1. Understanding the Oil & Gas Sector
Dharminder Dargan – Principal Cyber Security Architect
Houston, Texas
2. Oil Production Capacity
120
World Production
Capacity
100 Excess
Capacity
Oil Rate MMbd
80
60
40
World
20 Demand
0
1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: BP Statistical Review, IEA WEIO, Salomon Smith Barney
3. Oil Demand vs Production Capacity
120 Projected Demand growth 240
at 1.6% per year
110 World 220
Excess
100 Capacity
Capacity 200
90 180
Oil Rate MMbd
E&P Expenditures $ Billion
Oil Price $/bbl
80 160
70 140
60 E&P Expenditure 120
50 100
40 World 80
Demand
30 60
20 Oil Price $/B 40
10 20
0 0
1970 1975 1980 1985 1990 1995 2000 2005 2010
Source: BP Statistical Review, IEA Oil Market Annual Summary, OPEC Secretariat, Salomon Smith Barney. Data Revised January 2006.
Source: BP Statistical Review, IEA WEIO, Salomon Smith Barney
4. Terminology Check…
• SCADA = Supervisory Control and Data Acquisition
Systems
(these open and close valves, read flow, and give input into
companies’ accounting systems)
• BTU = British Thermal Unit = Caloric Value = how
natural gas is measured
6. Poll
• Question: Which term is used to refer to the Exploration and
Production part of the oil cycle?
• Multiple Choice Answers:
- Downstream
- Transcontinental
- Upstream
- Midstream
8. Oil Exploration & Extraction
• Oil is a fossil fuel formed from the remains of
tiny plants and animals (plankton), 10 million-
600 million years ago, which fell to the bottom
of the sea.
• There, little or no oxygen was present,
allowing microorganisms to break down the
remains into carbon-rich compounds that form
organic layers. The organic material mixed
with the sediments to form fine-grained shale,
or source rock.
• As the rocks layer, they exert extreme heat
and pressure to distill the organic material into
crude oil and natural gas.
• The oil then flows from the source rock and
accumulates in thicker, more porous limestone
or sandstone known as reservoir rock.
• When the earth moves the oil and natural gas
is trapped in reservoir rocks, which are
between layers of impermeable rock, or cap
rock– usually granite or marble.
• The whole process takes millions of years.
Source:Howstuffworks.com
9. Finding Oil
• Government and Oil companies usually assign
finding oil to contracted geologists
• The Geologists make an average of $100,230
making it an incentive to find new reserves
• Oil geologists examine surface features,
surface rock, reservoir rock, entrapment,
satellite images, sensitive gravity meters and
magnometers. They can also detect the smell of
hydrocarbons using electronic noses called
sniffers.
• The most common technique for finding
reserves is seismology which uses shock waves
that interpret waves reflected back to the
surface.
• Despite all the technology, modern oil
exploration methods are only 10 percent
successful.
10. Once the Site is Selected
Getting the land ready Making way for the Rig
• Area surveyed to determine • Holes dug to make way for the rig and
boundaries. main hole
• Environmental studies done. • A rectangular pit (cellar) is dug around
• Land cleared and access roads built. the location of the drilling hole. (This
• Water is drilled if no natural sources provides a workspace.)
available. • Crew drills a main hole
• A reserve pit is dug to dispose of rock • Additional holes dug to the side to store
cuttings and mud. It is lined with plastic equipment
to “protect” the environment only if the
area is considered to be “ecologically
sensitive.”
Source:Howstuffworks.com
11. Setting Up the Rig
Once the land is ready, several holes are dug to make way for the rig and main hole. A
rectangular pit called a cellar is dug around the location of the actual drilling hole. The cellar
provides a workspace around the hole. The crew then drills a main hole.
Here’s how a rig is set up.
12. Drilling
• Drill bit, collar and drill pipe placed in the
hole.
• Kelly and turntable attached; drilling begins.
• As drilling progresses, mud is circulated
through the pipe and out of the bit to float the
rock cutting out of the hole.
• New sections (joints) of drill pipes added as
the hole gets deeper.
Directional Drilling
• Remove (trip out) the drill pipe, collar and bit
when the pre-set depth (anywhere from a
few hundred to a couple thousand feet) is
Photo courtesy Institute of Petroleum
reached.
13. Confirming the Presence of Oil
• After the pre-wet depth is reached, the
workers run and cement the casing –
pipe sections into the hole to prevent it
from collapsing.
• Drilling continues in stages.
• When the rock cuttings from the mud
reveal the oil sand from the reservoir
rock, they may have reached the final
depth.
• Then, they remove the drilling
apparatus from the hole and perform
several tests to confirm the presence
of oil.
• These tests are Well Logging, Drill-
stem Testing, and Core Samples.
14. Extracting the Oil
• Once the well is completed, the operators
must start the flow of oil into the well.
• For limestone reservoir rock, acid is
pumped down the well and out the
perforations.
• For sandstone reservoir rock, a special
blended fuel containing proppants is
pumped down the well and out the
perforations.
• The pressure from this fluid makes small
fractures in the sandstone that allow oil to
flow into the well, while the proppants hold
these fractures open.
• Once the oil is flowing, the oilrig is removed
from the site and production equipment is
set up to extract the oil from the well. Source:Howstuffworks.com
18. Oil Refining - Cracking
• Further chemical processing is needed to make products such as gasoline of various grades,
lubricating oils, kerosene, jet fuel, heating oil, chemicals for plastics and other polymers. It is
possible to change one fraction into another through these three methods; cracking, unification, and
alteration.
• Cracking takes large hydrocarbons and breaks them into smaller ones.
19. Poll
• Question: Which of these day-to-day activities is not touched by oil at
some point?
• Multiple Choice Answers:
- Air Travel
- Dry Cleaning
- Driving a Toyota Prius/Hybrid Car
- Paddling a Wooden Canoe
25. Seismic Data Utilization Overview
Real-Time Decision
3D Map creation
Visualization
Well Mapping Remote Well Operations &
Completions
26. Real-time Oil & Gas Operations
Onshore
Facilities
Offshore
Facilities
Decision
Centers
Source: Peter Breunig (CVX)
27. Integrated Global Operations
Service Company’s
External Experts
Onshore Operation Center
Decision Center
Control Room
Offshore
Remote
Collaboration Remote Monitoring
Room
28. Business Challenges facing Oilfield Sector
1. Maintain high production while prices are high.
2. Manage production decline at existing sources.
3. Manage/effectively use huge amounts of data (seismic, wireline etc.).
4. Integrate/manage continuous data from multiple sources
5. Optimize production operations with real-time decision support.
6. Applying technologies effectively, and not “owning” technology.
7. Direct support and close collaboration with the industry and partners working on
the projects internationally.
8. Staying compliant with accounting, privacy, safety, and environmental laws in the
countries where they are working.
9. Managing the growing shortage of skilled workers.
10. Securing data and information in a world of contract employees and multiple
partners on every job.
29. CA as a Player in Oil and Gas
• EITM is highly relevant to the industry
- Security Management
- Project & Portfolio Management
- Compliance Management
- Records Management
- Service Management
• Upcoming webcasts will drill into these solutions with a
number of use cases
30. Further Reading / Reference
• U.S. Energy Information Administration: Oil Market Basics
http://www.eia.doe.gov/pub/oil_gas/petroleum/analysis_publications/oil_market_basics/default.htm
• UK Government Energy/Regulatory site – includes links to
other useful sites http://www.dti.gov.uk/energy/statistics/index.html
• Society of Petroleum Engineers http://www.spe.org/spe-app/spe/index.jsp