Class PPT - FOPE - 16DEc21

Fundamentals of Petroleum Exploration
OGOG 7002
MBA OG-I
Prof. Promod Painuly
Total professional experience 35 years, Academic experience
4+ years, Industries 31+ years
Professor – Oil & Gas ,Department of Energy Management, SOB, UPES, Dehradun.
Chief Geophysicist- Oil & Natural Gas Corporation, Dehradun.
General Manager- Exploration, Reliance Industries Limited, Mumbai.
Exploration Manager REPSOL, West Africa, Madrid.
Exploration Advisor – South America, REPSOL, Houston.
Member of SEG, SPG & AAPG
Distinguished Educator SPG, AAPG
Resource for MOPNG & DGH on Exploration Processes
Todays Agenda
1. Introduction by students ( Name, Academic background, Work

experience, skills & hobbies).
2. Department at a glance
3. India’s Energy outlook

Oil & Gas Industry
Upstream : Searching and Finding Oil & Gas reserves,

Developing the Facilities, and Producing Oil & Gas in the form
of Crude Oil & Natural Gas. Commonly known as Exploration &
Production (E&P).
Midstream : Delivering Crude Oil and Natural

Gas from E&P industry for further processing, either by
pipeline, truck, oil tanker, or LNG tanker.
Downstream : Processing crude oil & natural gas in a refinery

or petrochemical plant into usable product or raw materials
for other industry and marketing them to the consumers.
Exploration in West Africa & South America
Team Lead West Africa Exploration (Madrid) SL- Wells

 Sierra Leone and Liberia exploration assets
 3D (6300 sq.km) Seismic AP&I
 Prospects Maturity, Volumetric and Risking
 DW Wells Drilled (SL) : Venus B-1, Mercury-1, Jupiter-1,
Mercury-2
 DW Wells Drilled (LB): Montserrado-1
 Post Drill Analysis
 EQA & ERA
Team Lead Atlantic Basins Exploration

(Houston)
 Guyana- Surinam-French Guyana Exploration
 Trinidad & Tobago Deep water Exploration
 17000 sq.km of 3D Seismic in Trinidad deep waters
 Tectono- Stratigraphy and Regional geological model for
T&T
 Jaguar-1 ultra HTHP well in Guyana
Energy Sector Growth and Skilled Workforce Demand
 The total energy consumption is expected to grow by
128% by 2035.
 Demand for gas is expected to expand by 155%, followed
by coal (121%) and oil (118%).
 while demand for renewables, nuclear and hydro are
estimated to rise by 656%, 334%, and 99%, respectively .
 India’s potential clearly positions us as the leading global
driver of growth in energy consumption in the next 20
years
 India is blessed with abundant natural resources in the
form of sun and wind,
Human Capital Challenges in Energy Sector?
Department At Glance
Department USP Overview
Vision
 High growth sector programs (Oil & Gas, ET & Power)  First Petroleum focused program in
 MBA Oil & Gas- Accredited by Accreditation Council for Business India
Education (IACBE)  Over 85% students in MBA –OG and
 Five stars QS Stars™️rating in Program Strength (MBA Oil & Gas MBA-PM come with engineering
Management background
 Industry experienced faculty  High Placement success rate of
students (Last 5 years) – 95%
 Strong Industry alignment of programs
 Strong External linkages – MoU (MCX,
 Industry collaborated events (Naftanomics, HR- Oil & Gas Round
Tata Power & Niti Aaayog). Essar Oil
Tables, SMAZKA, Energy Emporia)
and University of Adelaide (UA)
 Faculty as resource of EMBA program for engineers of
Government of Uttrakhand.
Department At Glance
1
MBA OG (Started in 2003)
 First petroleum focused management program offered in the country.
 Covers all the business processes from Exploration to the Retailing of petroleum products
2
MBA Power (Started in 2005)
 Unique management program offered in power sector.
 Program specifically tailored to develop one’s skill sets by relating the management theories to the prevalent
problems in the power value chain
3
MBA ET (Started in 2008)
Only ET program in India
 Distinctive management program covering the broad spectrum of energy trading. Expose students to
basic energy derivative structures that are currently used in trading, marketing and risk management
4
BBA OG (Started in 2004)
A specialized program provides various aspects of the Oil & Gas marketing and develop
skills to manage the challenges
It aims at guiding students toward petroleum marketing at an early stage
Faculty Details: Domain experts with industry experience
Full Time Faculty: 9 (P:2, Asso.P:1, IF:1, Dr Anil Kumar (HOD)
AP:4)
Visiting Faculty: 2 (Dr B S Negi: Ex GAIL
Experience: 24 Yrs (Industry), 13 Yrs (Academics)
Companies: Tata Steel, NPTI 4 5
Director; S C Gupta Ex ED IOCL)
Average Industrial experience: 10+ years Areas of Expertise: Energy, Infrastructure & PhD Pursuing PhD
SFR: 20:1 Sustainability
Mr. Promod Painuly Dr. Mohd. Yaqoot Mr. Anirudh Singh Mr. Atul Rawat
Experience: 35 Yrs (Industry);4 Yrs Experience: 5 Yrs (Industry); 13 Yrs Experience: 16 Yrs (Industry); 3 Yrs Experience: 9 Yrs (Industry), 5 Yrs
(Academics) (Academics) (Academics) (Academics)
Companies: ONGC, RIL,ESSAR, Companies: RIL Companies: Shell, Castrol, Companies: Genpact Analytics,
REPSOL Houston Areas of Expertise: Power, Petronas Deloitte, and EY
Renewable & Infrastructure
Areas of Expertise: E&P, Surface Areas of Expertise: Lubricant Areas of Expertise: Research and
Facilities, Portfolio Management Strategy Formulation
Mr. Avishek Ghosal Mr. Navdeep Bhatnagar Dr. Sonal Gupta

Experience: 3 Yrs (Industry), 6 Yrs Experience: 8 Yrs (Industry); 4 Yrs Experience: 2 Yrs (Industry); 7 Yrs
(Academics) (Academics) (Academics)
Companies: Vedanta Companies: REL, BSES Companies: REL
Areas of Expertise: Power, Areas of Expertise: Energy Trading Areas of Expertise: EDRM
Sustainability, Infrastructure
9
Data shown is for 2016, the latest year with complete data in all categories)
Course Objectives
Fundamental of Petroleum Exploration (FOPE) is the domain course in MBA (O & G)
program. The course has been designed to impart learning about the basic understanding
of petroleum, its constituents, formation, migration & accumulation process, various
exploration methods and their significance. Risk and commercial assessment.
The course objectives are:
.To develop participant’s understanding of petroleum origin and trapping mechanism.
· Development of understanding about hydrocarbon resources and reserves.
· Providing insight regarding geo- scientific methods of investigation.
· Providing understanding of unconventional petroleum resource.
· Providing understanding of mineral acreage licensing policy, NEPL and HELP, DSF
· Techno economic appraisal of prospects.
. Commercialization of Oil and gas discoveries

Course Outcomes
1.Demonstrate a clear understanding of the concepts related to Exploration and

Production.
2. Analyze issues in Global Exploration and Production scenario and take a strategic
view of the Global business environment impacting the industry.
3. Develop and evaluate the managerial decisions and align it with the strategic
business objectives of a firm.
4. Integrate their knowledge of E&P sector with industry requirements.
5. Demonstrate effective application capabilities of their conceptual understanding to
the real world business situations.
6. Manage International Oil and Gas companies and service providers.
As per IACBE
MYTH...
… the Stone Age ended, not because we ran out of stones. It’s
ideas, it’s innovation, it’s technology that will end the Age of Oil
before we run out of oil
(By Sheikh Zaki Yaman / Oil Minister Saudi Arabia)
For 200 years we have been systematically de-carbonizing our energy system?
Proved Oil Reserves Vs Remaining Oil
(Conventional)
Global proved oil reserves are sufficient to meet > 50. yrs. of global production at 2016 levels
 Petroleum (L. petroleum, from Greek πετρέλαιον, lit. "rock oil") or crude oil is a
naturally occurring, flammable liquid found in rock formations in the Earth consisting
of a complex mixture of hydrocarbons of various molecular weights, plus other organic
compounds.
 The term "petroleum" was first used in the “treatise De Natura Fossilium”, published
in 1546 by the German mineralogist Georg Bauer, also known as Georgius Agricola.
 Petroleum occurs in the earth in combination of any of the four states: gas, liquid,
semi-solid, and solid. Chemically, petroleum is a mixture of carbon, hydrogen and
oxygen with minor amount of nitrogen, and Sulphur as impurities along with traces of
heavy metals.
 The earliest known oil wells were drilled in China in 347 BC or earlier.
 In the 9th century, oil fields were exploited in the area around modern Baku, Azerbaijan,
to produce naphtha.
 n 1854, Benjamin Silliman, a science professor at Yale University in New Haven, was the
first to fractionate petroleum by distillation.
 The first commercial oil well drilled in Romania in 1857 at Bend, North of Bucharest.
347 A.D.
Oil wells are drilled in China up to 800 feet deep using bits attached to bamboo poles
1264 Mining of seep oil in medieval Persia witnessed by Marco Polo on his travels through
Baku.
1594 Oil wells are hand dug at Baku, Persia up to 35 meters (115 feet) deep
1859 First oil well in United States is drilled 69 feet deep at Titusville, Pennsylvania by
Colonel Edwin Drake
Oil Transportation
Oil and Gas Business
• Upstream Business (Exploration and Production)
• Midstream Business (Storage and
Transportation)
• Downstream Business (Refining, Marketing and
Distribution)
Subir Raha Oil Museum – ONGC Dehradun
https://www.bing.com/videos/search?q=subir+raha+oil+mu
seum+dehradun&&view=detail&mid=DAC89B7AECF0B89B5
CE9DAC89B7AECF0B89B5CE9&&FORM=VRDGAR&ru=%2Fvi
deos%2Fsearch%3Fq%3Dsubir%2Braha%2Boil%2Bmuseum
%2Bdehradun%26FORM%3DHDRSC4
Wells- To – Watch (2018)
Global Conventional Discoveries (Million boe)
Source – Rysad Energy Research & Analysis

The Upstream Project Cycle
High Risk – High Reward
Risk can be grouped
under three
categories
1. Geological
2. Financial/
Economic /Geo-
political
While the geological

risk begins to
diminish once the
• Exploration and production of hydrocarbons is a high-risk venture. Geological discovery is made,
concepts are uncertain with respect to structure, reservoir, seal, and hydrocarbon financial and
charge. Economic evaluations have uncertainties related to costs, probability of political risk
finding and producing economically viable reservoirs, technology and oil price. intensify
• Even at the development and production stage the engineering parameters have
high level of uncertainties in relation to their critical variables (infrastructure,
production schedule, quality of oil, operational costs, reservoir characteristics etc.).
56 of the top wells and drilling program from 36 countries
Three large recent discoveries:

• Yakar gas field (Senegal), Kosmos Energy,
• Zama field (Mexico), >1 Billion barrels
• Stabroak Block (Guyana) Exxon added another 4 Billion
VOLUMETRICS ,RISK ANALYSIS AND RESERVES ESTIMATION OF EXPLORATION
PROSPECTS
• Energy companies discovered about 13 billion barrels of oil equivalent in 2019,
the highest since 20 billion barrels in 2015 - from more than 25 discoveries of at least 100
million barrels each and mostly from offshore, according Rystad Energy.
• ExxonMobil was declared explorer of the year for a second year in a row as results in
Guyana, along with significant investments in Cyprus. The supermajor was exceptional,
both in terms of discovered volumes and value creation from exploration. "Exxon's finds
account for 9 percent of the global oil and gas discovery in 2019.
• .The global high impact well count in 2019 was 91 wells, up 36% on 2018. Drilling spend
was flat at $3.5 billion.. The commercial success rate was at a 10-year high of 32%.
• 77% of total discovered was gas, with seven of top ten discoveries in Russia, Iran,
Mauritania, Senegal, Indonesia and Cyprus. The two biggest oil discoveries were in the
Steabrook license in Guyana, which at 6 billion barrels and counting, is one of the most
prolific oil licenses ever issued.
Brazil is another country to watch in 2020 with one high impact well under drilling and seven wells planned
for 2020 testing 6 billion barrels of unrisked volume in pre-salt plays Santos and Campos basins.
The much anticipated Peroba well drilled in 2019 by BP, for which a $598 million signature bonus was paid
(2017 bid round), is understood to have found high CO2 content gas and is considered non-commercial.
Exploration - Top wildcat wells to watch in 2019
Improved market conditions and lower well costs led E&P players to ramp up their 2019 exploration
activities in all parts of the world, driven in particular by rising investments in South America and Africa.
Exploration - Top wildcat wells to watch in 2019
Improved market conditions and lower well costs led E&P players to ramp up their 2019 exploration
activities in all parts of the world, driven in particular by rising investments in South America and Africa
Latin America, Southern and Western Africa are the regions to keep an eye on when it
comes to offshore exploration (Wood Mackenzie)
South America –Stabroek
Block
In Guyana leading in
prolific discoveries (More
than 6 bn boe)
Course Outline
Module 1: Introduction to Petroleum Exploration
· Global Scenario of hydrocarbon supply and demand
· Indian Scenario
· Sedimentary basins of India
· Origin of Petroleum
· Hydrocarbons type and classification
· Petroleum system elements
· Source Rock, Reservoir Rock and Cap Rock quality and its impact on hydrocarbon
accumulations
·Hydrocarbon migration processes.
COURSE OUTLINE
Module 2: Licensing and Contracts

· Fiscal Regimes around the world and their economics
· Service Contracts (Drilling Contracts, Joint Operating Agreements)
· Service providers and their business
· Core companies and their business
Course Outline Cont…
Module 3: Geological Structures, Exploration Methods, Seismic and Non- Seismic
· Geological Structures for Petroleum Entrapment

o Structural Trap
o Stratigraphic Trap
o Combination Trap
· Geological Methods
· Geochemical Methods
· Geophysical Methods
o Magnetic
o Gravity
o Seismic 2D, 3D & 4D
o Electromagnetics and CSEM
Module 4: Hydrocarbon Resources and Reserves
 Definition of Resources and Reserves

 Classification of Resources and Reserves
o Deterministic & Probabilistic Estimates
o P90, P50 and P10 Method of describing size of the
 Reserves
o 1P, 2P and 3P Reserves
 Introduction to Estimation of reserves
o Volumetric Reserve Estimation
o Application of Reservoir Performance Techniques
o Material Balance
 Numerical Simulation
o Decline Curve Analysis
o Monte Carlo Approach
Module 5: Drilling & Well Completion
· Drilling environments and rig types

· Conventional petroleum drilling
· Unconventional petroleum drilling (Coal Bed Methane)
· Unconventional petroleum drilling (Shale Gas/Oil)
· EOR and IOR recovery methods
· Safety and Hazards implications and assessment

Module 6: Play and Prospect analysis, volumetric and risking
· Play chance analysis

· Geological, commercial and economic success (POS)
· Minimum Economic Field size (MEFS)

Module 7: Economic Evaluation of Prospects and Economic
indicators
· Production Sharing Contract
· Bidding Procedure
· Contractual Issues.
· Cash Flow
· Time Value of Money
· Depreciation
· Discount Rates, Weighted Average Cost of Capital
Module 8: Decision Making

· Net Present Value
· Internal rate of Return
· Payout Period
o Risk and Uncertainty
o Decision Making Under Uncertainty
· Decision Tree Analysis
· Commercialization of Oil & gas discoveries
Module 9: Commercialization of Oil & Gas discoveries
· Declaration of commercial discovery
· Field development & production plan
· General sales and purchase agreements
Module10: Audit of Oil Fields

• Global & India Audit guidelines
• Audit of lost oil in EOR Water Injection
Detailed Course Plan

Geologic Time Scale
The geologic time scale (GTS) is a system of chronological dating that classifies geological strata
(stratigraphy) in time. It is used by geologists, paleontologists, and other Earth scientists to describe the
timing and relationships of events in geologic history
Geologic Time Scale
Geologic Time Scale
Geologic Time Scale
Geologic Time Scale
Geologic Time Scale
Geologic Time Scale
Geologic Time Scale
Geologic Time Scale
Geologic Time Scale
World’s Oil Fields
Hydrocarbon Exploration –Seismic Image
The theory of plate tectonics states that the Earth's solid outer crust, the lithosphere, is
separated into plates that move over the asthenosphere, the molten upper portion of
the mantle. ... Thus, at divergent boundaries, oceanic crust is created.
Plates interact
at three types
of plate boundaries:
divergent, convergent and
transform. Most of the
Earth's geologic activity
takes place
at plate boundaries. At a
divergent boundary,
volcanic activity produces
a mid ocean ridge and
small earthquakes
Plate Tectonics & Global Distribution of Geological Phenomena
Pangea 250 my
Petroleum Composition
Petroleum is organic; it contains complex carbon-hydrogen molecular structures called chains
that are linked together to form long chains of more complex molecules. CH4 – Methane is
one such hydrocarbon.
 Crude oil refers to liquid petroleum as opposed to refined oil. These are
liquid hydrocarbons that contain varying amounts of dissolved gases,
bitumen, and other impurities.
 In raw state, crude oil resembles ordinary lubricating oil. It is

immiscible with water and has a density less than that of sea water –
thus, crude oil floats on water. Crude oil is, however, soluble in naphtha,
carbon disulfide, ether, and benzene.
 Natural gas is petroleum gas as distinguished from manufactured gas.

Natural gas consists of lighter paraffin hydrocarbons (hydrocarbons of
the methane series), the most abundant being methane gas (CH4).
 Semi-solid and solid forms are called heavy hydrocarbons and
bitumen. They comprise materials such as asphalt, tar, pitch,
albertite, or any number of names depending on their individual
characteristics and local usage.
 Natural gas is petroleum gas as distinguished from manufactured

gas. Natural gas consists of lighter paraffin hydrocarbons
(hydrocarbons of the methane series), the most abundant being
methane gas (CH4).
Composition of crude oil
Element Percent range
Carbon 83 to 87%
Hydrogen 10 to 14%
Nitrogen 0.1 to 2%
Oxygen 0.1 to 1.5%
Sulfur 0.5 to 6%
Metals less than 1000 ppm

The components of crude oil can be classified into two hydrocarbon series: methane series and

the naphthalene series. Crude oil belonging to the methane series is also referred as paraffin.
Paraffins are straight-chain hydrocarbons having a general formula of CnH2n+2. The four
principal types of paraffins are methane (CH4), ethane (C2H6), propane (C3H8), and butane
(C4H10) with each heavier molecule adding one CH2 molecule to the preceding compound.
Another type of crude oil belonging to this series is naphthalene. It contains carbon ring
compounds having the general formula CnH2n. These are called cycloparaffins with the most
common being cyclopropane (C3H6) and cyclobutene (C4H8). However, the molecular structures
for this group of hydrocarbons can contain long, branched chains with complex rings, such as C 30
H50OH
Of the two types of crude oil, paraffin or methane series oil is the most prized, but it comprises
less than 2% of the total world supplies. Crudes dominated by naphthenic components are
called asphalt-based oils. About 15% of total world supply is this type (also called black oil).
Structure of Paraffins
 Vast majority of crude oils are a mixed base of paraffin and
naphthalene.
 Natural gas consists of hydrocarbons not condensable at atmospheric

temperatures (68°F) and pressure. Natural gas comprises the first
four members of the paraffin series.
 If the natural gas is composed of entirely methane, it is referred to

as dry gas. But if the ethane content in methane exceeds 5 %, it is
referred as wet gas.
 Vast majority of crude oils are a mixed base of paraffin and

naphthalene.
Three distinct types of natural gas based upon their
origin:
 Petroleum gas: Petroleum gas is formed as a natural by-product during

generation of petroleum. It is often dissolved within liquid hydrocarbons or in
a free gas phase associated with the oil pool.
 Coal gas: Coal gas is formed by the modification of coal through the heat,
pressure or other natural processes. It is a major source of commercial gas
world wide.
 Bacterial gas: Bacterial gas forms during the low temperature alteration of
organic matter at or near the earth's surface.
Crude Oil Formation Organic Theory
Crude oil was formed over millions of years ago from tiny aquatic organisms called
planktons that lived in ancient water bodies mainly seas
Crude Oil Formation
What made oil? Plankton
Dying plankton
the tiny sea creatures
When plankton die they fall to the sea bed.
• The plankton are trapped under many layers of

sand and mud.
• Over millions of years, the sand and mud turn to
rock.
• Also, the pressure and the Earth's heat turn the
dead plankton into oil.
Petroleum System
Classification of Crude Oil
The petroleum industry generally classifies crude oil by the following:
1. Geographic location it is produced in.

2. It’s API (American Petroleum Institute) gravity.
3. Its sulfur content.
Geographical Location
Reference Basket
Saharan Blend (Algeria) Girassol (Angola)

Minas (Indonesia) Iran Heavy (Iran)
Basra Light (Iraq) Kuwait Export (Kuwait)
Es Sider (Libya) Bonny Light (Nigeria)
Qatar Marine (Qatar) Arab Light (Saudi Arabia)
Murban (UAE) BCF 17 (Venezuela).
Avg. API – 32.7; Avg. S – 1.77% (old basket numbers)

OPEC Countries
Founded in 1960, Baghdad
Members : Founders - Iran, Iraq, Kuwait, Saudi Arabia, Venezuela
Qatar - 1961
Indonesia -1962
Libya - 1962
UAE - 1967
Algeria - 1969
Nigeria - 1971
Ecuador - 1973 (suspended from 1992 to Dec-07)
Angola - 2007
Gabon - 1975 – 1994 (Rejoined in July 2016)
Algeria, Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar,
the Republic of the Congo, Saudi Arabia (the de facto leader), United Arab Emirates, and Venezuela
API Gravity
The American Petroleum Institute gravity, or API gravity, is a

measure of the relative density of a petroleum liquid and the
density of water at standard pressure and temperature, but it is
used to compare the relative densities of petroleum liquids .
The equation,
API Gravity
API Gravity
Crude oil is classified as light, medium or heavy, according to its

measured API gravity.
1. Light crude oil is defined as having an API gravity higher

than 31.1 °API
2. Medium oil is defined as having an API gravity between 22.3
°API and 31.1 °API
3. Heavy oil is defined as having an API gravity below 22.3 °API.
4. Extra Heavy oil is defined as having API gravity below 10
°API
Sulphur Content
Sweet crude oil:
• It has very little sulfur content (less than 0.5%) with diminutive
amounts of hydrogen sulfide and carbon dioxide.
• Due to low percentage of wax, it has low viscosity which facilitates
easy pumping and transportation of oil.
• Light sweet crude oil demands the highest price in the market.
Sour crude oil:
• It has a high percentage of sulfur impurities (more than 0.5%).
• It is usually processed into fuel oil and diesel instead of gasoline
Sulphur Content
•West Texas Intermediate (WTI) is a light, sweet crude oil that serves as one of the main
global oil benchmarks.
•It is sourced primarily from inland Texas and is one of the highest quality oils in the
world, which is easy to refine.
•WTI is the underlying commodity for the NYMEX's oil futures contract.
•WTI is often compared to Brent crude, which is an oil benchmark for two-thirds of the
world's oil contracts based on oil extracted in the North Sea.
API Gravity
 The top three oil producing countries are Saudi Arabia, Russia, and the
United States
.
 About 80% of the world's readily accessible reserves are located in the
Middle East, with 62.5% coming from Saudi Arabia, UAE, Iraq, Qatar
and Kuwait.
 A large portion of the world's total oil is found to exists as

unconventional sources, such as bitumen in Canada and Venezuela and
oil shale.
Petroleum
Systems
Elements
Introduction - Exploration Process Triangle

Sedimentary basins are regions of the Earth where long-term subsidence creates accommodation space
for accumulation of sediments. As the sediments are buried, they are subject to increasing pressure and
begin the processes of compaction and lithification that transform them into sedimentary rock
si on
si on
Stages of Basin

Formation

si on Stages of Basin

Formation

Introduction - Exploration Process Triangle

si on
Sedimentary Basins of India

Crude Production from Assam
Sedimentary Basins of India - Assam Arakan Basin
Sedimentary Basins of
India
Assam Arakan Basin
Sedimentary Basins of India - Cambay Basin
Sedimentary Basins of India Cambay Basin
Geographic Location of the basin The Cambay rift Basin,
a rich Petroleum Province of India, is a narrow, elongated
rift graben, extending from Surat in the south to Sanchor
in the north. In the north, the basin narrows, but
tectonically continues beyond Sanchor to pass into the
Barmer Basin of Rajastha
Western Offshore Basin
Mombai Offshore Basins
Oils mainly occur in the limestone
horizons of lower Miocene age (L-III) in
major hydrocarbon fields; viz., Mumbai
high, Panna, S. Bassein, Heera and Ratna,
Mahuva and Daman pay (Oligocene) in
Tapti area, Bassein pay (middle Eocene to
upper Eocene) in Panna-Bassein-Heera
and Ratna areas and Ratna pay (mid
Eocene to lower Eocene) in Ratnagiri area.
With the recent oil occurrences in the
sands of Panna Formation in Vasai East,
the Panna pay is emerging as a
commercial pay zone. Few oils also occur
in clastic / fractured basement reservoirs
and middle Miocene L-II and S1 pays. The
majority of these oils show moderate API
gravity (25-40°), high pour point (27-
33°C), significant wax (7-20%), and low
sulphur (0.1- 0.3%) contents. These oils
are predominantly aliphatic, having high
saturate/aromatic ratio (>1.5) and
saturate content (>40%). Only a few oils
and mostly condensates were found in
the Tapti Daman block.
Sedimentary Basins of India-Krishna Godavari Basin
Krishna Godavari Basin
Deep Water PLay

Krishna Godavari Basin – D-6 Field
Cauvery Basins of India
Cauvery Basin
Mahanadi Basin
Mahanadi Basin
Mahanadi Basin
Andaman Basin
The Andaman Sea Basin is still considered frontier with respect to
hydrocarbon exploration, as only 13 exploration wells have been drilled in
the project area (plus well AN-02-1 drilled in an area west of the Andaman
Islands). These had been drilled in two phases; a few, early, wells were
drilled in 1980, followed by a second phase of drilling in the period 1984
to 1987. All of the wells targeted the shallow water part of the fore-arc
basin and most of them were close to the Andaman Islands. Of these wells,
the first to be drilled (AN-01-1) discovered gas in Miocene limestone,
which flowed on test; another well (AN-32-1) encountered gas shows.
The Andaman Sea Basin extends approximately 1,250 km from Myanmar

to Sumatra and was formed by the oblique converging plate boundaries of
the Indian Oceanic and South East Asian Tectonic plates, which was
initiated in the early Cretaceous and has continued to the present day. The
effects of the easterly subduction of the Indian Ocean Plate beneath the
South East Asian Plate created a classic island arc system, with the
formation of six discreet geotectonic units which (from west to east
through the Andaman area) include; foredeep (Andaman Trench); inner
slope/accretionary prism; island arc/outer structural high; fore-arc basin;
volcanic-arc; and back-arc basin.
Andaman Basin
The first gas discovery from Miocene Limestone

(AN1-1), the see pages in the islands and oil/gas
shows in the mud volcanoes indicate presence
of hydrocarbon in the Tertiary sediments. Two
petroleum system are envisaged to be operative
in the area, the biogenic shallow gas and the
deep thermogenic system. These petroleum
systems are envisaged to be operative in fore-
arc Basin where exploration wells have been
Drilled.
Andaman Basin
Andaman Basin
Geological Cross Section
Andaman Basin
Geological Cross
Section
Gondwana Basins
Upstream Industry Development
OALP
NELP era
203 + 36
Blocks
Pre NELP era
28 Blocks, 29
Fields
Nomination era
Pre Independence
era
PSC Regime
1886 - 1946 1947 - 1990 1990 - 1996 1997 – till date Future
New Exploration Licensing Policy
 Policy approved in Feb. 1997
 Award of licenses through international competitive
bidding
 Fast track approval mechanism through single window
Empowered Committee of Secretaries (ECS)
 Up to 100% foreign participation
 No acreages on nomination basis
 NOCs to compete in the bidding rounds
Upstream Industry Development
E&P data
E&P operations in India have generated voluminous data in terms of geo-scientific surveys, exploratory and
development drilling and well data along with other type of data as indicated in the detailed scope of data to
be held within NDR. In broad terms, the quantum of E&P data populated so far in NDR is as under:
 Gravity &magnetic surveys 0.515 Million LKM

 2D seismic 1.670 Million LKM
 3D seismic 0.587 Million Sq.Km.
Exploratory wells 4500 nos.
 Development wells 2500 nos.
 Well Logs 65292 nos.
Other E&P Data:  Aero Gravity Magnetic Surveys  Magnetic Telluric / CSEM  Production Data  Reservoir
Data  CBM related Data  Gas Hydrate Data  Geochemical Data
The objective of this policy is to assimilate, preserve and regulate the E&P data generated by various
companies over the last several decades and held within the National Data Repository (NDR) in order to enable
systematic disclosure, sharing and dissemination and to standardize the norms for accessibility within the
overall provisions of the Oilfields (Regulations and Development Act 1948) and the Petroleum and Natural Gas
Rules 1959,
Data submission to NDR
The contractor/operator/ licensee/lessee/permit holder/E&P entity/Non-E&P Entity shall as soon as available but
not later than three months after acquisition/ processing/interpretation or any value addition at each stage, as
the case may be, shall compulsorily provide to the Government designated agency i.e. DGH, free of cost, all data
obtained as a result of petroleum operations under the license, lease, permit, contract or any other agreement.
Augmentation of NDR shall be a continuous process wherein all the data is compulsorily acquired on a perpetual
basis from all E&P and non E&P entities.
• Media of Data submission The data must be submitted in latest media such as 3592 cartridges or LTO-4, LTO-
5, and LTO-6 or hard disk or any other higher media as may be decided by NDR/DGH.
• Interpretation Data submission All interpretation work in its entirety shall be delivered to NDR/DGH in two
separate packages:
• The first package shall contain a backup of the interpretation project in workstation format (e.g. Open works,
Petrel, SMT etc.) the name of the interpretation software and version number and any other relevant
information that will enable NDR to restore the project shall also be included.
• The second package shall contain ASCII exported files of Horizons, Faults, Volume grids, Map grids, export of
logs in LAS format and seismic lines/cube in SEGY format, project coordinate reference system and any other
relevant information that will enable NDR to import the product of interpretation to any interpretation
software shall also be included.
• The submission shall be accompanied by an interpretation report that lists all interpretation assumptions,
conventions, standard horizons names and events used for picking
Visualization & Sharing of data with E&P and Non-E&P users /investors
• E & P users / investors will be allowed to see data in physical data rooms located at NDR, DGH after
scheduling an appointment with NDR. The investor should request NDR for loading & visualization of
data through Email. Any user on each occasion can view Data up to 30 sectors (One sector is equal to an
area bound by one grid of 10’x10’) for offshore, 20 sectors for shallow offshore area and 10 sectors for
onshore area. For visualizing data for more than 30/ 20 sectors or for other area/sector, investor should
book another appointment on the web portal of NDR. However, DGH may notify for smaller grid, if data
is available.
• Maximum 4 persons per company per work station will be allowed to visit data rooms. The end users
will be allowed to save interpretation project up to their booking date. They will be allowed to take
maximum 05 snapshots per project
• The Charges for data room per day per work station shall be as under: a. For first three days – USD 250
per day b. Fourth Day – USD 500 c. Fifth Day onwards – USD 1250 per day
Acquisition of Mineral Interests in Property
•After an oil company has identified an area with potential, the company will seek to acquire the right to explore,
develop, and produce any minerals that might exist beneath the property, unless it already holds those rights.
•This right, along with the right to simply share in proceeds from the sale of any minerals produced, is referred to
as a mineral interest or an economic interest. The specific type of mineral interest that is owned determines how
costs and revenues are shared.
Mineral Rights
For ownership purposes, the surface of a piece of property can be separated from minerals existing underneath
the surface. When a piece of land is purchased, one may acquire ownership of the surface rights only, the mineral
rights only, or both rights. An ownership of both the surface and mineral rights is called a fee interest.
When the owner of the mineral rights enters into a lease agreement or contract, two
types of mineral interests are created-a working interest (WI) and a Royalty interest (RI).
Royalty Interest (RI):
This type of mineral interest is created by leasing. The RI is retained by the owner of the
mineral rights when that owner enters into a lease agreement with another party.
The RI receives a specified portion of the minerals produced, free and clear of any costs
of exploring, developing, or operating the property. The royalty interest owner is
responsible for any severance or production taxes assessed on production from the
property.
Working Interest or Operating Interest (WI):
This interest is created via leasing and is responsible for the exploration, development,
and operation of a property.
While the working interest owner pays all (100%) of the cost of exploring, drilling,
developing, and producing from the property, the WI's share of revenue is the amount
that remains after deducting the share of the RI and other nonworking interests
Fiscal Regimes around the world and their economics
• Although host governments and the investors may share one common
objective—the desire for the project to generate high levels of revenue—their
other goals are not entirely aligned.
• Host governments aim to maximize the rent for their country over time, while
achieving other development and socio economic objectives.
• Investors aim is to ensure that the return on investment (ROI) is consistent

with the risk associated with the project, and with their corporations
'strategic’ objectives.
• To reconcile these often conflicting objectives, more and more countries rely on
transparent institutional arrangements and flexible, neutral fiscal regimes.
• The key elements of the legal and fiscal frameworks utilized in the petroleum sector
and aims to outline desirable features that should be considered in the design of
fiscal policy with the objective of optimizing the host government’s benefits, taking
into account the effect that this would have on the private sector’s investment
• Governments compete for capital and technology to develop their hydrocarbon sector.
• In order to devise and apply the appropriate policies/strategies, each must assess its
position in the global marketplace and evaluate its particular situation, boundary
conditions, concerns and objectives.
• Companies look for investment opportunities that suit their corporate strategies and
risk-reward profiles. The initial decision to invest and the resulting allocation of revenue
and benefits are greatly influenced by the content of existing legal arrangements and
fiscal policies
The fiscal regime can be used to convert a government’s policy into economic signals
to the market, and influence investment decisions, provided that the framework is
clear, is not changed retro-actively, and does not discriminate among the actors.
Several countries have used favorable taxation of oil and gas to support the
development of the sector in addition to relevant sector reforms.
The challenge of an efficient fiscal system is to induce maximum effort from the oil
companies while ensuring that the host government is adequately compensated.
In designing a fiscal system, a government has to answer the following questions:
What is the effect of the fiscal regime on oil/gas output?

Does it discourage the development of marginal fields?
Does it influence the pace of development?
Does it favor early abandonment?
Is it insensitive to oil/gas price and cost variation?
In other words, how flexible, neutral and stable is the fiscal regime?
• Many fiscal systems around the world make use of sliding scales for the determination of at least
one of the following parameters: royalty, bonuses, profit oil /gas split, cost recovery, and taxes.
Sliding scales introduce flexibility into the system by allowing it to respond to changes in project
variables.
• Unfortunately, the vast majority of these sliding scales are linked to daily or cumulative production
targets. Hence they are insensitive to changes in economic variables. No wonder that the changing
level of oil prices in recent years has pushed many host governments to seek improvement in their
contractual terms.
• oil prices also trigger demand for services and equipment, which in turn increase their cost. As
many fiscal systems were designed when oil prices were in the US$15-18 barrel range and finding
and development costs were US$5-9 barrel, these systems no longer efficiently capture the
projects’ economic rent.
• High risks and long project cycles are key elements of the oil and gas industry. As risks can differ
substantially by project and over time, an efficient fiscal system needs to be flexible enough to allocate
risks equitably, thus minimizing the need for and cost of negotiations or renegotiations
• No ideal or model regime is available for policy makers to adopt. Each country’s circumstances, needs,
and objectives define the key features of an appropriate legal and fiscal framework.
• Although many of the variables that affect the profitability of a petroleum project are beyond the
control of both the host government and the investing companies, the host government can take
actions to minimize uncertainty. Options include providing potential investors with access to existing
geological and geophysical data; strengthening macroeconomic and fiscal stability; improving
transparency and the rule of law; promoting contract stability; and signing/ratifying relevant
international conventions.
Ownership of Natural Recourses
 Under a concessionary system, the title to hydrocarbons passes to the investor at the borehole. The
state receives royalties and taxes in compensation for the use of the resource by the investor. Title to
and ownership of equipment and installation permanently affixed to the ground and/or destined for
exploration and production of hydrocarbons generally passes to the state at the expiry, or
termination, of the concession (whichever is earlier). The investor is typically responsible for
abandonment.
 Under a contractual system, the investor acquires the ownership of its share of production only at
the delivery point. Title to and ownership of equipment and installation permanently affixed to the
ground and/or destined for exploration and production of hydrocarbons generally passes to the state
immediately. Furthermore, unless specific provisions have been included in the contract (or in the
relevant legislation) the government (or the national oil company, “NOC”) is typically legally
responsible for abandonment
Legal Framework
Legal Framework
Ownership of Natural Resources
Legal Framework
From the government’s standpoint, this means the design of a tax system:
(i) supports macroeconomic stability by providing predictable and stable tax revenue
flows;
(ii) permits capturing a greater share of the revenue during periods of high profits;
(iii) avoids the introduction of distorting effects through the fiscal instruments;
(iv) maximizes the present value of revenue receipts by providing for appropriations
during the early years of production; and
(v) is neutral and encourages economic efficiency as a yardstick

Upstream Oil & Gas Life Cycle
Acquisition
• Activities to obtain a right to explore a block/area
through concession/contractual system
Exploration
si on
• Activities to search for oil & gas deposit on the
certain location beneath the earth surface
Appraisal
• Activities to define the oil & gas volume and
characteristic more precisely after discovery
Development
• Activities to build the subsurface & surface
facilities to produce oil & gas safely and efficiently
Production
• Activities to extract, process, and export oil & gas
as per contract agreement
Abandonment
• Activities to plug wells permanently, remove surface
facilities, and restore the field as per initial state
The Upstream E&P Project
Cycle
Blocks are made available to E & P companies through a variety of systems:
 Negotiations
Govt. awards blocks through negotiations based on the programs the companies commit to
carry out.
 Exploration Bidding Rounds

Oil companies must bid considerable funds up-front and in completions with other companies.
ICB.
 Farm in / Farm out

Oil companies trade interest in blocks among them for consideration of cash or for work which
one company commits to undertake on another company’s behalf.
 Lottery and Government discretion.

There are two main strands of approach to fiscal frameworks in the oil industry.
 Concession systems
 Contractual systems
 Production sharing contracts
 Service contracts (with or without risk)
 Association contracts
The production sharing contracts (PSCs) are among the most common types of contractual
arrangements for petroleum. Under PSC, the state, as the owner of mineral resources,
engages a contractor to provide technical & financial services for operations.
The state is represented by govt. or through NOC.
Contractor is entitled to a share of Oil or Gas produced and of cash flows that accrue from
the sale.
 The contractor carry the entire exploration risk and if no oil is found, the contractor
receives no compensation. In the event of a discovery, FOC accepts all risks financing
the operations - development & production.
 The contractor recovers the entirety of its costs associated with operations through a
part of production referred as ‘Cost oil’ ,up to a % of production – Cost recovery limit.
 Once the capital and operating costs have been recovered (high in first years), the
left over is termed ‘Sharing oil’, shared between NOC & FOC under agreed ratios
(Profit oil).
Liberia Block 10 Timeline & Work Commitments
©
Production Sharing Contract (PSC)
Total Production
Up to 75% 25%
From 0 to 20.000 BOPD 50.0%
Cost Oil From 20.001 to 40.000 BOPD 47.5%

Sharing Oil
From 40.001 to 60.000 BOPD 45.0%
From 60.001 to 80.000 BOPD 42.5%
More than 80.000 BOPD 40.0% %
Si el descubrimiento es
de GAS, el reparto sería Contractor Estate
aplicado a los BOES a Profit Oil Profit Oil
menos que el Contratista
obtenga mejores
condiciones para el gas
Opex
Development
Exploration
Formation & Rentals
Contractor
Cash flow
Indonesia Production Sharing Contract (PSC)
GROSS-SPLIT PSC REGULATION
The Gross-Split PSC model introduced by the Gross-Split PSC Regulation splits gross revenues derived from hydrocarbon
production between the Government and Contractors. Contractors must bear all capital and operating costs subject to such
costs being tax deductible if commercial reserves are discovered and production generates taxable revenue. This is in contrast
to the Cost Recovery System, which permitted the recovery of a share of production equivalent in value to such costs incurred
by Contractors prior to the remaining revenue being shared with the Government based upon an agreed ‘profit’ split for oil
and natural gas. The idea of transforming the Indonesian PSC to a gross-split model was conceived as early as 2011. 10 While
there were a series of meetings between the Indonesian Petroleum Association (the ‘IPA’), the Director General of Oil and
Gas/ESDM, MIGAS, SKK Migas and Pertamina in late 2016, there was ongoing debate with respect to the economics of the
new fiscal regime compared to the traditional PSC regime and the focus was on the abolition of the Cost Recovery System to
respond to political pressures. While the variable and progressive elements of the split do take into account various factors, an
economic comparison between each type of contract can only occur if a particular project is modelled and the results are
compared.
The Gross-Split PSC Regulation was implemented in order to ensure that it could be used for the ONWJ PSC, which was
scheduled to expire on 18 January 2017. It is unfortunate that more time was not taken by the Government and ESDM to
refine the Gross-Split PSC Regulation and solicit comments from the IPA, E&P companies and other stakeholders.
Service Contracts
Under a service contract, the contractor never acquires the title to the resource. On the
contrary, he is paid a fixed or variable fee for his services. In some service contracts the fee is
paid in kind.
From mid 1960 to 1980, the industry was seeking new places to explore outside the OPEC
domain. It became quite popular among many host govt. to turn to risk service contracts in
which foreign contractors takes on all the risk and expense of exploring and developing from
contract area.
In return the contractor is paid a stipulated fee per barrel produced for the account of the
NOC.
Service Contracts
Service contract occur in a number of forms but share certain basic similarities.
There is no ownership of reserves by the developer. The contract is to develop the

reserves for the mineral owner(Govt.)
The FOC usually recovers his cost from a portion of the production, often ahead of the
service fee. Development facilities normally becomes the property of the mineral
owner.
In 1958 Amoco signed a service contract with Argentina in which they agreed to drill 50
wells at their expense. If production was found (it was), the company agreed to lay a
pipeline to the coast. For this they were paid a fee per barrel.
Service Contracts
Service contracts are the results of the extensive negotiations, they are not all the
same.
The Service contracts with risk supposes that contractor is employed to provide
technical, financial and commercial services associated with E&P. In return if
successful, govt allows the contractor to recover the cost through sale of oil/gas and
pay a fee per bbl.
Service contract without risk, in which the state directly sub contract a contractor ,
whereby it does not assume the exploration risk and is not entitled to production in
case of a discovery.
.
Farm in/Farm out
Farm in/Farm out
Joint Operating Agreements
The Joint Operating Agreement (JOA) in oil and gas industry is an underlying contractual framework of a
Joint Venture (JV). The JOA is a contract where two or more parties agree to undertake a common task to
explore and exploit an area for hydrocarbons. The parties to the agreement can be broadly classified as
operators and non-operators
The operator is the one who is responsible for the day-to-day management and operation of the field. It is
usually a single party with the highest interest in the agreement. But it is not uncommon to have a
designated operator who is a minority to the agreement.
Though the operator is entitled to full control over the operations, it usually does not receive any
remuneration. The main duty of the operator is to carefully plan the activities in order to increase the
profitability of the operations. But it is not liable for any loss of production or revenues as a result of its
decisions except in cases of gross negligence and/or willful misconduct
As the name suggests, parties other than the operator are designated as "non-
operator(s)." The most important duty of non-operator is to answer any cash-calls as
the operation requires.
Non- operators form part of the joint operating committee (JOC) which oversees the
activities of operator. The voting rights of operators and non-operators in the JOC are
as per the interest they hold in the JOA.
Typical JOA will include the followings:
1.Duration of the Agreement

2.Parties to the Agreement
3.Parties participating Interests
4.Scope of Work
5.Exclusive Operations
6.Designated Operator
7.The Joint Operating Committee
8.Cost Control and Contracting
9.Hydrocarbon Allocation
10.Hydrocarbon Lifting and Disposal
11.Transfer of Interests
12.Withdrawal from JOA
13.Liabilities
14.Decommissioning
15.Default
16.Dispute resolution
17.Accounting procedure
Service Providers and Their Business
 G & G Service providers
• Geophysical services
• Geological services
• Geochemical services
 Drilling Service provider

• Drill ships
• Rigs
 Well Services provider
• Wireline logs
• Cementing
• Mud Logging
• Well test
 Oil field Service providers
Module-Exploration Methods
Geologists focuses their attention on :
• Oil seeps
• Establishment of lithostratigraphic succession
• Preparation of geologic maps
• Preparation of cross section of geological formation.
Oil seeps
Oil & gas seeps are where the petroleum has migrated from its source through either porous beds,
faults or springs and appears at the surface.
Locating seeps at the surface was the primary method of exploration in the late 1800’s and before.
Oil seep demonstrates that there is a generating source rock & hence a active petroleum system.
Oil Seeps
Oil & Gas Seeps located either up dip (A) or along fractures (B)
Oil Seeps
Oil Seeps
Oil Seeps
Patterns
Oil Seeps
http://www.soscalifornia.org/natural-oil-s
eepage-facts
/
Oil Seeps
https://youtu.be/m4S9uazWAB0
Geotechnical Data (SGE)
1. High resolution Bathymetric data
• MBES, Backscatter, SBPD
2. Piston core Geochemical exploration data ,Hydrocarbon

anomaly
• Oil anomaly
• Gas anomaly
• Geochemical characterization and Inversion
3. Piston core Thermal parameters

• Heat Flow, GG, TC values
• Exploratory implications
• Geochemical exploration program is based on the idea that upward migrated petroleum
from subsurface can be detected in near-surface sediments and they are used to define
the type of fluid and geographic extent of the Petroleum System of the Offshore area.
• Coring points are selected based on sediment
water interface expression indicated possible
CORING SEQUENCE
conduits for oil and gas upward migration
(pockmarks, volcanoes, collapse, faults)
subsurface structures and points with seismic DHI (
Bright, phase inversion, dim spots, flat).
• Laboratory Analysis:
– TFS and R1 Total Scanning Fluorescence max Intensity and the R1
value (ratio of fluorescence intensity at 360:270 versus 320:270
emission: excitation wavelengths)
– GC ANALYSIS OF CANS FOR INTERSTITIAL GASES. Gas
Compositional and Carbon isotopic ratio
– Oil extraction, GC C15+, whole oil chromatogram. Total Alkanes
and UCM (unresolved complex mixture) & GC MS (Biomarker
Analysis). N-Alkanes
UCM
Surface Expression, Oil/Gas Anomaly Sample
Sample
Gas anomaly Analysis
Total Gases Alkanes vs % Wetness
25
PC-36; PC-98; PC-99; PC-100 AND PC-
103 COULD BE CONSIDERED AS
POSITIVE GAS ANOMALY.
20
15
Background Piston Core Trinidad 23B BHP
% Wetness
PC Anomaly Close 23B Block

PC Gas Anomaly
10
Thermogenic
5
Biogenic/Thermogenic?
0
1 10 100 1000 10000 100000 1000000 10000000
Total gases Alkanes ppm

Geophysical Surveys
Geophysicists commonly use 3 surface methods – Gravity, magnetic and seismic to explore the
subsurface. Most of the exploration expenditure is being spent on seismic exploration, where
the most technology advances are being used.
Geophysical surveys measure the physical properties of rocks (like magnetism, density,
electrical conductivity etc.) to infer the presence or absence of petroleum concentration .
Three types of Geophysical Surveys:

• Gravity survey: to determine the earth’s gravity field
• Magnetic survey: to determine the strength of earth’s magnetic field.
• Seismic survey: to draw subsurface maps using sound wave.
Geophysical Methods
Gravity Methods:
 It involves measuring variations in gravitational fields which occur as a result of the different
densities of rock close to the surface, and gives indications of the nature and depth of layers.
This method makes use of the earth’s gravitational field to determine the presence of gravity
anomalies (abnormally high or low gravity values), which can be related to the presence of
dense igneous or metamorphic rock or light sedimentary rock in the subsurface.
 A gravity meter or gravimeter is used - The gravimeter is very sensitive to the density of
rocks in the sub surface. e.g. Over an area of earth’s crust with 5000 ft. of sedimentary rocks
underlain by basement rock that is very dense , the gravity measurements is predictable. A
mass of relatively lighter rocks such as a salt dome can be detected by gravity meter because
of lower than normal gravity values over it. Similarly, a mass of relatively heavy rocks near the
surface such as basement rock can be detected by higher than normal gravity values. The
gravity values are measured in milligals.
Gravity Methods:
 Dense igneous or metamorphic basement rocks close to the surface will read much
higher on a gravimeter because the gravitational force they exert is more powerful
than the lighter sedimentary rocks.
 Data collected from gravity surveys can be used to construct contour maps showing
large scale structures.
Gravimeter
Gravimeter, also called gravity meter, sensitive device for measuring
variations in the Earth’s gravitational field, useful in prospecting for oil and
minerals. In one form, it consists of a weight suspended from a spring;
variations in gravity cause variations in the extension of the spring. A number
of different mechanical and optical schemes have been developed to measure
this deflection, which in general is very small. Gravimeters have been
developed that can detect variations in the Earth’s gravitational field as small
as one part in 10,000,000.
Free Air Gravity Anomaly
This is the Free Air Gravity Anomaly Map. As it is presented, the colour-bar varies from the minimum
values in dark blue to the maximum, colored in pale pink. The variation rate is (-183.5, 16.3 mGal).
Free Air anomaly images lateral density contrasts within the earth´s lithosphere but is very sensitive to
topography/bathymetry (reflects topographic and sea floor features).
Bouguer Gravity Anomaly
Bouguer Gravity Anomaly is calculated to reduce the topography/bathymetry contribution to the
gravity signal. Thus, anomalies are better correlated to geological sources than in the Free Air
Gravity grid. The variation rate is (-183.5, 21.4 mGal).
Areas of minima are possibly

related to basement lows
(possible sedimentary
depocenters) and maxima to
basement highs or volcanic
intrusions.
Long wavelengths signature

related to Moho geometry, may
still affect the data.
Vertical Gradient of Getech´s Bouguer Gravity Anomaly
The vertical gradient is used to sharpen up anomalies and further highlight
low/high gravity areas, allowing a clearer imaging of the causative structures.
Maxima locate over

the body source of
the positive
anomalies, possibly
basement tilted
blocks or horst
configurations, while
lows may show a
direct relationship
with basins or
troughs.
Gravity-based delineation possible depocenters using the Vertical
Gradient of Bouguer Gravity Anomaly
The vertical gradient is used to sharpen up anomalies and further highlight low/high gravity areas, allowing a
clearer imaging of the causative structures.
As anomalies tend to locate over the

central axis of the causative bodies,
minimums can be correlated to
sedimentary basins.
A qualitative gravity-based
delineation of depocenters was
achieved by the Non-Seismic
Methods Group. It can be noticed
that most of the gravity depocenters
are highly geometrically consistent
to the regional structures of the
area.
Magnetic Methods
Magnetic methods involves measuring , usually from an aircraft, variations in the

earth’s magnetic field.
 A magnetometer is used to measure local variations in the strength of the earth’s

magnetic field & indirectly the thickness of sedimentary rock layers where oil & gas may
be found.
 The magnetometer can also be operated while being towed behind a boat.
 It provides an indication of the subsurface distribution of crystalline formations,
which have no or remote chance of containing oil and more promising sedimentary
formations.
Airborne Magnetics
Magnetic Method ( Cont.……)
 Igneous & metamorphic rocks usually contain some amount of iron bearing
minerals and are frequently found as basement rock that lies beneath
sedimentary rock layers.
 Basement rocks seldom contains HCs, but it sometimes into the overlying
sedimentary rock, crating structures (folds, faults) that could serve HC traps.
 If a large mass of magnetite bearing rock occurs near the surface, it is detected by
a large magnetic force than normal value.
 It can be also used to locate faults that displace basement rock.

Magnetic Method ( Cont.……)
 Magnetic methods not only predicts the rock variations but, also depth of the rock
 An igneous rock formation 1,000ft below the surface will affect a magnetometer more strongly than a
similar mass 10,000ft down.
 Once the magnetic readings have been plotted on a map, points of equal field strengths are
connected by contour lines, thus, creating a map that is rough equivalent to a topographic map.
Gravity and Magnetic anomalies over a salt dome
Fig. Gravity and Magnetic anomalies over a dome or anticline.
Regional Tectonic and Crustal Boundaries
Gravity and Magnetic Data
Block 23b
Gravity and Magnetic Data
Regional Tectonic and Crustal Boundaries
Grav-mag modelling shows a +10 km thick melange beneath

Geophysical Methods
SEISMIC METHOD
The geophysical method that provides the most detailed picture of subsurface
geology is the seismic survey.
The seismic method explains that different rocks permit seismic wave propagation
with different velocities.
This involves the natural or artificial generation and propagation of seismic waves
down into Earth until they encounter a discontinuity (any interruption in
sedimentation which is also called Reflector) and are reflected / refracted back to
the surface and picked up by the geophone.
The Seismic data collected is processed in large computers to reveal the subsurface
structures.
 Like echoes, the reflected waves return to the surface and are recorded by
sensors which convert the vibrations in the ground into electrical voltages.
 There are three types of acquisition:

a. 2D
b. 3D
c. 4D seismic acquisition.
 Traditional 2D acquisition is used for extensive exploration and in zones where

access is difficult.
 3D seismic methods are used for detailed prospecting and offshore exploration
Dynamite is the simpler and generally preferred source, but for several reasons it is limited to open areas, such as
field sand farmlands. Dynamite is also the only practical energy source in swampy areas, such as much of Southern
Louisiana. Quite simply, dynamite is buried and then set off. The resulting explosions generate the requisite
underground reverberation, which is then relayed via geophones to a special recording truck.
The other common method, more frequently seen in populous areas or places in which dynamite is impractical, is
vibroseis. Vibroseis uses large, purpose-built trucks as the source of the seismic waves. Five or six trucks are
commonly used to create enough energy for the procedure. Simultaneously, these trucks then begin to generate
energy of increasing frequency over the period of several seconds. Like with the dynamite method, the resulting
reverberations are measured by geophones, with the data being sent to a recording truck .
233
Seismic Survey (Land)
235
Seismic Survey (Marine)
Seismic Method
Marine Guns
Seismic Survey
Seismic Method
Reliance Industries - S. Aramco, $15 Bn deal falls through as priorities shift .

India's Reliance Industries Ltd said on Friday it had decided to revaluate it previously
proposed deal with Saudi Aramco on the latter’s proposed $15 billion investment in
Reliance's oil-to-chemicals (O2C) business.

In 2019, Reliance announced plans to separate the business into a new entity to enable Saudi
Aramco to take a 20% stake - besides refineries and petrochemical plants, the O2C business
also comprises a stake in the fuel retailing business. It, however, does not include the
upstream oil and gas producing assets such as the KG-D6 block in the Bay of Bengal. But the
process was delayed due to global uncertainty regarding the coronavirus pandemic, and
resulting questions on demand and oil prices. The application to the National Company Law
Tribunal is being withdrawn, Reliance said.
241
𝐑𝐞𝐥𝐢𝐚𝐧𝐜𝐞’𝐬 𝐠𝐫𝐞𝐞𝐧 𝐞𝐧𝐞𝐫𝐠𝐲 𝐟𝐨𝐜𝐮𝐬:
In line with RIL's commitment to becoming net carbon zero by 2035, Mr. Ambani announced the
establishment of the 𝘙𝘦 𝘭 𝘪 𝘢 𝘯 𝘤 𝘦 𝘕𝘦 𝘸 𝘌 𝘯 𝘦 𝘳 𝘨 𝘺 𝘊𝘰 𝘶 𝘯 𝘤 𝘪 𝘭 and pledged to invest Rs 60,000
crores in four gigafactories for green initiatives. Additionally, Rs 15,000 crore will be invested in value
chain, partnerships and future technologies, including upstream and downstream industries taking the total
investment to Rs 75,000 crores (US$ 10 Bn) in the next three years.

New Energy ecosystem: these giga factories are expected manufacture and fully integrate critical
components and equipment, including:

1. An integrated solar photovoltaic module factory for production of solar energy
2 An advanced energy storage battery factory for the storage of intermittent energy
3. An electrolyser factory for production of green hydrogen
4. A fuel cell factory for converting hydrogen into motive and stationary power

242
𝐀𝐭 𝐨𝐝𝐝𝐬 𝐰𝐢𝐭𝐡 𝐀𝐫𝐚𝐦𝐜𝐨:
RIL’s green energy plans were perhaps not in congruence with Aramco which would want to reinforce its position as
the worlds leader in oil production and the bedrock of the crude producing world.

Aramco may have also had concerns that a bulk of its investment into RIL could be used to finance this foray into
renewables and to raise debt for its green energy related projects, at the cost of its traditional oil and chemicals'
business.
17,717 km2
Ramform Titan
Average 60-70 Sq.km data/per day
An example from Trinidad Deep offshore

Seismic Wavelet
245
Seismic Reflection
Stress / Strain
Seismic Waves
Seismic Waves
Convolution Model
Brief of seismic data acquisition
• seismic methods,
• source and receivers,
• spreads,
• arrays,
• noise characters,
• multiples
250
Seismic sources
Desirable characteristics include:
• Signal – High amplitude, broad frequency bandwidth.
• Safety – Hazards in use, storage and maintenance be managed.
• Cost – Total cost of equipment (acquisition, operation and maintenance) and supplies
• Operation – Relatively simple, efficient and fast operation preferred.
• Environment –Minimal physical and biological damage to the surroundings.
Types of energy sources:

• Impulsive
• vibratory
.
251
Impulsive seismic sources
• Explosives loaded at the bottom of a drilled hole (or holes).
• The charge is usually dynamite .
• The size of the charge depends on depth and shot medium.
If the time and cost of drilling deep holes is high, multiple shot holes are to be drilled.
Impulsive seismic sources-contd…
Advantages:
• High energy and a broadband signal
• Direct measure of time through low - velocity zone be obtained.
Disadvantages:
Much energy may be lost and permanent deformation around the charge.
High amplitude horizontal noise is produced above or just below the surface.
Drilling trucks, auxiliary equipment, and supplies may be expensive.
Cost of drilling be high, when drilling in difficult areas
Safety regulations and tight security for explosives
Harmful effects on marine life eliminates its use as a marine source.
Government regulations on use of explosives

Vibrators
Uses hydraulic energy to produce a signal of several seconds long.
The base plates, or ”pads” lowered to the ground and trucks jacked-up to
place the weight of trucks on the base plates, providing a reactive mass.
Converts hydraulic energy into mech. energy input to the base plate.
Seismic Receivers
1. Geophone on land
2. Hydrophone offshore
Seismic receivers
Type Name
(a) Velocity meter – output is Proportional to Geophone or Seismometer
ground velocity. (mv/in/s)
(b) Accelerometer– output proportional to Note: Seismograph used in

ground acceleration. (mv/in/s2) earthquake seismology.
Accelerometer Hydrophone (water phone, crystal
Pressure-Sensitive: Pressure Transducer (mv/μBar) phone, pressure phone)
Geophone components
Hydrophone
Geophone
• Converts the physical motion of the earth into electrical signal that can be
stored, processed and subsequently displayed for interpretation.
• Geophones are of the electromagnetic type
Essential elements:
Coil of wire
Magnet
The voltage measured across the coil is proportional to the velocity of

motion, hence the detector is referred to as velocity geophones
Hydrophone
Employ piezoelectric crystals in the form of disks as their active elements.
Piezoelectricity: Property that produces electric current when a stress is applied to

it.
When pressure is applied to the face of a piezoelectric disk, a current proportional

to the pressure is produced.
Array of hydrophones is used as outputs are quite small .
Spaced very closely together and the array effect is to increase signal, not attenuate
noise
Streamer configuration
• A marine in-water system usually consists of several streamers.
• The towing bridle and the lead-in section provide the physical connection
between the vessel and the main streamer.
• Streamers use sectionalized cables but there is more than one kind.
• Live sections have hydrophone groups built into them.
• Stretch sections at the front and back of the streamer to absorb shocks caused
by tail buoy jerks. Dead sections are used as spacers.
• Depth controllers that monitor streamer depth and “birds” that are used to
maintain and adjust streamer depth are attached to the streamer.
Streamer
configuration
Acquisition Methodology
2-D Acquisition:
• The spread is laid out along the lines and sources shot into them.
• After one is shot into, the spread and source are moved along the line.
End-on spread:
All receiver groups are on one side of the source.
Pulling the spread: the source is at the end of the receiver groups that is in the direction of
progression along the line.
Pushing the spread: the source is opposite to the direction in which the shooting the line
progresses.
261
Symmetric split spread: Equal number of receivers on each side of the
spread
asymmetric split spread: more receivers on one side of the source than
the other.
Symmetric split spread
Asymmetric split spreads
262
3-D Acquisition
Eight receiver lines are laid out but only six are active at a time.
The total length of the six lines is called a swath.
The portion of the swath enclosed by a rectangle is called a patch.
Receivers in the patch are the receiver groups used for the first shot.
The source position for this patch is circled.
The subsurface reflection points are distributed over an area instead of along a line.
The patch and source are moved up the swath in the direction shown.
When the first swath is completed, one or more receiver lines are moved laterally (rolled) such
that there is overlap in surface and/or subsurface coverage.
Marine 3-D Acquisition
• In Marine 3-D multiple streamers are towed behind the vessel.
• Since streamers rarely straight, midpoints tend to be quite scattered.
• The approach is to divide the survey area into bins that are usually rectangular.
• Traces whose midpoints fall in the same bin are considered common midpoint traces.
• Acquisition to track the positions of the hydrophone groups in all streamers.
• A method of online binning (determining in which bins midpoints fall) is used to aid vessel steering
to meet objectives of subsurface sampling.
• Two airgun arrays be used, to be fired alternately. (Flip-Flop shooting)
• This is because there is insufficient time for an airgun array to be fully charged between
consecutive source points.

Land vs. Marine Seismic Survey
Land Seismic Marine Seismic
Physical Spread is unmoved from shot Physical spread length is moving with
point to shot each advancing shot.
Shooting is normally carried out in one Shooting is carried out in both the
direction in particular prospects. direction normally.
Acquisition of seismic data is the main Marine seismic data acquisition –

activity – Navigation work is supportive. Navigation is main followed the
acquisition of data
Shot point is provided by the navigator Navigation & Acquisition is carried out
(surveyor) before actual seismic data simultaneously because of dynamic
acquisition. nature of operation.
Static correction is done from shot point In case of marine seismic survey it is
to shot point. bulk static.
265
Time Lapse 3D Seismic (4D)
The basic premise of 4D is a simple one. The method involves the acquisition,
processing and interpretation of repeated seismic surveys over a producing field
with the aim of understanding the changes in the reservoir over time, particularly
its behavior during production. This understanding has very real budgetary
consequences as increasing the recovery factor of a reservoir, even by a few
percent, has significant revenue implications
The ability to monitor the behavior of a reservoir during its production lifetime
now allows engineers to observe changes in the subsurface beyond the limited
Jaguar
Targets
windows provided by wells. The field-wide information provided by seismic is now

considered key in optimizing the recovery of remaining reserves. 4D seismic has
evolved from a qualitative tool to identify producing zones and bypassed oil, to
become an integral part of quantitative reservoir management.
266
PPress PPress
Jaguar
Targets
PPress PPress
Jaguar
Targets
Barge Filed Norway
Jaguar
Targets
Jaguar
Targets
Jaguar
Targets
SEG Recording Formats
It is an open standard, and is controlled by the SEG Technical Standards Committee, a non-profit
organization. The format was originally developed in 1973 to store single-line seismic reflection
digital data on magnetic tapes. The specification was published in 1975. The format and its name
evolved from the SEG "Ex" or Exchange Tape Format.
The SEG Technical Standards Committee serves as a forum for discussion of geophysical
developments in which standards for acquisition and processing of geophysical data need to be
identified or improved.
When data problems of a sufficient magnitude to warrant action by SEG are identified, an
appropriate subcommittee is appointed to develop a set of standards and make a
recommendation to the SEG Board of Directors concerning their adoption. The committee works
in partnership with a wide range of industry organizations.
SEG-A, B, C, D and Y data formats have evolved

SEG-D is a specialized format, while SEG-Y is a general-purpose format. In general, SEG-D is
intended for field recordings of seismic data, and SEG-Y is intended for 'seismic data exchange
272
Time Processing Example
PSTM Seismic Section –Golf of Mexico
274
Time Slices
Deep water Fans : West Africa Margin
©
Jaguar–1 Well in Guyana offshore Georgetown. The target is an interpreted thick Middle
Cretaceous deepwater “basin floor” fan sandstone reservoir with a viable hydrocarbon
stratigraphic trapping geometry.
PPress PPress
Jaguar
Targets
Classification of Reserves and Estimation methods
Why Classify Reserves?
Government
 Manage country’s petroleum resources
 Overseas financial operations (SEC)
Industry
 Manage exploration and production processes
Corporate financial management

 Compare investment opportunities
 Petroleum includes:
 Oil
 Condensate
 Natural gas
 Petroleum resources:
 The total quantity of discovered and undiscovered petroleum at a
specific date and a given area.
Volumetric estimate of reserves:-

Reserves = Area x Net reservoir thickness x R
(R = Recovery factor, accounts for conversion of unit, porosity, oil
saturation, formation volume factor & recovery efficiency)
Petroleum resources originally in place
 Total resources, which are estimated by geological and technological methods to be in
place in a deposit:
 GOIP
• Free gas
• Associated gas
Petroleum recoverable resources
 The total deliverable petroleum quantities from the start of the production to cease:
 Discovered recoverable resources
• Potential recoverable
• Reserves (Commercial recoverable)
 Undiscovered recoverable resources

Undiscovered resources
 Unidentified potential (unmapped).
 No structural indication.
• Limited/poor data.
• No evaluation done.
 Structural indication.
 Identified potential (mapped)
 Prospects/Leads
Discovered resources
 A discovery in a petroleum deposit in which the existence of mobile petroleum
has been made probable through testing, sampling or logging.
There is frequent confusion in the understanding of Identified Unidentified
the terms resources and reserves. It is important to

define correct usages. Reserves
 Technically recoverable resources, Volume of

petroleum representing a proportion of assessed in-
place resources that may be recoverable using current Prospective Resources
recovery technology without regard to cost.

Contingent Resources
 Economically recoverable resources (Reserves) – That

part of technically recoverable resource for which the
cost of discovery, development, production, including
a return on capital ,can be recovered at a given well
Increasing degree of Geologic Assurance
head price, economic and operating conditions.

Classification system
International system
 WPC / SPE / AAPG
 United nations framework classification for world petroleum resources
(UNFCP)
Regional cooperation
 CCOP (Asian countries)
National systems (Examples)
 Norwegian
 Russian
 Canadian
Security Exchange Commission (SEC) rules
SPE/ WPC / AAPG

Proved Reserves
 Proved reserves are those quantities of petroleum, which by analysis of geological and
engineering data can be estimated with reasonable certainty to be commercially
recoverable, from a given date forward, from known reservoirs under current economic
conditions, operating methods and govt. regulations. Can be categorized as developed or
undeveloped.
 If deterministic methods are used, the term reasonable certainty is intended to express
high degree of confidence that quantities will be recovered.
 If probabilistic methods are used, there should be at least 90% probability that quantities
recovered will equal or exceed the estimate.
Probable Reserves
 Probable reserves are those unproved reserves, which by analysis of geological and
engineering data suggests more likely than not to be recoverable. If probabilistic
methods are used, there should be at least 50% probability that quantities recovered
will equal or exceed the estimated sum of the proved plus probable reserves..
Possible Reserves
 Probable reserves are those unproved reserves, which by analysis of geological and
engineering data suggests are less likely to be recoverable than possible reserves. If
probabilistic methods are used, there should be at least 10% probability that
quantities recovered will equal or exceed sum of the proved plus probable plus
possible reserves.
Asian Classification (CCOP)
Probabilistic Classification of Reserves
 The recovery of oil & gas from subsurface reservoir is controlled, to a significant
degree by the reservoir heterogeneities and type of reservoir drive mechanism.
 Neither of these factors can be determined with a reasonable degree of certainty

until pools have been developed and placed on production.
The range of uncertainty in reserve estimation depends mainly on :

 Degree of geologic complexity.
 Maturity of prospect.
 Quality and quantity of geologic & engineering data.
 Operating environments.
When we restrict our models so

that each parameter takes on only
one vales, we call it model
deterministic.
When we allow parameters to be

represented by random variables or
probability distribution, the models
are stochastic or probabilistic (both
refers to uncertainty).
Two fundamentally different philosophies have developed in applying a deterministic

approach to reserves estimation. One is a risk-based or “incremental” approach, while
the other is based on uncertainty. Risk is defined here as the probability that a discrete
event will or will not occur, whereas uncertainty is defined as the range of possible
outcomes in an estimate. Whenever a numeric estimate is made of a parameter that is
not known exactly, there is uncertainty associated with the estimate. An obvious
example is the estimate of the recoverable volume of petroleum for an accumulation; it
is not possible to estimate this volume exactly as a result of both technical and
commercial uncertainties. In the exploration side of the business, this distinction
between risk and uncertainty has long been appreciated and utilized. Undrilled
prospects are assessed on the basis of the risk of a dry hole and the uncertainty of the
potentially recoverable volume if a discovery is made
where probabilistic methods are used, the probabilities associated with the low, best,
and high case scenarios should be consistent with those values appropriate for the
equivalent category of reserves. Thus, there should be at least a 90% probability that the
estimated potentially recoverable quantity (from a technical standpoint) will equal or
exceed the low estimate, on the assumption that development did proceed. Equivalent
probability values of 50% and 10% should be used for the best and high estimates
respectively. These resource uncertainty categories of Low Estimate, Best Estimate, and
High Estimate may be related to the reserve categories.
• P-90: There should be at least 90% probability that the quantities

actually recovered will equal or exceed the estimate.
actually recovered will equal or exceed the sum of estimated proved
plus probable reserves.
actually recovered will equal or exceed the sum of estimated proved
plus probable plus possible reserves.
Resource Uncertainty Categories
Reserves/ Resource estimate (MMRA)
Note:
Resources
distribution is not
straight line
Go to “Resources”
tab
Dr. Ankur Mittal, UPES

Minimum Economic Field Size (MEFS)
MEFS 46.6 MBOE
Intercept -168.7
Slope 3.6 P10 Pmean P90
Technical Case 100% W.I. Success Success Success
Gross Oil Prod (MBO) 493 150 13

Gross Gas Prod (BCF) 0 0 0
Total Production (MBOE) 493 150 13
G&A, G&G, Studies & Seismic 6 6 6
Exploration Drilling & Appraisal 40 40 40
Total exploration Capex (M$) 46 46 46
Development drilling 4,576 2,277 341
Facilities & Pipelines 1,268 640 342
Total Development Capex (M$) 5,844 2,917 683
OPEX (M$) 2,503 1,770 1,319
Abandonment (M$) 1,274 589 147
Per Barrel Ratios (in $/boe)

Finding Cost 0.1 $/boe 0.3 $/boe 3.7 $/boe
Development Cost 11.9 $/boe 19.5 $/boe 54.2 $/boe
Operating Cost 5.1 $/boe 11.8 $/boe 104.8 $/boe
Abandonment Cost 2.6 $/boe 3.9 $/boe 11.6 $/boe
NPV 1454 373 -123

IRR 51% 35% N/D
Material Balance Method
 Also known as tank model studies.

 Basic concept is:
 Mass produced = (Mass originally in place - Mass currently in place)
 Volume produced = (Volume originally in place-Volume currently in place).
 The material balance method gives an assessment of oil-in-place independent
of areal distribution of the reservoir.
 Comparison of MB estimates with Volumetric method at times may lead to
the possibility of existence of oil field extension.
Material Balance Method
 Some production history (5-10%) of the field essential as input data.
 Data at different point of time required like,

 Volume of oil, gas, water produced.
 Behavior of reservoir pressure & drive mechanism .
 Important input to have the,

 Pressure – Volume – Temperature relationship (PVT).
 Fluid and rock compressibility data
 Provides better understanding of remaining reserves
Numerical simulation Method
 Reservoir simulation represents the reservoir as a large numbers of cells

(Layers & Grids)
 Fluid flow between cells is calculated using 3D–3P fluid flow equation, which
is a powerful tool to predict reservoir performance.
 Considerable data in terms of thickness, porosity, permeability initial
pressure and saturation as well as formation volume factor, rock and fluid
compressibility, capillary pressure in required as input for the simulation
model.
Numerical simulation Method
 Once the input parameters of the reservoir model are adjusted, a match
between the computed value with the performance history is done.
 Once a reasonable history match is achieved, prediction runs are made

under different producing conditions.
 Useful for infill drilling, horizontal drilling, optimal production rates etc.
 Ultimate recovery under different operating conditions of the field.

Reservoir Simulation & Forecasting
RESERVOIR SIMULATION WORKFLOW
Pressure-
Production data
Geological
Data
Initial Fluid Dynamic
Petrophysica Static Model In-place
l Data Model
Match
Fluid data
History
Match
Economic
Final Analysis Predictions
Report
CMG and Eclipse Software History Matching Technique
1.CMG and Eclipse software suites are globally used for

reservoir simulation and modelling.
2.With continued production, inputs are adjusted in
simulator in such a way as to achieve a better fit to the
actual reservoir performance.
3.The changes in the simulation model should most
closely reflect the changes in the understanding of the
field geology.
4. The field and individual wells cumulative productions,
water cuts and pressures are those for matching.
Auditor’s Responsibility: Software does history matching.

Check if best fit method is used?
Reservoir Simulation & Forecasting
NUMERICAL MODELING
Well Model Reservoir Model
Porosity Distribution Rock Types
Permeability Distribution
Flow Model
𝑘 𝜕
𝑞=− 𝛻 𝑃 −𝛻. 𝑀= ( ф 𝜌 ) +𝑄
𝜇 𝜕𝑡
Darcy Law Mass flux = Accumulation + Injection/Production
313
Decline Curve Analysis
 Well production declines with time. The rate of decline depends upon production rate,
productivity index, total reserves and reservoir drive mechanism.
 Decline curve are plots of production rate vs time, usually on a semi- log graph paper.
 Provides estimation of three important items.

 Remaining oil and gas reserves.
 Future expected production rate.
 Remaining productive life of field.
Risk and Uncertainty in E & P Projects
A primary use of risk analysis is to compare two or more alternative investment opportunity – to
determine which one has the greater risk, or which one offers the greater potential for ROI (return
on investment)
si on
 Explorationists want to quantify uncertainty associated with finding hydrocarbons – basin analysis
or paly analysis. Estimate for a given prospect the likelihood of adequate reservoir, trap, proximity
of mature source. Then estimate reserves and associated cash flows.
 Drilling engineers examine historical data to estimate normal drilling cost and also quantify the risk
of stuck pipes, blowouts, lost circulation, and other potential hazards.
 Reservoir and production engineers simulate field sizes, productivity indices, decline rates, prices,
development and operating costs. Together with exploration, drilling teams estimate schedules and
capital investment (drilling, platforms, pipeline etc.)
 Public utility companies that transport natural gas are concerned with demand & supply matters
and the probability of experiencing peak load,
Dr. Ankur prices
Mittal, UPES and costs.
‘Success’ as we understand:
Geological success –si Meaning

on that a reservoired accumulation was found that was at least
large enough to support a flowing test. In onshore any well that flows is likely to completed, but
offshore many such small reservoirs are often reported as shows.
Commercial success – The exploratory well was completed because anticipated future
production revenues will return a profit on cost of completion and operating it, but not on the cost
of exploratory drilling , leasing and seismic , viewed as sunk cost and not recoverable (Economic
success on half-cycle basis).
Economic success – The well was completed as the discovery well for a field in which
average wells generate sufficient production revenues to recover the cost to drill, complete operate
them, plus a reasonable profit (Economic success on full- cycle basis). Economics of discovering and
developing a field including the risk cost of the dry holes.
Geological success but economic failure!!

Explorers are often over-optimistic in prediction of prospective resources. This can be
remedied by rigorous assurance of input parameters and regular tracking (look-back) of
drilling results.
si on
Assessment of POS is a more challenging task. The POS is derived from the risk
(POS= 1- Risk). Explorers use the concept of risk to reflect incomplete and uncertain data
(they do not know if the well will be a success) and have to plan for the possibility of losing
money invested in sub surface property and drilling.
There is no equation to calculate risk and POS precisely and accurately, because there is no
‘Correct’ POS’ value – petroleum accumulations either exists or do not. Still PoS is one of the
most critical determinants of outcome of exploration (Rose,1987).
Geological POS values are commonly used to calculate risked prospective volumes and rank
prospects.
When the geological POS and probabilistic range of volumes (Success case) are combined,
we can calculate POS for finding any volume, including the MEFS (Pe).
si on

Chance check list

si on
 Rose & Associates

Multi – Method Risk Analysis (MMRA)
 Five chance components
Most of the Deep water projects

(frontier) are drilled with 15-20 % Pg.

Techno – Commercial Aspects In
Hydrocarbon Value Chain )
Cash flow
 elements of cash flow
 cumulative cash flow, depreciation, depletion and
 Amortization etc.
Profitability
 payout time,
 profit to investment ratio, NPV,
Risk Analysis
Unit theory
Utility theory etc.
Techno – Commercial Aspects In
Hydrocarbon Value Chain )
Cash flow Indicators
 Payout
 Profit –To-Investment Ratio
 Rate Of Return
 Net Present Value
 Discounted Profit – To- Investment Ratio
We may use many tools that have limitations. As long as we understand those
limitations, we can make wise use of the tool.
Economic Factors Influencing Evaluations
Cash
Cash Flow
Flow
is the net result of all financial transactions occurring annually :

including all revenues, costs, capital expenditures, royalties and taxes paid.
Or Simply
CASH FLOW = ALL CASH IN - ALL CASH OUT
 Cash flow can be used as an indication of a company’s financial strength
 Cash flow is crucial to companies . Having ample cash on hand will ensure
that creditors, employees, and other can be paid on time.
At the end the most important is…. The cash!!!

Project Economics - Cash Flow
Project economic value is measured by calculating the cash balance over
project period.
Cash balance is commonly called NET CASH FLOW (NCF).

In a simple formula:
NET CASH FLOW = CASH INFLOW – CASH OUTFLOW
NET CASH FLOW = CASH INFLOW – CASH OUTFLOW
 Cash Inflow (revenue/income) comes from sales of oil and/or gas during
production period.
 Cash Outflow (expenditures/spending/outcome) comes from all expenditures
starting from acquisition until abandonment.
 It is important to note that Cash Inflow only come in production period while
Cash Outflow come in all stages, even during production period.
 So it is important to consider the timing of cash flow or value of cash relative
to time.
Cash Flows schedule

Year 0 .... To ...n
Operating Receipts (1)
Investment (2)
Depreciation Charges (non-cash cost) (3)
Operating Expenses (4)
Taxable Income (5) = (1 - 3 - 4)
Income Tax (6) = (5) x tax rate %
Operating Cash Flow CF = (1 -2 – 4-6)

 Money Received = revenue from sale + tax saving
 Money Paid out = Capital investment+ operating expenses+ taxes, royalities, tariffs
Year Net Cashflow, $MM Cumulatve Cashflow
1993 -200 -200

1994 -80 -280
1996 35 -245
1997 100 -145
1998 130 -15
1999 150 135

2000 140 275
2001 110 545
2002 80
385 2003 50
465
Total 675 1140
Economic
Factors Influencing Evaluations

Cash Flow Indicators
 Payout
 Profit – to – Investment Ratio (PIR)
 Rate of Return (ROR)
 Net Present Value(NPV)
 Discounted Profit – to – Investment Ratio
+
We use many tools with limitations. As long as we understand those
limitations, we can use the tools.
Net cash flow = (money received ) – (money paid out)
Money received = (revenue from sales) + (tax savings)
Money paid out = (capital investment) + (operating expenses) + (taxes, royalties, tariffs)

Pay out Times / Period
 An investment payout or payout period is the time required for

the cumulative cash flow to switch form negative to positive.
It’s a measure of investment liquidity.
 Alternatively the length of time required to recover the cost of

an investment.
 Payout is simple to calculate and lends itself to easy

comparisons. It’s weakness is that it ignores all of the cash flow
beyond payout period. Two investments may have the same
payout period but one may be more attractive, as it continue to
generate profits while other cease to yield.

Payout
Times / Period
Profit
- To - Investment Ratio (P/I)

 It is the ratio of total undiscounted cash flow to the investment.
It is a dimensionless number relating the amount of new money
generated from an investment project per monetary unit.
CASH = REVENUES – INVESTMENT – COSTS – TAXES

CASH
ROI =
INVESTMENT
 Weakness
 Does not reflect time-rate patterns of income from the project.
 Two projects could have the same payout and P/I , yet different
cash flow patterns.

Profit - To - Investment Ratio (P/I)
Undiscounted
Project Economics – Time Value of Money
Discount Factor
The extent to which discounting diminishes the contributions of future receipts

to the value
of the project is illustrated in the fig below, showing the time profile
of the flows from oil field development project.
+
Opportunity Cost & Discount Factor

Once we have a discounted cash flow for a given investment, we can

calculate some measures of value, or yardsticks
Net Present value (NPV)

Internal rate of Returns (IRR)
+
Expected Monetary Value (EMV)
Higher the interest rate, the smaller the NPV for a given cash flow.
NPV offers clear comparisons among competing alternatives. Its
most serious weakness is that it does not take into account the size
of the investment required to obtain the NPV.
Net Present Value (NPV)

NPV isthe sum of all cash flows discounted from project year end to start of
the project.
A way of comparing the value of money now with the value of money in
future. A $ today is worth more than $ in the future, because inflation
erodes the buying power of the future money, while money available today
can be invested and grow.
+
NPV = -C + S1/(1+i)1 + S2/(1+i)2 +…. + Sn/(1+i)n
C = Initial investment
S1, S2.. = Net cash flows
n = Total number of year
i = Discount rate
Project Economics – Time Value of Money (Example)
Discount factor = (1 + r)n

Discounted Cash Flow (DCF) = Present Value (PV)
YEAR N Cash ($ million) Discount Factor @ 10% Discounted Cash ($
2015 0 -100 1.000 million) -100.000
2016 1 -50 1.100 -45.455
2017 2 30 1.210 24.793
2018 3 100 1.331 75.131
2019 4 70 1.464 47.811
2020 5 30 1.611 18.628
TOTA 80 NPV = 20.909
L
Net Present Value (NPV) is total present value over a period
By 2020, this project is expected to generate $ 80 million value, or called Real Term
(RT) value. So, project value is $ 80 million RT2020.
However, in 2015 term, it worth only $ 20.9 million to the Company , or called
Money of the Day value (MOD) value. In this case, project value is $ 20.9 million
MOD (NPV10)
Project Economics - Internal Rate of Return (IRR)
The Discount rate which makes the Present Value (PV) of net
cash receipts equal to the Present Value of the investment. In
other words IRR is the discount rate which makes: NPV = 0
Rate (%) NPV

IRR Chart
0 80.000
100.000
2 65.889
4 53.054 80.000
6 41.356 60.000
NPV ($ million)
8 30.677
40.000
10 20.909
12 11.960 20.000
IRR
I R ==115%
R
14 3.748 0.000
15 -0.104 0 5 10 15 20 25
16 -3.799 -20.000
18 -10.746 -40.000
20 -17.149 Interest Rate (%)
Project Economics - Internal Rate of Return (IRR)
The Characteristics
 The calculation is a trial –An-Error process or following NPV
profile or Extrapolation process.
• The concept introduces the Time value into the criterion.
• It is independent of the magnitude of cash flows
• Early cash flows weight more than later cash flows.
• It is very sensitive to errors in estimating the initial
investments.
• IRR is nor additive
• It is a good measure to compare with a minimum
• It includes the implicit assumption that all cash flows will
be reinvested at the computed ROR (limitation)
Discount Rate
Usually set by top management after considering :
 If a firm has borrowed money, the rate should exceed the

interest rate.
 If the money comes from several sources than average cost
of capital is sometimes used as a minimum value.
 Corporate growth objectives.
 The risk of an activity compared to a less risky investment.
Investment Criteria
Investment
Criteria
Discounting Non
Criteria discounting
Criteria
Net Present Benefit cost Internal rate Payback Accounting

value ratio of return period rate of return
Investment Criteria
Criterion Accept when
Pay back period (PBP) PBP < target period
Accounting rate of return (ARR) ARR > target rate
Net present value (NPV) NPV > 0
Internal Rate of Return(IRR) IRR > cost of capital
Benefit cost ratio (BCR) BCR > 1

/Profitability Index
Sensitivity Analysis
Sensitivity analysis measures the impact on project outcomes of changing one or more key
inputs about, which there is uncertainty.
When computing measures of project worth, for example, how sensitive the economic
payoff is to uncertain values of a critical input – discount rate, opex, capex expected over the
period.
Sensitivity analysis reveals how profitable or unprofitable the project might be , if input
values turn out to be different than assumed?
.
Methods of Assessing Stand-alone Risk
 Goal
– Determine uncertainty of a project’s cash flows
 Methods
 Sensitivity Analysis
• Change one input (holding all others constant) and observe its impact
on NPV.
 Scenario Analysis
• Change multiple inputs simultaneously & allow for a range of outcomes
(scenarios)
 Monte Carlo Simulation
• Similar to Scenario Analysis, but with thousands of possible scenarios &
distribution for each uncertain input (rather than a single value or “point
estimate”)
Sensitivity Analysis
Steeper lines indicate greater sensitivity to changes in the input

• Price and Variable Cost seem to be of greatest concern
Decision Analysis
promod painuly
Decision Analysis
promod painuly
promod painuly

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Fundamentals of Petroleum Exploration

1. Introduction by students ( Name, Academic background, Work

3. India’s Energy outlook

Upstream : Searching and Finding Oil & Gas reserves,

Midstream : Delivering Crude Oil and Natural

Downstream : Processing crude oil & natural gas in a refinery

Team Lead West Africa Exploration (Madrid) SL- Wells

Team Lead Atlantic Basins Exploration

Mr. Avishek Ghosal Mr. Navdeep Bhatnagar Dr. Sonal Gupta

. Commercialization of Oil and gas discoveries

1.Demonstrate a clear understanding of the concepts related to Exploration and

Source – Rysad Energy Research & Analysis

While the geological

Three large recent discoveries:

Module 2: Licensing and Contracts

· Geological Structures for Petroleum Entrapment

 Definition of Resources and Reserves

· Drilling environments and rig types

Module 6: Play and Prospect analysis, volumetric and risking

· Play chance analysis

Module 8: Decision Making

Module10: Audit of Oil Fields

Detailed Course Plan

 In raw state, crude oil resembles ordinary lubricating oil. It is

 Natural gas is petroleum gas as distinguished from manufactured gas.

 Natural gas is petroleum gas as distinguished from manufactured

Oxygen 0.1 to 1.5%

Metals less than 1000 ppm

 Natural gas consists of hydrocarbons not condensable at atmospheric

 If the natural gas is composed of entirely methane, it is referred to

 Vast majority of crude oils are a mixed base of paraffin and

 Petroleum gas: Petroleum gas is formed as a natural by-product during

• The plankton are trapped under many layers of

The petroleum industry generally classifies crude oil by the following:

1. Geographic location it is produced in.

Saharan Blend (Algeria) Girassol (Angola)

Avg. API – 32.7; Avg. S – 1.77% (old basket numbers)

The American Petroleum Institute gravity, or API gravity, is a

Crude oil is classified as light, medium or heavy, according to its

1. Light crude oil is defined as having an API gravity higher

 A large portion of the world's total oil is found to exists as

Deep Water PLay

The Andaman Sea Basin extends approximately 1,250 km from Myanmar

The first gas discovery from Miocene Limestone

 Gravity &magnetic surveys 0.515 Million LKM

costs and revenues are shared.

• Investors aim is to ensure that the return on investment (ROI) is consistent

In designing a ﬁscal system, a government has to answer the following questions:

What is the effect of the ﬁscal regime on oil/gas output?

(v) is neutral and encourages economic efﬁciency as a yardstick

Blocks are made available to E & P companies through a variety of systems:

 Exploration Bidding Rounds

 Farm in / Farm out

 Lottery and Government discretion.

The state is represented by govt. or through NOC.

From 0 to 20.000 BOPD 50.0%

Cost Oil From 20.001 to 40.000 BOPD 47.5%

Formation & Rentals

There is no ownership of reserves by the developer. The contract is to develop the

1.Duration of the Agreement

 Drilling Service provider

2. Piston core Geochemical exploration data ,Hydrocarbon

3. Piston core Thermal parameters