O&G Systems

• Non Renewables /Fossil Fuels - O&G/Coal/Nuclear Minerals

• Conventional O&G Systems
• Unconventional Systems-
Non renewables.. Shale Gas/Shale Oil/Gas Hydrates
Coal Bed Methane (CBM)
O&G Processes

• Upstream O&G –
• Reconnaisance/Exploration/Drilling /Testing /Well Completion
• Reserves Calculation /Field Development Drilling
• Production
• MidStream O&G
• Land Acqisition/Pipeline Laying/Maintenance /Surveylance Transportation Of
O&G
• Downstream O&G
• Refineries /Distillation Processes/Marketing of O&G Products/
• LPG/CNG/City Gas Distribution
Books Suggested for O&G Business
Understanding
• O&G Industry For Beginers – Samir Dalvi
• Global Oil & Gas Industry – Management , Strategy & Finance
• The Prize – The Epic Quest for Oil, Money & Power – Daniel Yergin
All Could be Bought from Amazon Kindle
Upstream E&P Business Verticals- Work
Flows
• Upstream -(E&PBusiness)-Regulator/Upstream Oil Co’s /Service Co’s
• Exploratiion & Dev. Licensing Rounds/NELP Rounds by Regulator
• Recon.– Surface Geol mapping/O&G Shows/Remote sensing Maps
• Imageries / Structural Mapping /Narrow down Target Expl.
• Exploration –G&G Surveys ie Gravity Magnetic; Geochem Surveys for
• O&G Seepages/Regional 2D Seismics / Followed by 3D Seismics
• Drilling- Expl. Wild Cat Well/More Exploratory Drilling/Initial Prod. Testing of O&G
Intervals/Well
• Development Drilling
• Production of O&G
• GGS
• Midstream /Transportation of O&G
Exploration Life Cycle Stages- Activities/Facilities
Processes – Bid Acqisition to Field Retirement

• •BidAcqisition/Recon,Exploration.Drilling/Appraisal/Develop/Produce/Retire
• Recon & Exploration Services/Activities/Facilities (Work Flows & Process Flows )
• Execute Survey - G&G Prospecting : Geological Mapping , Geochemical, remote Sensing
/land sat Imageries geophysical surveys, Samling ,Prospect Analysis etc.
• Exploration/G&G Concepts - for processing, analysis, and interpretations/Prospect Analysis
• Construct Wells (E) / GTO - for exploration wells Universally Applicable Service Processes:
Site Preparation & Drilling Infra Structure – Casing /Mud pumps/Drilling Rig/Mech Engines
/Draw Works /Telecom/Mudlogging Units-Geologging AutoControl Censor Based Units
• Provide Goods-Services • Provide Logistics • Provide Finance • Provide HR • Provide IT •
Provide Labs • Maintain - for facilities and equipment used in this stage
Key Attributes /Results of Exploration Stage
• During exploration drilling, vital information and samples are collected about
the rocks and fluids (water, gas and oil) encountered by the well in order to
find out:
• If there exists any hydrocarbons at that location
• How much oil or gas may be available at the present explored area.
• What depth the oil or gas exists at Exploration activities can also be risky
because of:
• The geographical location – remote or difficult terrain, or a sensitive ecosystem
• Safety – people can have accidents while acquiring seismic surveys or drilling
wells, even though safety is always a top priority.
Appraisal Stage/Cycle – Actvities/Facilities
• Appraisal Stage
• Process spans post-exploration processing, analysis, and interpretation leading to static and
dynamic models before starting the third stage, develop (Development /production and
facility plans). This stage is also known as the definition stage.
• Typical Activities/Service Processes
• Add on G&G Survey at reservoir level - for additional geophysical surveys, well log surveys,
site surveys, etc. • Develop Concepts - for processing, analysis, and interpretations •
Construct Facilities - for support of field activities in this stage • Construct Wells - for appraisal
wells • Acquire-Divest Asset (L) - if additions or reductions are needed during this stage
• Provide Goods-Services/ Logistics/Finance/ HR (N)/Legal /Policy / IT support
• Provide Geology Labs- Geologging units/Maintainance /for facilities and equipment used in
this stage
Appraisal Stage Conclusions
• After O&G Discovery Appraisal phase occurs reduce the uncertainty or possibility of losses about the
size of the oil or gas field and its properties.
• During appraisal, more wells are drilled in addition to the exploration wells to collect more O&G
reservoir information and samples from the reservoir.
• Additional 3d seismic surveys are generally repeated to get a better image at reservoir producing
zone /intervals
• These activities takes several more years and cost tens to hundreds of millions of dollars. More
seismic surveys and wells assists  petroleum geologists, geophysicists and reservoir engineers
comprehend  the reservoir better.
• For example, they try to find out whether rock or fluid properties change away from the discovery
well,
• how much oil or gas might be in the reservoir, and how fast oil or gas will move through the reservoir. 
• After the success of the appraisal  stage, it is generally definite that the oil or gas field can be
commercially developed.
Appraisal Stage- Contd.
• Appraisal – how much oil and gas have we got ?
Aims of Appraisal
• To provide an accurate estimate of hydrocarbon reserves in order to
make the right decision about whether and how to develop the
hydrocarbon discovery
• Key tools Geological and geophysical interpretation /Well test data
evaluation /Reservoir modelling
• Key Metrics Safety /Reserves/ Development plan,/ meeting economic
targets/Ultimate goal/Project sanction – approval to develop the field
O&G Reserves from Appraisal Well Data
• How much oil and gas have we got ?
GROSS ROCK VOLUME
• POROSITY AND SATURATION
• RECOVERY
• Resources and Reserves
• Hydrocarbons in Place = GRV x N/G x Porosity x Saturation x
Formation Volume Factor
• Reserves = Hydrocarbon in Place x Recovery Factor
Rock Properties for Calculation of Volumes
• Petrophysics – rock properties to calculate volumes/resrves
Data from Core provides the only ‘real’ information from the
subsurface
• Analyses are undertaken on the core to understand the rock
properties
• Horizontal
• Plug
• Uninvaded core centre
Development Cycle/ Stage- Activities &
Facilities – drilling Dev. Wells for Field Dev.
• Develop (3) Scope of this process spans the pre-production development activities,
including well and facility construction for fourth stage -production.
• The service processes include :
• Construct Facilities (for direct and indirect support of the planned production activities
• Maintain (for facilities and equipment used in this stage • Construct/Drill the Wells – for
Field development
• Execute G&G Survey - for initial production logging, well log surveys, etc.
• Develop Concepts (G) - for processing, analysis, and interpretations
• Acquire-Divest Asset - if additions or reductions are needed during this stage Universally
Applicable Service Processes:
• Provide Goods-Services
Sailent Features--Development Stage – Contd
• The development stage occurs  after successful appraisal and before full-scale
production. The main activities (and people involved) are:
• Formation of a plan to develop the oil or gas field, with the inclusion of how
many wells needed to be drilled to produce the oil or gas (geologists,
geophysicists and reservoir engineers)
• To make a decision on the best design for the production wells (drilling
engineers)
• To decide what production facilities are required to process the oil/gas before
it is sent to a refinery or customer (facilities engineers)
• To decide what the best export route might be for the oil and gas (logistics
engineers)
Sailent Features Development Stage - Contd
• The risk of accidents is highest in this phase because of the number of people
involved at construction sites.
• The development of oil field sometimes cost hundreds of billion and it typically last
for 5-10 years to develop an oil or a gas field,, depending on the location, size and
complexity of the facilities, and the number of wells needed.
• Onshore developments are comparatively  much cheaper than offshore
developments.
• Oil and gas companies makes rational expectations with cost and benefit analysis
before undertaking a project on exploration, , appraisal and development costs, as
well as profit from selling the hydrocarbons.
• Even more importantly, developments will only happen if the communities or
ecosystems affected can be protected
Summary : Production Field Life Cycle
/Stages – Activities/facilities
• scope of this process spans the production development activities, including well and facility
construction through to commissioning and preparation for fourth stage, produce. This stage is also
known as the exploitation stage.
• The service processes :
• Operate - Production operations activities • Trade Hydrocarbons - Associated hydrocarbon trading
and marketing • Construct Facilities - if new or upgraded facilities are needed • Maintain- for facilities
and equipment used in this stage •
• Construct Wells - for in-fill wells
• Execute Survey - for real-time data collection, testing, and logging
• Develop Concepts - for processing, analysis, and interpretations of existing and new data • Acquire-
Divest Asset - if additions or reductions are needed during this stage
• Provide Goods-Services • Provide Logistics • Provide Finance • Provide HR • Provide IT • Provide Labs
 Beginning of Production Stage –
Installations .
Aims of Production Operations
• Safely and economically install, the appropriate facilities in order to optimally produce
the hydrocarbon reserves in the field
• Key Stages – Drilling more wells as and when needed to maintain Prod profile
• Safety in all production processes
• Installing well production equipment (completions) in newer wells
• Installing the add on surface facilities (platforms, pipelines)
• Testing and commissioning the facilities in old & newer wells
• Producing hydrocarbons and delivery to pipelines or vessels
• Key Metrics – Safety, Costs, Reserves, schedule Ultimate Goal – Safe Production
Production Curve /Stage – Primary O&G
Depletion Declining Curve and arresting
• Production methods Primary Depletion
• Pressure declines as fluids are produced. Used mainly for gas fields.Pumping and
Compression
• Eventually field/formation pressure is no longer sufficient to lift the fluid
• – assistance provided by pumping (in oil fields) or compression (in gas fields)
• Secondary pressure maintenance is kept high by injecting water or gas into the
reservoir, through dedicated/relief ( EOR wells) Used in most oil fields today.
• Tertiary production and special methods include steam or detergent floods – used
for heavy or waxy oils only
• –tend to be expensive and require much supporting technologyProduction strategy
is decided during the development plan and is based on maximum economic returns
Conclusion-- Life Cycle of O&G Fields
• Oil and gas fields generally have a lifespan ranging from 15 to 30 years, from first
oil to abandonment. Production can last 50 years or more for the largest
deposits. Deepwater fields, however, are operated just five to ten years due the
very high extraction costs.  
• The preparatory phase- ( Exploration/Appraisal/Dev Phases )
• During the exploration phase, oil and gas companies locate and appraise the 
preservation (hydrocarbons) contained in a field
• Before production can begin, they must devise a development plan. This involves:
• Calculating the field's profitability to determine whether or not the future sales of
oil and gas will be enough to cover the cost of production over the field’s entire
lifespan.
Summary Contd.

• Determining the number of wells need to be drilled and selecting the most

suitable installations for each stage of production.
• Studies at this point focus on which extraction methods should be used and how
products brought to the surface will be processed, temporarily stored and shipped.
• Defining the field's production profile in order to forecast annual production
volumes from the start of production to abandonment.
• Next, the company needs to prepare the site for production by leveling the land,
clearing trees, developing roads to transport equipment and building technical
facilities and accommodation for the site's future workers.
• In offshore locations, the platform will need to be built or transported to the site.
Conclusion Contd : 3 Stages of Field
Production Life Cycle
• Start-up (two to three years). During this period, production increases gradually as
more and more wells are drilled.
• Plateau production, when output stabilizes. This stage also lasts two to three years,
or sometimes longer in the case of larger fields.
• Decline, during which production falls at a rate of 1% to 10% a year. When
production ends, large quantities of oil and gas remain underground. Oil and gas
companies are therefore constantly seeking to improve recovery rates using
enhanced recovery techniques (see Close-up:
• . Oil field recovery rates range from 5% to 50%. The rate is higher (60% to 80%) for
fields that produce only natural gas, as its lower density and greater flow rate make
production more efficient.
 
Conclusion:Ups & Downs of Production
Phase
• Things do not always go as per to plan production. Some reservoirs will
produce up to 10% to 20% more oil or gas than expected, while others may
produce a great deal less than initially estimated.
• There are many reasons for this unpredictability as following :
• Oil and gas fields contain residual water, which is driven up the well with the
hydrocarbons.
• After time, there may be more water and less oil or gas. The cost of extracting
and separating the water out can result in a loss-making operation.
• In addition, at some sites the natural gas extracted is not intended for sale. Yet,
gas production at these fields can sometimes spike, which means that less oil is
produced.
Ups & Downs of O&G Production Phase
• The global economic climate can also impact the life cycle of oil and gas fields.
• For example, if oil prices drop over a long period of time, companies may decide to
abandon an oil field earlier than planned.
• Conversely, if oil prices rise, production may continue longer.
• All of these factors impact profitability, and in some cases force companies to abandon
production early at the risk of losing almost all of their considerable initial investment.
• To reduce this risk, engineers carry out regular appraisals throughout a field's life cycle.
• The Life Cycle of Oil and Gas Fields | Planète Énergieswww.planete-energies.com 
Field Retirement /Abandonment-
• Abandon (5)
• scope of this process addresses the post-production disposition of the asset, whether through sale or
site restoration.
• The service processes in this stage of the asset life cycle are:
• Acquire-Divest Asset - if disposition is through sale in whole or part • Wells - Plug and abandon activities
Abandonment – safe and economic removal of facilities
Aims of abandonment – to safely and economically remove wells and installed facilities in order to comply
with local laws, international conventions and company policy.
Key Stages – deciding when to cease production
decision made on economic limits with the help of the reservoir model
Key Metrics – Safety, Costs, schedule, environmental factors
Ultimate Goal - Safe facilities removal Decommissioning as per North Sea platform re-float for
decommissioning model – Onshore/Offshore decommissioning
Managing Abandonment, Decommissioning, Remediation and
Restoration throughout the E&P Lifecycle

• If retirement activities are deferred too late in the life of an exploration and
production (E&P) asset, the number of retirement activities (i.e. well
abandonment, facility decommissioning, site remediation, land restoration)
could potentially exceed the funds, resources and time available.
• Large inventories of inactive assets (e.g. idle wells and facilities) carried
long-term further compound the potential budgetary, resource, and
schedule shortfall at end-of-life.
• A set of operating practices has been developed to systematically manage
asset retirement throughout an E&P asset's lifecycle, enabling completion
of retirement activities at a rational pace in alignment with the business
unit's cash flow profile, resource availability, and lifespan. 
Managing Abandonment, Decommissioning, Remediation and
Restoration throughout the E&P Lifecycle-- Contd

• These practices guide inventorying, prioritizing and managing abandonment-

decommissioning candidates (e.g. wells, pipelines, and facilities designated for
retirement or inactive long-term), remediation candidates (sites with potentially
impacted environmental media; inactive pits) and restoration candidates (borrow
pits or disturbed land designated for restoration or inactive long-term) as an integral
component of the asset's business plan.
• Technical guidelines for suspension, abandonment, decommissioning, site
assessment, remediation and restoration complement the operating practices by
driving task execution to world-class technical standards.
• These operating practices positions E&P business units to manage asset retirement
progressively and perform the activities to world-class technical standards.
Sedimentry Basins Of India-O&G Prospects
• India has 26 sedimentary basins covering an area of 3.14 million square
kilometres.
• The sedimentary basins of India, onland and offshore up to the 200m
isobath, have an areal extent of about 1.79 million sq. km.
• In the deepwater beyond the 200m isobath, the sedimentary area has
been estimated to be about 1.35 million sq. km.
• Thus, the total works out to 3.14 million sq. km.
• Broadly Indian sedimentary basins have been divided into four
categories based on their degree of prospectivity as presently known.
The categorization based on the prospectivity of the basin
Sedimentry Basins Contd.

• Categories & Prospects of Indian sedimentary basins Type of basins Area – 26

• ( 7 Basins) 518500 Established commercial production Cambay, Assam Shelf, Mumbai
offshore, Krishna Godavari, Cauvery, Assam Arakan Fold Belt and Rajasthan
• Category II ( 3 Basins) 164000 /Known accumulation of hydrocarbons but no commercial
production as yet /Kutch, Mahanadi-NEC & AndamanNicobar
• Category III ( 6 Basins) 641000/ Indicated hydrocarbon shows that are considered geologically
prospectivity./ Himalayan Foreland, Ganga, Vindhyan, Saurashtra, KeralaKonkan-Lakshadweep
& Bengal
• Category IV (10 basins)/ 461200/ Uncertain potential which may be prospective by analogy
with similar basins in the world./ Karewa, Spiti-Zanskar, SatpuraSouth Rewa-Damodar,
Narmada, Decan Syneclise, Bhima-Kaladgi, Cuddapah, Pranhita-Godavari, Bastar, Chhattisgarh
Deepwater 1350000 East & west cost from 400 m water depth to EEZ
 O&G Reserves & Classification
• Definition Of Reserves – Defined Expl./Appraisal/Dev. stages
• Known Quantities/Volumes Estimated to be commercially recovered/produced
• All Reserves&Estimates involve certain degree of Uncertainity
• Depends on reliable E&P Data & their interpretations – keeps changing with more data
• Proved & Unproved Category
• Unprproved reserves are further classified in Probable & Possible Categoroes -
indicating degree of Uncertainities
• Estimation Of Reserves –
• Deterministic ( if made on Known E&P data )
• & Probabilistic : When the Known E&P data is used to generate a probable range of
Estimates
Resources & Reserves Classification – Contd.

• Identification Of reserves – Proved/ Unproved (ProbablePossible )

• Proved Reserves : Proven reserves are those reserves claimed to have a reasonable
certainty (normally at least 90% confidence) of being recoverable under existing
economic and political conditions, with existing technology. Industry specialists refer to
this as "P90" (that is, having a 90% certainty of being produced). Proven reserves are also
known in the industry as "1P"
• Proven reserves are further subdivided into "proven developed" (PD) and "proven
undeveloped" (PUD)
• Unproved Reserves
• Probable Reserves
• Possible Reserves
Unproven Reserves – Probable & Possible

• Probable reserves are attributed to known accumulations and claim a 50% confidence

level of recovery. Industry specialists refer to them as "P50" (i.e., having a 50% certainty
of being produced). The sum of proven plus probable reserves is also referred to in the
industry as "2P" (proven plus probable).
• Possible reserves are attributed to known accumulations that have a less likely chance
of being recovered than probable reserves. This term is often used for reserves which
are claimed to have at least a 10% certainty of being produced ("P10"). Reasons for
classifying reserves as possible include varying interpretations of geology, reserves not
producible at commercial rates, uncertainty due to reserve infill (seepage from adjacent
areas) and projected reserves based on future recovery methods. The cumulative
amount of proven, probable and possible resources are referred to in the industry as
"3P" (proven plus probable plus possible).
Gas Pricing Mechanism & Plans

• Oct 2020 -Cabinet Committee on Economic Affairs (CCEA) approved the formulation of a
standard procedure for market price discovery of gas across various contractual regimes,
• a standardized e-bidding mechanism will be proposed by the directorate general of
hydrocarbons (DGH) for the transparent discovery of gas market price.
• The move to attract investors and India’s push for a gas-based economy.
• will help increase domestic gas production by additional 40 million standard cubic
meters a day (mmscmd), from the current 80 mmscmd.
• GOI has already provided for pricing and marketing freedom of gas from blocks awarded
under the Discovered Small Field Policy (DSF), Hydrocarbon Exploration and Licensing
Policy (HELP) and Coal Bed Methane (CBM) contracts, and discoveries from difficult fields
such as deep water, ultra-deep water and high pressure-high temperature areas.
Gas Pricing Policy Reforms In India – Contd

--- GOI’s objective of policy is to prescribe standard procedure to discover market

price of gas to be sold in the market by gas producers, through a transparent and
competitive process, permit Affiliates to participate in bidding process for sale of gas
and allow marketing freedom to certain Field Development Plans (FDPs) where
Production Sharing Contracts already provide pricing freedom," .
--- However, this mechanism will not be applicable for production from blocks
awarded on a nomination basis, governed by a formula announced in October 2014
by the National Democratic Alliance government.
--- The formula uses the weighted averages of prices in the three major international
gas trading hubs of US Henry Hub, the UK National Balancing Point and Japan’s
custom-cleared rate.
Gas Pricing Contd.
• This is a great development and brings India near to open market mechanism.
• benefit the producers who may get constrained owing to prevalent ceiling prices.
• will promote investment in E&P and potentially balance the margins from
downstream to upstream players. Going forward, maybe even a centralised
platform may not be required and we could move to open mechanism, where gas
to gas competition becomes prevalent given significant LNG import terminals
being commissioned.( Delloite Report )
• will bring uniformity in the bidding processes across the diff. contract regimes and
avoid ambiguity (ease of doing business )
• All Gas discoveries and field development plans approved after 28 Feb, 2019 have
complete marketing and pricing freedom."