How Oil Drilling Works by Craig C. Freudenrich, Ph.D.

In January 2001 alone, the United States produced an estimated 181 million barrels of crude oil and imported 273 million barrels from other countries. This oil gets refined into gasoline, kerosene, heating oil and other products. To keep up with our consumption, oil companies must constantly look for new sources of petroleum, as well as improve the production of existing wells. How does a company go about finding oil and pumping it from the ground? You may have seen images of black crude oil gushing out of the ground, or seen an oil well in movies and television shows like "Giant," "Oklahoma Crude," "Armageddon" and "Beverly Hillbillies." But modern oil production is quite different from the way it's portrayed in the movies.

Photo courtesy Phillips Petroleum Co. Offshore oil rig

In this edition of HowStuffWorks, we will examine how modern oil exploration and drilling works. We will discuss how oil is formed, found and extracted from the ground.

Oil Exploration Oil is a fossil fuel that can be found in many countries around the world. In this section, we will discuss how oil is formed and how geologists find it. Forming Oil Oil is formed from the remains of tiny plants and animals (plankton) that died in ancient seas between 10 million and 600 million years ago. After the organisms died, they sank into the sand and mud at the bottom of the sea.

Photo courtesy Institute of Petroleum Oil forms from dead organisms in ancient seas. (Click here for a larger image.)

Over the years, the organisms decayed in the sedimentary layers. In these layers, there was little or no oxygen present. So microorganisms broke the remains into carbon-rich compounds that formed organic layers. The organic material mixed with the sediments, forming finegrained shale, or source rock. As new sedimentary layers Photo courtesy Institute of were deposited, they exerted intense pressure and heat on Petroleum the source rock. The heat and pressure distilled the Close-up of reservoir organic material into crude oil and natural gas. The oil rock flowed from the source rock and accumulated in thicker, (oil is in black) more porous limestone or sandstone, called reservoir rock. Movements in the Earth trapped the oil and natural gas in the reservoir rocks between layers of impermeable rock, or cap rock, such as granite or marble.

Photo courtesy Institute of Petroleum Oil reservoir rocks (red) and natural gas (blue) can be trapped by folding (left), faulting (middle) or pinching out (right).

These movements of the Earth include:

Folding - Horizontal movements press inward and move the rock layers upward into a fold or anticline. Faulting - The layers of rock crack, and one side shifts upward or downward. Pinching out - A layer of impermeable rock is squeezed upward into the reservoir rock.

Finding Oil The task of finding oil is assigned to geologists, whether employed directly by an oil company or under contract from a private firm. Their task is to find the right conditions for an oil trap -- the right source rock, reservoir rock and entrapment. Many years ago, geologists interpreted surface features, surface rock and soil types, and perhaps some small core samples obtained by shallow drilling. Modern oil geologists also examine surface rocks and terrain, with the additional help of satellite images. However, they also use a variety of other methods to find oil. They can use sensitive gravity meters to measure tiny changes in the Earth's gravitational field that could indicate flowing oil, as well as sensitive magnetometers to measure tiny changes in the Earth's magnetic field caused by flowing oil. They can detect the smell of hydrocarbons using sensitive electronic noses called sniffers. Finally, and most commonly, they use seismology, creating shock waves that pass through hidden rock layers and interpreting the waves that are reflected back to the surface.

Photo courtesy Institute of Petroleum Searching for oil over water using seismology

In seismic surveys, a shock wave is created by the following:

Compressed-air gun - shoots pulses of air into the water (for exploration over water) Thumper truck - slams heavy plates into the ground (for exploration over land) Explosives - drilled into the ground (for exploration over land) or thrown overboard (for exploration over water), and detonated

The shock waves travel beneath the surface of the Earth and are reflected back by the various rock layers. The reflections travel at different speeds depending upon the type

or density of rock layers through which they must pass. The reflections of the shock waves are detected by sensitive microphones or vibration detectors -- hydrophones over water, seismometers over land. The readings are interpreted by seismologists for signs of oil and gas traps. Although modern oil-exploration methods are better than previous ones, they still may have only a 10-percent success rate for finding new oil fields. Once a prospective oil strike is found, the location is marked by GPS coordinates on land or by marker buoys on water.

Preparing to Drill Once the site has been selected, it must be surveyed to determine its boundaries, and environmental impact studies may be done. Lease agreements, titles and right-of way accesses for the land must be obtained and evaluated legally. For off-shore sites, legal jurisdiction must be determined. Once the legal issues have been settled, the crew goes about preparing the land: 1. The land is cleared and leveled, and access roads may be built. 2. Because water is used in drilling, there must be a source of water nearby. If there is no natural source, they drill a water well. 3. They dig a reserve pit, which is used to dispose of rock cuttings and drilling mud during the drilling process, and line it with plastic to protect the environment. If the site is an ecologically sensitive area, such as a marsh or wilderness, then the cuttings and mud must be disposed offsite -- trucked away instead of placed in a pit. Once the land has been prepared, several holes must be dug to make way for the rig and the main hole. A rectangular pit, called a cellar, is dug around the location of the actual drilling hole. The cellar provides a work space around the hole, for the workers and drilling accessories. The crew then begins drilling the main hole, often with a small drill truck rather than the main rig. The first part of the hole is larger and shallower than the main portion, and is lined with a large-diameter conductor pipe. Additional holes are dug off to the side to temporarily store equipment -- when these holes are finished, the rig equipment can be brought in and set up. Setting Up the Rig Depending upon the remoteness of the drill site and its access, equipment may be transported to the site by truck, helicopter or barge. Some rigs are built on ships or barges for work on inland water where there is no foundation to support a rig (as in marshes or lakes). Once the equipment is at the site, the rig is set up. Here are the major systems of a land oil rig:

Anatomy of an oil rig

Power system large diesel engines - burn diesel-fuel oil to provide the main source of power electrical generators - powered by the diesel engines to provide electrical power

Mechanical system - driven by electric motors hoisting system - used for lifting heavy loads; consists of a mechanical winch (drawworks) with a large steel cable spool, a block-and-tackle pulley and a receiving storage reel for the cable turntable - part of the drilling apparatus

Rotating equipment - used for rotary drilling swivel - large handle that holds the weight of the drill string; allows the string to rotate and makes a pressure-tight seal on the hole kelly - four- or six-sided pipe that transfers rotary motion to the turntable and drill string turntable or rotary table - drives the rotating motion using power from electric motors drill string - consists of drill pipe (connected sections of about 30 ft / 10 m) and drill collars (larger diameter, heavier pipe that fits around the drill pipe and places weight on the drill bit) drill bit(s) - end of the drill that actually cuts up the rock; comes in many shapes and materials (tungsten carbide steel, diamond) that are specialized for various drilling tasks and rock formations

Casing - large-diameter concrete pipe that lines the drill hole, prevents the hole from collapsing, and allows drilling mud to circulate

Circulation system - pumps drilling mud (mixture of water, clay, weighting material and chemicals, used to lift rock cuttings from the drill bit to the surface) under pressure through the kelly, rotary table, drill pipes and drill collars pump - sucks mud from the mud pits and pumps it to the drilling apparatus pipes and hoses - connects pump to drilling apparatus mud-return line - returns mud from hole Photo courtesy Institute of shale shaker - shaker/sieve that Petroleum separates rock cuttings from the mud Mud circulation in the shale slide - conveys cuttings to the hole reserve pit reserve pit - collects rock cuttings separated from the mud mud pits - where drilling mud is mixed and recycled mud-mixing hopper - where new mud is mixed and then sent to the mud pits

Drill-mud circulation system

Derrick - support structure that holds the drilling apparatus; tall enough to allow new sections of drill pipe to be added to the drilling apparatus as drilling progresses

Blowout preventer - high-pressure valves (located under the land rig or on the sea floor) that seal the high-pressure drill lines and relieve pressure when necessary to prevent a blowout (uncontrolled gush of gas or oil to the surface, often associated with fire)

Drilling

The crew sets up the rig and starts the drilling operations. First, from the starter hole, they drill a surface hole down to a pre-set depth, which is somewhere above where they think the oil trap is located. There are five basic steps to drilling the surface hole: 1. Place the drill bit, collar and drill pipe in the hole. 2. Attach the kelly and turntable and begin drilling. 3. As drilling progresses, circulate mud through the pipe and out of the bit to float the rock cuttings out of the hole. 4. Add new sections (joints) of drill pipes as the hole gets deeper. 5. 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. Once they reach the pre-set depth, they must run and cement the casing -- place casing-pipe sections into the hole to prevent it from collapsing in on itself. The casing pipe has spacers around the outside to keep it centered in the hole. Photo courtesy Phillips Petroleum Co. Rotary workers trip drill pipe

The casing crew puts the casing pipe in the hole. The cement crew pumps cement down the casing pipe using a bottom plug, a cement slurry, a top plug and drill mud. The pressure from the drill mud causes the cement slurry to move through the casing and fill the space between the outside of the casing and the hole. Finally, the cement is allowed to harden and then tested for such properties as hardness, alignment and a proper seal.

Drilling continues in stages: They drill, then run and cement New Drilling new casings, then drill again. When the rock cuttings from Technologies the mud reveal the oil sand from the reservoir rock, they may have reached the final depth. At this point, they The U.S. Department of remove the drilling apparatus from the hole and perform Energy and the oil industry several tests to confirm this finding: are working on new ways to drill oil, including Well logging - lowering electrical and gas sensors horizontal drilling into the hole to take measurements of the rock techniques, to reach oil formations there under ecologically Drill-stem testing - lowering a device into the hole sensitive areas, and using to measure the pressures, which will reveal whether lasers to drill oil wells. reservoir rock has been reached Core samples - taking samples of rock to look for

characteristics of reservoir rock Once they have reached the final depth, the crew completes the well to allow oil to flow into the casing in a controlled manner. First, they lower a perforating gun into the well to the production depth. The gun has explosive charges to create holes in the casing through which oil can flow. After the casing has been perforated, they run a smalldiameter pipe (tubing) into the hole as a conduit for oil and gas to flow up the well. A device called a packer is run down the outside of the tubing. When the packer is set at the production level, it is expanded to form a seal around the outside of the tubing. Finally, they connect a multi-valved structure called a Christmas tree to the top of the tubing and cement it to the top of the casing. The Christmas tree allows them to control the flow of oil from the well.

Once the well is completed, they must start the flow of oil into the well. For limestone reservoir rock, acid is pumped down the well and out the perforations. The acid dissolves channels in the limestone that lead oil into the well. For sandstone reservoir rock, a specially blended fluid containing proppants (sand, walnut shells, aluminum pellets) 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 oil rig is removed from the site and production equipment is set up to extract the oil from the well.

Blowouts and Fires In the movies, you see oil gushing (a blowout), and perhaps even a fire, when drillers reach the final depth. These are actually dangerous conditions, and are (hopefully) prevented by the blowout preventer and the pressure of the drilling mud. In most wells, the oil flow must be started by acidizing or fracturing the well.

Extracting the Oil After the rig is removed, a pump is placed on the well head.

Photo courtesy California Department of Conservation Pump on an oil well

In the pump system, an electric motor drives a gear box that moves a lever. The lever pushes and pulls a polishing rod up and down. The polishing rod is attached to a sucker rod, which is attached to a pump. This system forces the pump up and down, creating a suction that draws oil up through the well. In some cases, the oil may be too heavy to flow. A second hole is then drilled into the reservoir and steam is injected under pressure. The heat from the steam thins the oil in the reservoir, and the pressure helps push it up the well. This process is called enhanced oil recovery. With all of this oil-drilling technology in use, and new methods in development, the question remains: Will we have enough oil to meet our needs? Current estimates suggest that we have enough oil for about 63 to 95 years to come, based on current and future finds and present demands.

Photo courtesy California Department of Conservation Enhanced oil recovery

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Given current gas prices, the arguments for and against drilling for oil offshore are being reconsidered.
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With gas prices skyrocketing and President Bush and other politicians calling to lift a ban against offshore drilling, a polarized debate has again flared up over the true risks and rewards of this approach to oil prospecting. "There are extremes on both sides," said Judy Penniman of the American Petroleum Institute. A federal ban was initiated by Congress in 1981 to protect sites off California and Massachusetts and has been repeatedly expanded since then. President George H.W. Bush put his own ban in place, by executive order, in 1991, and Bill Clinton extended it to 2012. Together, the rules now thwart drilling in Alaska's oil-rich Arctic National Wildlife Refuge and elsewhere. Scientists and politicians disagree on how much effect any new drilling might have on prices at the pump. Further, they argue about potential impacts on the ecosystem.
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To find potential oil reserves, researchers send seismic waves into the ground. The waves bounce back to reveal the buried topography and can hint at a possible reserve. But seismic noise disorientates whales and leads to mass beachings, said Richard Charter, a government relations consultant for the Defenders of Wildlife Action Fund. Laboratory experiments attempting to pin down the impact of seismic waves on wildlife often must rely on caged animals, which raises questions about whether the animals would have fled and avoided ear damage if they could have, note Robert McCauley and colleagues in The Journal of the Acoustical Society of America. However, Andy Radford, a policy advisor at the American Petroleum Institute, isnt worried. "[We] make sure there are no whales in the area when we are doing our seismic search," Radford said. Several weeks ago, ExxonMobil suspended exploration near Madagascar because more than 100 whales had beached themselves. Ultimately, the seismic tests only help geologists make educated guesses. "You never know until you drill," said Eric Potter, associate director of the Bureau of Economic Geology at the University of Texas at Austin. The usual outcome is failure, Potter said, sending wildcatters back to the seismic drawing board. Questions on land too There are also questions about the impacts on land. Radford described advances that reduce oil drillings environmental footprint. For instance, oil companies are now able to drain several oil fields from one platform. And new horizontal drilling techniques allow more oil to be extracted from a single well. Major infrastructure such as roads, jet landing strips, repair shops, homes and industrial complexes is, of course, still necessary and could disturb wildlife that is accustomed to pristine land, said Charles Clusen, director of National Parks and Alaska Projects for the Natural Resources Defense Council. Similar concerns about wildlife arose before construction of the Alaskan Pipeline, built in the 1970s. "But there hasn't really been any effect on the wildlife; they congregate near the pipeline and it doesn't seem to bother them," said UT's Eric Potter. However, any development of the Arctic National Wildlife Refuge (ANWR) for drilling, as President Bush has long advocated for, could have a greater impact. Polar bears, caribou and other animals trek across this unique area to give birth, said Clusen. Birth is the most vulnerable time in a species life cycle and disrupting it will lead to diminished populations, he explained.

The true overall environmental impact of oil drilling is hard to gauge, due to the paucity of baseline studies, said Jeff Short, a supervisory researcher for the U.S. National Oceanic and Atmospheric Administration (NOAA). In the wild, most animals quickly flush PAH, a toxin associated with oil wells, from their bodies which is why PAH rarely concentrates in the food web and is of minimal risk to humans. The animals justifiably panicked immune response to PAH can cause cancer especially if the animal is exposed continually by, say, living near an oil platform, explained Short. As for human populations, many coastal communities depend on tourism and fishing both of which may be affected by off-shore drilling by increased development, pollution and disruption of marine life habitats. Among traditional communities in the ANWR, some oppose drilling while others have cautiously welcomed it within limits for the improved access to jobs and amenities it could bring. Spills and transportation "The public doesnt have a clear idea of how much oil is moved every day," said Potter. "The amount spilled is miniscule, compared to the amount that is transported," he said. The industry now has a great track record, said APIs Penniman. "Back in the 1880s, we would have had a pretty good chance of ruining the world," she said, but technology and safety regulations are now significantly improved. Today, according to the Mineral Management Service, of the billions of oil transported in U.S. water, 0.001 percent is spilled. Far more oil seeps naturally into the sea, reports the National Research Council (NRC). According to the NRC's most recent analysis, almost half of oceanic oil worldwide arises from natural processes. Oil spills contribute about 12 percent. Even so, says Clusen, there are 300 to 500 spills every year, a number which will grow with increased production. "And once you have a spill, you are pretty much screwed," NOAA's Short said. That's because oil spreads on water at a rate of one-half a football field per second. Recovery can take decades. After 20 years of natural weathering, Prince William Sound the area affected by the ExxonValdez spill appears completely recovered to the casual observer, said Short, but animals high up on the food chain are just now starting to re-colonize. Even a perfectly functioning oil well is a cause of concern due to "produced water," explained Short. Produced water which rises with oil and contains environmental toxins such as polycyclic aromatic hydrocarbons (PAH) is usually tossed overboard. At high concentrations, the contaminants are lethal to marine life. At lower concentrations, according to lab experiments, they can cause birth defects, impaired growth and skewed sex ratios.

Prices at the pump Estimates for the output of oil drilling sites can only accurately be given in very large ranges, Potter explained. For example, the Energy Information Administration predicts ANWR could produce between 1.9 and 4.3 billion barrels of oil, and that might not do much for our pocketbooks. In 2007, the United States consumed 7.5 billion barrels, according to the U.S. Energy Information Administration (EIA). In the best-case scenarios, said Clusen, "we're talking lowering the price of gas by three cents, 20 years from now." The American Petroleum Institute is more optimistic. "When we went into Prudhoe Bay [in northern Alaska], we expected nine billion barrels, and we have already pumped 15," Radford said. And the White House estimates that lifting the drilling bans would produce an extra 18 billion barrels from various locations. But the federal EIA sees no short-term value in additional drilling, a process that takes years for awarding contracts and obtaining permits. "Access to the Pacific, Atlantic, and eastern Gulf regions would not have a significant impact on domestic crude oil and natural gas production or prices before 2030," the EIA states on its web site. "Leasing would begin no sooner than 2012, and production would not be expected to start before 2017." Potter and others note that drilling that began 30 years ago, such as in Prudhoe Bay, Alaska, are helping meet today's demands.

Next Step: Wild New Technologies Why Oil Prices Skyrocketed Black Gold: Where the Oil Is

New Drilling Method Opens Vast U.S. Oil Fields

Published February 10, 2011 Associated Press A new drilling technique is opening up vast fields of previously out-of-reach oil in the western United States, helping reverse a two-decade decline in domestic production of crude. Companies are investing billions of dollars to get at oil deposits scattered across North Dakota, Colorado, Texas and California. By 2015, oil executives and analysts say, the new fields could yield as much as 2 million barrels of oil a day -- more than the entire Gulf of Mexico produces now. This new drilling is expected to raise U.S. production by at least 20 percent over the next five years. And within 10 years, it could help reduce oil imports by more than half, advancing a goal that has long eluded policymakers. "That's a significant contribution to energy security," says Ed Morse, head of commodities research at Credit Suisse. Oil engineers are applying what critics say is an environmentally questionable method developed in recent years to tap natural gas trapped in underground shale. They drill down and horizontally into the rock, then pump water, sand and chemicals into the hole to crack the shale and allow gas to flow up. Because oil molecules are sticky and larger than gas molecules, engineers thought the process wouldn't work to squeeze oil out fast enough to make it economical. But drillers learned how to increase the number of cracks in the rock and use different chemicals to free up oil at low cost. "We've completely transformed the natural gas industry, and I wouldn't be surprised if we transform the oil business in the next few years too," says Aubrey McClendon, chief executive of Chesapeake Energy, which is using the technique. Petroleum engineers first used the method in 2007 to unlock oil from a 25,000-square-mile formation under North Dakota and Montana known as the Bakken. Production there rose 50 percent in just the past year, to 458,000 barrels a day, according to Bentek Energy, an energy analysis firm. It was first thought that the Bakken was unique. Then drillers tapped oil in a shale formation under South Texas called the Eagle Ford. Drilling permits in the region grew 11-fold last year.

Now newer fields are showing promise, including the Niobrara, which stretches under Wyoming, Colorado, Nebraska and Kansas; the Leonard, in New Mexico and Texas; and the Monterey, in California. "It's only been fleshed out over the last 12 months just how consequential this can be," says Mark Papa, chief executive of EOG Resources, the company that first used horizontal drilling to tap shale oil. "And there will be several additional plays that will come about in the next 12 to 18 months. We're not done yet." Environmentalists fear that fluids or wastewater from the process, called hydraulic fracturing, could pollute drinking water supplies. The Environmental Protection Agency is now studying its safety in shale drilling. The agency studied use of the process in shallower drilling operations in 2004 and found that it was safe. In the Bakken formation, production is rising so fast there is no space in pipelines to bring the oil to market. Instead, it is being transported to refineries by rail and truck. Drilling companies have had to erect camps to house workers. Unemployment in North Dakota has fallen to the lowest level in the nation, 3.8 percent -- less than half the national rate of 9 percent. The influx of mostly male workers to the region has left local men lamenting a lack of women. Convenience stores are struggling to keep shelves stocked with food. The Bakken and the Eagle Ford are each expected to ultimately produce 4 billion barrels of oil. That would make them the fifth- and sixth-biggest oil fields ever discovered in the United States. The top four are Prudhoe Bay in Alaska, Spraberry Trend in West Texas, the East Texas Oilfield and the Kuparuk Field in Alaska. The fields are attracting billions of dollars of investment from foreign oil giants like Royal Dutch Shell, BP and Norway's Statoil, and also from the smaller U.S. drillers who developed the new techniques like Chesapeake, EOG Resources and Occidental Petroleum. Last month China's state-owned oil company CNOOC agreed to pay Chesapeake $570 million for a one-third stake in a drilling project in the Niobrara. This followed a $1 billion deal in October between the two companies on a project in the Eagle Ford. With oil prices high and natural-gas prices low, profit margins from producing oil from shale are much higher than for gas. Also, drilling for shale oil is not dependent on high oil prices. Papa says this oil is cheaper to tap than the oil in the deep waters of the Gulf of Mexico or in Canada's oil sands. The country's shale oil resources aren't nearly as big as the country's shale gas resources. Drillers have unlocked decades' worth of natural gas, an abundance of supply that may keep prices low for years. U.S. shale oil on the other hand will only supply one to two percent of world consumption by 2015, not nearly enough to affect prices.

Still, a surge in production last year from the Bakken helped U.S. oil production grow for the second year in a row, after 23 years of decline. This during a year when drilling in the Gulf of Mexico, the nation's biggest oil-producing region, was halted after the BP oil spill. U.S. oil production climbed steadily through most of the last century and reached a peak of 9.6 million barrels per day in 1970. The decline since was slowed by new production in Alaska in the 1980s and in the Gulf of Mexico more recently. But by 2008, production had fallen to 5 million barrels per day. Within five years, analysts and executives predict, the newly unlocked fields are expected to produce 1 million to 2 million barrels of oil per day, enough to boost U.S. production 20 percent to 40 percent. The U.S. Energy Information Administration estimates production will grow a more modest 500,000 barrels per day. By 2020, oil imports could be slashed by as much as 60 percent, according to Credit Suisse's Morse, who is counting on Gulf oil production to rise and on U.S. gasoline demand to fall. At today's oil prices of roughly $90 per barrel, slashing imports that much would save the U.S. $175 billion a year. Last year, when oil averaged $78 per barrel, the U.S. sent $260 billion overseas for crude, accounting for nearly half the country's $500 billion trade deficit. "We have redefined how to look for oil and gas," says Rehan Rashid, an analyst at FBR Capital Markets. "The implications are major for the nation

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