Introduction To The Oil and Gas Industry & Sustainable Development

Introduction
Introduction to
to the
the
Oil
Oil and
and Gas
Gas Industry
Industry &&
Sustainable
Sustainable Development
Development
PCB
PCB 1012
1012
Introduction to the Oil and Gas Industry & Sustainable Development
PCB1012 Professor Dr. Bernard J. Pierson
PCB1012 Course Coordination
• Coordinator: Mr. Khaled Elraies, GPED

• Meeting by appointment, can be contacted
through e-learning message or email
• Room: 14-03-23
• Extension number: 7037
• Email: Khaled_elraies@petronas.com.my

PCB1012
Course Schedule
• Monday 8-10 am
CE, CV, EE
• Friday 8-10 am
ME, PE, PG, ICT, BIS
• Please select 1 representative from each
program/batch for coordination
Representatives to email hp numbers to Mr Khaled
• Lecture topics can be found on e-learning
Password: 888888
PCB1012
Course Evaluation
• 60% Final Examination
• 40% Coursework (tests, spot quizzes)
• Test – 2 tests, MCQ
• Quizzes – during random lectures
 only students present in the first half hour of
the class will get the quiz paper. Answer
sheets will be collected at the end of the
lecture.

PCB1012
Why should you be interested in the
Oil & Gas Industry?
• You are now studying at PETRONAS University and need
to be aware (‫) ندرك‬of the type of activities carried out( ‫تتضلع‬
‫ ) بها‬by PETRONAS, the national oil company of Malaysia.
• Because of its affiliation (‫) انتماء‬with PETRONAS, UTP
considers it an important mission (‫مهمة‬,‫) رسالة‬to form high-
quality skilled staff for PETRONAS and other industry
players.
• Most, if not all disciplines taught at (‫) التخصصات التي تدرس‬UTP
may lead to careers in the oil and gas industry.
• Some of you may be interested in choosing to study a
petroleum-related discipline(‫) االنضباط‬.
PCB1012
Course Coverage
• Several modules taught by specialists in the various
disciplines involved in each step of the petroleum life cycle:
Geoscientists who will introduce acreage (‫)مساحة‬basin
analysis, prospect ‫ت‬
(‫) احتماال‬evaluation, exploration techniques,
and discovery appraisal(‫) تقييم‬.
Petroleum engineers who will elaborate on ‫ي‬ ( ‫) التوسع ف‬the field
development planning, drilling, reservoir engineering and
production technology;
Chemical, mechanical and electrical engineers who will
introduce manufacturing of petroleum products.
Refining(‫) التكرير‬, gas processing, and petrochemicals
industries are also discussed.
Safety and environmental engineers will cover aspects of
HSE during all operations from exploration to manufacturing.

PCB1012
Learning Outcome
• At the end of the course, students should be able to:
• Describe the various steps of the petroleum industry life
cycle and understand which disciplines are involved at
each step.
• Explain how oil and gas are generated, discovered and
produced.
• Explain how oil and gas are transported from the site of
production to refineries or treatment plants.
• Explain how oil and gas are treated and how products are
exported to markets.
• Describe various petrol and petrochemical products

PCB1012
Today’s Lecture
1. Review some myths and truths about

the oil industry.
2. Introduce fundamentals about
petroleum systems.
3. Present the various steps of the
petroleum industry life cycle and the
disciplines involved at each step.
PCB1012
Lesson Outcome
• Be able to explain
• How important are oil & gas as energy sources?
• How much changes have we seen in the use of energy
sources over time?
• How much oil and gas are produced daily?
• What are the proven world reserves of oil and gas?
• The various steps of the petroleum industry life cycle and
understand which disciplines are involved at each step

PCB1012
Who am I to Talk to You about
the Oil & Gas Industry?
• I am a Petroleum Geoscientist with 30 years of experience
in the oil and gas industry.
• I have a B.Sc. In Geology, a M.Sc. In Geochemistry and a
Ph.D. in Marine Geology & Geophysics.
• I joined Shell in 1980 and had assignments in 8 different
countries.
• I am currently Shell Chair in Petroleum Geosciences at
UTP and am director of the South-East Asia Carbonate
Research Laboratory (SEACARL) in the Department of
Geosciences and Petroleum Engineering.

PCB1012
Intro to The Oil Industry: PART 1
Myths and Truths about The Oil Industry

PCB1012
Our reliance on oil is an addiction
We will run out of oil in 10 years
Renewable energies will soon replace oil
Myths & Truths
Jobs in the oil industry will soon disappear

The oil industry is a low-tech world
Old people, all from western countries
It is a dirty and polluting industry
Oil companies fix the oil price
The oil lobby sabotages renewables
Oil companies steal natural resources
PCB1012
Myths & Truths Our reliance on oil is an addiction

PCB1012
Our Reliance on Oil is an Addiction
• Oil is necessary to ensure the continuation of life on the
planet.
• For instance, we use oil to power farm equipment that
provide us with food.
• We use oil to make our vehicles work: motorcycles, cars,
trucks, buses, trains, airplanes, ships.
• Oil is also used to make many things we use every day, like
the chairs in this lecture hall, the paint on the wall, the
plastic and nylon for our clothes and shoes, asphalt on the
roads, even cosmetics.

PCB1012
We will run out of oil in 10 years
Myths & Truths

PCB1012
Will we run out of oil in 10 years?
• The current oil reserves (producible with existing
technologies) will last for at least 40 years.
• Oil resources (discovered but not included in reserves yet)
will still be produced in 100 years.
• New technologies will allow us to find more oil that will be
added to existing reserves and resources.
• Oil is increasingly reserved for mobility
• Natural gas complements oil in fixed plants (power plants
and heavy industry).

PCB1012
Renewable energies will soon replace oil
Myths & Truths

PCB1012
Fossil Fuels vs. Renewables
t r ic
elec
New Technologies
dr o
Hy
100
100 BILLION
Solar, wind,
Geothermal
Billion BOE/year
80
World Energy Demand Nuclear
Coal
60
after Edwards, AAPG 1997

Natural
gas
40
Fossil Fuels
Decreasing
Crude Oil
20
1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100

PCB1012
Myths & Truths
Jobs in the oil industry will soon disappear

PCB1012
Careers in the Oil & Gas Industry
t r ic
elec
New Technologies
100
Careers in Oil & Gas Hy dr o
100 BILLION Remain Important

Solar, wind,
Geothermal
In coming 50+ years
Billion BOE/year
80
World Energy Demand Nuclear
Coal
60
after Edwards, AAPG 1997

Natural
gas
40
Fossil Fuels
Decreasing
Crude Oil
20
1900 1920 1940 1960 1980 2000 2020 2040 2060 2080 2100

PCB1012
The Resource Gap: Geoscientists
90
The resource
World Demand gap: the&case
for Geologists of geoscientists
Geophysicists
Petroleum Geoscientists (Thousands)
80
Demand
70
60 Tota
lW
GAP
orkfo
50 Cu rce
rr ent
40 Wo
rkf
orc
e
30
M. Keane, 2007
20
s (3% Growth)
10 rui t
New Rec
0
1995 2000 2005 2010 2015 2020
Year

PCB1012
Myths & Truths
The oil industry is a low-tech world

PCB1012
Technology in the Oil & Gas Industry
• The Upstream Oil & Gas Industry uses more computer
power than any other industry except the entertainment
industry.
• Exploration and production of oil & gas rely heavily on high
technology: 3D and 4D seismic, basin analysis, reservoir
modelling, “smart wells”, well logging, reservoir monitoring,
etc.
• A large number of technology and service companies focus
on developing new technologies for the oil & gas industry.

PCB1012
High-Tech Hardware & Software
Used by the Oil Industry
3-D visualization of reservoir Seismic Acquisition: Coil Shooting
Acoustic
Reel well sub-sea BOP
Drilling
Seismic reservoir 3-D well
monitoring array trajectory design

PCB1012
The oil and Gas Industry needs brains
• Oil and gas exploration and production are very

costly. The very large investments must be justified
by intelligent proposals and decisions.
• The high technology used in the oil industry
requires a high level of skills.
• Major oil company graduate workforce is
dominated by M.Sc., Ph.D. and engineers

PCB1012
Myths & Truths
Old people, all from western countries

PCB1012
Old people from western countries?
• In the 1970’s, the majority of graduate staff in major oil
companies was from western countries.
• In the 1980’s, all major oil companies put in place diversity
programmes aimed at increasing the number of
nationalities of their staff.
• National oil companies employ mainly staff from their own
country.
• 80% of the industry’s workforce will age out in the next five
to ten years and are gradually replaced by eager, younger
workers.

PCB1012
Myths & Truths
It is a dirty and polluting industry

PCB1012
A Dirty and Polluting Industry
• True in the early 20th century when the environment was
not an issue.
• A behavioural turn-around took place in the 60’s, along with
an increased awareness about our environment.
• Staff hired in the 1970’s and 1980’s were very much aware
of the need to protect the environment and drove their
companies to become more environmentally-conscious.
• Drilling for oil and gas involves many technical risks,
especially as drilling moves into deeper waters, where
everything must be done remotely. Insufficient safety
measures may lead to catastrophic accidents.

PCB1012
A Dirty and Polluting Industry…
Oil field in Russia in 1920
Oil field in Venezuela in 1950
An Oil
“Gusher”
Oil field in Baku in 1930

PCB1012
…That is Changing its Ways of Working
Oil Field in France
The Groningen field clusters, designed to make

as little visual impact on the environment as possible
Constant monitoring of environmental impact

Of operations at offshore platforms

PCB1012
Deep Water Platform Horizon

PCB1012
Blown-out Macondo Well

PCB1012
Myths & Truths
Oil companies fix the oil price

PCB1012
Petroleum Consumption and Price

PCB1012
Historical Oil Price

PCB1012
Oil Price on the Stock Market

PCB1012
Myths & Truths
The oil lobby sabotages renewables

PCB1012
The Oil Industry and Renewables
• Major Oil Companies have become Energy Companies
• Since 2006, the oil industry produces more than 75% of
new energy options for our future (solar, fuel cells, wind,
and hydrogen).
• The current trend is a focus on bio or agro-fuels.
• In Abu Dhabi, over the next decade, a city of 50,000
residents will be built from scratch. And unlike any other city
in the world, Masdar City will have no carbon footprint.
Once it's built, the city will be powered entirely by
renewable energy.

PCB1012
Myths & Truths
Oil companies steal natural resources

PCB1012
The Ownership of Oil & Gas
• Until the 50’s, the oil produced by oil companies belonged
for a large part to them. They paid taxes and royalties to the
producing countries.
• In the 60’s oil-producing countries nationalized their oil and
gas resources. Oil companies received a share of the
production.
• Currently, in most countries, natural resources belong to
the state. Oil companies are contracted to find and extract
oil and gas. Their investment and expertise are paid in kind,
a share of production called “equity oil or gas”, or receive a
fee per barrel produced.

PCB1012
The Petroleum System

PCB1012
What is Petroleum ?
• From Latin, Petro (rock) and oleum (oil)
• Definition of Petroleum:
‘A naturally-occurring liquid, gas, semi-solid or
solid mixture of hydrocarbons and non-
hydrocarbons molecules’
• Conventional petroleum: oil, condensates, gas
• Unconventional petroleum: heavy oil, tar sand,
and shale oil

PCB1012
What are Hydrocarbons?
• Hydrocarbons are organic compounds containing carbon &
hydrogen atoms bonded together, forming chains.
Cyclo Hexane
H H H H C6H12
H-C-C-C-C-H
H H H H Benzene
methane n-Butane C6H6
CH4 C4H10

PCB1012
Crude Oils Come in Various Colours

PCB1012
Crude Oils Come in Various Colours
• Due to different composition

of the crude
Anding Utara-1 Anding Utara Anding Utara

Basement-1 DST-2 Basement-1 DST-3

PCB1012
Common Volumetric Units
Used in the Industry

PCB1012
The Origin of Oil: Organic Matter
Lake Plankton
Plant Material
Ocean Plankton

PCB1012
Deposition and Burial or Organic Matter

PCB1012
Source Rock:
PCB1012 Organic-rich Black Shale
Source Rock
• A source rock is a rock that is capable
of producing hydrocarbons.
• requirements for source rocks:
• they need to have a high enough
concentration of organic matter and
• they should have been heated to a high
enough temperature to reach thermal
maturation.

PCB1012
Fate of Organic Matter
Graphite
Dead Carbon
Dry
Temperature
Thermally Gas
Matured
Organic Wet
Matter
Gas
Kerogen
oil
Humic
Substances methane
Organic
Matter

PCB1012
Source Rock Maturation &
Petroleum Generation
• The earth’s temperature
increases with depth in the
earth’s crust.
• As organic matter is buried,
it is heated and
transformed into kerogen,
oil and gas.
• Most oil is produced
between temperatures of
60 and 120 degrees C, at a
depth range known as the
“oil window”.

PCB1012
Migration
• After petroleum has been generated, it must migrate out
of the source rock and into the trap where it will
accumulate and form an oil or gas field.
• Some oils form close to the reservoir and can reach it
vertically but in many cases oil migrates laterally over
several kilometers before coming to rest in a reservoir.
• Petroleum migrates as a mixture of oil and gas through
water-saturated rocks.
• In the reservoir these phases separate according to
density with the most dense water on the bottom, least
dense gas on top and oil between the two.

PCB1012
Oil Migration into Reservoirs

PCB1012
Where are Oil & Gas Found?
• In large holes like caves

in the subsurface ?
• In the middle of the sea,
below the seafloor?
• In dune sands?
• In the pores of host
rocks?

PCB1012
Oil and Gas are Found
in the Pores of Rocks
0.5 mm
SEM Photo of Miocene limestone reservoir
5 cm Core sample of Cretaceous limestone reservoir

PCB1012
Reservoir Rock
Upper
Under the Microscope Khuff Limestone
5 mm
PCB1012
Reservoir Rock
• Reservoir rocks are rocks capable of storing large
quantities of oil and gas.
• They are characterized by
high porosity and
effective permeability.
Examples of good reservoir rocks are sandstone and
limestone.
• Aquifers, which are rocks that contain ground
water, have the same properties as reservoir
rocks with the exception that they contain water
rather than petroleum.

PCB1012
Petroleum System Elements

PCB1012
Sealing Rock
• A seal is an impermeable rock through

which oil and gas cannot move effectively
and which blocks the upwards migration of
oil and gas.
• Sealing rocks are made of mudstone,
claystone or salt.

PCB1012
Traps
• A trap is a geometric body where oil and gas are
kept in place.
• It usually consists of a porous rock sealed by an
impermeable rock
• Examples of traps include:
•Structural Traps
Folds (Anticline)
Faults
•Stratigraphic Traps
Pinch out
Unconformity

PCB1012
The Classical Anticlinal Trap

PCB1012
Trap Styles
Fault
Anticline
Salt dome
Pinch-out
Unconformity

PCB1012
Petroleum System Summary
• 4 essential elements of a Petroleum System:
Source Rock
Reservoir
Seal
Trap
• 4 essential processes of a Petroleum System:
Maturation
Generation
Migration
Accumulation

PCB1012
Careers in the Oil Industry

PCB1012
Typical Oil
Field Life Cycle
From Acreage
Acquisition
To
Product marketing
upstream
(exploration and
production) to
downstream
(transport, refinery,
manufacture
and sales)

PCB1012
Careers in the
Oil Industry
Many different
disciplines are
involved in the
various domains of
the oil industry, from
upstream
(exploration and
production) to
downstream
(transport, refinery,
manufacture
and sales)

PCB1012
Careers for Geoscientists
• Explorationist: finds new oil and gas fields
• Reservoir Geologist: studies fields and reservoirs for
development and production
• Operations Geologist: analyses the subsurface geology in
wells while drilling
• Seismic Acquisition and Processing Geophysicist:
designs, executes and processes seismic surveys
• Seismic interpreter: extracts the geology in seismic
• Production seismologist: images the subsurface geology
of producing fields.
PCB1012
Careers for Petroleum Engineers
• Operations PE: Designs wells, leads and supervises
drilling operations.
• Drilling Engineer: Executes the drilling operations of new
wells.
• Reservoir Engineer: analyses and models the reservoir to
ensure optimum recovery of hydrocarbons.
• Completion Engineer: designs and supervises the
completion of wells in producing reservoirs.
• Production Engineer: Supervises producing wells to
ensure optimum production performance
PCB1012
Careers for Mechanical Engineers
• Drilling Engineer: Executes the drilling operations of new
wells.
• Facilities Engineer: Designs and builds surface facilities in
field development
• Operations Engineer: Designs and supervises
development and production operations.
• Control Engineer: Coordinates operations in field
• Maintenance Engineer: Ensures that all facilities are in
good working order during production operations.
PCB1012
Careers for Electrical Engineers
• Logging Engineer: Plans and executes the logging
operations in new wells.
field development, especially power plants.
• Instrumentation Engineer: Designs and supervises
production monitoring instrumentation in field development.
• Control Engineer: Coordinates operations in field
• Maintenance Engineer: Ensures that all electrical facilities
are in good working order during production operations.
PCB1012
Careers for Civil Engineers
• Construction Engineer: Plans and executes the
construction of drilling sites onshore and offshore; designs
and builds refineries and other plants.
field development.
• Pipeline Engineer: Designs and builds pipelines onshore
and offshore
• Environmental Engineer: Determines environmental
measures for wells and fields; ensures that all operations
are environmentally safe.

PCB1012
Careers for Chemical Engineers
• Mud Engineer: Plans and executes the preparation of
drilling mud while drilling wells.
• Reservoir Engineer: analyses and models fluid flow in
reservoirs to ensure optimum recovery of hydrocarbons;
designs and executes chemically enhanced recovery
operations.
• Process Engineer: Designs and builds hydrocarbon
treatment plants and refinery components.
• Product Engineer: plans and supervises hydrocarbon
product manufacturing operations.

PCB1012
Careers for Other Disciplines
• Environmental Scientists: Prepares, submits and
evaluates Environmental Impact Assessments (EIA);
ensures that all operations are environmentally safe.
• IT Engineer: Plans IT and computer hardware and

software requirements for petroleum operations. Ensures
that all IT equipment is up-to-date and operational; designs
software for petroleum operations.
• Safety Engineer: Executes HSE Management plans for all

stages of petroleum operations; ensures that all operations
are conducted in a safe and healthy way.

PCB1012
Compensation in the 21st Century
• Salary ranges: Average

Geoscientists $75,000 - $260,000 $140,000
Geo-technicians $40,000 - $90,000 $66,000
Engineers (19 years avg.) $83,000 - $185,000 $122,000
Engineering technicians $55,000 - $86,000 $64,000
9% increase over last year

Average additional compensation, ($60,000 for technical
people or 50%)
Signing bonus, relocation expenses expected
Sources: SPE, AAPG, AAPL, Internal

PCB1012
Next Lecture
Exploring for oil and gas

The future of energy

PCB1012
THANK YOU

PCB1012

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Introduction

• Coordinator: Mr. Khaled Elraies, GPED

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

1. Review some myths and truths about

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Myths and Truths about The Oil Industry

Jobs in the oil industry will soon disappear

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

after Edwards, AAPG 1997

Introduction to the Oil and Gas Industry & Sustainable Development

Jobs in the oil industry will soon disappear

Introduction to the Oil and Gas Industry & Sustainable Development

100 BILLION Remain Important

after Edwards, AAPG 1997

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

The oil industry is a low-tech world

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

• Oil and gas exploration and production are very

Introduction to the Oil and Gas Industry & Sustainable Development

Old people, all from western countries

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

It is a dirty and polluting industry

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Oil field in Baku in 1930

Introduction to the Oil and Gas Industry & Sustainable Development

The Groningen field clusters, designed to make

Constant monitoring of environmental impact

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Oil companies fix the oil price

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

The oil lobby sabotages renewables

Introduction to the Oil and Gas Industry & Sustainable Development

Oil companies steal natural resources

Introduction to the Oil and Gas Industry & Sustainable Development

The Petroleum System

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

Introduction to the Oil and Gas Industry & Sustainable Development

• Due to different composition