oil & gas production

1. IN THE NAME OF GOD

2. Oíl & gas production
chapter 9
Presented by:
Mehrnoosh Salehzadeh

4. Introduction
• After ending development phase, the well is placed on production by
installing surface equipment that will :
• (1) collect and gather the produced emulsion of natural gas, oil, and
water from the well;
• (2)separate the gas, oil, and water;
• (3) treat the gas and oil as necessary to minimize any remaining
impurities and bring the gas and oil to a marketable condition;
• (4) store the oil briefly prior to sale;
• (5) measure the volumes produced and sold;

5. Production costs (Lifting costs)
• Labor costs (direct or indirect)
• Repair & maintenance (ordinary or extra-ordinary)
• Material & supplies (inventory)
• Overhead costs (calculations based on contracts)

6. Production process

7. Well head
(Christmas tree)

8. separator

9. storage

10. transformation
Onshore
offshore

11. Allocation of production costs
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No. of direct labor hours
Amount of direct labor costs
No. of wells
No. of miles driven
Barrels of water injected
No. of drilling days
..
..

14. Crude oil production
• The volume of crude oil produced & sold is measured in
barrels and the quality of that is based on its gravity.

15. Standards for measuring oil
• The worldwide standard for a barrel is 42 US. Gallons of
liquid measured at 60 F.
• API gravity: a measure of the density of oil based on
its specific gravity.
• API gravity = (141.5 / specific gravity) - 31.5
API
Lighter crude oil
price

16. Some points
• BS&W
*(Basic Sediment & Water)
• Price:
* geographic area
* the amount of sulfur (sweet,intermediate,sour)
* date of sale
* API gravity

17. Dispositions
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Outright sale
Direct supply
Indirect supply
Exchanges
Frac oil
Oil used in operations
Un-merchandisable oil

18. Allocating oil
• Oil allocating is typically based on well tests.
• Theoretical production:
* the amount of oil that was produced from a
well based on the tests results & the number of
days that the well actually produced during the
month.

21. allocating oil (part2)
• If there is an inventory in the tank from the beginning of
the period, tow methods can be used:
* FIFO
(example page 239)
* available for sale (example page 241)

26. Quality of oil
• Factors such as the gravity of the oil can materially affect
the value or selling price of the oil.
• For this purpose, tow methods can be used:
(example page 243)
* value-on-value method (example page 244)
* gravity barrel method

29. Natural gas
• Associated gas: natural gas that comes from oil wells ;
* free gas: The gas can exist separate from oil
*dissolved gas: The gas can be dissolved in the crude oil
• Non-associated gas: the natural gas that comes from gas
wells in which there is little or no crude oil

30. Types of gas
• The natural gas is characterized in several ways
dependent on its components:
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Wet gas
Dry gas
Sour gas
Acid gas
..
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31. Gas products
• Raw gas is processed into various products
such as:
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Natural gas
Natural gas liquids (NGL)
Liquefied petroleum gas (LPG)
Liquefied natural gas (LNG)
Compressed natural gas (CNG)
..
..

32. Gas production
• Gas is generally sold in a different market than oil.
• Gas sales are typically of tow types:
* long term contract sales (producer & pipeline company)
*short term sales:
* spot market sales
* direct sales

33. Gas measurement
• Many physical factors affect gas volume measurement
such as temperature, pressure, compressibility, gravity,
etc..
• When measuring gas in Mcf, the standard for pressure is
often 14.73 pounds per square inch (psi) at 60 F.
• When gas is measured on an energy content basis such
as Btu, its not affected by pressure or temperature.

34. Conversion methods
MMBtu:
Mcf * MMBtu/Mcf = MMBtu
MMBtu * sales price per MMBtu = total sales value
Or
Mcf :
Btu factor per Mcf * price/MMBtu = price/Mcf
Mcf * price/Mcf = total sales value

36. Orifice meter

37. Turbine meters

38. Allocating gas
• The most commonly used methods for gas allocation involves
the use of metering & well tests.
• When joint production of oil & gas occurs gas allocation may
involve the use of gas-oil ratios (GORs).
• Metered gas allocations (example page 250)
• Allocation based on well tests (example page 251)
• Allocation based on dry gas production (example page 252)
• Allocating flash gas (example page 254)
• Allocating based on GOR (example page 255)

46. performance measurement
&
evaluation
• The most popular ratios for companies to evaluate the
efficiency of their operating & producing operations are as
follows:
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Lifting costs per BOE= total annual lifting costs / annual production in BOE
DD&A per BOE= total annual DD&A / annual production in BOE
Average daily production= annual production /365(days)
Average daily production per well= (annual production /365) / net wells
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Average production per employee= annual production / NO. of full time employees

52. Thank
you!