Petroleum Geology & the Exploration Process

Embed Size (px)

Citation preview

  • 8/18/2019 Petroleum Geology & the Exploration Process

    1/66

    Module Objective:

     The objective of this module is to examine the geological conditions that make for a

    good petroleum prospect, and explain why oil and gas are found in some places and

    not others. You will learn the step-by-step process that exploration teams follow to

    identify projects, from the initial surface reconnaissance to the drilling of exploratory wells.

    Overview

    “il is found in the minds of men! "#nonymous

    $e may de%ne petroleum exploration in several ways&

    • 't is the process of exploring for oil and gas resources in the earth(ssedimentary basins. The process relies on the methodical application of technology by creative geoscientists  that leads to viable prospects  todrill and the actual drilling of these prospects with exploratory and appraisalwells.

    • 't is the commitment of large amounts of risk capital to explore prospectsthat have an uncertain outcome.

    • 't is the primary way in which producing companies)replace theirreserves and grow, and the way in which small companies, through a majordiscovery, may become giants overnight.

    • *ost of all, it is a necessary core competency for an upstream oil and gascompany. 'f you have the right exploration strategy, capable geoscientists,access to exploration acreage, deep pockets of risk capital and a little luck,

    you will be successful. 'f not, you will have modest results)or you may even+bite the dust.+

     The petroleum exploration process, like the process of buying common stock,involves a series of decisions made under uncertainty)we do not knowwhether oil or gas is present until after an exploratory well has been drilled. Tomanage this uncertainty, companies often spread their risk capital over a portfolioof prospects rather than putting all of their investment into one prospect “puttingall their eggs in one basket!. This gives rise to companies sharing prospects amongeach other through multiple “ joint ventures.! ometimes one company isresponsible for generating a prospect but, as the capital costs of drilling and %eldcommitment loom, it “sells! partial ownership of the prospect to other companies

    who “farm in! to the joint venture in return for a drilling commitment. 'n this way acompany may participate in multiple prospects in a given year by holding less than/001 stake in each.

    2inally, a petroleum exploration company(s strategy re3ects not only its vision butalso available capital resources. 4xploration success is a classic “good news-badnews! situation, as in&

  • 8/18/2019 Petroleum Geology & the Exploration Process

    2/66

    “The good news is that we spent $1 million on the exploration well and found alargeamount of oil; the bad news is that we now need $600 million to develop the eld.” 

    # small 5 or 6anadian company will likely explore “close in! to existing production,where exploration risk is low and the infrastructure costs of getting production to

    market are modest. The majors the world(s largest up- and downstream oil andgas companies, on the other hand, with access to large amounts of capital and aneed to discover large reserves, will explore in remote regions worldwide. This willinclude, for example, the deepwater blocks o7shore #ngola, where an explorationwell may cost 89:-;0 million and the %eld development might cost 8< billion ormore, balanced against an oil production rate of 900,000 barrels per day for :-/0years before declining. Thus, a company(s risk-reward prole is tempered byits capital resources. #s the company achieves success and increases its cash3ow, it can expand its exploration vision and drill more substantial prospects in avariety of international sedimentary basins.

    'n this module, we will %rst learn about the presence of oil and gas in sedimentarybasins by providing an overview of Petroleum eology, and then proceed to the!xploration Process. $e will then apply what we have learned to the Pam "asinProspect  and undertake the %rst year of exploration with the objective of generating good oil and gas prospects.

    #undamentals of Petroleum eologyPetroleum eology  is the area of geology that focuses on the formation,migration and trapping of oil and gas within the 4arth(s sedimentary basins. $e willbegin by discussing how sedimentary basins are created within the earth(s crustand then move on to discover how oil and gas forms, migrates and ultimatelyaccumulates in petroleum reservoirs.

    Building of Sedimentary Basins$hen the 4arth cooled more than =.; billion years ago, magma solidi%ed into whatwe refer to as igneous rocks, typi%ed by the hard granites that outcrop todayalong the rocky coast of >ew 4ngland. ver geologic time the 4arth(s stressescaused these igneous rocks to slowly form mountain chains and accompanyingdepressions and the seas ?uickly %lled these depressions. ver long periods themountains grew higher and, because of weathering caused by wind, water andfree@ingAthawing cycles, they were eroded into particles of many di7erent si@es,which in turn were carried downward by water and wind, where they eventuallysettled in and %lled the depressions. 'n time the mountains grew higher and thedepressions formed into larger and deeper +basins.+ The sediments that %lled the

    basins became compacted by subse?uent layers of particles, and cemented intonew forms of rock called sedimentary rocks. This process, which can take millionsof years to complete, is known as diagenesis. These sedimentary rocks are thesource of all oil and gas reservoirs. Metamorphic rocks, such as schist and mica,are formed from igneous and sedimentary rocks through the forces of heat andpressure #igure $.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    3/66

    Figure 1: hows the three forms of ro!" #igneous sedimentar% and metamorphi!&and how the% are transformed from one to the other. 'gneous ro!"s were formedwhen the earth(s magma !ooled. The others were formed later b% for!es of heat 

    and pressure.

    #lthough the earth(s crust formed billions of years ago, most sedimentary rockswere formed only in the past :B: million years. Ceologists have grouped these :B:million years into Deriods and eries, as shown in the left and center columns of theCeologic Time cale #igure %. Thus, for example, the sedimentary rocks formedbetween =;:-=/: million years ago are of ilurian age, while those between 9/0-9/: millions years old are Triassic. >ote& we use radioactive dating methods suchas 6arbon dating to estimate the age of a rock sample.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    4/66

    Figure 2: The )eologi!al Time !ale shows the *eriods and eries of the earth(sgeologi! histor% and the ma+or ph%si!al !hanges and the living things that evolvedon its surfa!e during those periods in ,orth -meri!a. ,oti!e that the -tlanti! !ean

    began to form during the Triassi! *eriod.

     The types and locations of newly formed sedimentary rocks are determined by themajor events that occurred on the 4arth(s surface during a given geologic period.

     Thus, it is the physical history  of the 4arth(s surface that is of interest topetroleum geologists. They must also study the presence of living things during

    these same periods because organic matter  was mixed and deposited withsediments and, as we shall see later, was transformed over time into petroleum. 'nthe Ceological Time cale for >orth #merica, therefore #igure %, we considerutstanding 4vents both in the context of Dhysical Eistory and the 4volution of Fiving Things.

    #s one example of the meaning of this Time cale, the earth(s forces caused the#ppalachian *ountains, which exist today as modest mountains along the 5 4ast6oast, from *aine to Ceorgia see #igure &, to begin to grow :/0 million years ago

  • 8/18/2019 Petroleum Geology & the Exploration Process

    5/66

    during the rdovician age and reached a climax

  • 8/18/2019 Petroleum Geology & the Exploration Process

    6/66

    Figure 4: - ph%siographi! outline of the -ppala!hian

  • 8/18/2019 Petroleum Geology & the Exploration Process

    7/66

    Figure 5: The !ontinents on!e +oined together in a single landmass beganseparating during the Triassi! *eriod forming new o!eans at their boundaries. The

     plates and their respe!tive surfa!e landmasses are shown here.

    #s the continents began to separate and form new oceans, the continental marginsprovided new basins for the deposition of sediments and the formation of organic-rich sedimentary rocks. #nd so, in addition to basins in the interior of continents,

    such as the Dermian Jasin in $est Texas #igure *, we also have the basinsformed along the continental margins, such as the basins under the >orth ea, apart of the #tlantic cean #igure +.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    8/66

    Figure 6: ross=se!tion of the /idland

  • 8/18/2019 Petroleum Geology & the Exploration Process

    9/66

    Figure 7: This gure is a geologi! !ross=se!tion of the ,orth ea basin between the2> and ,orwa%. This basin has also been a proli! produ!er of both oil and gas.,ote that the basin is about "m deep and !ontains sediments from Triassi! to

    Tertiar% in age.

    Ceologists have identi%ed more than +,, sedimentary basins  in the world, as

    shown in #igure . *any of them have been explored, especially those that can beaccessed on land, but those in the deepwater or harsh o7shore environs incountries like #ngola, Jra@il, >ewfoundland, >ew Kealand and the #rctic regionshave not been heavily explored, if at all. The deep o7shore basins east of >ewKealand and east of >ewfoundland have only recently been explored. #t a giventime during its formation, each basin contains a number of di7erent environmentswhere sediments may be deposited. o we now turn our attention to depositionalenvironments.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    10/66

    Figure 8: This gure shows the ma+or sedimentar% basins of the world. /an% of these 800 basins that are eas% to a!!ess have been explored but those in more

    harsh environments are relativel% unexplored.

    Sedimentary Environments#s basins were being formed, sedimentary particles were carried down alongstreams and rivers, or transported by winds. 'nitially, as narrow streams 3oweddown steep slopes, these particles moved at high velocities. Cradually, as thestreams became wider and the land leveled out, they began to slow down andultimately came to rest. The winds, as well, tended to slow down in certain places,which became @ones of sediment accumulation. These di7erent geological

    environments as shown in #igure /.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    11/66

    #igure /: *ajor geological environments in which sediments may be depositedand, by implication, where oil and gas may later accumulate.

    ome of these sediments, as shown in #igure /, are deposited onshore and arecalled 0ontinental  deposits. thers are formed along the 1horeline  and evenothers are formed in the deeper Marine environment along the shelf, slope and

    deep o7shore. The various depositional environments are summari@ed in #igure $,below.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    12/66

    Figure 10: summari?es the three geographi!al settings in whi!h sedimentar% ro!"sare formed and the !lassi!ation of their depositional environments.

     The location at which clastic sediments  drop out of the 3ow stream, in eachdepositional environment mentioned above, depends on gravity forces. #s a streamwidens or reaches a larger body of water and slows down, the largest, heaviestparticles fall to the bottom of the 3ow stream and are deposited %rst. maller,lighter particles are carried further downstream. Thus, there is a separation and

    layering of grain si@es within clastic sedimentary rocks, which gives us a convenientway of naming them #igure $$. # rock composed of the largest-si@e grains iscalled a conglomerateL one of medium-grain si@es is a sandstoneL one withsmaller grain si@es is a siltstoneL and one made up of very %ne particles is called ashale. 2luids can 3ow easily through conglomerates and sandstones because theopenings between their grains are comparatively large. Eowever, 3uids 3ow moreslowly through siltstones and not at all through shalesL because they are made of tightly packed, very %ne particles that are impermeable to 3uid 3ow.

    #long with the clastic rock types described above, there are two other main types of sedimentary rocks&!vaporites and biochemical rocks. 4vaporites are formed in ?uiet lagoons in dry

    environments, through chemical precipitation. 4xamples of evaporites are the halitea source of commercial salt and gypsum. Jiochemical rocks are formed by theactivity of microorganisms like those present on coral reefs. # typical example of biochemical rock is limestone. $hen formed, limestones are non-porous solid,and so are unable to contain 3uids. Dore spaces can develop over time, however, asthe presence of water acts to partially dissolve the rock. Thanks to this process of dissolution, these pore spaces can provide excellent potential reservoirs for oil andgas.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    13/66

    0lastic sedimentary rocks are classied by particle si2e:3ock 4ame 'verage Particle 1i2e 5mm6

    6onglomerate Creater than 9 mmandstone /A/; to 9 mmiltstone /A9:; to /A/; mmhale Fess than /A9:; mm

    0arbonate rocks are classied according to their

    chemical composition:3ock 4ame Mineral Present

    Fimestone 6alcite, 6a6Golomite Golomite, 6a *g 6

    a!le 1: The "lasti" sedimentary ro"#s formed b% the deposition of ro!"  parti!les are !lassied a!!ording to their average parti!le si?e as shown here.

    These ro!"s ma% be found in la%ers within a depositional environment or there ma% be subtle gradation in parti!le si?e from perhaps sandstone to shale within a givenenvironment. arbonate ro!"s the se!ond t%pe of sedimentar% ro!" is formed b% 

    !hemi!al pre!ipitation.

    Jecause of the natural layering of clastic rocks by average grain si@e, especially inthe near and deep o7shore environments, many basins may contain layers of di7erent types of sedimentary rocks as shown in #igure $$. This type of layeringmay take place in continental deposits, along the shoreline, in the ocean shelvesand the deep o7shore.

    Figure 11: The !ross=se!tion of the 2inta

  • 8/18/2019 Petroleum Geology & the Exploration Process

    14/66

    Figure 12: hows photographs of four diAerent sedimentar% ro!"sB shale reeflimestone and sandstone that were drilled se@uentiall% in one well in the

     -ppala!hian

  • 8/18/2019 Petroleum Geology & the Exploration Process

    15/66

    Figure 14$a%: is a map of the super=giant )hawar Dield in audi -rabia 6ourtesy of audi #ramco.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    16/66

    Figure 14$!%: is an east=west !ross=se!tion through the basin. The produ!ing oilreservoir at )hawar shown in the !enter of the basin is the late Eurassi! -rab=9

    limestone #in light blue& whi!h is about 50 feet thi!" and o!!urs 6000=8000 feet beneath the surfa!e. # 6ourtesy of audi #ramco &.

    'f the stresses within a basin are very high, they may create faults as shown in

    #igure $). >otice in #igure $*  how both folding and faulting occurred in theoverthrust basin of 6olorado from the Fate Daleo@oic period to the present day. Thisbasin has been an active gas-producing region.

    Figure 15: depi!ts the various t%pes of faults that ma% o!!ur within the earth(s!rust. The an -ndreas Dault in alifornia is a stri"e=slip fault that builds up stresses

    and then moves to relieve these stresses !ausing signi!ant e!onomi! damage.,ote the displa!ement of ro!" la%ers a!ross the normal and reverse faults.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    17/66

    Figure 16: This !ross=se!tion shows the transformation over geologi!al time fromFate *aleo?oi! to the present da% of the faulted and folded overthrust basin of 

    olorado in the 2nited tates.

    Sedimentary &o"# 'ro(erties: 'orosity and 'ermea!ility 

    Jecause sedimentary rocks are formed by the compaction of particles in thepresence of water, the rock volume contains “pore“ space around the grains thatcan be %lled with 3uids, initially water but later, perhaps oil or gas. The percent of the gross rock volume that is 3uid-saturated, referred to as Porosity, is typically inthe range of :-9: percent as shown in #igure $+.

    Figure 17: shows how the values of porosit% diAer for a !ontainer lled with #a&orderl% marbles #b& !ompa!ted marbles and #!& a mixture of sand grains. 3hen thesand grains be!ome !emented to form a sedimentar% ro!" the porosit% is redu!edfurther. 'f Guid saturates one=fth of the volume of a sedimentar% ro!" we sa% that 

    its porosit% is 50H.

    Permeability is a second important characteristic of a sedimentary rock " it is ameasure of the ability of a 3uid to 3ow through the rock under a pressure gradient#igure $. The higher the permeability, the greater the 3uid 3ow capacity of therock will be.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    18/66

    Figure 18: shows how the permeabilit% of a sample of sedimentar% ro!" ismeasured in the laborator%. The sample is pla!ed in a spe!ial sleeve and air is thenfor!ed through the ro!". The Gow rate for a given pressure drop is measured and

    the permeabilit% of the ro!" !al!ulated. The unit of permeabilit% is the 9ar!%named after Dren!h !ivil engineer 4enr% 9ar!% who made the rst permeabilit% test 

    in 161 when he was designing sand=lled !onduits to deliver water to thefountains of 9i+on.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    19/66

    Chawar audi #rabia il /I ;

  • 8/18/2019 Petroleum Geology & the Exploration Process

    20/66

  • 8/18/2019 Petroleum Geology & the Exploration Process

    21/66

    Figure 20: hows the wide diversit% that exists among petroleum Guids dis!overedworldwide. 't is a sele!tion of petroleum samples ranging from heav% bla!" oil onthe right to a light !ondensate on the left. 'f natural gas were shown here it wouldbe a !lear gas lo!ated to the left of the light !ondensate. # ource& Dhoto taken by

    author at the Dhillips *useum in Jartlesville, M  &

    'etroleum .igration and /""umulation The source rocks in which petroleum formed millions of years ago are not the samerocks in which it is found today. Qather, oil and gas, being lighter than the waternormally contained in rock formations, moved slowly upward by gravitational forceslike warm air rising above a radiator from the source beds  along migrationpaths, through typically more permeable sedimentary rocks like sandstones.4ventually, it either rose to the surface or accumulated in reservoirs  containedwithin geologic traps, surrounded by impermeable cap rocks or seals that have keptit from traveling any farther #igure %$.

    n the bottom left of #igure %$ we note the temperature pro%le of the basin and

    remember that oil is formed from ;0-/B:N6 and so the source beds within this depthrange are within the oil window and, below this, from /B:-

  • 8/18/2019 Petroleum Geology & the Exploration Process

    22/66

    Figure 21: ross se!tion showing oil and gas windows sour!e ro!"s migration paths reservoirs and seals in a sedimentar% basin similar to the ,orth ea basin. -fter oil and gas form in the sour!e ro!"s gravit% !auses them to migrate upward

    until the% are trapped in a reservoir waiting for dis!over%.

     The task of an exploration team when proposing a petroleum prospect is to explainhow the petroleum was formed in the identi%ed source rock , how it migrated alongthe migration path to a porous and permeable reservoir rock  and where it hasbeen contained in an identi%ed trap  by an impermeable seal. These geologicalfeatures are shown in #igure %$.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    23/66

    'etroleum &eservoirs and &eservoir ra(s

     The term +reservoir+ brings to mind the image of a large pond or lake, so it isnatural to hear the term petroleum reservoir  and picture a huge underground+pool+ of oil. 'n reality, a petroleum reservoir is a porous, permeable rock formation,in which oil and gas are contained in the empty spaces between the rock grains.

     These pore spaces are interconnected, thereby forming channels or conduitsthrough which 3uids can 3ow to a well, and up the wellbore to the surface.

    # reservoir rock   must exhibit favorable porosity  and permeability. Dorosityre3ects the ?uantity of hydrocarbons contained in a given volume of rock.Dermeability re3ects how ?uickly the hydrocarbon can 3ow through the rock.

     The reservoir must be con%gured to trap the migrating petroleum " in essence itmust be a permeable rock formation, surrounded and con%ned by impermeableformations or other barriers. *ost traps fall into one of three categories& structuraltraps, which are typically caused by folding, faulting, salt intrusions or other post-depositional activityL stratigraphic traps, which form by subtle changes in rock

    typeL or combination traps, which contain both structural and stratigraphicfeatures. These two major types of traps are shown in #igures %%5a6 and %%5b6.#bout H01 of petroleum has been discovered in structural traps because they areeasier to %nd #igure %&.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    24/66

    Figure 22 (a) and (b): The two major forms of reservoir traps are structural and stratigraphic.Structural traps are formed by folding or faulting, while stratigraphic traps are formed by subtle

    changes in rock type.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    25/66

    Figure 23: *etroleum is trapped in man% diAerent environments but approximatel% 0H has been found in stru!tural traps.

    &eservoir Seals# seal is an impermeable rock unit that overlies a trap and prevents thehydrocarbons from further upward migration. #s shown in #igure %(, shales,because they were formed from the cementation of %ne, compacted particles thatare essentially impermeable comprise about ;:1 of reservoir seals. The otherimpermeable class of seals is evaporites e.g. salt layers, which comprise about

  • 8/18/2019 Petroleum Geology & the Exploration Process

    26/66

    •  These sediments were transported  to and deposited  in many di7erentenvironments within the basins, where they formed sedimentary rocks,which are named according to average particle si@e as conglomerates,sandstones, siltstones and shales.

    • #nother form of sedimentary rock is formed by the biochemical action of 

    microorganism in warm waters, to form limestone and dolomites, known asbiochemical rocks. These rocks are initially non-porous, but water dissolutioncan make them an excellent oil gas reservoir.

    5nder the right subsurface environmental conditions mainly temperature,organic matter, which was deposited mainly with the %ne-particle shales, wastransformed into oil or gas, which then migrated to reservoirs  where thehydrocarbons were con%ned in structural or stratigraphic traps by seals and caprocks awaiting petroleum exploration

    $ith this background in petroleum geology you are now ready to continue topetroleum exploration  where you will learn the processes that geoscientists

    follow in their search for new oil and gas reserves.

    Petroleum Geology & The Exploration Process - Section 1

    assessment.

    Note: You have 3 attempts.

    1 A strike-slip ault is characteri!e" #y mo$ement o the ault #locks in a %%%%%%%%%%%%% 

    plane

      (a) Horizontal/Lateral

      (b) ertical

      (c) !ombination of horizontal an" vertical

     

    ' (hich o these statements is )A*SE+

     (a) # roc$ formation in which oil an" gas are foun" to"ay is usually the same

    formation in which it was forme" millions of years ago.

     (b) %he temperature of roc$s that lie within the gas win"ow is higher than that of

    roc$s that lie within the oil win"ow.

     (c) &tructural traps are typically cause" by fol"ing' faulting' salt intrusions or other

     post"epositional activity

      (") ost petroleum is "iscovere" in structural traps.

     

    3 (hat type o rock ,as the irst to orm on the surace o the Earth+

      (a) &e"imentary

      (b) etamorphic

      (c) *gneous

  • 8/18/2019 Petroleum Geology & the Exploration Process

    27/66

      (") !lastic

     

    (hich o these rock properties is a measure o the a#ility o a lui" to lo, through the

    rock un"er pressure+

      (a) +orosity

      (b) +ermeability

      (c) ,lui" saturation

     

    . (hat type o petroleum is most likely to orm in shallo, source rocks+

      (a) -ry gas

      (b) Wet gas

      (c) Light oil

      (") Heavy oil

     

    / (hat type o se"imentary rock is orme" #y chemical precipitation+

      (a) &an"stone

      (b) &hale

      (c) Limestone

      (") #ll of the above

      (e) &an"stone an" shale only

     

    0 Geologists ha$e i"entiie" more than 0 se"imentary #asins in the ,orl"

    Approximately ,hat raction o these ha$e #een explore"+:

      (a) nly a few have been eplore".

      (b) nethir" have been eplore".

      (c) Half of them have been eplore".

      (") ore than twothir"s have been eplore".

    1 A strike-slip ault is characteri!e" #y mo$ement o the ault #locks in a %%%%%%%%%%%%% plane

      2a 4ori!ontal5*ateral

     

    ' (hich o these statements is )A*SE+

     2a A rock ormation in ,hich oil an" gas are oun" to"ay is usually the same ormation in

    ,hich it ,as orme" millions o years ago

  • 8/18/2019 Petroleum Geology & the Exploration Process

    28/66

     

    3 (hat type o rock ,as the irst to orm on the surace o the Earth+

      2c 6gneous

     

    (hich o these rock properties is a measure o the a#ility o a lui" to lo, through the rock

    un"er pressure+

      2# Permea#ility

     

    . (hat type o petroleum is most likely to orm in shallo, source rocks+

      2" 4ea$y oil

     

    / (hat type o se"imentary rock is orme" #y chemical precipitation+

      2# Shale

     

    0 Geologists ha$e i"entiie" more than 0 se"imentary #asins in the ,orl" Approximately ,hat

    raction o these ha$e #een explore"+:

      2" 7ore than t,o-thir"s ha$e #een explore"

     

    1 (hich one o these se"imentary rock types is characteri!e" #y ha$ing the S7A**EST

    grain si!es+

      (a) !onglomerate

      (b) &an"stone

      (c) &iltstone

      (") &hale

     

    ' (hich o these rock properties is a measure o the a#ility o a lui" to lo, through the

    rock un"er pressure+

      (a) +orosity

      (b) +ermeability

      (c) ,lui" saturation

     3 Geologists ha$e i"entiie" more than 0 se"imentary #asins in the ,orl"

    Approximately ,hat raction o these ha$e #een explore"+:

      (a) nly a few have been eplore".

      (b) nethir" have been eplore".

      (c) Half of them have been eplore".

  • 8/18/2019 Petroleum Geology & the Exploration Process

    29/66

      (") ore than twothir"s have been eplore".

     

    (hat type o rock ormation presents the 78ST a$ora#le con"itions or a petroleum

    reser$oir+

      (a) Low porosity' low permeability

      (b) Low porosity' high permeability

      (c) High porosity' low permeability

      (") High porosity' high permeability

     

    . (hat type o petroleum is most likely to orm in shallo, source rocks+

      (a) -ry gas

      (b) Wet gas

      (c) Light oil

      (") Heavy oil

     

    / (hich o these statements is )A*SE+

     (a) # roc$ formation in which oil an" gas are foun" to"ay is usually the same

    formation in which it was forme" millions of years ago.

     (b) %he temperature of roc$s that lie within the gas win"ow is higher than that of roc$s

    that lie within the oil win"ow.

     

    (c) &tructural traps are typically cause" by fol"ing' faulting' salt intrusions or other

     post"epositional activity

      (") ost petroleum is "iscovere" in structural traps.

     

    0 9eser$oir rocks are locate" %%%%%%%%% their source rocks

      (a) above

      (b) below

    (c) at the same level as

     

    1 (hich one o these se"imentary rock types is characteri!e" #y ha$ing the S7A**EST

    grain si!es+

      2" Shale

     

    ' (hich o these rock properties is a measure o the a#ility o a lui" to lo, through the

  • 8/18/2019 Petroleum Geology & the Exploration Process

    30/66

    rock un"er pressure+

      2# Permea#ility

     

    3 Geologists ha$e i"entiie" more than 0 se"imentary #asins in the ,orl"

    Approximately ,hat raction o these ha$e #een explore"+:

      2" 7ore than t,o-thir"s ha$e #een explore"

     

    (hat type o rock ormation presents the 78ST a$ora#le con"itions or a petroleum

    reser$oir+

      2" 4igh porosity high permea#ility

     

    . (hat type o petroleum is most likely to orm in shallo, source rocks+

      2" 4ea$y oil

     

    / (hich o these statements is )A*SE+

     2a A rock ormation in ,hich oil an" gas are oun" to"ay is usually the same

    ormation in ,hich it ,as orme" millions o years ago

     

    0 9eser$oir rocks are locate" %%%%%%%%% their source rocks

      2a a#o$e

     

    The Exploration Process

    >ow that we understand the basics of petroleum geology let us turn to theprocesses that exploration teams follow to develop viable prospects " ones thatcan be recommended for the drilling of exploration wells.

    7he !xploration 7eam

    Petroleum eologist& a specialist in the application of geology to the search for oiland gas in sedimentary basins. # petroleum geologist may be a specialist in a giventype of “play“ e.g. deltas, reefs and focus on exploration or the development of reservoirs after discovery.

    !xploration eophysicist& a specialist who applies the laws of physics to thesearch for oil and gas in sedimentary basins. Their most signi%cant processesinclude the measurement of the earth(s gravity and magnetic forces and the

  • 8/18/2019 Petroleum Geology & the Exploration Process

    31/66

  • 8/18/2019 Petroleum Geology & the Exploration Process

    32/66

    and the other )%S #i.e. * ($. )ote that very little is currently known about the basin, e+cept the locationof the sea floor, as we begin our search.

    Detroleum exploration is essentially a search process that can be represented by afunnel  #igure %*. 't starts with broad surveying techni?ues designed to gatherinformation, at low cost, over the full extent of an entire basin. This may generatesome “leads“ and then, as the exploration team gathers and analy@es moreinformation at progressively greater cost, the search area narrows to one or moreprospects where the interpretation of subsurface data convinces them that anexploration well is economically compelling should be drilled.

    “Public domain“ information, at little or no cost, is often very useful in the searchprocess. *ost government agencies have collected seismic, drilling, logging andproduction records from operators and make it available in their archives or throughthird parties.

    Figure 26: The funnel process conceptually illustrates the petroleum e+ploration search approach. As

     you move down the funnel you spend more money as you generate more data for analysis, and narrow the

  • 8/18/2019 Petroleum Geology & the Exploration Process

    33/66

     search area to one or more prospects that re-uire e+ploration wells to demonstrate the presence of hydrocarbons. "n the process, as you gain more certainty, you move from what geoscientists call a  play to

    a lead  to a prospect . f course, you may stop the search process at any point along the funnel if viable prospects are not identified.

    Broad Surveying e"niues

    'n many cases we begin our search by looking for data that has already beencollected and published. 2ailing that, we turn to basin-wide search techni?ues,which include the application of surface mapping and remote sensing techni?ues.

    • urface mapping involves sampling and mapping of surface outcrops that thegeologists use to infer the location and structure of the formations below thesurface. #lso, in keeping with the earliest methods for %nding petroleum, theyattempt to %nd direct presence of hydrocarbons, such as surface seeps of oilor asphalt, or the presence of gas in water wells. Ceochemical studies of organic matter in surface samples can also be used to link its presence to

    potential source rocks and migration paths.• Qemote sensing involves the ac?uisition, processing and interpretation of 

    images from aircraft and satellites. #erial photography has played major rolesin the discovery of oil and mineral deposits around the world, and is still themost widely used remote sensing method. This method is relatively cheap incomparison with seismic and allows access to inaccessible areas. Theongoing development and deployment of satellites has expanded areas of application for remote sensing and provided an orbital vantage point forac?uiring 4arth images #igure %+. >either of these techni?ues can beapplied to the Dam Jasin because it is o7shore and the surface is covered bywaterR

    Figure 27: /emote sensing via satellite of rocks outcropping in Saudi Arabia suggests that a structural trap has been uplifted and eroded at the surface. The e+ploration team can use these types of images to

     project the rock layers into the subsurface to obtain a better understanding of the basin geology.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    34/66

    ravity and Magnetic 7echni9ues& The exploration team might also undertake abroad survey of the basin by pulling instruments behind an airplane, in an orderlygrid pattern, to measure variations in the 4arth(s gravitational or magnetic %elds inthe area of interest. uch variations or anomalies allow us to identify the subsurfacepro%le of the igneous basement rock  upon which the sedimentary formationshave been deposited. This, in turn, provides some indication of potential structures

    within the basin. $e have performed just such a survey for the Pam "asin and itgave us the basement pro%les in the >- and 4-$ cross-sections shown in #igure%. You can see how it gives us some indication of the structural pro%le of thesedimentary rocks above the basement.

    Figure 28: 'e see here the )%S and !%' cross%sections of the Pam asin showing the character of theigneous basement rocks within the basement area that we obtained from gravity and magnetic surveys.

    'e still do not know the geology of the sedimentary rocks above the basement.

    Eisting ell ata

    #nother source of valuable and, perhaps, inexpensive subsurface data within thebasin is available from wells that have been drilled in the area. ell data, whenavailable, can provide a wealth of local information on formation rock and 3uidproperties that are very detailed compared with more broad-based survey methods.

    ell logs  are one of the most valuable sources of subsurface data, and areavailable from virtually every well that has been drilled. $ell logging devices arelowered into the borehole once a well is drilled #igure %/ and then, as the tool is

    withdrawn from the hole, the formation and 3uid properties are continuouslyrecorded as the tool progresses up the hole. The information is recorded in theservice company(s truck at the surface and often uploaded and transmittedimmediately to some distant oUce for evaluation.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    35/66

    Figure 2: 'ell logs are obtained by passing a special tool up the open%hole section of a recently drilled wellbore so as to measure rock and fluid properties in the immediate vicinity of the wellbore.

    'n the well log of #igure %/, we see that the depth from datum usually feet ormeters below sea level is noted in the middle of the strip. n the left is therecording of the natural amma radiation  CQ of the rocks. hales have anaturally high value and sandstones do not. o this recording allows us to identifythe depth and type of rocks we have drilled. Eere we see that impermeable shale@ones are located above and below the hydrocarbon-saturated sandstone reservoir.

    n the immediate right of the depth-recording strip are the 8ensity and 4eutron

    measurements. These two logs give us an indirect measurement of the porosity of the formation " the percentage of the rock volume that contains 3uids. The greaterthe density of a rock, the lower its porosity will be.

    2urther to the right are the 3esistivity logs. These logs measure the electricalresistivity of the 3uids that saturate the pore volume of the rock. alt waterconducts electricity very easily while oil and gas do not. o this log allows us todi7erentiate oil; gas and water within the pores of the formations beingmeasured.

    'n some cases contractors will run a special tool, called a 1idewall #ormation

    7ester, into the open hole, stop it next to the formation sections of interest andcollect 3uid samples that can be brought back to the surface for analysis in thelaboratory.

    ell logs; then; are valuable because they allow us to identify the type of formations penetrated in a wellbore; obtain an estimate of their rock andsaturating

  • 8/18/2019 Petroleum Geology & the Exploration Process

    36/66

  • 8/18/2019 Petroleum Geology & the Exploration Process

    37/66

    saturation pro%les. 5nfortunately the well was dry and so the 3uids were mainlywater.

    Figure !$: The well log for 'ell 0 allows us to e+pand our interpretation of the basin on the eastern side.The core taken from the well provides us with valuable direct information of rock types to correlate with

    log and acoustic measurements. This should be especially helpful in the interpretation of seismic surveys. Preliminary mapping suggests that oil might accumulate in the structurally high point of the sandstone

    that also serves as the migration path.

    $e are now able to correlate and connect the subsurface rock layers between wellsand make the preliminary interpretation shown in #igure &$. Eowever, because ourdata is sparse we do not have a lot of con%dence in the outcomeL thus we show theconnection in dashed lines with a ?uestion mark. >ote that this gives us only onepossible structure in which hydrocarbons may accumulate which we refer to as a“lead“ " we will need more de%nitive information to give us more con%dence thatwe have a “prospect.“ $e will call this an >Oil ?ead> because  that is thehydrocarbon that we expect to migrate and become trapped. $e are energi@ed tocontinue our searchR

    ,eo(ysi"al Surveying and te Seismi" &ee"tion .etod 

    Jecause the two well logs provide us with a lead to a potential explorationopportunity we need to take the next step in the exploration “search“ process& aseismic re

  • 8/18/2019 Petroleum Geology & the Exploration Process

    38/66

  • 8/18/2019 Petroleum Geology & the Exploration Process

    39/66

    Figure !2: The reflection seismic process takes place on land and at sea. "n both cases the acoustic signal travels downward, partially reflecting energy at each rock interface, and the reflected signal 

    travels back to the surface where it is recorded by the geophones, on land, and hydrophones, at sea.

    #igure &%  depicts both land-based and o7shore seismic surveys, in which anacoustic source  is activated at a shot point. n land this source may be anexplosive charge placed into a shallow “shot hole,“ or it may be a truck-mounted,mechanical vibrating plate or weight-drop device. The seismic source generatessonic vibrations, which travel downward and spread out in all directions. $heneverthe vibrations encounter a subsurface interface)for example, a change materialfrom one formation to another)part of the acoustic energy is re3ected back and thebalance continues to travel downward to deeper formations.

     The acoustic source in a marine survey consists of air guns located just below thewater(s surface, while the receivers or hydrophones are contained in streamers

    behind the vessel. The air guns emit a vibration, while the hydrophones pick up there3ected acoustic signal. These signals are then captured in computers on theseismic vessel and converted to seismic traces.

    2or a land-based survey, a receiver, or geophone 5#igure &&6, records thevibrations transmitted back from the subsurface. $hen the re3ection arrives at thegeophone, the earth vibrates a magnet and the time of arrival is recorded in thetruck or boat.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    40/66

    Figure !!: The geophone picks up the vibration of the reflected signal within the magnet and coil and 

    conveys it to the recording instruments.

    #s the acoustic wave encounters each formation, or interface, it “sees“ the

    di7erence in “hardness“ of the two rocks and re3ects a vibration signal to therecorder whose character depends on the that di7erence in hardness. This is shownfor a set of geophones in #igure &(. The rest of the energy continues travelingdownward. #s it reaches a second, deeper formation, it returns another vibration,characteri@ed by the di7erence in “hardness“ of that interface, and so forth.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    41/66

    Figure !4: The nature of the seismic reflection depends on the difference in hardness #acousticimpedance$ of the two rocks across an interface.

    )ondu"ting a 2 Seismi" Survey 

    'n order to conduct a seismic survey the geophysicist will provide the surveyspeci%cations to the seismic contractor. 2or a 9G survey this will include the numberand location of the seismic lines to “shoot“ across the survey area i.e. how many“slices“ of the earth are needed to obtain a good “picture“ of the subsurface, thefre?uency and location of introducing an acoustic signal along the line i.e. thelocation of the “shot-points“ and the spacing of the geophone array or “thespread“ and the acoustic energy needed to reach the depth to the potentialtargets. ee #igures &% and &).

  • 8/18/2019 Petroleum Geology & the Exploration Process

    42/66

    Figure !5: The seismic line spacing and the shot points are shown here for a 01 seismic survey.

    # typical practice in a new exploration area is initially to shoot a reconnaissancegrid with lines :, /0 or even :0 km apart to delineate the subsurface. 'f there isan indication of a geologic structure, the reconnaissance grid may be followed by asemi-detail grid with lines / or 9 km apart over the areas of speci%c interest. 'f the decision is then made to drill a well, a detail grid with lines a few hundredmeters apart may be shot prior to drilling.

     The seismic survey is conducted along each line on land or at sea an o7shore 9Gsurvey is depicted #igure &*. The acoustic signals re3ect o7 the interfaces of eachdi7erent rock formation and are captured as they return to the surface, as shown in#igure &+. 6areful surveys are made on land and geopositioning is done at sea toidentify the location of the shot points and geophones hydrophones as the surveyprogresses.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    43/66

  • 8/18/2019 Petroleum Geology & the Exploration Process

    44/66

    Figure !7: Acoustic signals for a 01 survey are introduced at shot points along the identified lines and the reflection time to the top of each formation is recorded at the surface for each shot point.

    'n an actual survey, multiple sources and receivers are deployed at e?ual spacingalong a line at the surface. The recorded signals are then computer-processed toimprove the clarity of the re3ections, and the results are then displayed in the form

    of a seismic section for each survey line 5#igure &6. This is typically providedin both re3ection-time and depth, with the conversion to depth made using the bestestimate of the acoustic velocity of each formation through which the wave passes.

    # cross-section  is a geologist(s valuable “tool“ for visuali@ing the subsurfacebecause it gives himAher a pro%le of the subsurface formations and their relativethicknessesL however, it does not provide a spatial view of the subsurface. Toprovide this “areal“ view we need the geologist(s second “tool,“ the contour map "a three-dimensional view of the subsurface on a two-dimensional surface. $e startwith a plan view looking down of the area of the survey as shown on the rightside of #igure &. $e locate survey Fine / on the surface and then, for a contourmap showing the depth to the top of the formation of interest “re3ector“ in ourcross-section, say in intervals of /00 feet below the datum often sea level, wesimply indicate the location along the line where the depth to the re3ector is anincrement of /00 feet, i.e. "//00, -/900 and so forth note& by convention depthbelow datum is negative. $e then post these individual values at points along theline in the plan view as shown in #igure &5b6. >ote that di7erent colors re3ectdi7erent depths. These points, then, refer to the depth to the top of the re3ector atthat point along the line.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    45/66

    Figure !8(a): Here is the cross%sectional interpretation of the depth to the top of the formation of interest,the major reflector, under 2ine 3 of the survey shown in 4igure 56 and its transformation to the plan view.

    Figure !8(b): The location of each 377 ft interval in depth to the top of the reflector is transferred to the plan view as shown here.

    $e can now plot the location to the re3ector, in increments of /00 feet, of all %veseismic cross-sections in our survey onto the plan view as shown in #igure &/.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    46/66

    Figure !: Here we see the results of transferring the depth to the first reflector for all five seismic lines

    onto the plan view.

    >ow, as you have probably guessed, we simply join the points of constant depth

    i.e. all the -//00 points, all the -/900 points and so forth. The results are shown inthe structural contour map of the re3ector shown in #igure (, below.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    47/66

    Figure 4": Here we see the contour map showing the depth to the top of the first reflector, the formation

    of interest.

    $e usually call this map a “structural contour map“ because it shows thestructure of the top of the re3ecting formation. $ith a little visuali@ation you can seehow the main structure on the left has a peak and then falls o7 in both the 4-$and >- directions. $e say it has “four-way closure“ and, if it has all the attributesof a potential oil or gas reservoir, we can now classify it as a “prospect;“ assumingthat it has all %ve attributes of a prospect source, migration path, reservoir, trap

    and cap rock. >ote that we also have the beginnings of a prospect to the right, butbecause we cannot demonstrate four-way closure, we would likely classify it as a“lead“ and attempt to extend our seismic survey further to the east to see if we candelineate it. 't could be even bigger than our identi%ed prospect.

     These two major tools of the geologists, the cross-section and the contour map;are very useful ways to view the subsurface and, in earlier years, were drawn byhandL however, today we have many software systems that allow them to be“drawn“ electronically. 'n fact, today, we can even develop &8 visuali2ations  of the prospect.

    f course we need to keep in mind that a seismic survey provides us with re3ectiontime for many di7erent re3ectors as we see in #igure ($; for an o7shore $est#frica seismic line.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    48/66

    Figure 4$: The results of a 01 seismic survey before interpretation are shown here for offshore 'est  Africa. This cross%section is a compilation of data recorded for many geological reflectors along a 87 km

     seismic line.

    nce the data are processed and interpreted, using actual or estimated acousticvelocity of each rock type encountered by the seismic wave, the geoscientistsprovide us with a picture of subsurface geologic features #igure (%. Today thisinterpretation is usually done on multiple computer screens with the opportunity to“view“ the results in special rooms using special glasses see #igure (&.

    Figure 42: The figure shows the interpretation of the seismic section of 4igure 93 before converting 

    reflection time to depth on the vertical scale.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    49/66

    a 'nterpreting seismic data

    on multiple computers b

    Xiewing

  • 8/18/2019 Petroleum Geology & the Exploration Process

    50/66

    Figure 44: Seismic lines are located on a 6 km grid for the Pam asin 01 reconnaissance marine seismic survey.

     The results of this survey, presented on a contour map on the “top“ of our targetreservoir, are shown in #igure (). >ote that we have four-way closure and so wehave identi%ed an attractive prospect. $e have all the elements of a prospect& asource rock in the shale, the migration path to the reservoir, an attractivesandstone formation for the reservoir rock and a cap rock and seal above the

    reservoir.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    51/66

    Figure 45: The structural contour map of the top of the potential reservoir formation is shown in theupper graphic and the cross%section obtained from the seismic survey is shown below. )ote the location

    of the potential oil :one at the top of the structure.

    3 and 4 Seismi" Surveys

    2or greater resolution and more 3exibility in interpreting subsurface data,exploration companies turned to

  • 8/18/2019 Petroleum Geology & the Exploration Process

    52/66

    Figure 46: 51 seismic surveys record reflection data at many more data points than a 01 survey and  provide much better resolution of the subsurface.

    Figure 47: A 51 survey at sea re-uires multiple air gun source arrays and streamers, containing 

    hydrophones that are 5%6 miles long as shown here #;ourtesy of P

  • 8/18/2019 Petroleum Geology & the Exploration Process

    53/66

     Today about B:1 of seismic surveys commissioned internationally are reported tobe

  • 8/18/2019 Petroleum Geology & the Exploration Process

    54/66

    Figure 4: ;omparison of 01 survey shot in 3=68 with 51 survey taken in the same area in 3==6 of the >akum oil field in Abu 1habi.

    # (8 seismic survey  is the repetition of a

  • 8/18/2019 Petroleum Geology & the Exploration Process

    55/66

     The %rst step in the economic analysis re?uires that estimates be made of thepotential oil-in-place in the Dam Drospect “resources“ and those that may beeconomically recovered “reserves“ and whether, on a preliminary basis, thedrilling of an exploratory well and ultimately the development of the %eld is justi%ed.

    !stimation of 3esources

     To complete this analysis, the exploration team must estimate the volume of oil#igure ), that might be found in the oil-saturated portion of the Dam reservoirresources using a volumetric estimation process as follows&

    Figure 5": il resources for the Pam Prospect, shown here as an e+panded view of 4igure 96, areestimated volumetrically by multiplying the oil :one area by the average oil :one thickness to give a value

     for the gross volume of the oil :one. ?ultiplying this value by reservoir porosity, the oil saturation and impact of the oil shrinking as it travels to surface conditions will e-ual the oil resources in stock tank 

    barrels. Appropriate conversion factor is then applied to convert ft 5 or m5 to barrels #3 barrel @ 6.83 ft 5

    and 7.36 m5 $.

    9esources 2Stock Tank 8il 8riginally in-Place 0 reservoir area (#) average reservoir thic$ness (h)  porosity (fraction) ( ) oil saturation (fraction) (&o) / oil shrin$age factor (1o)

  • 8/18/2019 Petroleum Geology & the Exploration Process

    56/66

    17OOBP, the acronym used by petroleum engineers for the ?uantity of oil in-placein the reservoir, represents oil resources and means 1tock 7ank Oil Originally in-Place.

    1tock 7ank Oil is the ?uantity of oil produced and delivered into the storage tanksat the surface. 6rude oil shrinks as it travels from the high-pressure conditions inthe reservoir to much lower, atmospheric pressure conditions at the surface storage

    tanks because gas evolves from the oil as the pressure drops. The amount of shrinkage depends on the volatility of the oil " light oils shrink much more thanheavy oils. 'f /.= barrels of light oil in the reservoir “reservoir barrels! shrink to /.0barrel as it travels from the reservoir to the surface storage tanks “stock tankbarrels!, the shrinkage factor, often called the “#ormation Colume #actor! is/.=. 2or the Dam Drospect the exploration team has estimated a formation volumefactor of /.9: so /9: bbls of reservoir oil will become /00 bbls of stock tank oil.

    Jefore drilling a well into the reservoir, we have neither reservoir rock nor 3uidsamples to estimate values for porosity, oil saturation and shrinkage impactfactors. 5nder these conditions the exploration team will usually assume a range of data from comparable reservoirs in the same basin analog elds. Jecause the

    Dam Drospect is in a frontier basin the exploration team assumes a range of valuesfrom a comparable formation in a nearby basin. They estimate possible low, highand mid-range of values for each of these values, as shown in 7able & below, forthe Dam tructure in the event of a discovery. f course, it is possible to drill a dryholeR #s you would expect their range of uncertainty is ?uite high - the T'Dvalues range from a low of ::0 to a high of /090 million stock tank barrels**bbls.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    57/66

    !stimation of 3eserves

    Jecause of the micro-pore structure of reservoirs, it is not possible to recover all of the oil from an oil reservoir. 'f we rely only on the natural energy 5primarydepletion6  available in the reservoir from 3uid expansion we may recover

    approximately %,D of the oil-in-place 3esourcesL however, if we supplement theenergy with water or gas injection 5enhanced recovery6  we may obtainrecovery factors up to (,D. 5sing these estimates of recovery the exploration teamestimated the potential 3eserves 53eserves V 3esources x 3ecovery #actor6of the Dam Drospect to range from $,,-%,, million barrels for primary recoveryand %,,-(,, million barrels for enhanced recovery, as shown in 7able &. #t thisstage of the exploration process the range of uncertainty is ?uite broad but it willnarrow considerably as we drill exploratory wells and obtain more reservoir data.

    Pam Prospect Oil Columetrics?ow Mid Eigh

    #real 4xtent acres 99,000 9B,000

  • 8/18/2019 Petroleum Geology & the Exploration Process

    58/66

    8ry Eole 0ost is the cost to drill an exploration well to the target formation andlearn whether hydrocarbons are present. 'f not, the well is abandoned as a dry hole.

     The dry hole cost is estimated to be 8

  • 8/18/2019 Petroleum Geology & the Exploration Process

    59/66

    2or the Dam Drospect the analysis team completed cash 3ow analyses for each of the three cases. # graphic pro%le of one case is shown in #igure )$.

    Figure 5$: This figure shows a graphical presentation of a typical cash flow analysis for the Pam Prospect, specifically the high resource case. The annual cash flow is shown to the left, the cumulative

    cash flow to the right. "t is assumed that e+ploration takes three years #!3%5$, development planning two years #13%0$, construction three years #;3%5$ and production fifteen years #P3%36$. The oil price is

    assumed to be C67Dbbl.

    'n #igure )$ we see that the investment should be repaid by the fourth year of production and that the cash 3ow, after taxes, should reach about 8< billion on atotal investment of 8/.; billion.

     Two of the more important %nancial measures of performance of a project, inaddition to these two, are the 4et Present Calue 54PC6 of the cash 3ow and the8iscounted 0ash #low Bnternal 3ate of 3eturn 5B336. $e calculate the 4PC bydiscounting each year(s cash 3ow by the company(s cost of capital perhaps /91to re3ect their value on the %rst day of the project(s life and then summing thediscounted values to obtain the >DX. 'f the value is positive the company isachieving a return that is higher than its cost of capital. 'n 7able ( we see that the

    >DX is positive for all three cases and ranges from F$&(-&&/ million.

     The B33 is the discount factor that causes the >DX to e?ual @ero. 'n essence the 'QQis the discount factor that causes the negative cash 3ows in the early life of theproject, discounted to present value at the 'QQ, to be e?ual to the positive cash3ows during the later life of the project, also discounted at the 'QQ. 'QQ values in therange of $*-%,D, as shown in 7able ( for the three cases, is well within the rangeof deepwater prospects that the industry is developing in such places as #ngola and>igeria.

  • 8/18/2019 Petroleum Geology & the Exploration Process

    60/66

     The Dam Drospect, from our preliminary analysis, appears to be a very attractiveopportunity and, if capital is available, we are now ready to progress to the nextstage " the drilling of the exploratory well. 'f it is a dry hole we will spend about8

  • 8/18/2019 Petroleum Geology & the Exploration Process

    61/66

      (a) &urface mapping

      (b) #erial an" satellite photography

      (c) 2ravity an" magnetic surveys

      (") &eismic reflection metho"s

     

    3 (hat is the primary #eneit o a 3-< seismic sur$ey o$er a '-< sur$ey+

      (a) Less epensive to run

      (b) &impler to "esign an" implement

      (c) 2reatly improve" 3uality of information

     

    (hat mem#er o the Exploration Team is in$ol$e" in i"entiying ,ell locations as ,ell

    as mo"eling lui" lo, in the su#surace+

      (a) +etroleum 2eologist

      (b) 4ploration 2eophysicist

      (c) 2eochemist

      (") -rilling 4ngineer 

      (e) 5eservoir 4ngineer 

     

    . (hich o the ollo,ing cost items is impacte" #y royalties an" taxes+

      (a) ,in"ing costs

      (b) -evelopment costs

      (c) perating costs

      (") +ro"uction costs

      (e) 6one of the above

     

    / 6n ,hat type o seismic sur$ey ,oul" you use air guns an" hy"rophones+

      (a) Lan"base" survey

      (b) arine survey

      (c) %ransition zone survey

      (") #ll of the above

     

    0 (hat property can #e estimate" rom a reser$oir lui" sample+

      (a) +orosity

  • 8/18/2019 Petroleum Geology & the Exploration Process

    62/66

  • 8/18/2019 Petroleum Geology & the Exploration Process

    63/66

    0 (hat property can #e estimate" rom a reser$oir lui" sample+

      2c )ormation @olume )actor

     

    = (hat is the primary o#>ecti$e o an exploratory or ,il"cat ,ell+

      2# To pro$i"e "etaile" inormation a#out su#surace ormations 

    ? (hat "o the lines on a structure contour map represent+

      2a Points o e;ual "epth to the top o a ormation

     

    1 (hat is the main $aria#le that is nee"e" in or"er to con"uct an economic analysis o a

    prospect+

      (a) -istance to mar$ets

      (b) +otential oil inplace

      (c) 5eservoir "epth

      (") 6umber of wells

      (e) il gravity

     

    ' (ell logs are o#taine" rom ,hat raction o the ,ells that are "rille"+

      (a) #bout onefourth

      (b) #bout onehalf 

      (c) #bout twothir"s

      (") Well logs are obtaine" from virtually every well "rille"

     

    3 (hat "o the lines on a structure contour map represent+

      (a) +oints of e3ual "epth to the top of a formation

      (b) +oints of e3ual formation thic$ness

      (c) +oints of e3ual seismic reflection time

      (") -istances between subsurface features 

    (hich o these metho"s are classiie" as remote sensing techni;ues+

      (a) &urface mapping

      (b) #erial an" satellite photography

      (c) 2ravity an" magnetic surveys

  • 8/18/2019 Petroleum Geology & the Exploration Process

    64/66

      (") &eismic reflection metho"s

     

    . (hich o the ollo,ing statements is )A*SE a#out 3< Seismic Sur$eys+

      (a) 7- seismic surveys are generally more epensive than a 8- survey.

     (b) 7- seismic surveys result in many more "ata points an" greatly improve" 3uality of 

    information compare" to 8- surveys.

     (c) *n 7- surveys' reflection "ata is recor"e" at many receivers locate" at points in a

    gri" pattern.

      (") 7- seismic surveys become more popular beginning in the late 9;ect+

      (a) 6et +resent alue (6+)

      (b) *nternal 5ate of 5eturn (*55)

      (c) -iscount 5ate

      (") 1rea$even +oint

     ? (hich o these techni;ues represents the irst step in the unnel process o

    petroleum exploration+

      (a) &tu"ies of surface geochemistry an" heat flow

      (b) &eismic surveys

      (c) 5emote sensing

  • 8/18/2019 Petroleum Geology & the Exploration Process

    65/66

      (") 4ploratory "rilling

      (e) +otential fiel" surveys (gravity/magnetics)

     

    1 (hat is the main $aria#le that is nee"e" in or"er to con"uct an economic analysis o a

    prospect+

      2c Not Ans,ere"

     

    ' (ell logs are o#taine" rom ,hat raction o the ,ells that are "rille"+

      2" (ell logs are o#taine" rom $irtually e$ery ,ell "rille"

     

    3 (hat "o the lines on a structure contour map represent+

      2a Points o e;ual "epth to the top o a ormation

     

    (hich o these metho"s are classiie" as remote sensing techni;ues+

      2# Aerial an" satellite photography

     

    . (hich o the ollo,ing statements is )A*SE a#out 3< Seismic Sur$eys+

      2" 3< seismic sur$eys #ecome more popular #eginning in the late 1??Bs

     

    / (hich o the ollo,ing cost items is impacte" #y royalties an" taxes+

      2e None o the a#o$e

     

    0 (hat is the $aria#le actually measure" in a seismic relection sur$ey+

      2# T,o-,ay tra$el time

     

    = (hich o these is N8T a typical inancial measure o perormance o a pro>ect+

      2c

  • 8/18/2019 Petroleum Geology & the Exploration Process

    66/66

    'a(ers

    The Goo" the Ca" an" the Dgly o the Stage-Gate Pro>ect 7anagement Process in the 8il an" Gas

    6n"ustry' Wal$up' 2. W. an" Ligon' =. 5.: &+4 9;88>' +resente" at the 8;;> &+4 #nnual %echnical

    !onference an" 4hibition' &ept 8?8@' 8;;@.

    Boo#s

    &toneley' 5obert: 6ntro"uction to Petroleum Exploration or Non-Geologists' for" Aniversity +ress

    (9B)

    Hyne' 6orman =.: Nontechnical Gui"e to Petroleum Geology Exploration