miles, but the cost of doing that would be astronomical – not to mention that you might miss the good stuff (and you’d never be certain that you hadn’t stopped drilling a foot or two too soon). So companies work hard to reduce risk so they only have to drill one – or maybe two or three – exploration wells to find out if a prospective site has oil or not. To do this, highly-trained geoscientists make educated guesses about the area using data from nearby wells; and they also use seismic surveys. Now we’re talking about money: a seismic survey of an area will cost hundreds of thousands to several million dollars depending on the size of the survey and the difficulty of getting the data. Those billions of digital records must be processed and reprocessed with highly technical software, and then they’re loaded into high-end computers running expensive software. All that to just look for a prospective location…
We’ll skip the details and cut to the chase: an oil company has determined that there is a sufficient probability of a sufficient amount of oil that they’re willing to take the risk and drill. Before they can do that, however, they have to get permission to drill in the form of a lease. Companies pay for the right to lease land, either from individuals or governments, and also promise to pay part of the profits from any oil that’s produced from that property. Those payments are called royalties, and range from 10% of the sale price of oil up to more than half the proceeds in some foreign countries. The company must also pay to prepare the site if it’s on land, and usually pay for a permit to drill. The up-front investment to drill a well – including salaries for the exploration department – can be, shall we say, “substantial.” Exploration budgets for large companies are typically on the order of hundreds of millions to billions of dollars. Companies spend millions of dollars just picking a place to drill – and then the real money comes into play. Drilling a shallow well on land, perhaps 2500 feet deep, costs on the order of $75-100,000. Offshore exploration costs are far higher, and increase rapidly as the well gets deeper. A recent discovery in 4000 feet of water in the Gulf of Mexico is estimated to have cost a quarter of a billion dollars to drill!
Obviously, if oil sells for $50 per barrel and it costs $55 per barrel just to find it, the company is not going to make any money – that’s one reason why company projections of changing oil prices have to be taken into account just like company guesses at the size of the oilfield.
Step 2: Producing the oil
Let’s say you drilled yourself a gusher. Whoopee! But except for what returned to the surface from that one well, everything else is still deep underground. The physics of fluids like oil and water just don’t allow you to pump all the oil out of one hole, so you need to drill more wells to produce what’s down there. If you’re on land, you could just drive the drill rig to another spot and poke another hole, but if you’re in water, you will have to build an offshore platform and drill several wells to out at an angle. Each of those wells also costs a bundle, and the offshore platform could easily cost hundreds of millions of dollars. That’s all before you pump a single drop of oil into a tanker. If you’re on land, you still need to move the oil from all the individual wells (sometimes hundreds or even thousands of them) to central collection points so that the oil can be piped or trucked to market. There is a lot of money tied up in all the infrastructure, maintaining it, and the personnel needed to keep it operating. That’s a big part of “producing” or “lifting costs.”
But wait, there’s more: there’s also water produced along with the oil, more and more of it as the field ages. The water has to be separated from the oil and disposed of – usually by pumping it back into the reservoir, since it can’t just be poured out on the ground or dumped in a river because it’s salty. More expense…
Remember that we learned some time ago that oil doesn’t collect in underground streams and lakes, but is stored in the tiny pore spaces between grains of rock? That has an important side effect: most of the oil would rather stay clinging to its grains of sand than flow to a well. Companies use all sort of tricks to break that hold: pumping in lots of water, pumping in natural gas, even pumping in carbon dioxide in an effort to”re-energize” the oil and get it moving. Guess what: more expense! and there’s one truth that every oil company scientist and engineer knows: you can never get all the oil out of a field – you’re lucky when you can get half of it.
Step 3: Moving the oil to market
Though it’s not as expensive as finding or producing the oil, getting it to market also has its associated costs. You can’t drive a couple of tank trucks up to a field that produced hundreds of thousands of barrels of oil per day; that would eat up all your profits. So when a company finds a new field, transportation costs are another factor. Building a pipeline big enough to transport that volume of product costs hundreds of thousands of dollars for every mile of pipe. If you can’t get the oil to a refinery or a terminal to sell it, then producing it does you no good!
The bottom line:
Every drop of oil that a company like Shell or Conoco-Phillips sells has all of those costs, and more, associated with it. Just finding oil can cost a bundle, and that’s only the beginning: getting it out of the ground costs even more, and a company is still not done paying to produce oil until it finally reaches a buyer. It is possible – in fact happens frequently – to strike oil but determine that there isn’t enough in the reservoir or it’s not of good enough quality to pay for pumping it out of the ground. When this happens, the find is called “uneconomic.” Obviously, if prices increase faster than producing costs and transportation costs, a find can become economic sometime later.
A company will not drill a well unless they believe that there is enough oil at the site to pay back every one of the costs and have some left over for profit – without profit, they can’t drill the next well. This explains the so-called “obscene profits” that oil companies rake in when the price of oil hits $140 per barrel. Their experts forecast that they would make a reasonable profit at a price of $50 or $70 per barrel, and when the market started paying more, the extra dollars become pure profit. This is no different from a farmer who plants soybeans expecting to make $7 per bushel; except that if he gets $10 instead, no one talks about his “obscene profits.” Oil companies and farmers have the same downside as every commodity producer, because they don’t control the prices – their buyers do. So if our hypothetical farmer got paid $6 per bushel instead of the $7 he was expecting, he has a bad year, and the same with oil companies: if they’ve forecast $50 oil and the price drops to $35 (as it did in December, 2008) then they’re losing money.
So there you have it. That gallon of gasoline you bought today did not simply run out of the ground into a handy gas pump, it’s had a arduous journey from the reservoir to the pump – a journey that had costs at every step along the way.
This is the fourth of a series of minilectures on the petroleum industry from the ground up
1) Where Does Oil Come From?
2) Where Do Oil Companies Find Oil?
3) How Do Oil Companies Find Oil?
4) The Economics of Petroleum Exploration and Production <== You are here. Future installments include:
5) Refining
6) The Economics of Big Oil
7) The Future of Oil
OK, so far, we’ve talked about how oil forms, how it accumulates in fields, and how scientists look for new oil fields. Everything we’ve looked at so far has been about science or technology, and how the nerdy guys and gals who work for oil companies use their high-tech toys to help find new fields. At one time, oil companies were the world’s leading users of technology; and they’re still close to the top. We’re talking about more than numbers of computers and amounts of memory and data storage; we’re also talking about software. One high-end software program widely used by large oil companies has a list price of a quarter of a million dollars – for every one-seat license – and the big multinationals have paid for hundreds of licenses and training so their staff can run these highly complex programs. And computers, software, and training are just a tiny part of the cost of finding new oil…
This time, let’s take a look at the economics of the petroleum industry. That gallon of gasoline you burned on your way to work this morning has had a long journey. Let’s ignore for now the minor miracle that had to happen for oil to accumulate in the first place and concentrate on what it costs along the way to get that stuff out of the ground and into your gas tank.
Step 1: Finding the oil
The business calls this “finding costs,” the expense of searching for oil fields. It might seem simpler to just take a drill and go out and stick a new hole in the ground every couple of miles, but the cost of doing that would be astronomical – not to mention that you might miss the good stuff (and you’d never be certain that you hadn’t stopped drilling a foot or two too soon). So companies work hard to reduce risk so they only have to drill one – or maybe two or three – exploration wells to find out if a prospective site has oil or not. To do this, highly-trained geoscientists make educated guesses about the area using data from nearby wells; and they also use seismic surveys. Now we’re talking about money: a seismic survey of an area will cost hundreds of thousands to several million dollars depending on the size of the survey and the difficulty of getting the data. Those billions of digital records must be processed and reprocessed with highly technical software, and then they’re loaded into high-end computers running expensive software. All that to just look for a prospective location…
We’ll skip the details and cut to the chase: an oil company has determined that there is a sufficient probability of a sufficient amount of oil that they’re willing to take the risk and drill. Before they can do that, however, they have to get permission to drill in the form of a lease. Companies pay for the right to lease land, either from individuals or governments, and also promise to pay part of the profits from any oil that’s produced from that property. Those payments are called royalties, and range from 10% of the sale price of oil up to more than half the proceeds in some foreign countries. The company must also pay to prepare the site if it’s on land, and usually pay for a permit to drill. The up-front investment to drill a well – including salaries for the exploration department – can be, shall we say, “substantial.” Exploration budgets for large companies are typically on the order of hundreds of millions to billions of dollars. Companies spend millions of dollars just picking a place to drill – and then the real money comes into play. Drilling a shallow well on land, perhaps 2500 feet deep, costs on the order of $75-100,000. Offshore exploration costs are far higher, and increase rapidly as the well gets deeper. A recent discovery in 4000 feet of water in the Gulf of Mexico is estimated to have cost a quarter of a billion dollars to drill!
Obviously, if oil sells for $50 per barrel and it costs $55 per barrel just to find it, the company is not going to make any money – that’s one reason why company projections of changing oil prices have to be taken into account just like company guesses at the size of the oilfield.
Step 2: Producing the oil
Let’s say you drilled yourself a gusher. Whoopee! But except for what returned to the surface from that one well, everything else is still deep underground. The physics of fluids like oil and water just don’t allow you to pump all the oil out of one hole, so you need to drill more wells to produce what’s down there. If you’re on land, you could just drive the drill rig to another spot and poke another hole, but if you’re in water, you will have to build an offshore platform and drill several wells to out at an angle. Each of those wells also costs a bundle, and the offshore platform could easily cost hundreds of millions of dollars. That’s all before you pump a single drop of oil into a tanker. If you’re on land, you still need to move the oil from all the individual wells (sometimes hundreds or even thousands of them) to central collection points so that the oil can be piped or trucked to market. There is a lot of money tied up in all the infrastructure, maintaining it, and the personnel needed to keep it operating. That’s a big part of “producing” or “lifting costs.”
But wait, there’s more: there’s also water produced along with the oil, more and more of it as the field ages. The water has to be separated from the oil and disposed of – usually by pumping it back into the reservoir, since it can’t just be poured out on the ground or dumped in a river because it’s salty. More expense…
Remember that we learned some time ago that oil doesn’t collect in underground streams and lakes, but is stored in the tiny pore spaces between grains of rock? That has an important side effect: most of the oil would rather stay clinging to its grains of sand than flow to a well. Companies use all sort of tricks to break that hold: pumping in lots of water, pumping in natural gas, even pumping in carbon dioxide in an effort to”re-energize” the oil and get it moving. Guess what: more expense! and there’s one truth that every oil company scientist and engineer knows: you can never get all the oil out of a field – you’re lucky when you can get half of it.
Step 3: Moving the oil to market
Though it’s not as expensive as finding or producing the oil, getting it to market also has its associated costs. You can’t drive a couple of tank trucks up to a field that produced hundreds of thousands of barrels of oil per day; that would eat up all your profits. So when a company finds a new field, transportation costs are another factor. Building a pipeline big enough to transport that volume of product costs hundreds of thousands of dollars for every mile of pipe. If you can’t get the oil to a refinery or a terminal to sell it, then producing it does you no good!
The bottom line:
Every drop of oil that a company like Shell or Conoco-Phillips sells has all of those costs, and more, associated with it. Just finding oil can cost a bundle, and that’s only the beginning: getting it out of the ground costs even more, and a company is still not done paying to produce oil until it finally reaches a buyer. It is possible – in fact happens frequently – to strike oil but determine that there isn’t enough in the reservoir or it’s not of good enough quality to pay for pumping it out of the ground. When this happens, the find is called “uneconomic.” Obviously, if prices increase faster than producing costs and transportation costs, a find can become economic sometime later.
A company will not drill a well unless they believe that there is enough oil at the site to pay back every one of the costs and have some left over for profit – without profit, they can’t drill the next well. This explains the so-called “obscene profits” that oil companies rake in when the price of oil hits $140 per barrel. Their experts forecast that they would make a reasonable profit at a price of $50 or $70 per barrel, and when the market started paying more, the extra dollars become pure profit. This is no different from a farmer who plants soybeans expecting to make $7 per bushel; except that if he gets $10 instead, no one talks about his “obscene profits.” Oil companies and farmers have the same downside as every commodity producer, because they don’t control the prices – their buyers do. So if our hypothetical farmer got paid $6 per bushel instead of the $7 he was expecting, he has a bad year, and the same with oil companies: if they’ve forecast $50 oil and the price drops to $35 (as it did in December, 2008) then they’re losing money.
So there you have it. That gallon of gasoline you bought today did not simply run out of the ground into a handy gas pump, it’s had a arduous journey from the reservoir to the pump – a journey that had costs at every step along the way.
This is the fourth of a series of minilectures on the petroleum industry from the ground up
1) Where Does Oil Come From?
2) Where Do Oil Companies Find Oil?
3) How Do Oil Companies Find Oil?
4) The Economics of Petroleum Exploration and Production <== You are here. Future installments include:
5) Refining
6) The Economics of Big Oil
7) The Future of Oil
Thursday, September 10, 2009
How Do Oil Companies Find Oil? Basic Petroleum Geology, Part III
The Hunt for Hydrocarbons
Last time, we learned that four things are necessary to create and capture oil. Those four are, an organic carbon-rich source that gets “cooked” deep underground; a reservoir rock layer with bazillions of tiny empty spaces to hold liquid petroleum and water; a shape to the underground rocks that will trap the fluids in a confined space; and non-reservoir (impermeable) rocks to seal the hydrocarbons inside the trap. Now that we know which puzzle pieces have to join to create an oil field, to find oil we have to look for places where all four pieces are present.
Scientists who work for oil companies will tell you, “There is no direct hydrocarbon indicator.” That’s a fancy way of saying that there is nothing we can see or measure that lets us just point to a spot and say, “Drill here!” and know that we’ll strike oil. Instead, we have to study blurry images of the rocks deep beneath the surface and use training and experience to interpret them. That’s how we hunt for places where source, reservoir, trap, and seal all come together in the right relationships.
The first people to use oil found puddles where it had leaked out on the ground’s surface, like at La Brea Tar Pits in California, USA. Oil found at the surface, however, is usually gummy and thick because it’s been exposed to air and water; so early use was often as salves and medicines (not a good idea, really, since petroleum is an organic poison). Not only that, but the amount available in these leaks, or "seeps," is small. Early entrepreneurs dug wells by hand near seeps looking for larger deposits and, when they were successful, also noticed that the oil was higher quality – it was lighter and thinner, and could be burned in a lamp, for instance. The first successful drilled oil well in North America, the Drake #1 in Pennsylvania, was located near a surface seep. The presence of a seep is the closest thing there is to a direct hydrocarbon indicator, but we still have to figure out which direction to go if we want to find the good stuff!
As we entered the age of oil, demand grew faster than wells drilled or dug near a few surface seeps could supply it. Short supply means higher prices, and this bigger payback for the work ushered in an era of surface mapping to hunt for oil. By studying the shapes and order of rocks exposed at the surface, early oil-company geologists (scientists who study the earth) could identify possible traps in the crumpled layers around basin edges. Drilling holes in geological structures – bent or broken sedimentary rocks - caused a boom in oil exploration in the early twentieth century. This method also introduced the oil-seekers to risk: even though a trap is visible, that doesn’t mean that the other three pieces of the puzzle are present. If there’s no reservoir rock, there can be no oil accumulation. If there’s no source, there is nothing to put in a reservoir. And if there is no seal, anything that does enter a trap simply leaks out. Early “wildcatters,” as oil-drillers were called, either learned how to identify which structures had the best chance of all four components being present, or they went broke drilling “dry holes.”
Just before World War II, there was second forward leap in exploration. Research scientists devised a way to bounce sound waves off underground layers, and record the waves that return to the surface. By carefully measuring the time it takes for that sound to return, scientists can create a sort of “sound image” similar to the layering of the rocks underground. This method, called seismic exploration, created a new field for scientists who called themselves geophysicists. The new tool came along just in time: geologists doing surface mapping had found most of the fields visible on the ground. With seismic tools, the two groups of scientists – geologists and geophysicists – could work as a team to identify traps that aren’t visible from the surface.
Today, geologists and geophysicists work together exploring for oil fields using powerful computers and special software. Exploration geologists and geophysicists are like detectives: they spend their days following subtle clues, putting together complex puzzles for which there are never enough pieces – and when they’re done, the ultimate test of their puzzle-solving skill is an exploration well. As a famous geologist said more than fifty years ago, “All the easy oil has been found.” These days, the hunt for oil involves months and years of painstaking work by highly-trained professionals using state-of-the-art technology. Even with all that power brought to bear on the problem, only about one of every eight exploration wells drilled finds enough oil to pay the cost of the well.
And here you thought all they had to do was stick a pipe in the ground…
This is the third of a series of minilectures on the petroleum industry from the ground up
1) Where Does Oil Come From?
2) Where Do Oil Companies Find Oil?
3) How Do Oil Companies Find Oil? <== You are here. Future installments include:
4) The Economics of Petroleum Exploration and Production
5) Refining
6) The Economics of Big Oil
7) The Future of Oil
Scientists who work for oil companies will tell you, “There is no direct hydrocarbon indicator.” That’s a fancy way of saying that there is nothing we can see or measure that lets us just point to a spot and say, “Drill here!” and know that we’ll strike oil. Instead, we have to study blurry images of the rocks deep beneath the surface and use training and experience to interpret them. That’s how we hunt for places where source, reservoir, trap, and seal all come together in the right relationships.
The first people to use oil found puddles where it had leaked out on the ground’s surface, like at La Brea Tar Pits in California, USA. Oil found at the surface, however, is usually gummy and thick because it’s been exposed to air and water; so early use was often as salves and medicines (not a good idea, really, since petroleum is an organic poison). Not only that, but the amount available in these leaks, or "seeps," is small. Early entrepreneurs dug wells by hand near seeps looking for larger deposits and, when they were successful, also noticed that the oil was higher quality – it was lighter and thinner, and could be burned in a lamp, for instance. The first successful drilled oil well in North America, the Drake #1 in Pennsylvania, was located near a surface seep. The presence of a seep is the closest thing there is to a direct hydrocarbon indicator, but we still have to figure out which direction to go if we want to find the good stuff!
As we entered the age of oil, demand grew faster than wells drilled or dug near a few surface seeps could supply it. Short supply means higher prices, and this bigger payback for the work ushered in an era of surface mapping to hunt for oil. By studying the shapes and order of rocks exposed at the surface, early oil-company geologists (scientists who study the earth) could identify possible traps in the crumpled layers around basin edges. Drilling holes in geological structures – bent or broken sedimentary rocks - caused a boom in oil exploration in the early twentieth century. This method also introduced the oil-seekers to risk: even though a trap is visible, that doesn’t mean that the other three pieces of the puzzle are present. If there’s no reservoir rock, there can be no oil accumulation. If there’s no source, there is nothing to put in a reservoir. And if there is no seal, anything that does enter a trap simply leaks out. Early “wildcatters,” as oil-drillers were called, either learned how to identify which structures had the best chance of all four components being present, or they went broke drilling “dry holes.”
| Where there’s money to be made, technology soon comes along to make it easier (or not as hard) to earn it. This has happened in the “oil patch” many times. The first big leap in exploration came soon after World War I began, when French scientists developed a way to record the order and thickness of rock layers encountered in a well, and well logging was born. Well log measurements were soon invented that helped scientists figure out which deeply buried rocks are sources, reservoirs, or seals. Almost a century later, well logs are still used to help geologists understand the rocks in the subsurface, though the sorts of information collected today are much more complex than the first logs. |
Just before World War II, there was second forward leap in exploration. Research scientists devised a way to bounce sound waves off underground layers, and record the waves that return to the surface. By carefully measuring the time it takes for that sound to return, scientists can create a sort of “sound image” similar to the layering of the rocks underground. This method, called seismic exploration, created a new field for scientists who called themselves geophysicists. The new tool came along just in time: geologists doing surface mapping had found most of the fields visible on the ground. With seismic tools, the two groups of scientists – geologists and geophysicists – could work as a team to identify traps that aren’t visible from the surface.
Today, geologists and geophysicists work together exploring for oil fields using powerful computers and special software. Exploration geologists and geophysicists are like detectives: they spend their days following subtle clues, putting together complex puzzles for which there are never enough pieces – and when they’re done, the ultimate test of their puzzle-solving skill is an exploration well. As a famous geologist said more than fifty years ago, “All the easy oil has been found.” These days, the hunt for oil involves months and years of painstaking work by highly-trained professionals using state-of-the-art technology. Even with all that power brought to bear on the problem, only about one of every eight exploration wells drilled finds enough oil to pay the cost of the well.
And here you thought all they had to do was stick a pipe in the ground…
This is the third of a series of minilectures on the petroleum industry from the ground up
1) Where Does Oil Come From?
2) Where Do Oil Companies Find Oil?
3) How Do Oil Companies Find Oil? <== You are here. Future installments include:
4) The Economics of Petroleum Exploration and Production
5) Refining
6) The Economics of Big Oil
7) The Future of Oil
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