Oil 101: Introduction to Oil and Gas - Upstream
What is Upstream? This Midstream content is derived from our Oil 101 Upstream ebook and can be found in our oil and gas learning community.
This Upstream module includes the following sections (use the links below for quick access):
-Introduction to Upstream
-Upstream Business Characteristics
-Oilfield Services
-Reserves – Formation and Importance
-Production – The First Step in Adding Value
-The Unconventional Future of Upstream
Upstream
What is Upstream? Most oil and gas companies’ business structures are segmented and organized according to business segment, assets, or function.
The upstream segment of the business is also known as the exploration and production (E&P) sector because it encompasses activities related to searching for, recovering and producing crude oil and natural gas.
The upstream segment is all about wells: where to locate them; how deep and how far to drill them; and how to design, construct, operate and manage them to deliver the greatest possible return on investment with the lightest, safest and smallest operational footprint.
Exploration
The exploration sector involves obtaining a lease and permission to drill from the owners of onshore or offshore acreage thought to contain oil or gas, and conducting necessary geological and geophysical (G&G) surveys required to explore for (and hopefully find) economic accumulations of oil or gas.
Drilling
There is always uncertainty in the geological and geophysical survey results. The only way to be sure that a prospect is favorable is to drill an exploratory well. Drilling is physically creating the “borehole” in the ground that will eventually become an oil or gas well. This work is done by rig contractors and service companies in the Oilfield Services business sector.
Production
The production sector of the upstream segment maximizes recovery of petroleum from subsurface reservoirs.
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What Oil 101: Upstream Will Cover
This Oil 101: Upstream module includes the following sections:
Introduction to Upstream
Upstream Business Characteristics
Oilfield Services
Reserves – Formation and Importance
Production – The First Step in Adding Value
The Unconventional Future of Upstream
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Drilling
Drilling is physically creating the “borehole” in the ground
that will eventually become an oil or gas well.
This work is done by rig contractors and service companies
in the Oilfield Services business sector.
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Simple or Complex
Wells can be drilled on land or in miles of water. They can
be less than 100 feet (30 meters) deep and totally vertical,
or 20,000 feet (6,000 meters) deep and horizontal.
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Drilling
There are even highly complex “J” and “S” configurations
with numerous branches, or laterals, emanating from the
original, or “mother”, hole.
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Production - Decline Curve
The inevitable fact of every oil or gas field is that
production will eventually decline.
The question is how fast?
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Deepwater Drilling
Some of the largest oil and gas discoveries of the last
decade have been found in deep water off the coasts of
Africa and South America as well as the Gulf of Mexico.
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Independents are known for their ability to make decisions
and move quicker than other industry participants.
They are also considered early adopters of the more
innovative drilling and production technologies.
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Majors
Major Oil Companies (also called Integrated Oil Companies
– IOCs) also have assets in the downstream — the
refineries and service stations that bring the products to the
end-user customers.
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The Oilfield Services industry provides the following support:
Exploration services
Drilling services
Well completion
Production services
Offshore
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Oilfield Services
At a typical drilling well site, there could be 25-30 different
oilfield service companies handling the mechanical,
technical and analytic operations needed to successfully
complete a well.
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Oil Reserves
Proven reserves are the estimated quantities which
geological and engineering data demonstrate can be
recovered in future years from known reservoirs, assuming
existing economic, technical and operating conditions.
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Oil & Gas Reservoir Characteristics
Oil and gas are not found in easy-to-access underground
pools or puddles but, instead, are trapped in various rock
formations and geological structures.
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Oil & Gas Reservoir Characteristics
There are four key types of geological formations needed
to have oil and gas reserves in place
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Types of Crude Oil
There are hundreds of different grades of crude oil that
come out of the ground.
Most commonly, the crude will be described as light or
heavy and sweet or sour.
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