overview of petroleum business

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1

Overview of Petroleum

Industry

June 25, 2011

By

Dr. Vinit Hansamuit



2

What is Petroleum?

• Petroleum: a natural yellow-to-blackflammable liquid hydrocarbon

found beneaththe earth’s surface

• Hydrocarbon: an organic compound made

up of carbon and hydrogenatoms



The Goal - „Black Gold‟

Light Texas CrudePalo Pinto Field

North Texas

Heavy TexasCrude

Humble Oil Field

Southwest Texas

Petroleum Supplies our Energy Needs



4

What is Petroleum?

A natural, yellow-to-black, flammable, liquidhydrocarbon found beneath the earth’s surface



5

Petrochemical Products

• Detergents - Cosmetics

• Fertilizers - Weed Killers

• Medicine - Antiseptics - Anesthetics

• Plastics - Synthetic Fibers

• Synthetic Rubber

• Rust Preventatives

• Liquid Petroleum Gas

American Petroleum Institute,1999

More Than 3,000 Products



6

History of Petroleum

First Use:

• Egyptians: oil to preserve mummies

• Chinese: natural gas for fuel• Babylonians: oil to seal walls and pave streets• Americans: tar to seal canoes

FirstDrilling:

• Chinese using bamboo: to 800’ in 347 AD • Americans using cable tool: to 70’ in 1859

ADFirst

Product:

• Kerosene for lamps• Gasoline was unwanted by-product

DemandIncrease:

• Industrial Revolution- Internal Combustion Engine (1885)- Global Economic Growth

http://en.wikipedia.org/wiki/Image:Babylonlion.JPG



7

Energy Usage: 1750-2000An Energy Dependent Society

Steam Steamlocomotive

Power stations

Internal combustionengine

Air travel

Populationgrowth

Globalmarkets

1750 1800 1850 1900 1950 2000

H yd ro c a r b o

n s N u

c l e

a r

Telecommunications

WWI

WWII

Satellite

Environmentalissues

Micro-processor

Internet

E n e r g y U s a g e

? Modifiers

Drivers

Cook and Sheath, 1997



8

Population-Driven Energy Demand

10,000

8,000

6,000

4,000

2,000

01500 1700 1900 2100

World

Population(Millions)

World Primary

Energy Consumption(Quadrillion BTU)

500

400

300

1975 1985 1995 2005 2015 AAPG Explorer, 8/95



9



10

(NOT FROM UNDERGROUND LAKES!)

Where Do Oil and Gas Come From?



11

Where Do Oil and Gas Come From?



12

Rock Porosity



13Breccia Conglomerate

Volcanic Sandstone

Sample of Rock



14

Rock Permeability



15



16

Geologic Time



17

Carboniferous 360-290 ma



18

Jurassic 200-146 ma



19

Fossils like these Trilobites…

…can give clues about the ages

of rocks and their environmentsof deposition



20

The Origin of Petroleum

Organic-richSource Rock

Thermally MaturedOrganic Matter

Oil



21

Source: Oil is produced from “source rock”

Oil is formed in sedimentary rocks that contain largequantities of organic material. Most of the world‟s oil is

generated from rocks containing algae, an aquatic plant



22



23

Sea or lakeImpermeable stratum

Accumulation



24

Weathering and Erosion



25




26




27

Rock Formation

Sea or lakeSandSediment + sandImpermeable stratum



28

Folding



29

Geological Structure



30

Volcano Eruption



31

Basins: Forces that shape the earth’s crust

Basins form in response to subsidence caused by movement of

the crust and grow due tectonic “loading”



32

Folding



33

Petroleum System Process

120° F120° F

350° F350° FGenerationGeneration

MigrationMigration

Seal RockSeal Rock

Reservoir RockReservoirRock

OilOil

WaterWater

Gas CapGasCap

EntrapmentEntrapment



34

The 5 Steps of Petroleum



35

1.Finding&Drilling

2. Pumping 3. Transporting

4. Refining

The 5 Steps of Petroleum

5. Selling ProductsTexas A&M University SPE-Student Chapter

PEEC Elementary School Division



36

Do we have enough InformationBefore we drill?



37

More Information means lower risk



38



Source Receivers Shot record

Seismic Survey



40

Vibroseis

Land Seismic



41

Seismic Acquisition



42

Seismic energy is put into the earth

Vibrators

Veritas DGC, Inc.



43

Seismic energy is put into the earth

Dynamite

Veritas DGC, Inc.



44

Seismic Acquisition



45

Marine Seismic



46

Special 3 Dimensional Visualization Techniquesare used to understand the subsurface



47

3D Visualization Techniquesare used to enlarge the subsurface images



48

Stacked seismic data is correlatedand tied to other well logs



49

SENW

AREA 1 AREA 2 AREA 3 AREA 4

Seismic Cross Section



50

3D Modeling



51

Movie

http://c/Documents%20and%20Settings/vinit/Desktop/Presentation_Dr.Vinit/Riggy030807.wmv





52

4D Seismic



53

First Petroleum Wells

Drilled in 1859 in NorthOf Pittsburgh, PA

The discovery was important

but only produced about

25 barrels per day

http://www.fe.doe.gov/education/images/drake_well.jpg



54

The First Oil Well Has

Turned to be a Museum

D illi Ri i Th D



55

Drilling Rig in Those Days



56

Scene of Early Oil Field

Scene of Ea l Oil Field



57

Scene of Early Oil Field

Old Da s T anspo tation



58

Old Days Transportation

Oil as Transported in the



59

Oil was Transported in the

Wooden Barrels

Th fi j il di



60

The first major oil discoverySpindletop, Texas 1901

The “Lucas Gusher” producedover 100, 000 barrels of oil perday into the air before the wellcould be capped and controlled

This was the first realizationthat a significant supply of thewell-known fuel could beachieved.

It was also the first time thatfortunes were made in the oilfields.

T d ’ D illi O ti



61

Today’s Drilling Operation

These are some of the tools we use

to drill wells



62

1. Mud pit

2. Pump

3. Injection line

4. Injection head

5. Drilling pipes

6. Descending mud

(in pipes)

7. Returning mud

(in annular space)

8. Filter

9. Mud return for

recycling

Drilling Operation



63

Drilling Rigs



Land Rig



65

LAND OFFSHORE



66

DEEP WATER RIG



67

Jack-up Rigs

Cost of Drilling Rigs



68

Offshore Onshore

Daily Rig Cost

1998 $90,0001999 $40,000(Single year contract)

Ultra DeepDaily Rig Cost

1998 $180,0001999 $180,000(Five year contract)

Cost of Drilling Rigs

Daily Rig Cost

1998 $60,000

1999 $30,000(Single year contract)

JMA



69

Offshore Rig



70



71



72



73

Extended Reach Drilling



74

Extended Reach DrillingTechnology Advances Result in More Cost-EffectiveWells

•

•

•

Reduce friction • Use geology to find stable path of least resistance

Drill Mud reduces torque and drag

Tri-cone Drill Bit Downhole Motor and

Steering Assembly

Logging Tool

Torque Torque Drag Drag



75

Directional Drilling Avoids Surface Hazards

Gas

OilWater

American Petroleum Institute, 1986



76

Well Logging

Physical properties measured in the core are



77

Physical properties measured in the core arecorrelated with well logs to deduce rock properties

ll i



78

Well Testing

1. Hydrocarbons rising

under pressure 2. Flow bean3. Gage measuring

pressure variation



79

Completed Oil Well



80

Cross Flow fromMulti-zone

Perforation



81

Single and

Double Tubing

Completion

R i Si l i



82

Reservoir Simulation



83

Production

Beam Pump



84

Beam Pump



85

Oil Production at Fang



86

Gas Lift



87

Down HolePump

http://upload.wikimedia.org/wikipedia/en/2/22/Electrical_Submersible_Pump.png



88

Gas Production wellOn shore

Off h G P i Pl t



89

Offshore Gas Processing Plant



90

Gas Production Platform

Off shore



91Arthit Gas Field

Oil Field in

North Sea

Wellhead Platforms



92

Wellhead Platforms

Tripod WPFour-pile WP



93



94



95



96

SecondaryProducing Wells



97

SecondaryRecovery

Water

Gas

SteamChemical

Fire

Pumped into thereservoir to force

additional petroleumout of the pores inthe reservoir rock

Injection

WellsOf 60% Remainingin Reservoir



98

Water Flooding



99



100



101



10224803

Transporting PetroleumTransporting Petroleum

Oil FieldOil Field

Oil FieldOil Field PipelinePipeline RefineryRefinery

PipelinePipeline

Railroad Tank CarsRailroad Tank Cars

MobilTank TruckTank Truck

ConsumersConsumers

Industrial Customers

IndustrialCustomers

Local

Distributor

Local

DistributorMobil

TankerTanker

Offshore PlatformOffshorePlatform

after World BookEncyclopedia

JMA

Gas Pipeline



103

Trans A laska Pipel ine abou t 40 miles

south of Prudhoe Bay ( July 2001, photo by M. McCaffrey )

Gas Pipeline



104

Crude Tanker

LNG Tanker



105

LNG Tanker

Natural Gas in China



106

Natural Gas in China

Where is Heavy Oil?



107



SAGD

THAI



109

THAI



110



111



112



113

Methane Hydrate



114

Mol. Ratio 1:5.75

Vol. Ratio 1:168

Stable@-20C (-162 C for LNG)

y

Mystery at Bermuda

http://en.wikipedia.org/wiki/Image:Burning_hydrate_inlay_US_Office_Naval_Research.jpg

http://en.wikipedia.org/wiki/Image:Gas_hydrates_1996.jpg

http://en.wikipedia.org/wiki/Image:Burning_hydrate_inlay_US_Office_Naval_Research.jpg

http://upload.wikimedia.org/wikipedia/commons/8/85/Bertriangle.jpg

http://upload.wikimedia.org/wikipedia/commons/f/f0/TBF_(Avengers)_flying_in_formation.jpg




115 115

Mystery at Bermuda

Hydrothermal Energy


http://upload.wikimedia.org/wikipedia/commons/f/f0/TBF_(Avengers)_flying_in_formation.jpg




116

Hydrothermal Energy

Nature of Business



PRODUCTION

STAGE

20 + 10 Yrs

DEVELOPMENT

STAGE

3 - 5 Yrs

EXPLORATION

STAGE

6 + 3 Yrs

ACQUISITION

STAGE

HIGH

LOW

1 Yr

RISK

EXPLORATION PERIOD PRODUCTION PERIOD

E&P Process



Production

Development

Dry

Drilling (More Well)

Discovered

Drilling Well LoggingWell Testing

Sale Agreement

Exploration Geological Survey

SEISMIC

Reserve Estimate

Abandonment



119

World primary energy consumption



120

y gy



121

Think Gasoline is Expensive?



122

It’s a bargain compared to many other everyday

products THB per Litre

Chanel N05 Perfume .....….….... 20,000

Chang Beer................……....... 63

Orange Juice ...............…...... 70Evian Bottled Water …...…… 20

Milk ..................................…... 40

Gasoline ……………………… 36

Based on price comparisons in Bangkok, August 2008



123

T O P T E N O I L P R O D U C E R S

TOP TEN OIL PRODUCERS



124

1972

COMPANYNAME

TYPECOMPANY

EXXON

BP

SHELL

TEXACO

CHEVRON

GULF

MOBIL

ROSNEFT

TOTAL

SONATRACH

Major

Major

Major

Major

Major

Major

Major

NOC-USSR

Major

NOC-Algeria

AVERAGE DAILY NETPRODUCTION

MBO / DAY

4,968

4,664

4,169

3,777

3,232

3,214

2,316

1,301

977

925

1.

2.

3.

4.

5.

6.

7.

8.

9.

10.

2006

COMPANYNAME

TYPECOMPANY

ARAMCO

GAZ PROM

NIOC

PEMEX

EXXON MOBIL

BP

CNPC

SHELL

SONATRACH

PDVSA

NOC-Saudi Arabia

NOC-Russia

NOC-Iran

NOC-Mexico

Major

Major

NOC-China

Major

NOC-Algeria

NOC-Venezuela


MBO / DAY

11,663

9,874

6,036

4,328

4,237

3,878

3,479

3,425

3,172

2,895

Data Source – Schlumberger

1972 2006 1972 - 2006

SUPERMAJORS’ PRODUCTION DECLINE



125

COMPANY


MBO / DAY


MBO / DAY


CHANGE

SHELL 18 %4,200 3,425(SHELL + ENTERPRISE)

TOTAL 24 %1,970 1,506(TOTAL + CFP + ELF + FINA)

BRITISH PETROLEUM 38 %6,200 3,878(BP + SOHIO + BRITOIL + AMOCO + ARCO)

EXXONMOBIL 42 %7,350 4,237(EXXON + MOBIL + SUPERIOR)

CHEVRON 11,030 1,759 84 %(CHEVRON + GULF + TEXACO + GETTY + UNOCAL)

Data Source – Schlumberger

E&P REVOLUTION

GETTYTEXACO



126

$ / B a r r e l I n 2 0 0 4 U S D

$60

$40

$20

$ 0

$80

Data Source – Energy Information Administration

ENTERPRISE

SOHIO

SHELL

YEAR

UNOCAL

GULF

SUPERIOR

FINA

AMOCO

TENNECO

ELF

ARCO

TOTAL

MOBIL

EXXON

CHEVRON

1984 200019981988 2001 200520021987

BRITOILBP

CPC

SINOPEC

ONGC

ENI

JNOC

CNOOCCNOOC

SINOPEC

JNOC

ONGC

CPC

ENI

CHEVRON

EXXON

SHELL

TOTAL

BP

• ALL ACQUIRED COMPANIES WANTED TO BE ACQUIRED

NO SUCCESSFUL GROWTH PROGRAM

ESCALATING COSTS

DECLINING PRODUCTION

• THE M&A’s WERE NOT HOSTILE TAKE OVERS!



127Department of Reservoir Engineering



128

The Oil Industry Saved the Whales



129

•

Mid-1800s –

735 U.S. whaling ships; whaleshunted to near extinction

• 1849 – method to distill kerosene frompetroleum discovered

•

1859 –

first U.S. patent for clean-burningkerosene lamp

• Kerosene took over lighting market

• 1876 – only 39 U.S. whaling ships

Tarr

Farm, PA, 1862



130

, ,

But Nature Heals: Tarr Farm, 1991, same view



131



132

And Nature is a WillingHelper for Solving

Old Problems

Pioneer &

Funkville,PA

1867

1984

Oil Spill in GOM



133

Oil Field outside California



134

Oil Field outside California



135

Drilling Rigs, Production Platforms Are“Pit Stops” for Monarch Butterflies



136

Source: Gary Noel Ross, PhD, professor emeritus of biology, Southern University, Louisiana Environmentalist , September-October 1994.

• 300 million monarchs fly from Canada,U.S.

• Spend winters in warm central Mexico

• Offshore oil-industry equipmentin Gulf of Mexico offers ideal rest stop

• Monarchs attracted to structures with

bright yellow paint• Sleep-over lets them

take a breather

Shhhh! Don’t Disturb the Bears



When drilling in an area that was home to

grizzly bears, companies cared enough toprotect them:

• Restricted human access by using remote

technology to monitor drilling• Controlled hours of road use

• Drilled wells only during winter

• Muffled equipment noise