EXPLORATION AND

PRODUCTION
 THE OIL BUSINESS -who’s who

•National Governments
•National Oil Companies
•International Oil
Companies
•OPEC
•Others e.g. HSE,
Environmentalists
National Oil Companies (NOCs)

•Now form the top 10 Biggest Oil

Companies

•They want control over their reserves

•Want share in economic rent-tax

•Technology transfer

•Have political objectives

•Economic Objectives

•Health, Safety and Environmental

concerns
• International Oil Companies(IOCs)

Super Majors are the Fully integrated oil and gas companies, e.g. BP, Shell,
ExxonMobil, Chevron, Total
•Independent Oil companies, small to medium size-non integrated.

• They could be;

•Investors
-mostly oil companies and financial institutions such as Blackstone and JP
Morgan,

•Operators
-usually small oil companies, e.g. Tullow Oil, Kosmos Energy etc

•Service providers
-service companies, contractors, vendors, big service companies such
Schlumburger, Halliburton etc
• The Oil Business -Who’s Who
Operators:

• Manage fields on behalf of

Partnership or Consortium

• –Objectives
Usually leads a partnership
main aim is to share risk
commonly 5-10 partners
now more typically 2-5 partners
•The Oil Business -Service Companies
Service Companies are Highly Specialised and are low risk takers.
•Objectives:
•They Supply
–equipment
–specialist labour
–specialist skills

•They work under the direction of the Operator.

Eg. EXPRO, WEATHEFORD, BAKER HUGHES, SCHLUMBERGER,
HALLIBURTON
 The Oil Business -Who’s Who
Contractors
• •Engaged by Operators to
construct and operate
platforms

• •Provides technical
assistance in oil production
AMEC

MODEC
 Vendors
•Highly Specialised Manufacturers
•Low risk takers
•Supply
–specialist engineering
–specialist equipment manufacture
–specialist maintenance skills
•Work under the direction of the Operator
Vendors make equipment
• The Oil Business – Who are the Regulators
Control the industry on behalf of the Government
• Ministry of Energy
• Ghana National Petroleum Corporation(GNPC)
• National Petroleum Authority
• Energy Commission
• Ghana Maritime Authority
• Petroleum Commission
•Health Safety and Environmental function
• Environmental Protection Authority (EPA)
 LEGISLATIVE ENVIRONMENT
•Ghana National Constitution confers the rights
of all petroleum resources found within its
jurisdiction to the state.
•Ghana National Petroleum Corporation Act,
1983 (PNDCL. 64)
•The Petroleum (Exploration and Production)
(PNDCL. 84),Act 1984; Act 919 (2016)
Petroleum Revenue Management Act 2010, Act
815
•Petroleum Commission Act 2011, Act 821
Field Development Lifecycle
•Gaining access to oil block
•Exploration phase
•Appraisal phase
•Development phase
•Production phase
•Decommissioning phase
Fiscal Systems to choose
•Many types of upstream fiscal arrangements
exist in many different oil-producing countries.
•No one type of fiscal regime is better than the
other.
•Type of fiscal regime depends on the
objective(s) to be derived by the resource
owner; eg. To attract technology, local content
maximization, knowledge transfer, investment
to develop/exploit asset, etc
Oil & Gas Taxation
Oil & gas taxation is a very important part of today’s
industry with government-take invariably representing
the single largest portion of an oil & gas project’s cash
flows.
There are two main systems – Tax & Royalty or
Production Sharing arrangements.
While no two countries are likely to have identical fiscal
legislation, as a general rule there are just two major
fiscal arrangements used in the taxation of oil and gas
producing activities;
•Tax & Royalty Concessions
Concessions or tax & royalty regimes describe a
system where the oil industry is granted the
rights to prospect for resource within a defined
onshore or offshore acreage.
The concession holder takes ownership of all
minerals found on that acreage, but pays a
percentage of their value upon extraction to the
government together with a modest annual fee
to retain the acreage.
•The royalty is the right to receive a
certain portion of the production of
property, without sharing in the costs
incurred in producing the oil, such as
drilling, completion, equipping and
operating or production costs.
•The costs are borne by the holder of the
right to drill and extract the mineral,
which right is usually referred to as the
working interest.
•Production Sharing Contracts (PSCs)
• Under a concession system the concession holder has
the economic right to all of the oil produced within
the concession but is liable to pay tax and royalty on
the proceeds.
• In a production sharing contract the mineral resource
remains the property of the state.
• As such, the PSC agreement lays down the terms
under which the barrels produced from a
development project will be allocated between the
resource holder and contractor i.e. the contractors
entitlement to the resource produced.
• Amongst others, these terms will typically indicate
how the oil produced will be allocated to cover the
capital and operating costs of the project (so called
‘cost oil’) and in what proportions the remaining
‘profit’ oil will be allocated between contractor and
state.
GHANA’S CONTINENTAL SHELF
•Continental Shelf is up to 200 Nautical Miles(NW) from the
baseline

•This can be extended by 150NM to a total of 350NM on approval

by the International Court of Justice
• Exploration surveying
• Risk is inherent in all stages of the oil and
gas exploration and production process.
• The financial stakes are high. The bill for an
offshore wildcat well where the well
planners have little knowledge of the
subsurface geology can easily run to $100m.
• Technology has improved the chances of
finding oil and gas and also ways of
producing it profitably.
• The first step in the exploration process is political and
commercial, not technical.
• Development permits must be secured and
companies must carefully weigh up geological
potential, political risk and the investment terms on
offer before embarking on an expensive exploration
campaign.
• In the first stage of the search for hydrocarbon-
bearing rock formations, geological maps are reviewed
in desk studies to identify major sedimentary basins.
• More detailed information is assembled using a field
geological assessment, followed by one of three main
survey methods: magnetic, gravimetric and seismic.
• A seismic survey is the most common assessment
method and is often the first field activity undertaken.
• Seismic imaging has done for oil exploration what
medical imaging has done for health industry. Twenty
year ago, doctors had to rely on exploratory surgery as
a diagnostic tool. Now, scans often make risky
physical interventions unnecessary.
• It is the same as oil; without seismic, explorers would
have to perform a great deal of expensive exploratory
surgery in the form of dry or non-optimal wells in
order to strike it lucky.
• Seismic surveys allow geophysicists to form a detailed
picture of what the layers of the rock are like and,
therefore, to choose the optimal location for the well .
• Seismic method in exploration uses a source and a
detector (geophone).
• The source such as dynamite of gun shots, is located
on or near the surface or by specially equipped boats
and gives off an impulse sound energy into the
subsurface.
• The sound energy bounces off sedimentary rock layers
and returns to the surface to be recorded by the
detector.
• Sound echoes are used to make an image of the
subsurface rock layer.
Seismic Sources
Vibrators
Vibroseis for land acquisition
Exploration - Onshore Seismic Surveys

Drill here!

Earth Science World Image Bank Image #h5inor Earth Science World Image Bank Image #h5inpj

Seismic surveys are used to locate likely rock structures underground

in which oil and gas might be found
Shock waves are fired into the ground. These bounce off layers of rock
and reveal any structural domes that might contain oil

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Detectors
Geophone
For land acquisition
measure the particle velocity of
the ground
The Search for Oil and Gas - Seismic Acquisition (Onshore)
Laying out the Recording Cables

Mangrove Swamp, Niger Delta, Nigeria

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. Offshore seismic survey
Exploration - Offshore Seismic Surveys

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• Detectors
– Hydrophone

• For marine acquisition

• measure the variation
of water pressure
relative to hydrostatic
pressure
• Also called ‘Cable’ or
‘streamer’
How can we Decide Where to Drill a Well ?
Looking on Seismic Data

PLEISTOCENE

PLIOCENE MEDIO-SUP
ORIZZONTE MAPPATO
TOP PLIOCENE INF.
TOP TORTONIANO

F.P. 1500
TOP OLIGOCENE

TOP CARBONATI EOCENICI

Po Valley, Italy

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 Exploration Geophysics – Interpretation
• Seismic Interpretation
• Strong reflective surfaces are identified with known rock units and
‘isopach’ maps showing the thickness of these units

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Exploration Geophysics - Reflection seismic
• 2D Seismic
• Is generally done for reconnaissance survey to define potential prospects
• It used for seismic exploration with wide profile line spacing between 10
to 20 Km
• Data is in two dimensions (x, t) and has less data than 3D seismic

• 3D Seismic
• Data is acquired in three dimensions, which has latitudes and longitudes,
or on a grid with ‘inlines’ and ‘crosslines’
• Data is acquired for detail exploration and interpretation, and for field
development
• It is more expensive but gives more accurate picture, close to reality
• 4D Seismic
• This is a repeat or a time-lapse seismic data for monitoring fluid
movement within reservoirs

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The Search for Oil and Gas - 2D vs. 3D Seismic Data
seeing more detail !

2D seismic survey

3D seismic survey

20 km Offshore Mauritania

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•Drilling
• The only way to know for sure if a trap contains
commercial amounts of oil and gas is to drill a well.
• Exploration drilling
• The most common method of drilling in use today is
rotary drilling rig.
• The bit attached to the end of the drillpipe is the most
important tool.
• It is hollow and very heavy, and is attached to the drill
stem, composed of hollow lengths of pipe leading to
the surface.
Rotary drilling rig
• Who Drills the Well?
• Drilling may be carried out by a skilled contractor,
and supervised by the personnel of the oil
company
• The contractor will:
• Design and plan how the well will be drilled
• Estimate how much it will cost to drill
• Forecast the length of time it will take to drill
• Design safety measures to avoid lost of oil and
properties

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• Cost of Drilling Rigs
• On-shore
• Wells are between 1000 to 3500 m deep on land
• The cost ranges from US$20, 000 to US$50, 000 a
day, depending on the location, and anticipated
problems
• Off-shore
• Are on average very expensive
• The cost ranges between US$90, 000 to
US$1,000,000 a day depending on the water
depth
• Drilling time depends on the location and the
anticipated problems
• May range between one to three weeks
 Drilling
• Drilling an exploration well
• Examples of On-shore rigs are indicated below

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Drilling Onshore Today – Sahara, North Africa

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 Drilling
• Drilling an exploration well
• The rig is a device for boring holes
• There are a few off shore rigs
DIFFERENT OFF-SHORE RIGS

Jack-Up Fixed platform Semisubmersible rig Drilling ship

100 m

500 m

1000 m

2500 m
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• Bits
– Is the cutting device
– The type if bit to be used depends
on depth and type of the rock
that must be drilled
• Types of Drill Bits
– PDC bit
PDC Bit
• Polycrystalline diamond compact is
used for long drill section
• Most expensive bit
• Described as core bits
– Tri-cone bit
• This a standard steel bit (million-
tooth bit
• Is the cheapest bit

Tri-cone bit
Drilling Bits
• The well can be drilled either almost straight down as
a straight hole or out at an angle as a deviated well.
• As the hole gets deeper, more lengths of pipe can be
added at the top.
• Almost as important as the bit is the drilling fluid.
• The drilling mud is circulated continuously down the
drill pipe, through the bit, into the hole and upwards
between the hole and the pipe to a surface pit, where
it is purified and recycled.
Drilling mud in Cutting samples from well.

?
• Problems include
– Reactive formations
– Mobile formations
– Collapsed casing
– Junk
– Cement related
– Drill string vibration 46
• Functions of mud
– To lubricate and cool the bit
while in operation
– To transport the cuttings from
the well to the surface
– To maintain an overbalance
relative to the formation fluid
pressures in order to prevent
blowout.
– Different companies may
have different options:
• Water-based muds, or
• Oil-based muds
– Can have serious
enviromental issues
• Drill Floor and Pipe Rack

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Stack of Drill Pipe

49
• Drilling to total depth into the formation of interest
(the pay zone) is the ultimate goal of the company.
• It is now time for a big decision. The question is,
"Does this well contain enough oil or gas to make it
worthwhile to run the final production string of casing
and complete the well?"
• To help make this decision, the well has to be
evaluated (Formation Evaluation)
• 1. Cuttings must be optically examined for
hydrocarbon trappings with the help of a microscope
or ultraviolet light or gas detection instrument.
• 2. Wireline Well logging by use of the sonde which
remotely sense the electrical, sonic, and radioactive
properties of the surrounding rocks and their fluid
• The well log produced is used to determine the
composition of each rock layer , whether the rock
layer has pores, and whether there is oil or gas and
how much.

Well logging
 Drilling
• Well logging

• The logs are tools run on

electric cable (‘wireline’)
which record the physical
properties in the rock such as
resistivity, porosity, density,
radioactivity, and pore
pressure

• Other devices measure the

hole diameter, dip of strata
and direction of the hole

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54
• 3. Coring by the use of a core barrel or sidewall
sampler, produces core samples that is examined and
may reveal much about the nature of the reservoir.
• After analyzing all relevant data a decision is made on
whether to set production casing and complete the
well or plug and abandon it.
• If the decision is to abandon it, the hole is considered
to be dry. Therefore, several cement plugs will be set
in the well to seal it off more or less permanently.
• Types of Borehole Data
• Rotary Holes
• Nearly all modern holes are drilled with rotary
tools. The geologist needs to understand how
the drilling process itself determines the data
that he is able to use in mapping the
subsurface.
• Rotary drilling using mud as the cuttings
carrier provides many more kinds of useful
geological data than rotary drilling using air to
carry out the cuttings.
• The three main categories of rotary logs are:
• 1. Wire line logs,
• 2. Drill cuttings logs, and
• 3. Mud logs.
• Air-drilled holes constitute a special case of
rotary drilling. Because these holes contain no
liquid, many of the conventional wire line
logging systems do not work. Density,
neutron, and gamma ray logs may be used in
air filled holes.
• The gamma ray replaces the SP log used in
liquid-filled holes and is very useful for
correlation purposes.
• Wire line Logs
• They are by far the most important logs today
and are produced from several varieties of
physical signals recorded by fluid-proof metal
sondes which are lowered rapidly on wire lines to
the bottom of the open hole and are returned
slowly to the surface while the mud column is at
rest with the drillpipe stacked on the rig floor.
• A recording truck at the wellhead pays out and
retrieves the wire cables and sonde, registering
the signals from each bed on film and magnetic
tape as it passes upward in the logging mode.
• The most important types of wireline
logs record vertical changes in electrical,
nuclear, and acoustic properties of the
strata, from which inferences can be
made about lithology, porosity,
permeability, saturation of water, oil, and
gas, strata dip, degree of fracturing and
many other attributes of the rocks
penetrated.
• Wireline logs have two traditional uses:
• 1. identification and correlation of strata,
• 2. quantitative evaluation of hydrocarbon-
bearing formations.
• The latter function is handled formally by
specialists called well log analysts, and
routinely by company engineers and
geologists.
• Drill Cuttings Logs
• Direct studies of lithology and fossil content use
samples of drill cuttings caught in sieves or on
screens situated where the returning mud stream
flows into the mud pit.
• It is customary to catch, bag, and label cuttings
samples at regular depth intervals, for example,
every 30 f (10m) or 10ft (3 m).
• Here, it is enough to point out that sample logs
are plotted in a lithologic pattern or color code by
geologists as they examine suites of cutting
through binocular microscopes.
• In some provinces, less attention is given to
details of lithology and more to changes in
the microfossil content.
• The result is a paleontological log, which is put
to biostratigraphic uses. The significant
environmental and evolutionary (time)
markers are often transferred to electrical
logs.
• The geologist should carefully check whether
the depth written on a bag of rotary drill
cuttings is the depth of the strata from which
the cuttings came, or the drilling depth when
the sample was taken.
• In shallow wells, the difference between these
two depths is negligible but in wells deeper
than a few thousand feet, there is a
pronounced time lag between the chipping of
the formation by the bit and the arrival of the
chips at the surface.
• When working with rotary drill cuttings the
geologist should bear in mind that caving of
the walls normally occurs in all uncased
portions of a hole, particularly immediately
after the drillpipe has been pulled to change a
bit.
• Experienced sample examiners are often able
to eliminate many cavings from a depth
sample by their size or appearance.
• There is unavoidable contamination by caving,
and as a consequence, the "first occurrence"
or "top" of a distinctive lithology or fauna is of
primary stratigraphic significance in each
borehole.
• Obviously, the first appearance of something
new is not the result of caving but comes from
strata currently being drilled.
• Mud Logs
• A majority of modern , exploratory holes have
mud logging equipment attached.
• As a hole is being drilled, mud logs bridge the
normal gap between the drilling
superintendent, the petroleum engineer, and
the geologist.
• Mud logs record such parameters as the rate
of penetration of bit, various mud properties,
hydrocarbon shows, and changes in formation
pressure and temperature.
• In summary, in rotary holes we get three views
of the subsurface strata: wireline logs give
what could be called the electron's eye
picture; drill cuttings logs give us the
geologist's picture of the strata; and mud logs
record the behavior of the hole plus its
hydrocarbon shows during the drilling
process.
• COMPLETING THE WELL.
• If a decision is taken to set production casing to complete
a well, a long length of large diameter (commonly 14 -35
cm) steel pipe (casing) is lowered down the hole.
• Usually, the casing is set and cemented beyond the
producing formation.
• As a result, the casing and cement actually seal off the
producing zone-but only temporarily.
• Wet cement is then pumped between casing and the well
walls and time allowed for the slurry to set and harden .
• The cement stabilizes the hole and also seals off
formations to prevent fluids from one formation migrating
up or down the hole and polluting the fluids in another
formation.
• Perforating
• Since the pay zone is sealed off by the production
string and cement, perforations must be made in
order for the oil or gas to flow into the wellbore.
• Perforations are simply holes that are made through
the casing and cement and extend some distance into
the formation.
• The most common method of perforating
incorporates shaped-charge explosives ignited at the
surface which accomplish penetration by creating a jet
of high-pressure, high-velocity gas.
Fig. 15. Perforations
• OIL PRODUCTION
• Once an accumulation of oil has been found in a
porous and permeable reservoir, a series of wells are
drilled in a predetermined pattern to effectively drain
this "oil pool".
• The rate of production is highest at the start when all
of the energy from the dissolved gas or water drive is
still available.
• As this energy is used up, production rates drop until
it becomes uneconomical to operate although
significant amounts of oil still remain in the reservoir.
• After a well has been drilled, it must be completed
before oil and gas production can begin. The first step
in this process is installing casing pipe in the well.
•Oil and gas wells usually require four
concentric strings of pipe: conductor pipe,
surface casing, intermediate casing, and
production casing. The production casing
or oil string is the final casing for most
wells. The production casing completely
seals off the producing formation from
water aquifers.
•A drilling program might for example look
something like this:
•Pile-drive a 24 inch conductor pipe
down to 50m.
•Drill open hole to 1000m with a 17
inch diameter bit.
•Pull out the drill pipe and set a 13 3/8
inch ‘surface casing’.
•Drill on to 2000m using a 12 ¼ inch bit
size.
•Pull out the drill pipe, run a basic
wireline logging program then set a 9
5/8 inch ‘intermediate casing’.
•Drill on to target depth of 2500m using
an 8 ½ inch drill bit.
•Pull out the drill pipe, run a wireline
logging program over the target zone,
then if the indications are encouraging,
set a 7 inch ‘production liner’ in
preparation for more extensive testing
•After cementing the production casing,
the completion crew runs a final string of
pipe called the tubing. The well fluids flow
from the reservoir to the surface through
the tubing. Tubing is smaller in diameter
than casing-the outside diameter ranges
from about 1 to 4-1/2 inches.
•A packer is a ring made of metal and
rubber that fits around the tubing. It
provides a secure seal between
everything above and below where it is
set. It keeps well fluids and pressure away
from the casing above it.
•Since the packer seals off the space
between the tubing and the casing, it
forces the formation fluids into and up the
tubing.
•Subsurface Safety Valve
•A subsurface safety valve is installed in
the tubing string near the surface. The
valve remains open as long as fluid flow is
normal. When the valve senses something
amiss with the surface equipment of the
well, it closes, preventing the flow of
fluids.
•Wellhead
•The wellhead includes all equipment on
the surface that supports the various pipe
strings, seals off the well, and controls the
paths and flow rates of reservoir fluids.
•All wellheads have at least one casing
head and casing hanger, usually, a tubing
head and tubing hanger, and a Christmas
tree.
A wellhead
•Wells are equipped with a group of valves and
fittings called a Christmas tree.
•Gas wells are generally completed in the same
way as oil wells except that natural gas usually
flows without help.
•The valves and fittings are used to regulate,
measure, and direct the flow of hydrocarbons
from the well.
•Gauges measure pressure in the casing and in
the tubing.
•The choke controls the rate of production
from the well.