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The Oil Business

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Major Segments of Oil & Gas Industry

„ Upstream Activities
„ Exploration and production of oil and natural gas
„ Midstream Activities
„ Transportation, storage and trading of crude oil, refined products
and natural gas
„ Downstream Activities
„ Refining and marketing of crude oil
„ Local distribution companies
„ Participants
„ Majors –integrated oil and gas companies, which are involved in
every aspect of the business integrated
„ Pure-play companies in various areas.

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Upstream Operations: Oil & Gas E & P Process

„ Exploration
„ Search for oil and natural gas by geologists and geophysicists
„ Once such areas are found, subsurface conditions are
investigated using seismological or other techniques
„ Drilling & Logging
„ To drill –only way to know about the presence of resources
„ Move to next stage, if commercial amounts are encountered

Continue if the well contains commercialquantities

„ Completion
„ One or more flow paths must be constructed for the hydrocarbons
to travel between the reservoir and Earth‟s surface
„ Lifting
„ Bringing energy resources to Earth‟s surface

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Midstream Operations: Transportation and Storage

„ Once Extracted, crude oil&gas must be moved from the wellhead to the
refinery or distributors.
„ Transportation Methods (means):
Internationally:
„ Oil:Crude Tankers or barges. Global tanker fleet –2750 tankers
with total capacity of 287,400 dead weight tones (As of October
2002 )
„ Gas: Occasionally natural gas is liquefied and
transportedinternationally in LNG tankers.

On Land
„ Oil:Delivered to refineries with pipeline, truck or rail
„ Gas: Delivered to LDCs (Local Distribution Companies) with trunk
pipelines, or CNG
„ Storages
„ Essential function of an efficient and reliable pipeline network,
managing fluctuation in supply and demand
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Downstream Operations: Refining and Marketing of Oil Products

„ Refining –creating a variety of final products

„ Refining Steps: Hydro treating, Cracking, Reforming,
Alkylation
„ Gasoline Marketing
„ Direct marketing by integrated oil companies at a retail station
bearing the company‟s name and emblem
„ Selling gasoline through independent marketers
„ Self-Serve business
„ 24-hour point-of-sale terminals, Self service gas station

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Upstream Competition Creates „Super Majors‟

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Exploring for Oil

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Once the Exploration Site is Selected

Getting the land ready

„ The area is surveyed to determine its boundaries.
„ Environmental studies are said to be done.
„ The land is cleared and then access roads are built.
„ Water is drilled if there are no natural sources available.
„ A reserve pit is dug to dispose of rock cuttings and mud. It is lined
with plastic to “protect” the environment only if the area is considered
to be “ecologically sensitive.”

Making way for the rig

„ Several holes are dug to make way for the rig and main hole
„ A rectangular pit (cellar) is dug around the location of the drilling hole.
(This provides a workspace)
„ The crew drills a main hole
„ Additional holes are dug to the side to store equipment
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Seismic: Searching for Geological Traps

Any Traps! May be oil, or water or empty traps
„ The Government and Oil companies
usually assign finding oil to contracted
geologists
„ Oil geologists examine surface features,
surface rock, reservoir rock, entrapment,
satellite images, sensitive gravity meters
and magnometers. They can also detect
the smell of hydrocarbons using
electronic noses called sniffers.
„ The most common technique for finding
reserves is seismology which uses
shock waves that interpret waves
reflected back to the surface.
„ Despite all the technologies, modern oil
exploration methods
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Oil Exploration -Seismic

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Setting Up the Rig

„ Once the land is ready, several holes

are dug to make way for the rig and
main hole.
„ A rectangular pit called a cellar is dug
around the location of the actual drilling
hole.
„ The cellar provides a workspace
around the hole. The crew then drills a
main hole.
„ The following is how a rig is set up.

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Drilling

„ Place the drill bit, collar and drill pipe in

the hole.
„ Attach the Kelly and turntable and begin
drilling.
„ As drilling progresses, circulate mud
through the pipe and out of the bit to
float the rock cutting out of the hole.
„ Add new sections (joints) of drill pipes
ad the hole gets deeper.
„ Remove (trip out) the drill pipe, collar
and bit when the pre-set depth
(anywhere from a few hundred to a
couple thousand feet) is reached.

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Horizontal Well

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Horizontal Drilling Avoids Surface Hazards

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Confirming the Presence of Oil

„ After the pre-wet depth is reached, the

workers run and cement the casing –
pipe sections into the hole to prevent it
from collapsing.
„ Drilling continues in stages. When the
rock cuttings from the mud reveal the oil
sand from the reservoir rock, they may
have reached the final depth.
„ At this point, they remove the drilling
apparatus from the hole and perform
several tests to confirm the presence of
oil.
„ These tests are Well logging, Drill-stem
testing, and Core samples.

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Extracting the Oil

„ Once the well is completed, the
operators must start the flow of oil into
the well.
„ For limestone reservoir rock, acid is
pumped down the well and out the
perforations.
„ For sandstone reservoir rock, a special
blended fuel containing proppants is
pumped down the well and out the
perforations.
„ The pressure from this fluid makes
small fractures in the sandstone that
allow oil to flow into the well, while the
proppants hold these fractures open.
„ Once the oil is flowing, the oilrig is
removed from the site and production
equipment is set up to extract the oil 17
from the well.
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What Are the Four Life Stages of a Reservoir?

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Oil Drilling Equipments

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Drilling Rig & Oil Well Components

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Oil Drilling Equipment

„ Power System
„ Mechanical System
„ Casing
„ Rotating Equipment
„ Circulating System

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Circulating System

„ Pump
„ Pipes and Hoses
„ Mud-Return Line
„ Shale Shaker
„ Shale Slide
„ Reserve Pit
„ Mud Pits
„ Mud-Mixing Hopper

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An Oil Drilling Bit

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Cutaway of Drill Bit

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Soft Rock Bits

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Pipe Grappler

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Drilling Floor

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Christmas Tree

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Offshore Drilling & Platform System

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Offshore Deepwater Drilling Rig Technology

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Anchor Link for Deep Water Rig… BIG

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Type of Offshore Drilling Rigs

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Offshore Drilling Platform

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Offshore Drilling Rig -TLP

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Offshore Drilling Platform -Spar

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Jackups Drlling Rig

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What is a Jack-Up Rig ?Mobile Offshore Self-elevating drilling unit

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Semi-submersible Rigs

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Drillships and Swamp Barge

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