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The Awl BidnessLarry W. Lake
Petroleum and Geosystems Engineering
The University of Texas
The Oil Business
• Exploration
• Production
• Refining
• Transportation
• Marketing
Larry W. Lake
Petroleum and Geosystems Engineering
The University of Texas
Upstream
Downstream
A Brief Quiz…
1. What is the usual unit for a quantity of
crude oil?
2. What is the usual unit for a quantity of
natural gas?
3. How much crude oil goes into making
gasoline?
4. How much of your gasoline bill pays
for the crude oil?
A Brief Quiz (cont.)…
5. When was oil first discovered in
commercial quantities?
6. Name a transportation fuel that is not
hydrocarbon based.
7. What is the largest reservoir in the U.S.?
In the world?
8. When will we run out of oil?
Exploration…
Seal or trap
Water column or aquifer
Oil column
Gas cap
Source rock
Seismic
Onshore Seismic…
Offshore Seismic…
Offshore Receiver Spreads…
Production…
Productivity Index, PI
DrivingForce
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Production…
Oil Rate - make as large as possible
Goal of everything we do
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Production…
Constants - Live with them
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Production…
Natural logarithm - makes a large number small
For example, ln(1000) = 6.9
Natural logarithm
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Production…
• Make large
• God provides or doesn't
• Fracturing
Permeability - basic property of rocks
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Production…
• Make small
• Lift with gas
• Pump (reduce fluid level)
Well pressure
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Production…
• Make large
• Reinject produced gas
• Inject water (waterflood)
Average reservoir pressure
Production…
• Make large• God provides, etc.• Reperforating• Horizontal wells
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Penetrated thickness
Horizontal Wells….
Aggie Drilling Engineer
From A.D. Hill
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Production…
• Make large
• Large oil content
• Inject chemicals, CO2
Oil relative permeability
Schematic of solvent flood
Drawing by Joe Lindley, U.S. Department of Energy, Bartlesville, OK
Fig. 7-1
Typical Micellar-Polymer Flood...
Low salinityLow calciumUsually 0.5 PV
SurfactantCo-surfactantCo-solventPolymerOil (sometimes)Usually 0.1 PV
PolymerAdditives
Gradual change to water
Fig. 9-1
Production…
• Make small
• Inject heat (steam)
• Burn a little oil
Oil viscosity
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Process variations…
Driving the Oil...Steam Drive
Steam Oil + Water
Steam Water Cold Oil
ColdOil
ColdOil
Steam
Inject(2-30 days)
Steam
Coldoil
ColdOil
HotWater
Soak(5-30 days)
Shut in
Coldoil
ColdOil
HotWater
Produce(1-6 months)
Oil + Water
Steam soak
More variations...
Burning the Oil
Using horizontal wells (SAGD)
In-Situ Conversion Process (ICP)
Perspect
ive V
iew
¢
Producer
HeaterHeater
High Temperature Causes Long, Horizontal Fractures
Overburden
• NaphthaNaphtha• JetJet• DieselDiesel• Nat. GasNat. Gas• HydrogenHydrogen• Chem. FeedChem. Feed• HeatHeat
High Value Products
What is it? • Enhancement of natural maturation of kerogen by slow heating• Results in:
• thermal cracking • in-situ hydrogenation• high sweep vapor phase production • high API oil• N,S,O content vary with resource
• Average temperature limited to boiling point of diesel, i.e. essentially no bottoms
Current target resources:• Oil Shale • Heavy Oil / Tar Sands• Coal
How is it done?• Electric resistance or, potentially, gas heaters• Underground conductive heat transport
Light Processing
4Shell Unconventional Resource Energy - White House Briefing April 11th, 2005 filename.pptSURE
Freezewall Technology For Groundwater Isolation
Water &TemperatureMonitor Wells
FreezeWells
Heater &Producer
Wells
NaturalFracturedShaleAquifers
SolidShale
Water &TemperatureMonitor Wells
FreezeWells
Heater &Producer
Wells
Water &TemperatureMonitor Wells
FreezeWells
Heater &Producer
Wells
NaturalFracturedShaleAquifers
SolidShale
Next Research Phase2 Step Process (at least) to Commercial
Freezewall Test• Football field sized test on 10 acres
near existing research
• Test robustness of freezewall barrier
• Active construction/production from late ’05 – early ’07
• Reclamation 2010
Ice Wall on Surface
Production…
• Make small
• Fracture well
• Inject acid
Well damage (skin factor)
qo =4khkro
4ACArw
2( )ln + 2s[ ]o
(P – Pwf)
Results of Quiz…
1. What is the usual unit for a quantity of
crude oil?
• 1 barrel = 1 bbl = 42 U.S. gallons
• 1+6 zeros = 1 MMbbl
• 1+9 zeros = 1 Bbbl
• 1 metric ton = 7.5 barrels
• Giant field: 100 MMbbl = 0.1 Bbbl
Results of Quiz…
2. What is the usual unit for a quantity of
natural gas?
• 1000 standard cubic feet = 1 MCF
• 1 MCF+6 zeros = 1 BCF
• 1 MCF+9 zeros = 1 TCF
• Roughly: 6 MCF gas = 1 Bbl crude
Cost of gas= 0.405 $/Ccf
Results of Quiz…
3. How much crude oil goes into making gasoline?
• Crude oil = transportation
Transportation
Residential/Commercial
Industrial
ElectricityGeneration & Transmission
Non-Fuel
Waste = 25 %
Waste = 20 %
Waste = 83 %
Waste = 68 %
Work Achieved
Work Achieved
Work Achieved
Work Achieved
23 %
15 %
23 %
39 %
Coal
NaturalGas
Nuclear
Petroleum
HydroOther
Source: LLNL/DOE
Results of the Quiz…
(American Petroleum Institute, Sept. 2008)
4. How much of your gasoline bill pays for the crude oil?
Results of Quiz…
5. When was oil first discovered in
commercial quantities?
• Drake’s Folly …1859
• Corsicana …1894
• Spindletop …1901
• Big Lake (Permian) …1923
• East Texas …1928
Texas
Results of Quiz…
6. Name a transportation fuel that is not
hydrocarbon based.
• Wind
• Solar
• Hydrogen (fuel cells)
• Coal
• Muscles
Results of Quiz…
7. What is the largest reservoir in the U.S.?
Prudhoe Bay, Alaska – 20+ Bbbls in
place
In the world?
Ghawar, Saudi Arabia – 300+ Bbbls
Results of Quiz…
8. When will we run out of oil?
USGS Est. of Ultimate Rec
UR B-BblsProbability
Low (95%)
Mean (Expected Value)
High (5%)
2,248
3,003
3,896
2026
2037
2047
2% Growth
DeclineR/P = 10
History
Mean
Low (95%)
High (5%)
70
60
50
40
30
20
10
0
Bill
ion
Bar
rels
per
Yea
r
1900 1925 1950 1975 2000 2025 2050 2075 2100 2125
Campbell-Laherrere World Oil Production Estimates, 1930-2050
2005 2037
EIA- DOE Estimates, 1900--2125
2005
When will we run out of oil?
From Jackson (JPT, 2007)
Undulating Plateau vs. Peak Oil
U.S. Production, Hubbert vs. Actual
Major Points…
• Hydrocarbons found in porous rocks
• Crude oil = transportation
• Crude oil is about 70% of gasoline price
• Hydrocarbons essential to current way of
life
• World has a 30+ year supply; delivery rate
a question
Hydrocarbons and Prosperity…
100
1,000
10,000
100,000
0.0001 0.001 0.01 0.1 1 10 100 1000
Per Capita Hydrocarbon Consumption, BOE/day
Pe
r C
ap
ita
Gro
ss
Do
mes
tic P
rod
uc
t, U
S $
AfricaAsiaCentral America/CaribbeanEuropeMiddle EastNorth AmericaOceaniaSouth AmericaSoutheast AsiaWorld
Prosperity
Consumption
USA
Trinidad and Tobago
Luxembourg
Chad
Zimbabwe
Source: CIA World Factbook (Feb. 2009)
For More Information…
• U.S. Energy Information Administration
• American Petroleum Institute
• International Energy Agency
• California Division of Oil and Gas
• Early Texas Oil (Rundell)
• www.factsonfuel.org/gasoline
Chemical EOR Processes...
Process Typical Typical AgentRecovery (%) Utilization
Polymer 5 1/3-1/2 lb polymer/bbl oil produced
Micellar/ 15 15-25 lb surfactantpolymer bbl oil produced
Alkaline/ 5 35-45 lb chemicalpolymer bbl oil produced
US CO2 Emissions by Sector and Fuels 2000
Millions of metric tons per year carbon equivalent
Source: U.S. EPA Inventory of Greenhouse Gas Emissions, April 2002
0
100
200
300
400
500
600
700
Residential Commercial Industrial Transportation ElectricGeneration
Natural Gas
Petroleum
Coal
Solvent EOR Processes...
ProcessUlt. Recovery
% OOIPUtilization
Miscible 10-15 10 MCF/bbl
Immiscible 5-10 10 MCF/bbl
Results of Quiz…
4. How much of your gasoline bill pays for the crude oil?
Expense ¢ per gallon
Production 15-60
Producer profit 53-58
Refining 13
Marketing 5
Transportation 15
Retailer 6
Refining etc. profit
10
US taxes 19
Ave. state taxes 23
Total 159
1$ change in crude price causes 2.5¢ change in gasoline price
www.factsonfuel.org/gasoline
Thermal Recovery Processes...
Process Ult. Recovery
% OOIP
Utilization
Steam (drive
and soak)
50-65 0.5 bbl /bbl equivalent
Combustion 10-15 10 MCF air/bbl
SAGD ?? ??
Various EM Like steam Like steam
Undulating Plateau vs. Peak Oil
From Jackson (JPT, 2007)