This document provides an introduction to the petroleum industry, including: - A brief history of the origins and development of the petroleum industry from illumination and transportation to modern exploration and extraction techniques. - An overview of key concepts in petroleum geology like different trap types that can contain oil and gas reserves. - A summary of common classification systems for petroleum reserves like the Petroleum Resources Management System. - A discussion of the relationships between governments, petroleum companies and different licensing models like concessions, production sharing contracts, and service contracts. - A high-level look at some other petroleum industry topics like the global oil market, investment decisions, ownership and a short history of the industry

1. AN INTRODUCTIONTOTHE
PETROLEUM INDUSTRY
Chacrit Sitdhiwej

2. LAST WEEK
energy
primary energy
use of energy
forms of energy
petroleum
2

3. THE ORIGINS OFTHE
PETROLEUM INDUSTRY
illumination
transportation
associated gas v non-associated gas
3

4. FINDING PETROLEUM
gravimetric survey
geomagnetic survey
seismic survey
deviation drilling
refining and products
selected importance
oil and gas as secondary fuels
non-conventional sources of
petroleum
Hubbert’s peak
4

5. TODAY
an introduction to the petroleum industry
5

6. TODAY
petroleum, according to the
Schlumberger Oilfield Glossary
petroleum value chain
petroleum geology
petroleum resources
management system (PRMS)
governments, petroleum
companies and licensing
global market for petroleum
petroleum investment decision
ownership of petroleum and the
rule of capture
a short history of the global
petroleum development
6

7. PETROLEUM,ACCORDINGTOTHE
SCHLUMBERGER OILFIELD GLOSSARY
7

8. PETROLEUMVALUE CHAIN
8

9. PETROLEUMVALUE CHAIN
Adapted from Hunter and Chandler’s Petroleum law in Australia
9

10. PETROLEUMVALUE CHAIN
Adapted from Hunter and Chandler’s Petroleum law in Australia
9

11. PETROLEUMVALUE CHAIN
upstream midstream downstream
Adapted from Hunter and Chandler’s Petroleum law in Australia
9

12. PETROLEUMVALUE CHAIN
upstream midstream downstream
• exploration
• appraisal
• development
• production
•abandonment
Adapted from Hunter and Chandler’s Petroleum law in Australia
9

13. PETROLEUMVALUE CHAIN
upstream midstream downstream
• exploration
• appraisal
• development
• production
•abandonment
transportation of raw
commodity (usually
pipeline or ship)
Adapted from Hunter and Chandler’s Petroleum law in Australia
9

14. PETROLEUMVALUE CHAIN
upstream midstream downstream
• exploration
• appraisal
• development
• production
•abandonment
transportation of raw
commodity (usually
pipeline or ship)
• refining and
processing
• transport of refined/
processed products
• retail sales of
products
Adapted from Hunter and Chandler’s Petroleum law in Australia
9

15. ANY QUESTION?
10

16. PETROLEUM GEOLOGY
11

17. PETROLEUM GEOLOGY
Source: http://www.geomore.com/wp-content/uploads/2012/04/oil-and-gas-traps-4-types.jpg:
12

18. PETROLEUM GEOLOGY
Source: http://www.geomore.com/wp-content/uploads/2012/04/oil-and-gas-traps-4-types.jpg:
12
anticline

19. PETROLEUM GEOLOGY
Source: http://www.geomore.com/wp-content/uploads/2012/04/oil-and-gas-traps-4-types.jpg:
12
anticline fault

20. PETROLEUM GEOLOGY
Source: http://www.geomore.com/wp-content/uploads/2012/04/oil-and-gas-traps-4-types.jpg:
12
anticline fault
stratigraphic trap

21. PETROLEUM GEOLOGY
Source: http://www.geomore.com/wp-content/uploads/2012/04/oil-and-gas-traps-4-types.jpg:
12
anticline fault
salt domestratigraphic trap

22. ANY QUESTION?
13

23. PETROLEUM RESERVES
14

24. PETROLEUM RESERVES: PRMS
CLASSIFICATION
Source: http://www.iasplus.com/en-us/images/publications/united-states/industry-spotlight/oil-and-gas-issue-1-2
* PIIP: petroleum initially in-place
15

25. ANY QUESTION?
16

26. GOVERNMENTS, PETROLEUM
COMPANIES AND LICENSING
17

27. GOVERNMENTS, PETROLEUM
COMPANIES AND LICENSING
concessions
product-sharing contracts
service contracts
18

28. CONCESSIONS
the award of exploration and production rights over a vast area of
acreage
for a relatively long period
providing to the company extensive control over the schedule and
manner in which the petroleum reserves are developed
reserving few rights to the sovereign except for the right to receive
payment based on production (royalty)
Source: Hunter and Chandler’s Petroleum law in Australia
19

29. PRODUCT-SHARING
CONTRACTS (PSC)
[The] contractor bears the cost and the risk of exploration in a
defined area and is entitled to recover its cost out of the
production from the area.After recovery the balance of production
is split between the host country and the contractor.
Source: Hunter and Chandler’s Petroleum law in Australia
20

30. SERVICE CONTRACTS
21

31. A COMPARISON
TYPE CONTRACTOR GOVERNMENT
concession all risk/all reward
reward is function of
production and price
PSC
risk in exploration/
reward in production
share in reward
service contract no risk all risk/all reward
Adapted from http://image.slidesharecdn.com/contractsandpsc-130330081302-phpapp02/95/contracts-and-psc-14-638.jpg?cb=1364631251
22

32. ANY QUESTION?
23

33. GLOBAL MARKET FOR
PETROLEUM
24

34. ANY QUESTION?
25

35. PETROLEUM INVESTMENT
DECISION
26

36. PETROLEUM INVESTMENT
DECISION
HOST COUNTRY
the likelihood of finding
petroleum
the balance between risk and
reward
PETROLEUM COMPANY
net present value (NPV)
internal rate of return (IRR)
payback
Source: Hunter and Chandler’s Petroleum law in Australia
27

37. ANY QUESTION?
28

38. OWNERSHIP OF PETROLEUM
ANDTHE RULE OF CAPTURE
29

39. ANY QUESTION?
30

40. A SHORT HISTORY OFTHE GLOBAL
PETROLEUM DEVELOPMENT
31

41. THE IMPORTANCE OF POLITICS
32

42. ANY QUESTION?
33

43. INTERNATIONAL OIL
COMPANIES
34

44. ANY QUESTION?
35