F W Schroeder 04 L 1 - Focus of IndustryCourtesy of ExxonMobil Lecture 1 Exploration Production Refining Marketing

F W Schroeder ‘04

L 1 - Focus of IndustryCourtesy of ExxonMobil

Lecture 1Lecture 1

Exploration

Production

Refining

Marketing

F W Schroeder ‘04


A Fully-Integrated Oil CompanyA Fully-Integrated Oil Company

Getting RefinedProducts to

the Consumers

Getting RawOil & Gas tothe Refinery

Refinery

http://www.npl.co.uk/upload/img_400/oilrig.gif

F W Schroeder ‘04


Components of the Upstream

• How to Get It Out– where, in detail, are the reserves?– what to build (facilities)?– will it be profitable?

• Find Oil & Gas ‘Pools’– which regions and basins?– which blocks?– where on the block?

• From the Ground, to the Refinery– how to manage the field?– how to deliver the ‘crude’?

F W Schroeder ‘04


Oil Company TargetsOil Company Targets

To maintain a healthy petroleum company, one would want to:

• Replace production (what you take out of the ground) with new reserves

Exploration Finds Volumes Produced

• Keep finding costs below $1 per barrel

Exploration Costs

New Barrels < $1/barrel

F W Schroeder ‘04


We Need to Drill Wisely

• Wells can be very expensive, some > $200 million, a lot even for a major oil company

• Well placement and well path can be critical to success

• So …..

How can we determine where to drill and predict what we will find BEFORE we start

drilling?This leads to the need for geologists, This leads to the need for geologists, geophysicists, and other specialists geophysicists, and other specialists

focused on imaging and interpreting the focused on imaging and interpreting the subsurfacesubsurface

This leads to the need for geologists, This leads to the need for geologists, geophysicists, and other specialists geophysicists, and other specialists

focused on imaging and interpreting the focused on imaging and interpreting the subsurfacesubsurface

F W Schroeder ‘04


G&G in Exploration

• Which basins throughout the world offer the most promise?

• Which blocks in those basins should we bid for?

• Where on the block should we drill?

• What should we expect from a particular well?– What type of HC: oil, gas, or condensate?

– What amount of HC will we recover: # barrels?

– What sort of flow rates can we expect?

– How risky is this well?

– etc.

Geoscientists are needed to answer questions such as:

F W Schroeder ‘04


Exploration’s Task

SuccessUneconomic

Drill Wildcats

AssessProspects

DropProspec

t

ConfirmationWell

SuccessFailureInterpret

Seismic Data

ProcessSeismic Data

AcquireSeismic Data

CapturePrime Areas

Identify Opportunities

To DevelopmentOr Production

F W Schroeder ‘04


An Exploration Success

The Bonanza Basin, offshore Somewhereia, was deemed to have high potential.

Block1

Block5

Block4

Block3

Block2

Block8

Block7

Block6

Somewhereia

Bonanza Basin

F W Schroeder ‘04




We leased the two highest- ranked blocks in the last licensing round.

Block1

Block5

Block4

Block3

Block2

Block8

Block7

Block6

Somewhereia

Bonanza Basin

F W Schroeder ‘04





8 leads were identified, 3 passed economic screening and were matured into prospects.

Bonanza Basin

Block8

Block7

LeadA

LeadB

LeadC

Block8

Block7

Alpha Prospect

F W Schroeder ‘04






We drilled a wildcat at the Alpha Prospect & found oil.

Alpha Prospect

Block7

Bonanza Basin

Discovery Well

Block8

SaltDiapir

F W Schroeder ‘04






We drilled a wildcat at the Alpha Prospect & found oil.

A confirmation well proved that there are significant volumes of oil.

Alpha FIELD

EUR = 200 MBO .95 TCF

Block7

Bonanza Basin

Discovery Well

Confirmation Well

Block8

SaltDiapir

Our estimate of ultimate recovery is 200 MBO.

F W Schroeder ‘04


G&G in Development

• Can we refine our picture of the distribution of oil at Alpha?

• Is the reservoir a single unit, or is it segmented (separate regions to drain)?

• How many wells/where should they be drilled?

• What sort of facilities (platform?) will we need?

• How can we speed-up time to first oil?

• What uncertainties remain?

• Exploration has drilled a discovery and a confirmation well.

• The ultimate recover for Alpha is estimated to be 200 MBO, which greatly exceeds the economic threshold of 100 MBO

Questions:

F W Schroeder ‘04


We Need More Detail

Reservoir Mapat the end ofExploration

Reservoir Mapat the end ofDevelopment

F W Schroeder ‘04


We May Need Better Data

Data Used for ExplorationData Reprocessed or

Reshot for DevelopmentAnd Production

F W Schroeder ‘04


G&G in Production

• How should we manage the field so as to maximize our investments?

• Can we monitor how oil is being swept out of the reservoir?

• What about injection wells and enhanced recovery?

• Is there more oil in the vicinity – either at deeper depths or in nearby traps?

• Can we build a computer model of the field that matches existing production data? If so, we can test future recovery with different drilling scenarios.

• Production has begun at Alpha.

• The initial production rates are as expected.

Questions:

F W Schroeder ‘04


Reservoir Simulation

Geologic Model

Reservoir SimulationO

il P

rod

ucti

on

Time

HISTORY MATCH

F W Schroeder ‘04


The Value of G&G to an Oil Company

• G&G work is done to add HC reserves (volumes) – New discoveries

– More from discovered producing zones

– Additional producing zones

• Get the most reserves at the lowest cost– Invest in the right basins

– Drill in the optimum locations

– Correctly assess what can be recovered

– Avoid unnecessary wells

Documents

F W Schroeder 04 L 1 - Focus of IndustryCourtesy of ExxonMobil Lecture 1 Exploration Production Refining Marketing