Introduction to

Oil & Gas Industry

 Introduction to Petroleum Industry

• Introduction to Oil and Gas industry

consists of the following sections:
– 1. Oil formation and Historical perspective
– 2. Upstream & Downstream
– 3. Life cycle of oil field
 Introduction to Petroleum Industry

Oil Formation
Oil was formed from the remains of animals and plants that lived
millions of years ago in a marine (water) environment before the
dinosaurs.   Over the years, the remains were covered by layers of
mud.  Heat and pressure from these layers helped the remains turn
into what we today call crude oil .  The word "petroleum" means "rock
oil" or "oil from the earth."
 Introduction to Petroleum Industry

Scientific definition:
Oil and Gas are called Hydrocarbons because they
are compound of atoms of hydrogen and carbon.

H Methane (gas) – the simplest hydrocarbon

with one carbon atom and four hydrogen
H C H atoms; is written as CH4.

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 Introduction to Petroleum Industry

Historical Perspective
• The use of oil based products were recorded in the
earliest writing of man:
– Bitumen was used in the building of the tower of Babel
– Sumerians used it for paving the Hanging Gardens of Babylon
– In India, Burma pitch was used for buildings and as fuel for lamp
– In North America native Indians had been collecting oil for use
as a medicine
 Introduction to Petroleum Industry

Modern oil history started in:

– 1848 the first well was drilled in Baku,
Azerbaijan at Bibi-Eybat place
– 1859 “Colonel” Drake successfully drilled the well
at a depth of 69 feet in Titusville, Pennsylvania.
– Around the same time, successful drilling
for oil was also taking place in Canada and Trinidad.

Oklahoma, 1930, Baku, 1890, oil wells in

Wild Mary & Sudik Sabuntchi field
farm
 Introduction to Petroleum Industry

This slide shows some of the product that we use in our everyday life and
that are the result of refining process which is one of the main stages of the
Downstream phase
 Introduction to Petroleum Industry

Upstream and Downstream side of oil industry

The oil industry is divided into two major sectors. The sectors are defined to
categorize the operations within each.

(1) Upstream: Exploration & Production or E&P.

Involves operations in searching for underground or underwater oil

and gas fields and drilling exploratory wells and at the same time,
operating the wells that recover to re-direct the crude oil or raw natural
gas to the surface.
 Introduction to Petroleum Industry

Work, involved in both industry sectors, comprises not only of the oil field
jobs but also jobs within office environment.
Reservoir Engineers and Geoscientists Oil traders
(Upstream jobs) (Downstream jobs)
 Introduction to Petroleum Industry

What is Downstream?

• (2) Downstream: Includes operations that processes

and stores, markets and transports crude oil, natural gas
liquids like ethane, butane and propane.

The downstream sector includes:

–all oils refineries and petrochemical plants,
–petroleum product distribution via the affiliated retail outlets
–and natural gas distribution companies, within the operations.

The downstream industry markets products such as petrol and

diesel and jet fuel, asphalt, lubricants, plastics fertilizers, antifreeze
and even pharmaceuticals and cosmetics.
 Introduction to Petroleum Industry

Oil refineries are key to obtaining hydrocarbons. Oil in different parts of

the world contains different proportions of the various hydrocarbons.
There are refineries in many parts of the UK including Edinburgh,
Liverpool and Milford Haven. North Sea oil is relatively high in naphtha,
which is used for making plastics.
 Introduction to Petroleum Industry
Fuel/Energy

Crude Refinery
Gases
Oil
LPG
NGLs
Gasoline
Oil
Other
Feedstocks Refinery Naphtha
(Naphtha,
Residues, Jet/Kerosene
Blending
Components) Gasoil/ Diesel

Refining Residual
Fuel Oil
process Fuel/Energy
 Introduction to Petroleum Industry

3.Life cycle of processing of oil field consists

of 5 stages:
– Exploration
– Appraisal
– Development
– Production
– Abandonment

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 Introduction to Petroleum Industry
Revenue

PRODUCTION
40 EXPLORATION

30
APPRAISAL

20
Revenue
ABANDONMENT
10 DEVELOPMENT

-10

-20
-9

-7
-6
-5
-4
-3
-2
-1

14

16

19
20
21
-10

-8

0
1
2
3
4
5
6
7
8
9
10
11
12
13

15

17
18
Revenue
Year
 Introduction to Petroleum Industry

• Exploration is about finding oil and gas fields. Main goal is to

identify and deliver commercially viable field development
opportunities.

The following geological and geophysical (G&G) activities would

take place:
– Conduct seismic surveys
– Process and interpret the seismic data and map the potential reservoir
– select exploration well locations
– drill and evaluate exploration well data:
– core analysis to establish porosity and permeability
 Introduction to Petroleum Industry

The following geological and geophysical (G&G) activities would take

place:

– logging data to determine porosity, water and hydrocarbon saturation

– production test data to determine flow rates and maximum production
potential
– PVT to allow reservoir fluid analysis and ascertain oil/gas quality and
the shrinkage or expansion factor
– build a computer model of the reservoir and identify and where possible
remove major uncertainties by further data analysis, seismic
reprocessing etc
 Introduction to Petroleum Industry
Appraisal

Exploration phase of life cycle closely intertwines with the next stage of
processing which is Appraisal. The objective of Appraisal is to obtain
information about the reservoir in order to make a decision whether or not to
proceed with development of the field. This stage comprises of the following
activities:

– planning and execution of a data acquisition programme of additional

seismic,
– reprocessing existing seismic data to obtain enhanced results and the
drilling of
– appraisal wells
– evaluation of the results from the seismic and appraisal drilling activities
– using the information from the seismic and drilling programmes to update
the computer reservoir simulation models
– conduct initial conceptual field development planning and an environmental
impact assessment (EIA) study of these conceptual plans
 Introduction to Petroleum Industry
Development

Development stage
The initial phase of field development planning could involve the
assessment of more than one development option. Four components
of a development plan can be used to describe each option:

1. Reservoir: number, location, type of wells; assessment of oil

recovery mechanism; assessment of production over the
development stage
2. Wells: the design of wells to meet production requirements
3. Facilities: process facilities, infrastructure, terminal/export facilities
4. Operating and Maintenance strategies: manning level, daily
production level, support requirements, for ex. helicopters, supply
vessels
 Introduction to Petroleum Industry
Production

Production phase is targeted at bringing the well fluids to the

surface and preparing them for use in refinery or processing plant. All
production and maintenance activities would be carried out to meet strict
safety and environmental policies and procedures . The main activities
consist of the following:

– regulate production and injection to meet approved plans for the quantity
and quality of product.
– monitor and record all information to manage the reservoir, wells and
facilities.
– This could lead to further reservoir development or modifications to the
facilities
– plan and schedule all production and maintenance activities to minimise
production deferment and operating costs
– carry out maintenance to safeguard the technical integrity of all wells and
facilities and ensure their availability over the life of the field.
 Introduction to Petroleum Industry
Professions

Exploration
– Geologists / Geophysicists
– Reservoir Engineers
– Logging Engineers

Drilling
– Drilling Engineers
– Drilling Supervisors
– Toolpushers
– Drillers
– Drilling Fluid Engineers
– Drillers
 Introduction to Petroleum Industry
Professions

Production

– Completions Engineers
– Petroleum Engineers
– Production Engineers
– Production Assistants
– Guagers / Well Attendants
– Workover Toolpusher
 Introduction to Petroleum Industry

Oil Production
ONSHORE OFFSHORE
 Introduction to Petroleum Industry

• Offshore Drilling Platforms

 Introduction to Petroleum Industry

Floating Production Storage and Offloading Vessel is a floating vessel used by

the offshore industry for the processing and storage of oil and gas.
The FPSO vessel is designed to receive oil or gas produced from nearby
platforms or templates, process it, and store it until the oil or gas can be offloaded
onto a tanker or transported through a pipeline.
 Introduction to Petroleum Industry

FPSO - 2