Oil patch broad overview for non technicals

1
The “Oil Patch”
A Broad Overview
for Non-technical Persons
Glenn R. Power: Resource Management Senior Geologist

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The following PowerPoint Presentation is intended to provide
non-technical persons and „junior staff‟ with insight into the Oil
and Gas Industry (the “Oil Patch”).
It is impossible to completely avoid the use of technical terms.
Some of these terms have been intentionally included because
many people in this industry will hear „technical persons‟ use
these terms in presentations.
This broad overview of the many aspects of the Oil and Gas
Industry should help the non-technical person have some
confidence that the technical persons use lots of data to look
for, find, and produce oil and gas safely.
There is no exam; nobody will be asked what you are able to
recall. Relax, enjoy, just try to take in the “bigger picture”.
Glenn Power

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The „Oil Patch‟ in a Clamshell
Chapter 1:
Where does oil come from?

5
Exploration, discovery, delineation and
production…
Familiar words in the “Oil Patch”…
But where does oil and gas come from?

7
For the most part, ALL of Earth‟s
energy is provided by our Sun.
Plants harness that energy and
produce sugars and fats that are
consumed as food by animals.
This food can be considered as
„energy packets‟ and when plants
and animals die this energy gets
„trapped‟ as organic matter.
The organic matter that doesn‟t get
consumed gets buried in lakes,
swamps and oceans along with
sediments, grains of „dirt‟ (mud,
clay, silt and sand).
Over vast amounts of time this
organic matter (trapped in layers of
mud) gets buried deeper and
deeper into the earth. It forms
layers of rock which are known as
“source rock” from which oil and
gas are generated.

13
The plants and „critters‟ that
make up the organic matter, the
„storehouses of energy‟, can not
be seen with the „naked eye‟.
Microscopes allow us to see their
incredible structure.

17
Algae can reproduce in astounding numbers
in lakes and seas giving rise to what is
referred to as an „algal bloom‟.
Green algae blooms in lakes is often referred
to as “pond scum” and Red algae blooms in
oceans is often referred to as “Red tides”.
In a single season some algal blooms can
cover hundreds of square miles. Multiply that
by hundreds and even thousands of years!

19
Algal „blooms‟ can be seen by satellite.
This one (off the coast of SW England)
covers an area in excess of hundreds of
square kilometers! The inset white line is
80km in length.
This is a singular occurrence. Imagine the
volume of algae in a hundred years, a
thousand, a million or more!
That‟s an incredible amount of organic
matter which can eventually be converted
into oil and gas.

20
„Fossil fuel‟ is a “non-renewable”
energy source with a finite supply.
Despite decades of „warnings‟ and
„cautions‟ to reduce consumption
mankind‟s insatiable appetite for
energy continues to grow.

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As “conventional oil” reserves diminish modern technology is being challenged
to replace those reserves with “renewable energy”. One potential source is the
growth of algae on an industrial scale to generate biodiesel.

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Another potential source of “unconventional” oil and gas reserves is the
“Shale Plays”. What was once considered “source rock” with little to no
permeability is now being drilled and fractured to produce gas and oil.

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Chapter 2:
What makes up a reservoir?

25
The amount of porosity and
permeability in reservoir rocks is often
a function of the „parent rocks‟ that the
grains are eroded from.
The distance that those grains travel
before they are deposited will also affect
the grain size and shape and degree of
sorting; all are factors which affect the
porosity and permeability.
Additionally, sand grains that are
deposited in a beach environment will
likely be reworked over and over by
wave action and tides. This results in
angular grains becoming rounded, clays
are removed and the sorting is
increased.
Geologists need to study the source of
the sediment and the environments of
deposition in order help them predict
where the best reservoirs can be found.

27
In a later section we will be shown more detail on HOW a well is drilled.
At the moment it is sufficient to say that a drilling rig uses a “drill bit” to
drill down into the solid rock layers.
The drill bit breaks up the rock layers into small pieces called
“cuttings”. The geologist, or „mudlogging geologist‟ at the “well-site”
examines these cuttings under a microscope to determine what is the
rock type (sandstone, shale, limestone) and whether or not there is
any porosity and permeability.
The geologist also looks at these cuttings for their size (fine or coarse)
and shape (angular or round) and other parameters that help to
determine the “environment of deposition” of the sediments that
make up the „rock layers‟.

31
Oil comes out of the ground from microscopic holes in the
rock called “pores” or “pore spaces”. The measure of the
amount of pore space relative to the amount of solid rock is
called porosity and it is expressed as a percentage. Some
estimate of the porosity is essential to determine how much
oil there could be in a potential reservoir (the size of the
resource).
The next essential component of a reservoir is how well
connected those pore spaces are and how well oil or gas
can flow through the rock. This is called permeability and
is typically measured in units of millidarceys. The higher the
permeability of the rock the better the flow rate and the
more oil or gas you can produce (the larger the reserves).
Key Reservoir Rock Properties

32
A pore is a small open space.
Connected pores give a rock permeability.
The ability to flow fluids through them.
Porosity and Permeability
Touch a sugar cube to coffee and watch the
coffee „flow‟ into the cube!Quartz sand grains with visible pore spaces.

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Porosity
If all of the particles that make up the
rock are the same size and shape
and are stacked on top of each other
like the diagram on the top left, there
would be a very high porosity
percentage (48%).
If the particles get pressed together
(as they do when they get buried) the
rock will lose some of the initial
porosity. The diagram to the left
shows that the porosity has been
almost cut in half (reduced from 48% to
26%).

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Effects of Size and Shape on Porosity and Permeability
Porosity and permeability of the
reservoir rocks is affected by the size
and shape of the individual grains.
Angular grains that are not very
spherical tend to decrease the
porosity and permeability, rounded
grains that are highly spherical tend
to have the highest porosity and
permeability.
Another factor is how well sorted
those grains are.
Generally speaking, the maximum
porosity is achieved when all of the
grains are the same size and „highly‟
spherical. If there is a mix of grain
sizes and shapes the porosity and
permeability tend to be reduced.

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Effects of Sorting on Porosity and Permeability
If all of the particles that make
up the rock are NOT the same
size and shape (moderately
sorted) then some of the
smaller particles can fit in
between the bigger ones and
porosity is reduced further.
If there are lots of smaller
particles mixed in with larger
ones (poorly sorted) the
porosity will be reduced further
and the oil or gas will not flow
through the rock as well, so the
permeability is also reduced.

The geologist attempts to determine the „properties‟ of the cuttings,
their size and shape and degree of sorting.
These properties affect the reservoir porosity and permeability and
ultimately, how much oil and gas you can produce from the reservoir.

38
Chapter 3:
Environments of Deposition
Where do the reservoir rocks come from?

40
Mountains get eroded, forming sediment (gravel, sand, silt and mud). Rivers
move that sediment into lakes and oceans. Waves and tides continue to move
that sediment around. Incredible volumes of organic matter „rain down‟ to the
sea floor and get deposited together with the sand, silt and mud. Sediments
and organic matter get buried deeper and deeper over time, eventually forming
source rocks and reservoirs.

41
Very fine grained
Well rounded
Well sorted
Far
Very coarse grained
Angular
Poorly sorted
Close
Size
Shape
Sorting
Distance from source

42
Generally speaking rivers meet the sea at right angles to the shoreline. Beach
sands are close to shore and muddy sediments are further offshore. The continental
shelf and slope run parallel to the shoreline. These „patterns‟ can be recognized
from the data collected from seismic and wellbores. The better we can recognize
these patterns the more success we will have in finding oil and gas deposits.

43
When the regional scale is determined, the explorationist can „zoom in‟ on the
type of environment that presents the „best chance‟ to find oil and gas. The next
slide will focus on the area outlined in the red rectangle above. Clastic shoreline
deposits are common oil and gas reservoirs in the Jeanne d‟Arc basin.

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We have seen some schematics or
„cartoon‟ pictures of these
depositional environments,
now let‟s look at the actual
environments in „modern‟ settings.

46
Mountainous „highlands‟ with
alluvial fans at the base and
terraced sediments deposited
by rivers and streams.
Rivers redistribute the
sediment and carve river
valleys that form terraces
(„steps‟) from „earlier‟ incised
valleys.
The eroded rock and sediment
spills out onto floodplains. In
addition to coarse grained
sediments there are fine
grained sediment (clays and
muds) that support vegetation.
This type of environment is
ideal for farmland.

47
Braided fluvial channels in
an incised valley. Note the
„rocky outcrop‟ along the
valley edges.
There is very little vegetation
within the river valley which is
typically evidence of high
rates of water flow and
relatively steep gradients. The
fertile farmland in the
background contains muds
and clays from times when
the river overflows its banks
unto the „floodplain’.

48
When the gradient of the river
valley is low, „meandering‟ river
channels form. There is a high
content of clay and mud which is
ideal for establishing vegetation.
The water flow rate is typically low
for most of the year but may have
seasonal episodes where the
rates are very high. Some of the
„bends‟ in the river system can be
eroded and become cut off,
forming „ox bow‟ lakes
(highlighted in the red rectangles).
The one highlighted in the top of
the picture has filled with mud and
clay.
Sediment in the valley is
constantly eroded and
redeposited. The previous bends
in the „loops‟ are very obvious
from this aerial photo.

49
When the gradient of the river
valley is low, „meandering‟ river
channels form. There is a high
content of clay and mud which is
ideal for establishing vegetation.
The water flow rate is typically low
for most of the year but may have
seasonal episodes where the
rates are very high. Some of the
„bends‟ in the river system can be
eroded and become cut off,
forming „ox bow‟ lakes
(highlighted in the red rectangles).
The one highlighted in the top of
the picture has filled with mud and
clay.
Sediment in the valley is
constantly eroded and
redeposited. The previous bends
in the „loops‟ are very obvious
from this aerial photo.

50
Where fluvial (river) systems
merge with open ocean
(marine) systems and
sedimentation rates are high
deltas may form.
This delta has multiple
distributary channels that
„fan out‟ and distribute the
sediment into the nearshore
environment. These deposits
are constantly modified by
waves and tides.
„Modern‟ deltas have played a
very important role in the
history of humans on this
planet. „Ancient‟ deltas are
frequently targeted for their oil
and gas reserves.

51
The Nile delta (shown here)
clearly shows the importance
of fresh water river systems for
agriculture.
Arid conditions exist
everywhere within only a very
short distance from the „life
sustaining‟ waters of the Nile.
This is a „modern‟ delta.
„Ancient‟ deltas are frequently
targeted for their excellent oil
and gas reservoir qualities.

52
Satellite images of the Mississippi delta. The image on the right is color enhanced
to show the extent of sediment distribution beyond the mouths of the rivers and into
the Gulf of Mexico. The prolific oil and gas fields of the Gulf of Mexico are a result
of millions of years of sedimentation and burial of both sediment and organic
matter.

53
Where rivers meet the sea
you frequently find barrier
Islands with sandy beaches,
tidal inlets and muddy
lagoons.
These environments are great
places to live for a time but
they are constantly changing,
as sea level rises and falls
through time.
Shoreline erosion and
migration is constant despite
man‟s ceaseless efforts to
prevent such change.

58
From „modern‟ depositional
environments to „ancient‟ depositional
environments.
The following slides illustrate the types
of depositional environments that
contribute to the reservoirs found in the
Jeanne d‟Arc Basin.

Starting approximately
200 million years ago
North America was being
„torn away‟ from Europe
and Africa.
In the area of the Jeanne
d‟Arc Basin there were
mountains being uplifted
and eroded, large rivers,
lakes, beaches and
deltas were forming the
sandstone reservoirs of
the Jeanne d‟Arc,
Hibernia, Catalina and
Ben Nevis Formations.

60
Cartoon schematic
of depositional
systems active in
the Jeanne d‟Arc
Basin from Jurassic
through Cretaceous
ages.
Hibernia
Hebron
Terra Nova
Whiterose

61
Cartoon schematic
of depositional
systems active in
the Jeanne d‟Arc
Basin with modern
depositional
environments
superimposed.

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Chapter 4:
How do we find a reservoir?

63
How do we determine where to drill for oil?
Data is acquired at every stage of the search for oil and
gas. In the exploration phase seismic is the primary
data set. Seismic surveys are carried out over vast
areas (tens and even hundreds of square kilometers) on
land and at sea.
Seismic provides a basin-wide view of the rocks and
structures beneath the land surface or ocean floor. The
data is necessary to reduce uncertainty and risk and to
help identify locations to drill wells. Without seismic it
would be akin to drilling „blind‟.

64
Early in the “Exploration Phase” seismic acquisition is used to „image‟ the
rocks below the land surface (or below the sea-floor for offshore areas).
The vast majority of the world‟s oil and gas reservoirs are found in „layers‟ of
sedimentary rocks that reflect (and refract) sound waves. The seismic
images are processed and drilling „targets‟ (or prospects) are identified.

65A typical resultant 2D image is shown in the seismic line above.

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Note: The deeper layers are not continuous; they are „broken‟ or faulted. Faulting makes
it much more difficult to map and produce the oil and gas reservoirs.

68
Multiple 2D seismic lines are processed so that a 3D image
can be generated.

69
3D image of the Hibernia Field. Two wells are displayed. The one on the
left is an „up dip‟ oil producer and the one on the right is a „down dip‟ water
injector. These are referred to as a “producer and injector pair”.

70
3D image of the Hibernia Field with numerous wells displayed. Each new
well enhances the understanding of the field and helps determine where
the next well will be placed to maximize the oil recovery from the Field.

72
Chapter 5:
How do we get the oil out of the ground?

The following slides illustrate the
“drilling and completions process”
for oil and gas wells.

87
7
It is not simply a matter of „digging‟ a hole in the ground to
produce oil and gas. It is a very complicated process that
requires a great deal of technology.
Wells are drilled in stages, one section at a time, followed
by what is called a “casing run” to „line‟ the hole to
prevent it from „caving in‟ (and for other reasons).
The first stage drills the well to a relatively „shallow‟ depth
and then emplaces the first “casing string”; this is called
the Conductor Casing.
This is followed by drilling to a „deeper‟ depth and another
“casing run” and so on until the well is drilled to the Final
Total Depth (FTD).

Once a well has been drilled to the final
depth of the reservoir and all of the
casing is cemented in place, it is time to
produce the oil and gas from well.

93
There are four components
which must be present for oil
and gas to accumulate in
commercial quantities.
Source: Organic material
(plants and animals) that gets
„cooked‟ as the temperatures
and pressures increase with
burial.
Reservoir: Pore space that
can store or hold the
hydrocarbons.
Seal: Typically very fine
grained, clayey material
(shale) that is impermeable
(fluids cannot move or „flow‟
through it).
Trap: Typically a structural
feature such as a fold or a
fault that isolates and
encloses an oil or gas
reservoir.

94
Hydrocarbons do not
dissolve in water; they are
less dense than water and
(due to buoyancy) will try to
rise to the surface.
Oil and gas will rise through
the rock column until it
reaches an impermeable
layer that it cannot pass
through (a seal). The
hydrocarbons will then
accumulate in the porous
rock layers below the seal
(the reservoir).
IF there is both oil and gas
present in a reservoir the gas
is less dense and will „float‟
on the oil. Oil is less dense
than water and will „float‟ on
the water.
The result is that there will be
distinct „layers‟ in the
reservoir, a “gas cap”, an “oil
leg” and a “water leg”.

95
Hydrocarbons do not
dissolve in water; they are
less dense than water and
(due to buoyancy) will try to
rise to the surface.
Oil and gas will rise through
the rock column until it
reaches an impermeable
layer that it cannot pass
through (a seal). The
hydrocarbons will then
accumulate in the porous
rock layers below the seal
(the reservoir).
IF there is both oil and gas
present in a reservoir the gas
is less dense and will „float‟
on the oil. Oil is less dense
than water and will „float‟ on
the water.
The result is that there will be
distinct „layers‟ in the
reservoir, a “gas cap”, an “oil
leg” and a “water leg”.

96
Multiple wells are drilled into
an oilfield in order to maintain
the pressure and maximize
the amount of hydrocarbons
that can be produced.
Well A penetrates the „water
leg‟; it does not intersect the
gas or oil leg.
Well B penetrates the „water
leg‟ and the „oil leg‟.
Well C penetrates the
„reservoir in the gas, oil and
water legs.
In this scenario, Well B would
be the oil producer and Wells
A and C would be “injection
wells”. Well A would inject
water in the „water leg‟ and
Well C would inject gas into
the „gas cap‟.
A CB

97
Multiple wells are drilled into
an oilfield in order to maintain
the pressure and maximize
the amount of hydrocarbons
that can be produced.
Well A penetrates the „water
leg‟; it does not intersect the
gas or oil leg.
Well B penetrates the „water
leg‟ and the „oil leg‟.
Well C penetrates the
„reservoir in the gas, oil and
water legs.
In this scenario, Well B would
be the oil producer and Wells
A and C would be “injection
wells”. Well A would inject
water in the „water leg‟ and
Well C would inject gas into
the „gas cap‟.
A CB

99
As the oil is produced it needs to be stored and
then transported to market. In the offshore
environment there are many types of vessels
involved with the production, storage and
transportation of oil and gas to markets.

100
The Hibernia Platform is a Gravity Based Structure
(GBS) that is attached to the seafloor. The produced
oil is stored in the „legs‟ till it is offloaded to tankers.

101
Terra Nova and White Rose oil production is from large specialized „ships‟
called FPSO‟s (Floating, Production, Storage and Offloading).

102
In an offshore environment gas is much more difficult to transport than oil.
It is typically shipped via pipeline to a facility on land and may then be
pressurized and liquefied so that it can be transported by sea to markets
that are frequently very remote from where the gas is being produced.
This is a Liquefied Natural Gas tanker (LNG). There is not yet any
commercial gas production from the Newfoundland and Labrador offshore.
The gas that is produced from the oil is used for fuel and is also re-injected
into the reservoirs which helps to increase oil production.

103
Chapter 6:
Newfoundland and Labrador‟s
“Crown Jewels”

104
There are numerous Significant Discoveries in the NL
offshore but to date, only three producing fields (Hibernia,
Terra Nova, White Rose). The „Hebron Complex‟ is the next
field to be developed with first oil anticipated circa 2017.

105
Significant Discoveries – Grand Banks
Discovered Recoverable
Resources and Reserves:
 2.7 Billion barrels of oil
 6 Trillion cubic feet of
natural gas
 355 Million barrels of
natural gas liquids

108
Expenditures in the NL offshore approached $10 Billion
prior to producing the first barrel of oil from Hibernia in 1997.

109
A major milestone in the NL offshore was reached in the year 2010…
More than ONE BILLION BARRELS of oil have been produced.

Hibernia Field: Hibernia Formation Reservoir

Hibernia Field: Ben Nevis Formation Reservoir

Top Ten Hibernia Field
Producing Oil Wells
Oil Recovery to end 2011

119
Terra Nova
Production Stats

Terra Nova Field: Jeanne d‟Arc Formation Reservoir

Terra Nova FPSO offline
for maintenance.

126
White Rose
Production Stats

White Rose Field: Ben Nevis/Avalon Formations Reservoir

White Rose Field
Producing Oil Wells
Oil Recovery to end 2011

Oil patch broad overview for non technicals

Oil patch broad overview for non technicals

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