PETROLEUM TECHNOLOGY

Muhammad Ridha Adhari, S.T., M.Sc

Dept. of Geological Engineering

Faculty of Engineering
Syiah Kuala University
Darussalam, Banda Aceh
2014

OUTLINE
INTRODUCTION
THE FIELD LIFE CYCLE
PETROLEUM AGREEMENT AND BIDDING
EXPLORATION
DRILLING ENGINEERING
DRILLING TECHNIQUES
SUMMARY
REFERENCES

INTRODUCTION

 In chemical terms a hydrocarbon is a compound

containing only the elements carbon and hydrogen.

The early uses of oil date from the time of Noah, who had
used asphalt to make his ark watertight; in those times, oil
was used for medication, waterproofing, and in warfare.
Many references are found to using asphalt, collected
from the natural seepage. (Assaad, 2009)

Generation of petroleum
Hydrocarbons are generated when large volumes of
microscopic plant (algal, phytoplanktonic) and animal
material are deposited in marine, deltaic, or lacustrine
(lake) environments.
The organic material may either originate within these
environments and/or may be carried into the environment
by rivers, streams or the sea.
The microscopic plant and animal material generally is
deposited with fine clastic (silt and/or clay) sediments.

 During burial the sediments protect the organic

material by creating an anoxic (oxygen depleted)
environment.
This allows the organic material to accumulate rather
than be destroyed by aerobic organisms such as
bacteria.
Over time, the organic remains are altered and
transformed into gas and oil by the high temperatures
and increased pressure of deep burial.

 This process can take tens of thousands of years to

occur.
The amount of petroleum generated is a function of
the thickness of the accumulated sediments and
organic material, the burial of these materials, and
time.
Source rock refers to the formation in which oil and
gas originate.
Organically rich, black-colored shales deposited in a
quiet marine, oxygen depleted environment are
considered to be the best source rocks.

Five Major Types of Hydrocarbons of Interest to

Petroleum Exploration :
Kerogen/Bitumens
Petroleum is derived mainly from lipid-rich organic
material buried in sediments. Most of this organic
matter is in a form known as kerogen.
Kerogen is of great geological importance because it is
the substance that generates hydrocarbon oil and gas.

 The organic content of a rock that is extractable with

organic solvents is known as bitumen.
Bitumen forms largely as a result of the breaking of
chemical bonds in kerogen as temperature rises.

 Crude Oil
Crude oil is a mixture of many hydrocarbons that are
liquid at surface temperatures and pressures, and
are soluble in normal petroleum solvents.
It can vary in type and amount of hydrocarbons as
well as which impurities it may contain.

 Asphalt
Asphalt is a dark colored solid to semi-solid form of
petroleum (at surface temperatures and pressures)
that consists of heavy hydrocarbons and bitumens.
It can occur naturally or as a residue in the refining of
some petroleums.
It is produced by the partial maturation of kerogen or
by the degradation of mature crude oil.
Asphalt is particularly suitable for making high-quality
gasoline and roofing and paving materials

 Natural Gas
There are two basic types of natural gas, biogenic gas
and thermogenic gas.
Biogenic gas is a natural gas formed solely as a result
of bacterial activity in the early stages of diagenesis.
It forms at low temperatures, at overburden depths of
less than 3000 feet, and under anaerobic conditions.
Thermogenic gas is a natural gas resulting from the
thermal alteration of kerogen due to an increase in
overburden pressure and temperature.

 Condensates
Condensates are hydrocarbons transitional between
gas and crude oil (gaseous in the subsurface but
condensing to liquid at surface temperatures and
pressures).
Chemically, condensates consist largely of paraffins,
such as pentane, octane, and hexane.

THE FIELD LIFE CYCLE

The Field Life Cycle

The first step an oil company will undertake in
hydrocarbon exploration and production is to decide
what regions of the world are of interest.
This will involve evaluating the technical, political,
economic, social and environmental aspects of
regions under consideration.

Field Life Cycle. Jahn,et al, 2008.

 Exploration
For more than a century petroleum geologists have
been looking for oil.
During this period major discoveries have been made
in many parts of the world.
However, it is becoming increasingly likely that most
of the giant fields have already been discovered and
that future finds are likely to be smaller, more
complex, fields.

 Fortunately, the development of new exploration

techniques has improved geologists understanding
and increased the efficiency of exploration.
So although targets are getting smaller, exploration
and appraisal wells can now be sited more accurately
and with greater chance of success

 Despite such improvements, exploration remains a high-risk

activity. Many international oil and gas companies have large
portfolios of exploration interests, each with their own geological
and fiscal characteristics and with differing probabilities of
finding oil or gas.

 Even if geological conditions for the presence of

hydrocarbons are promising, host country political and fiscal
conditions must also be favourable for the commercial
success of exploration ventures.
Distance to potential markets, existence of an infrastructure
and availability of a skilled workforce are further parameters
which need to be evaluated before a long-term commitment
can be made.
Field work, magnetic surveys, gravity surveys and seismic
surveys are the traditional tools employed.

 Appraisal Phase
Once an exploration well has encountered
hydrocarbons, considerable effort will still be required
to accurately assess the potential of the find.
Four possible options have to be considered at this
point :
1. To proceed with development and thereby generate
income within a relatively short period of time. The risk
is that the field turns out to be larger or smaller than
envisaged, the facilities will be over or undersized and
the profitability of the project may suffer.

2. To carry out an appraisal programme with the

objective of optimising the technical development. This
will delay first oil to be produced from the field by
several years and may add to the initial investment
required. However, the overall profitability of the project
may be improved.
The purpose of appraisal is therefore to reduce the
uncertainties, in particular those related to the
producible volumes contained within the structure.

3. To sell the discovery, in which case a valuation will

be required. Some companies specialise in applying
their exploration skills, with no intention of investing in
the development phase. They create value for their
company by selling the discovery on, and then move
on with exploration of a new opportunity.
4. To do nothing. This is always an option, although a
weak one, and may lead to frustration on behalf of the
host nations Government, who may force a
relinquishment if the oil company continues to delay
action.

 Having defined and gathered data adequate for an

initial reserves estimation, the next step is to look at
the various options to develop the field.
The objective of the feasibility study is to document
various technical options, of which at least one
should be economically viable.

 The study will contain the subsurface development

options, the process design, equipment sizes, the
proposed locations (e.g. offshore platforms) and the
crude evacuation and export system.
The cases considered will be accompanied by a cost
estimate and planning schedule.
Such a document gives a complete overview of all
the requirements, opportunities, risks and
constraints.

 Development Planning
Based on the results of the feasibility study, a field
development plan (FDP) can now be formulated and
subsequently executed.
The plan (FDP) is a key document used for achieving
proper communication, discussion and agreement on the
activities required for the development of a new field, or
extension to an existing development.
The FDPs prime purpose is to serve as a conceptual
project specification for subsurface and surface facilities,
and the operational and maintenance philosophy required
to support a proposal for the required investments.

 It should give management and shareholders

confidence that all aspects of the project have been
identified, considered and discussed between the
relevant parties. In particular, it should include :
objectives of the development
petroleum engineering data
operating and maintenance principles
description of engineering facilities
cost and manpower estimates
project planning
summary of project economics
budget proposal.

 Production Phase
The production phase commences with the first
commercial quantities of hydrocarbons (first oil)
flowing through the wellhead.
This marks the turning point from a cash flow point of
view, since from now on cash is generated and can
be used to pay back the prior investments, or may be
made available for new projects.
Minimising the time between the start of an
exploration campaign and first oil is one of the most
important goals in any new venture.

 The production profile shown in is characterised by three

phases :
Build-up period During this period newly drilled
producers are progressively brought on stream.
Plateau period Initially new wells may still be brought on
stream but the older wells start to decline. Production
facilities are running at full capacity, and a constant
production rate is maintained. This period is typically 25
years for an oil field, but longer for a gas field.
Decline period During this final (and usually longest)
period, all producers will exhibit declining production

 Decommissioning
The economic lifetime of a project normally terminates
once its net cash flow turns permanently negative, at
which moment the field is decommissioned.
Economic decommissioning can be defined as the point
at which gross income no longer covers operating costs
(and royalties).
It is of course still technically possible to continue
producing the field, but at a financial loss.

 Most companies have at least two ways in which to

defer the decommissioning of a field or installation :
(a) Reduce the operating costs, or
(b) Increase hydrocarbon throughput

 In some cases, where production is subject to high

taxation, tax concessions may be negotiated, but
generally host Governments will expect all other
means to have been investigated first.
Maintenance and operating costs represent the major
expenditure late in field life.

 As decommissioning approaches, enhanced recovery

are often considered as a means of recovering a
proportion of the hydrocarbons that remain after
primary production.
The economic viability of such techniques is very
sensitive to the oil price, and whilst some are used in
onshore developments they can less often be justified
offshore.
Ultimately, all economically recoverable reserves will
be depleted and the field will be decommissioned.

 Management of decommissioning costs is an issue

that most companies have to face at some time.
Usually a company will have a portfolio of assets
which are at different stages of the described life
cycle.
Proper management of the asset base will allow
optimisation of financial, technical and human
resources.

PETROLEUM AGREEMENTS
AND BIDDING

 When the host government notifies its intent to offer

exploration acreage, the oil company has an
opportunity to gain access.
Two broad types of Petroleum Agreement exist:
Licence Agreements and Contract Agreements.
In a Licence Agreement the Government issues
exclusive rights to an oil company to explore within a
specific area.
The operations are financed by the licence holder
who also sells all production, often paying a royalty
on production, and always paying taxes on profits.

 In a Contract Agreement, the oil company obtains the

rights to an area through a contract with the
Government or its representative NOC.
Essentially the company acts as a contractor to the
Government, again funding all operations.
Title to the produced hydrocarbons is retained by the
Government, and the oil company is remunerated for
its costs and provided a share of the profits either in
cash or in kind (i.e. a share of the produced
hydrocarbons).
The most common form of this type of agreement is a
production sharing contract (PSC),

 The Invitation to Bid

Majority of the remaining world hydrocarbon reserves
lie under the control of NOCs, and usually this will be
developed by the NOC.
In cases such as these, the host Government may
invite third parties to participate in the region. Such
an opportunity may be posted in the international
press, trade journals or by specific invitation.

 Specific licence blocks

are offered, and an
interested bidder is left to
his initiative to make an
evaluation of the block.
This may be based on
speculative regional
studies performed by
consultants, or on the
companys own
understanding of the
block.

 Motivations and Form of Bid

In offering an exploration opportunity in a block, the
motivation of the Government is to encourage
investment in form of exploration activities, such as
shooting seismic and exploration drilling, with a view
to development if the exploration is successful.
The prime objective of the oil company is to discover
commercial hydrocarbons from which it can create
profits by subsequent development, and it therefore
considers the prospectivity of the block along with the
costs of both exploration and future development.

 Block Award
The successful bid will result in award of the block,
giving the rights to explore.
There is often a prescribed sequence of events that
dictate the timing of carrying out the work programme
and declaring a commercial interest in the block.
The company will need to convert the exploration rights
into development rights in the block.

Example of sequence of events in a PSC

EXPLORATION

 The objective of any exploration venture is to find

new volumes of hydrocarbons at a low cost and in a
short period of time.
Exploration budgets are in direct competition with
acquisition opportunities.
Once an area has been selected for exploration, the
usual sequence of technical activities starts with the
definition of a basin.

 Geophysical Methods : Gravity and Magnetic

method, Seismic method, Electro-magnetic method,
Resistivity method.
The mapping of gravity anomalies and magnetic
anomalies will be the first two methods applied.
Next, a coarse two-dimensional (2D) seismic grid,
covering a wide area, will be acquired in order to
define areas which show a structure which potentially
contains an accumulation.

 Electro-magnetic techniques have also been

deployed at this stage to assist in the delineation of
basins and the identification of potential hydrocarbon
accumulations.
A particular exploration concept, often the idea of an
individual or a team will emerge next.
More detailed investigations will be integrated to
define a prospect (a subsurface structure with a
reasonable probability of containing all the elements
of a petroleum accumulation).

 Eventually, only the drilling of an exploration well will

prove the validity of the concept.
A wildcat well is drilled in a region with no prior well
control.
Wells either result in discoveries of oil and gas, or
they find the objective zone to be water-bearing in
which case they are termed dry.

DRILLING ENGINEERING

Well Planning
The drilling of a well involves a major investment,
ranging from a few million US$ for an onshore well to
100 million US$ plus for a deep-water exploration well.
Well engineering is aimed at maximising the value of
this investment by employing the most appropriate
technology and business processes, to drill a fit for
purpose well, at the minimum cost, without
compromising safety or environmental standards.

Successful drilling engineering requires the integration of

many disciplines and skills.
Usually, wells are drilled with one, or a combination, of
the following objectives:
to gather information.
to produce hydrocarbons.
to inject gas or water to maintain reservoir pressure or
sweep out oil.
to dispose of water, drill cuttings or CO2.

 To optimise the design of a well it is desirable to have

as accurate a picture as possible of the subsurface.
A number of disciplines will have to provide
information prior to the design of the well trajectory
and before a drilling rig and specific equipment can be
selected.
The subsurface team will define optimum locations for
the planned wells to penetrate the reservoir and in
consultation with the well engineer agree on the
desired trajectory through the objective sequence.

 In discussions with production and well engineers

maximum hole inclination and required wellbore
diameter will be determined.
Wellhead locations, well design and trajectory are
aimed at minimising the combined costs of well
construction and seabed/surface facilities, whilst
maximising production.
The accuracy of the parameters used in the well
planning process will depend on the knowledge of
the field or the region

Rig Types and Rig Selection

The type of rig which will be selected depends upon a
number of parameters, in particular:
cost and availability
water depth of location (offshore)
mobility/transportability (onshore)
depth of target zone and expected formation
pressures
prevailing weather/metocean conditions in the area of
operation
experience of the drilling crew

The following types of rig can be contracted for offshore

drilling :
Swamp barges operate in very shallow water (less than
20 ft). They can be towed onto location and are then
ballasted so that they sit on bottom.
Drilling jackets are small steel platform structures which
are used in areas of shallow and calm water.
Jack-up rigs are either towed to the drilling location (or
alongside a jacket) or are equipped with a propulsion
system. The three or four legs of the rig are lowered
onto the seabed.

 Semi-submersibles are used for exploration and

appraisal in water depths too great for a jack-up. A
semi-submersible rig is a movable offshore vessel
consisting of a large deck area built on columns of steel
Drill ships are used for deep and very deep water work.
They can be less stable in rough seas than semisubmersibles. However, modern high-specification drill
ships can remain stable. The thrusters counter the
forces of currents, wind and waves to keep the vessel
exactly on target, averaging less than 2m off her mark,
without an anchor.

Offshore rig types.

Drill ship Transocean Enterprise.

Jack-up rig (courtesy of Reading & Bates,
UK).

Semi-submersible rig (courtesy of

Stena Drilling).

Tender-assisted drilling.

Drilling Systems and Equipment

Whether onshore or offshore drilling is carried out, the basic
drilling system employed in both the cases will be the rotary rig.
The three basic functions carried out during rotary drilling
operations are as follows:
1. Torque is transmitted from a power source at the surface
through a drill string to the drill bit.
2. A drilling fluid is pumped from a storage unit down the drill
string and up through the annulus. This fluid will bring the
cuttings created by the bit action to the surface, hence clean
the hole, cool the bit and lubricate the drill string.
3. The subsurface pressures above and within the hydrocarbonbearing strata are controlled by the weight of the drilling fluid
and by large seal assemblies at the surface.

 The basic rotary rig

 Drill bits

The drill string

Mud circulation system.

DRILLING TECHNIQUES

Directional drilling
Directional drilling is usually done with a rotary
steerable system.
Advances in drilling and completion technology today
allow us to construct complicated wells along 3D
trajectories.
In addition to vertical wells, directional drilling allows
us to build, maintain or drop hole angle and to turn
the drill bit into different directions.

 Rotary steerable
system.

Types of assemblies
for directional drilling

Horizontal drilling

Multilateral wells

Casing and Cementing

Imagine that a reservoir exists at a depth of 2500 m.
We could attempt to drill one straight hole all the way
down to that depth.
That attempt would end either with the hole
collapsing around the drill bit, with the loss of drilling
fluid into formations with low pressure or in the worst
case with the uncontrolled flow of gas or oil from the
reservoir into unprotected shallow formations or to
the surface (blowout).

Casing scheme.

Principle of casing cementation

SUMMARY

Summary
Hydrocarbons are generated when large volumes of
microscopic plant (algal, phytoplanktonic) and animal
material are deposited in marine, deltaic, or
lacustrine environments.
Five Major Types of Hydrocarbons of Interest to
Petroleum Exploration : Kerogen/Bitumens, Crude
Oil, Asphalt, Natural Gas, Condensates.
The Field Life Cycle : Gaining access, exploration,
appraisal, development, production,
decommissioning.
Two broad types of Petroleum Agreement: Licence
Agreements and Contract Agreements.

 The objective of any exploration venture is to find new

volumes of hydrocarbons at a low cost and in a short
period of time.
The usual sequence of technical activities starts with
the definition of a basin, the mapping of gravity and
magnetic anomalies, a coarse two-dimensional (2D)
seismic and electro-magnetic techniques.
The drilling of a well involves a major investment,
ranging from a few million US$ for an onshore well to
100 million US$ plus for a deepwater exploration well.
Drilling techniques : Directional drilling, Horizontal
drilling, Multilateral wells.

REFERENCES

References
Assaad, F.A. 2009. Field Methods for Petroleum
Geologists. Springer : USA.
Halliburton team. 2001. Basic Petroleum Geology and
Log Analysis.
Jahn, F, et al. 2008. Hydrocarbon exploration and
production, 2nd edition. Elsevier : Aberdeen, UK.

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