Oil 101 - Introduction to Production
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Oil 101 - A Free Introduction to Oil and Gas Introduction to Oil and Gas Production Today we’re going to talk about the production function of Upstream. If you missed the previous podcasts on Upstream Fundamentals, Exploration and Drilling, be sure to go check those out. We’ll put the relevant links in the program notes. The Production and Offshore Construction Module provides a high level overview of production operations. It introduces the offshore contractors and production service providers that assist E&P companies in efficiently producing oil and gas. We’ll also cover well completions and key measures and drivers that influence production business operations. We’ll also give some historical perspective on this part of upstream oil and gas operations. Production Once oil or gas is found with a wildcat or discovery well, the next step in adding value to reserves is to get the reservoir fluids brought to the surface, or “produce” them. After all, upstream is also called E&P!
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Oil 101 - Introduction to Production
- 2. EKTINTERACTIVE.COM This Production overview includes: Production Operations Well Completions Production Business Operations History of Production P R O D U C T I O N
- 3. EKTINTERACTIVE.COM Production Once oil or gas is found with a wildcat or discovery well, the next step in adding value to reserves is to get the reservoir fluids brought to the surface, or “produce” them.
- 4. EKTINTERACTIVE.COM E&P Upstream is also called E&P! ProductionExploration
- 5. EKTINTERACTIVE.COM Well Completions Once a reservoir has been found, and an exploratory well has been drilled, the well must be completed.
- 6. EKTINTERACTIVE.COM What is Well Completion? Well completion involves adding the “bottom hole” equipment to make the well commercially viable, then preparing the well fluids for production at the surface.
- 7. EKTINTERACTIVE.COM One widely held view is that completion begins when a drill bit first makes contact with a productive reservoir.
- 8. EKTINTERACTIVE.COM Optimum Connection Economic success of a well depends in large part on how the well is completed. A successful completion must first make the optimum mechanical connection between the wellbore and the reservoir.
- 9. EKTINTERACTIVE.COM Functions of Well Completion That optimum connection must perform three functions: • Let oil or gas into the well • Keep water out of the well • Keep the formation from collapsing into the wellbore or reservoir
- 10. EKTINTERACTIVE.COM Maintaining the Well Production technology, equipment and processes also focus on maintaining the well and the necessary processing facilities throughout their economic life.
- 11. EKTINTERACTIVE.COM Challenges in Production The easy oil and gas throughout the world has already been produced. There are new challenges to leave as little valuable hydrocarbon resource behind as possible, may be a 100+ year life of a field.
- 12. EKTINTERACTIVE.COM Estimated Ultimate Recovery (EUR) Estimated Ultimate Recovery (EUR) is defined as getting as many hydrocarbons out of the ground to maximize the value of a lease holding. It is one of the greatest underlying themes for the future economic viability of the oil and gas industry.
- 13. EKTINTERACTIVE.COM Production Operations Production operations is the management of the technology of well completions, field development plans and facilities.
- 14. EKTINTERACTIVE.COM Four Key Factors in Production
- 15. EKTINTERACTIVE.COM Four Key Factors in Production These four factors include: • Hydrocarbon type, whether oil or gas • Reservoir type, whether conventional or unconventional • Location, whether onshore or offshore, or in other remote or severe climate environments • Facilities, including surface and subsurface completion and processing equipment
- 16. EKTINTERACTIVE.COM Production Technology Two reasons to understand the technical aspects of production: 1. Technology is the limiting factor in finding and producing ever more scarce resources. 2. Understanding the offshore construction industry which is large and complex is helpful. A substantial portion of the world’s reserves are being found offshore.
- 17. EKTINTERACTIVE.COM Join now for access to free eBooks, members only forums, and a growing body of digital learning content. Free eBooks include: History of Oil Upstream Fundamentals Midstream Fundamentals Downstream Fundamentals Business Processes/Risk Management Industry Trends Learn More!
- 19. EKTINTERACTIVE.COM Early Well Completions Historical records show that the Chinese first discovered well completions around 1000 BC; primarily for saltwater wells. With the discovery of oil in Pennsylvania in 1859, the industrial petroleum era, as we know it, was born.
- 20. EKTINTERACTIVE.COM Handling Gushers Soon other large gushers were discovered.
- 21. EKTINTERACTIVE.COM Spindletop, TX Spindletop, Texas was discovered in 1901 at 1,170 ft and produced a 100,000 BPD. Known as the Lucas well gusher, it tripled US oil production overnight.
- 22. EKTINTERACTIVE.COM Signal Hill, CA Signal Hill, California was discovered in 1921, where the Alamitos was completed at a depth of 3,114 ft and led to the development of one of the most productive oil fields in the world.
- 23. EKTINTERACTIVE.COM Origin of ‘Upstream’, ‘Downstream’ Oil from these wells came in so quickly that ditches were used to get to move it away from the well. Thus the origin of the term upstream, toward the well, and downstream, toward the tanks and facilities. Upstream Downstream
- 24. EKTINTERACTIVE.COM Origin of the Pump Jack In the 1920s, the Lufkin Foundry and Machine Company, in Texas developed a pumping unit for Humble Oil Company (now Exxon). The pump jack design is now seen around the world.
- 25. EKTINTERACTIVE.COM Brown & Root Another milestone occurred in 1919 when George and Herman Brown, partnered with Dan Root, to start a construction business. Brown & Root constructed the world’s first offshore platform in 1947.
- 28. EKTINTERACTIVE.COM Current Production Capabilities Operators armed with complex technologies and equipment are now completing wells at depths of 25,000 ft, in offshore waters as deep as 10,000 ft or 3,000 m.
- 29. EKTINTERACTIVE.COM Life of an Oil Field Another factor affecting production operations is the life of an oil or gas field.
- 30. EKTINTERACTIVE.COM Oldest Producing Oil Well McClintock No. 1 in Titusville, Pennsylvania, is the world’s oldest producing oil well. McClintock No. 1 was drilled in August of 1861 at a depth of 620 ft. At one point it produced 50 barrels per day.
- 31. EKTINTERACTIVE.COM Optimizing the Field With such extended well life there is a need for accuracy and consistency in recording of every operation done to the well. Every operation affects the long term economic viability of a well or field.
- 32. EKTINTERACTIVE.COM Well History Operators use this data, called a well history, to optimize the field development plans and techniques needed to recover the maximum amount of hydrocarbons from each reservoir.
- 33. EKTINTERACTIVE.COM There’s More? This Intro to Production material was taken from our free Oil 101: Introduction to Oil & Gas course.
- 34. EKTINTERACTIVE.COM EKT Interactive staff have provided oil and gas training since 1986. Visit us at www.ektinteractive.com to learn more. Who are we?
Editor's Notes
- Hi, welcome to Oil 101, the podcast. My name is Doug Stetzer, and I’m content and community manager for EKT Interactive. This content is taken from our Upstream e-learning modules which were developed by industry experts with decades of experience. More content on this topic is available in the free members content library at www.ektinteractive.com. Today we’re going to talk about the production function of Upstream. If you missed the previous podcasts on Upstream Fundamentals, Exploration and Drilling, be sure to go check those out. We’ll put the relevant links in the program notes.
- The Production and Offshore Construction module provides a high level look at production operations. It introduces the offshore contractors and production service providers that assist E&P companies in efficiently producing oil and gas. We’ll also cover well completions and key measures and drivers that influence production business operations. Like our other podcasts, we’ll also give some historical perspective on this part of upstream oil and gas operations.
- Once oil or gas is found with a wildcat or discovery well, the next step in adding value to reserves is to get the reservoir fluids brought to the surface, or “produce” them.
- After all, upstream is also called E&P!
- Once a reservoir has been found, and an exploratory well has been drilled, the well must be completed.
- Well completion involves adding the “bottom hole” equipment to make the well commercially viable, then preparing the well fluids for production at the surface.
- One widely held view is that completion begins when a drill bit first makes contact with a productive reservoir.
- Economic success of a well depends in large part on how the well is completed. A successful completion must first make the optimum mechanical connection between the wellbore and the reservoir.
- That optimum connection must perform three functions. It must let oil or gas into the well, where it can then flow or be pumped to the surface. It must keep water out of the well. And it must keep the formation from collapsing into the wellbore or reservoir.
- Production technology, equipment and processes also focus on maintaining the well and the necessary processing facilities throughout their economic life.
- The easy oil and gas throughout the world has already been produced, and there are new challenges to leave as little valuable hydrocarbon resource behind as possible, over what may be a 100+ year life of a field.
- Estimated Ultimate Recovery (or EUR) is defined as getting as many hydrocarbons out of the ground to maximize the value of a lease holding. It is one of the greatest underlying themes for the future economic viability of the oil and gas industry.
- This module focuses on production operations, which is the management of the technology of well completions, field development plans and facilities.
- Like the drilling module, it is helpful to divide the subject into four basic themes around the key factors that drive complexity in managing production.
- These four factors include: Hydrocarbon type, whether oil or gas Reservoir type, whether conventional or unconventional Location, whether onshore or offshore, or in other remote or severe climate environments Facilities, including surface and subsurface completion and processing equipment
- There are two important reasons to understand the technical aspects of production. First, technology is the limiting factor in finding and producing ever more scarce resources. Second, it really helps to understand the offshore construction industry which is large and complex. It manufactures, assembles and delivers the equipment to produce from offshore wells. As we mentioned in the exploration module, a substantial portion of the world’s reserves are being found offshore.
- This podcast episode is brought to you by EKT Interactive’s Oil 101 - a free Introduction to oil and gas. Our Oil 101 materials are available at www.ektinteractive.com. Within this free, members-only content area you’ll find eBooks on oil and gas industry fundamentals, relevant articles on key oil and gas topics, and a growing body of digital learning content. Claim your free membership and join the Oil 101 learning community at www.ektinteractive.com today.
- Let’s take a step back and talk about some historical points relevant to production.
- Historical records show that the Chinese first discovered well completions around 1000 BC; primarily for saltwater wells. With the discovery of oil in Pennsylvania in 1859, the industrial petroleum era, as we know it, was born.
- Soon other large gushers were discovered.
- Spindletop, Texas was discovered in 1901 at 1,170 ft and produced a 100,000 BPD. Known as the Lucas well gusher, it tripled US oil production overnight.
- Signal Hill, California was discovered in 1921, where the Alamitos was completed at a depth of 3,114 feet and led to the development of one of the most productive oil fields in the world.
- Oil from these wells came in so quickly that ditches were used to get to move it away from the well. Thus the origin of the term upstream, toward the well, and downstream, toward the tanks and facilities.
- In the 1920s, the Lufkin Foundry and Machine Company, in Texas developed a pumping unit for Humble Oil Company (now Exxon). Initially used in the Goose Creek oilfield on the Gulf Coast, it was perfected and the pump jack design is now seen around the world.
- Another milestone occurred in 1919 when George and Herman Brown, partnered with their brother-in-law, Dan Root, to start a construction business. Brown & Root constructed the world’s first offshore platform in 1947.
- We have more interesting and important milestones on the timeline of our History of Oil page, and we’ll include a link in the program notes.
- The production side of the industry has come a long way since those early days.
- Operators armed with complex technologies and equipment are now completing wells at depths of 25,000 feet, in offshore waters as deep as 10,000 feet or 3,000 meters.
- Another factor affecting production operations is the life of an oil or gas field.
- The world’s oldest producing oil well, McClintock No. 1 in Titusville, Pennsylvania, celebrated its 150th birthday in September 2011 and recently underwent remedial work to restore its health. Now a property of the state of Pennsylvania, McClintock No. 1 was drilled in August of 1861 at a depth of 620 feet. At one point it produced 50 barrels per day. Today, it can produce 12 barrels a month if the pumps are turned on. However, saltwater needs to be taken care of because the well now pumps more brine than oil.
- With such extended well life there is a need for accuracy and consistency in recording of every operation done to the well, because every operation affects the long term economic viability of a well or field.
- Operators use this data, called a well history, to optimize the field development plans and techniques needed to recover the maximum amount of hydrocarbons from each reservoir.
- Thanks for listening, and we hope you’ve learned a few things about the production function of upstream.
- Be sure to share this as you see fit, and rate us on itunes if you have a chance. If you want more information about our Oil 101 - ‘Microbes to Markets’ content, go to www.ektinteractive.com and register to access our free members content library. Thanks a lot, and we’ll see you next time.