WORLD GEOGRAPHYUnit 4: Primary ResourcesEnergy from the Oceans

The Decision to Recover Offshore Oil

The decision to recover offshore oil depends on many factors.

These factors can be broken down into two general categories Physical Factors Human Factors

Differences in both of these factors influence the inputs into the oil and gas system

Physical Factors Physical factors are those that involve the

natural aspect of the offshore oil reserve. They may include

Location: How viable is it to recover oil in a particular location? How far would they have to ship it to refine it? Is there any dangers of setting up a oil rig in the area? Icebergs? Storms? Is the water shallow enough for us to build a platform, or to pump it out?

Size of Reserve: How much oil is down there? Is it economically feasible to build a rig to pump out the oil? How long will the oil last?

Quality of the oil: Quality is judged by viscosity, or stickiness. Light oil is easier and cheaper to refine than thick sticky oil. The best and most sought after oil is described as “light, sweet crude”.

Environmental concerns: If something goes wrong will it cause irreparable damage to the environment? Is it worth the risk?

Human Factors

Human factors are those that have a human dimension, and are influenced by people. Price of oil: Will putting this rig there pay us

enough to cover the cost? What are the long term forecasts for oil prices?

Technology: Do we have the necessary technology to drill for the oil? There have been improvements that have widened

our ability to recover oil. They come from three areas: 3-D Technology Design of the storage and offloading areas of rigs Directional Drilling

The Technology Used to Recover Oil

There are four types of offshore drilling rigs. Submersible Jack-up Semi-submersible Anchored Semi-submersible Dynamically Positioned

Offshore Drilling Rigs

Submersible: Built of concrete or steel. Anchored to the seabed. Economically feasible in water up to 20m

deep.

Offshore Drilling Rigs

Submersible: Advantages:

Stability Safety Not far from shore (usually) Water is not as deep therefore it is easier to fix

and contain any problems such as spills. Disadvantages:

Expensive Not reusable Very limited in where it can be used.

Offshore Drilling Rigs

Jack Up: Designed to move from place to place Deploys legs to anchor itself Used in water levels up to 100m deep.

Oil Drilling Rigs

Jack Up: Advantages:

Moveable Economically Feasible Reusable

Disadvantages: Cannot operate in deep water

Oil Drilling Rigs

Semi-Submersible Anchored: These rigs float on the ocean. They are anchored to the sea floor therefore they are

only feasible up to 200m water depth. The large columns that support the platform are hollow

and are alternately filled with sea water or oil as ballast for the rig.

It is extremely important to ensure that this ballast system is balanced or the rig could tip over.

Oil Drilling Rigs

Semi-Submersible Anchored : Advantages:

Operate in deep sea Cost effective

Disadvantages: Not as easily moved

Oil Drilling Rigs

Semi-Submersible Dynamically Positioned: These rigs are able to drill outside the

continental shelf. They are still limited to a depth of 2000m. They still have pontoons and ballast tanks, to

store oil and maintain stability but unlike other semi-submersible rigs they are not anchored to the sea floor.

“Dynamic” means changing or moving; this refers to the rig’s ability to be moved to a new location when needed. Thrusters position the rig over the drill site

Oil Drilling Rigs

Semi-Submersible Dynamically Positioned: Advantages:

Moveable Can be used in deep water

Disadvantages: Bad weather often causes problems Ocean Ranger Disaster

Economic Benefits of Oil

A story close to home 134.5 million barrels in 2007

Terra-Nova, White Rose, Hibernia Total value of production $10.3 billion

Creates Jobs in many fields Not only those directly involved with pumping

oil.

Jobs Fields Related to Oil Industry

• Coatings, insulation• Hydraulic, pumps

and compressors• Lifting/crane operations• Rigging• Fluids and chemicals• Lighting• Marine safety equipment• Flowlines, valves and fittings• Oilfield industrial

supplies• Equipment rentals• Cargo and Freight

Handling

• Catering and accommodations• Offshore/marine fabrication• Engineering and design consultants• Environmental consultants

• Medical services • Seismic and survey• Tubular goods• Leak detection

• Electrical/instrumentation personnel & services

• Testing and inspection• Remote Operated Vehicle support• Health and safety

• Drilling• Well services• Subsea• Opt., maint. & const. personnel • Warehousing and logistics• Marine logistics & transportation• Oil shipment & storage

Oil Companies

Sub-Contractors

Contractors

Newfoundland’s Oil Production

Economic Importance of the Offshore Oil Industry

As technologies advance, offshore oil extraction becomes easier and cheaper. When oil prices are high, cheap production costs generally mean high revenues for the local economy.

Oil is currently the largest significant contributor to NL’s economy. At 33% of our GDP (Gross Domestic Product) it accounts for one third of all revenue in our economy in 2012. This has more than doubled in 6 years when it was 16% in 2006.

In 2012, oil production value was over $8 billion and royalty revenues were $2 billion.