Oil 101:

Introduction to Oil and Gas

What is Upstream?

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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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 Company Structure
Most oil and gas companies are segmented and organized
according to business segment, assets, or function.

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 Generally, this consists of:

UPSTREAM MIDSTREAM
DOWNSTREAM

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 Upstream = E&P

The upstream segment of the business is also known as

the exploration and production (E&P) sector.

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E&P encompasses activities related to searching for,
recovering and producing crude oil and natural gas.

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It’s all about the

WELLS.
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Where to locate them,

How deep and how far to drill them,

How to design, construct, operate and manage

them...

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 ...to deliver the greatest possible return on
investment with the lightest, safest and smallest
operational footprint.

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 Exploration

The exploration sector involves obtaining a lease

and permission to drill.

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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

The production sector of the upstream segment maximizes

recovery of petroleum from subsurface reservoirs.

Production brings the oil to the surface.

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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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 An ‘Unconventional’ Upstream

Unconventional resources are considered by the petroleum

industry to be any resources extracted, or produced, by any
method other than the traditional vertically drilled well.

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This includes horizontal drilling and hydraulic fracturing, or
fracking.

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 Hydraulic Fracturing

Hydraulic fracturing, or fracking, is the process of injecting

water, chemicals, and sand into wells.

The resulting fractures in surrounding rock formations

allows for hydrocarbons to escape.

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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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Upstream Business Characteristics

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 Unbelievably Complex

The upstream industry is arguably the most complex of all

the oil and gas business sectors.

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Who are the Players?
Independents, Majors, NOCs,
Oilfield Services

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 Independents

The companies that focus solely on Exploration and

Production are called Independents.

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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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These companies have the prominent and advertised
brands that you are familiar with:

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 NOCs

National Oil Companies (NOCs) are those industry

participants that are owned and managed by governments
around the world.

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 Oilfield Services
What is the oilfield services sector?

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 Oilfield Service

The Oilfield Services sector of the Upstream segment

consists of companies that build the infrastructure and
provide the specialized equipment.

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The Oilfield Services industry provides the following support:

Exploration services

Drilling services

Well completion

Production services

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 Oilfield Services

Oilfield services and supply companies do not typically

produce oil and gas or own the assets that contain them.

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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
Reserves, Reservoirs, Types of Crude Oil

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 Oil Reserves

The vast amounts of crude oil and natural gas trapped

underground are referred to as reserves.

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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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Source rock – where the oil or gas was formed

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 Reservoir – where oil or gas reside, having migrated
through microscopic structures in the surrounding rock

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Seal – which is impermeable and stops the migration of the
oil and gas

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Trap – which is the combination of the reservoirs and seals

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Types of Crude Oil:
Heavy, Light, Sweet, Sour

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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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Types of Crude Oil

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There’s So Much More...
This material was taken from our free Oil
101 course.

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 Who are we?
EKT Interactive has been a leading oil and gas
training company since 1986.

Visit us at www.ektinteractive.com to learn

more.

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