This is the second part of topic 2. It covers the basics of petroleum origin from the geology aspect and it also includes the geopolitics of oil.

1. KC44703 OIL & GAS 1
ELECTIVE
COURSE SUMMARY INFORMATION
UMS

2. 9 Course Outcome:
At the end of the course, students
should be able to:
1. Describe and explain all the major stages in the life of an oil
or gas field, from gaining access to opportunity, through
exploration, appraisal, development planning, production,
and finally to decommissioning, including the fiscal and
commercial environment in which oil and gas field
development takes place.
2. Explain the fundamentals of petrophysics, its process and
methods used in extracting formation properties from core
sample for reservoir modelling and simulation afterwards.
3. Apply the state-of-the-art reservoir engineering principles,
concepts and basic practice to engineering problems.
4. Apply fundamental principles and specialized applications
in all forms of enhanced oil recovery techniques
2

3. 17
Content outline of the course/module and the SLT per topic Lect.
(hrs)
Tut.
(hrs)
Topic 1: Overview
Introduce the various steps of the petroleum industry life cycle and the
disciplines involved at each step
4 4
Topic 2: Introduction to Geology
Where and how to find oil and gas; looking into the subsurface; finding the
right target; discovering a new field; sizing up the resources, Petroleum Origin
& Accumulation
Types of reservoir rocks
2 2
Topic 3: Drilling and production
Focusing on the new field; imaging the reservoir; planning the field
development; building surface facilities and infrastructure; drilling the
producing wells; squeezing the last drop.
2 2
Topic 4: Petrophysics
Definitions & Measurements
Porosity & permeability
Packing & particle size
Porosity of complex porous media
Saturations
Capillary Pressures Curves
2 2
3

4. 17
Content outline of the course/module and the SLT per topic Lect.
(hrs)
Tut.
(hrs)
Topic 5: Overview of Volumetric Equations
GRV calculations
Reserve definition and catagories
Volume-in-Place calculations
Reserve estimates
Land descriptions
Trapping mechanism
Reservoir statistics
2 2
Topic 6: Phase behaviour
Pure substance
Two component mixtures
Three component mixtures
Reservoir Fluids Identification
Five reservoir fluid types
Production Rule of Thumb
2 2
Topic 7: Flow through porous media
Darcy’s Law
Diffusivity Equation
Transient State
Pseudo-steady State
Steady State
4 4
4

5. 17
Content outline of the course/module and the SLT per topic Lect.
(hrs)
Tut.
(hrs)
Topic 8: Fundamentals of Well-Test
Inflow Performance at High Production
Rates Transient Testing
Drawdown Testing and Semilog Analysis
Buildup Testing and The Horner Plot
2 2
Topic 9: Drive Mechanism
Primary drive mechanisms
Secondary drive mechanism
Tertiary/ Enhanced Oil Recovery
Performance of drive mechanism
Reservoir depletion concepts
2 2
Topic 10: Introduction to EOR
Displacement Fundamentals
Immiscible Gas Injection
Miscible Gas Drive
Thermal Recovery Methods
Chemical Recovery Methods
Microbial EOR
Case Studies
4 4
Total Hours 26 26
5

6. 18 Main references supporting the course;
 William D McCain (2000), The Properties of Petroleum Fluids, 2nd Edition,
Pennwell Corporation
 L.P Dake (2001), Fundamentals of Reservoir Engineering, 8th impression,
Elsevier Science
 Hyne N. J. (2001). Nontechnical guide to petroleum geology, exploration,
drilling and production, 2nd ed. Penn Well Corporation.
Additional references supporting the course;
 Introduction to Petroleum Technology, INSTEP Training Module for
PETRONAS staff (2007)
 How the energy industry works: an insiders’ guide. 2007
 Van Dyke, K, Fundamentals of Petroleum, University of Texas Petroleum
Extension Service
6

7. 19 Delivery Plan
Week Topic Assessment
1 Topic 1: Overview Assignment 1
2 Topic 1: Overview
3 Topic 2: Introduction to Geology
4 Topic 3: Drilling and production Assignment 1 - submission
5 Topic 4: Petrophysics Assignment 2
6 Topic 5: Overview of Volumetric Equations Test 1 - Topics 1, 2, and 4
7
Topic 6: Phase behaviour and Resevoir fluid
identification
8 Topic 7: Flow through porous media
9 Topic 7: Flow through porous media
10 Topic 8: Fundamentals of Well-Test Assignment 2 - submission
11 Topic 9: Drive Mechanism Test 2 - Topics 5, 6, and 7
12 Topic 10: Introduction to EOR
13 Topic 10: Introduction to EOR
14 Revision
7

8. KC44703 OIL & GAS 1 :
GEOLOGY – PETROLEUM
ORIGIN PART 1
ASSOC. PROF. DR RACHEL FRAN MANSA
SEPT 2015 SEM 1
Modified from materials by Assoc Prof Ir Abdul Aziz Omar, UTP, SEPT 2014

9. GEOPOLITICS OF OIL

11. Falling
oil
prices
Strong US dollar
• Strong dollar lowers
prices of commodities
OPEC: U.S. Output
could take Hit
• Drilling can subside due
to high cost, caused by
low oil prices, causes
drop in production
A Global Oil Glut
• Global oversupply
Iran Nuclear Deal
Could Add to
Oversupply
http://www.ibtimes.com/why-are-oil-prices-falling-here-are-four-reasons-crude-
prices-continue-trend-lower-1848742
http://www.bbc.com/news/business-29643612

12. Geopolitics of
oil
Quota
agreement
Oil and
international
conflict
Pipeline
diplomacy in
the Caspian
Sea
Peak Oil
Politics of Oil
Nationalization
Politics of
alternative
fuels

14. WORLD DEMAND
• End of 2013 – 92 million barrels per day
• 2014 will see 1.4% growth in demand

15. Where is the energy being used?

19. • What is it that is demanded from Oil?
• What makes oil so cheap now?
• What can gas be used for?
• What are the current changes in energy supply?

20. SUPPLY AND DEMAND OF OIL
FRACTIONS

22. HYDROCARBON LIFE CYCLE

23. HYDROCARBON LIFECYCLE
E & P
Transportaion
& Storage
Downstream
Processing
Marketing

25. UPSTREAM : EXPLORATION AND
PRODUCTION (E&P)
Exploration Phase Production Phase

26. FIELD DEVELOPMENT PHASES
Production
Engineering
and
Construction
Conceptual
Study
Exploration
TIM

28. PROSPECTING

29. PROSPECTING : PRELIMINARY
RESEARCH
Preliminary prospect research involves an investment of primarily time to make
a determination whether or not a prospect is worth pursuing.
• Preliminary lease checks.
• Researching and mapping logged wells (productive and
• dry holes) in the prospect area.
• Reviewing seismic the generation company may have in
• its library.
• QC publicly available seismic.
• Compare notes with other geologists with experience in
• the prospect area.

30. PROSPECTING : EXPANDED
PROSPECT DEVELOPMENT
Completing a developed prospect
usually involves utilizing multiple
confirming geological, geophysical or
geochemical technologies.

31. PROSPECTING : EXPANDED
PROSPECT DEVELOPMENT
Seismic Surveys - Seismic surveying is based
on the simple concept that sound waves will
travel through different geological structures at
different speeds that can be measured by time.
• A shock or sound wave is created using a thumper
truck/ship or even explosives drilled into the ground.
• The sound waves travel under the ground and are
reflected back by the various rock layers. These
reflections travel at different speeds depending upon the
type or rock and the density of the rock layers they pass
through.
• The seismic receiving truck/ship reads and records these
sound waves as they are detected by listening devices
called geophones.

32. PROSPECTING : EXPANDED
PROSPECT DEVELOPMENT
Types of Seismic Surveys -
• 2D Seismic - Two-dimensional seismic lines
are created by laying the geophones out in a
single line.
• 3D Seismic - A 3-D seismic survey is
basically a dense grid of 2-D lines.
• 4D Seismic - Adds a time lapse variable to
• 3D seismic, performing repeated 3D seismic
surveys over a producing hydrocarbon field
over time.

33. PROSPECTING : EXPANDED
PROSPECT DEVELOPMENT
Other prospecting methods
• Geochemical Techniques - Analysis of soil
samples at the
• surface is correlated to petroleum
accumulation at depth.
• Radar Gas Imaging - Hydrocarbons are
generated and/or trapped at depth and leak in
varying but detectable quantities to the
surface. Gas sensing instruments are flown
over an area to look for hydrocarbons seeping
from the earth.
• Magnetic Surveys - can determine where oil-
bearing sedimentary rock (nonmagnetic) is
more likely to be found.

34. PROSPECTING : EXPANDED
PROSPECT DEVELOPMENT
• Acquisition and analysis of these
technological surveys is quite capital
intensive.
• Purchased 3D seismic surveys - range of
$15,000 to more than $40,000 per square
mile.

37. PROSPECTING : ACQUISITION
AND EXPLORATION
• Appraisal Drilling
• Conceptual Development Plan
• Surface and Subsurface Development Plan
Appraisal and Conceptual
Development Plan
• Field Descrption
• Future Reservoir Characterization
• Drilling and Well Completion Plan
• Facilities Description
Field Development Plan
• Basic Design
• Front End Engineering Design (FEED)
• Detailed Design
• Operating Plan
Engineering and
Construction

38. PROSPECTING : ACQUISITION
AND EXPLORATION
• Issues considered:
1. Size of reserves
2. Water depth
3. Distance to shore
4. The environment
5. Risks
6. Costs - economics

39. PRODUCTION PHASE
Production needs construction of drilling facilities.
• Onshore and offshore

40. PRODUCTION PHASE

41. PRODUCTION PHASE

42. PRODUCTION PHASE

43. PRODUCTION PHASE

44. TYPES OF OFFSHORE
PLATFORMS

46. Tension-Leg Platforms
TLP

47. Gravity based platform

48. SPAR platform

50. DRILLING OPERATION
https://youtu.be/0SmSNRTU1Vw

51. DRILLING OPERATION

52. A PUMPJACKFOR
DRILLING

54. THE CHRISTMAS TREE

55. WELL COMPLETION

56. WELL COMPLETION
Well Completion
• Production casing: Set
through the payzone to seal
the well.
• Cementing: To keep the
casing in place
• Perforated casing: Where
the fluid flows into the well

58. ABANDONMENT
• Terminate ability of wells to produce
• Plug all penetrated zones
• 2 Phases –down hole and surface
abandonment

59. ABANDONMENT
• Down hole:
• Plugging and cementing
• • Surface:
• On shore –cut well casing 2-4 m
below ground and capped
• Off-shore –cap well

60. ENHANCED OIL RECOVERY (EOR)
• Typical primary recovery of a reservoir is 20-25% of estimated
volume
• EOR intends to capture another 20-30% volume.
• Current technologies:
• WAG/IWAG,
• chemical EOR,
• Microbial EOR,
• Thermal EOR

61. EOR - WAG

62. UPSTREAM PROJECT LIFECYCLE
Stages of a typical oil and gas project:
1. Licensing
2. Exploration
3. Appraisal
4. Development
5. Production
6. Abandonment

63. LIFE CYCLE PLANNING
(ECONOMIC ANALYSIS)

64. INPUT REQUIREMENTS FOR
DEVELOPMENT ECONOMICS
• TECHNICAL: Development plan
• Production forecast, total recovery
• Number of wells and costs
• Surface facilities (infrastructure,
export) + cost
• Phasing of development
• ENVIRONMENTAL
CONSIDERATIONS:
• Gas reinjection / disposal
• Water reinjection / disposal
• COMMERCIAL: Development plan
• PSVs?? (gas/oil)
• Price differentials with PSVs
• Forecast of inflation/exchange
rates
• CONTRACT & LEGISLATION:
• Type of contract (Royalty/tax, PSA,
Margin)
• Production/Signature bonuses
• Fiscal regime

65. DEVELOPMENT CHALLENGES
• Finding and development, production and technical costs are all currently rising
• As fields mature, companies intensify the search for new reserves, which are
becoming scarcer.
• Raw materials such as steel (which is used extensively by oil companies) are rising
in cost as the dollar (the default currency of oil company revenues) is falling. These
effects act to further squeeze margins.
• Fortunately for the oil companies, the significant rise in oil and gas prices has
outweighed these cost pressures,