Ray Govett

Almost all oil and gas found is the result of somebody’s idea. A few promoters have found oil and gas by just promoting drilling of wells based on the fact they owned the acreage and convinced those with money to invest with them. Early Texas oil and gas wells resulted from wells drilled in search of water, which at the time was much more valuable than the oil and gas. However, most current exploration for oil and gas is a result of someone’s idea about where hydrocarbons may be found.

The geologist uses publications, surface geology, well logs, sample logs, well cores, aerial photographs, satellite photography, topographic maps, gravity maps, geomagnetic maps and about anything else available to come up with an idea about where hydrocarbons may be in the subsurface. Depending on circumstances and available finances, the geologist will then work with a geophysicist to further refine the prospect and a land man to purchase acreage on the prospect.

If the area is one with little or no previous exploration, the least expensive way to start is a study of all available pertinent publications on the area followed by an examination of outcropping rock formations around the edges of the basin. If these rocks look favorable, then airborne gravity and magnetic surveys of the basin should be flown. These surveys will tell the geologist and geophysicist the depth of sedimentary rock in the basin and give an indication of possible structures. Assuming things look favorable after these surveys, 2D seismic lines may be run over structures indicated from the gravity and magnetic surveys. 3D seismic lines then might be run to select an optimum drill sight.

All sedimentary basins in the United States have been pretty well tested and those producing hydrocarbons have a great deal of data available with which a geologist may work in search of a new discovery of hydrocarbons. A typical geologist will spend hours studying well logs, scout cards and drawing geologic maps looking for new places to drill for hydrocarbons. The new prospect may be a geographic area or a deeper formation.

Drillers kept track of formations in which they were drilling with sample logs before the invention of electric logs. The first drilling rigs were cable tool rigs that brought samples back to the surface every few feet and a rig crew member would examine the samples to see what formation had been drilled and if it had any show of oil. When rotary rigs began to be used, the process was continued, but varied a little. The drilling fluid returned over a shaker that allowed some of the formation fragments to be collected and examined much the same way the cable tool driller had examined his samples.

Invention of the electric log did not eliminate the need for collecting drilling samples. The electric log became another valuable tool in analyzing what is in the subsurface. Mud logging, where the drilling mud is analyzed for gas content and a sample log constructed from analysis of well cuttings are still valuable exploration and well evaluation tools.

After the geologist has selected what he believes to be the best drill sight, a geophysicist may be consulted to analyze the area in more detail. Seismic surveys are done by generating shock waves at, or near, the surface of the ground. These shock waves travel into the subsurface and are reflected back to the surface of the ground by rock formations that are more dense than other formations. The reflected shock waves are picked up by geophones and transmitted to a recording truck. By measuring the time these shock waves travel to the rock formations and back to the surface, it is possible to map rock formations at depths from which the shock waves are reflected. Subsurface faults and other anomalies will also reflect the shock waves and by studying these reflections, the geophysicist can map the subsurface in greater detail than can be done with just control from drilled wells.

Dynamite was used as an energy source to create the shock waves in early seismic work and is still used. A method known as a, “Thumper,” where a heavy weight is lifted up and dropped, is used as an energy source to create the shock wave in some seismic work. The predominant method now in use is probably the, “Vibroseis,” where a big vibrator is mounted under a large truck and the vibrator creates the shock wave. A sonic source is often used to create the shock wave in off shore seismic exploration.

Where geophones are laid out predominantly in two directions, it is called 2D seismic. Where the geophones are laid out in four directions, it is called 3D seismic. The geophones are much more closely spaced in the 3D seismic surveys and as a result, more subsurface detail is collected at the surface.

A land man may be asked to purchase leases on the prospect prior to the seismic work, during, the seismic work, or after the seismic work. Land man is a generic term and both men and women do the job. A typical procedure is for a land man to purchase a, “Shooting option,” on all of the acreage in which the company may think it will do seismic. With the, “Shooting option,” the company will agree to pay so much to do the seismic work and so much for any acreage it wishes to lease after doing the seismic work.

If there is no shooting option under which the acreage is acquired, a land man will need to contact all land owners and mineral interest owners under all acreage of interest and try to acquire an oil and gas lease. The entity owning the surface of the land does not always own the mineral interest under the land. When ownership of the mineral interest has been separated from ownership of the surface interest, it often makes leasing of the mineral interest more difficult and operations more difficult when production is established. These are just some of the problems land men find when trying to secure oil and gas leases.

Once the oil and gas leases have been obtained, petroleum engineers begin the process of developing a drilling program to test the prospect. Nearby well logs, and scout tickets from those wells, are examined to determine surface casing requirements, possible over pressured zones that might be encountered while drilling, and other information that might be obtained from examining well records of nearby wells. Information from nearby wells will be used to develop a drilling program for the prospect well. The Railroad Commission has the ultimate say on surface casing requirements in Texas but the operator is required to make a request for the depth at which surface casing is to be set to protect fresh water in the area.

If the prospect is an ordinary straight hole, the Railroad Commission, may tell the operator to set the surface casing to a certain depth. Under some circumstances, the Railroad Commission may allow the operator to set a given amount of surface casing and cement the production casing all the way back to the surface. Some wells may require intermediate casing, where formation pressures are such that total depth of the well cannot be reached without drilling mud weights that would cause mud to be lost in shallower formations. There are a great many factors that need to be considered prior to beginning to drill a well.

Directional wells, such as so called, “horizontal wells,” drilled for shale development, require additional requirements. Development of the polycarbide drill bits probably made drilling for shale production possible. The old rotary style drill bits could not be left in the hole long enough and the uneven wear on the down side of the roller bit would not work very well in a horizontal hole. Logging while drilling and measurement while drilling are other new tools used in horizontal drilling. These two tools let the driller know within a few feet of where the bit is in the subsurface and in what formation the bit is drilling. All of these new features are very expensive and without the large increase in the price of oil, horizontal drilling for shale production would not be economical. One advantage that slightly reduces the cost of shale development is the fact that more than one well can be drilled from one surface location.

Early wells were completed in the open hole. The well was drilled to the producing formation and casing set above the producing formation. It was determined most wells performed better when casing was run through the producing formation, cemented in the well and perforated to allow the hydrocarbons to flow into the well bore. Slotted casing was probably used before perforating guns were used. A welder would cut slits in the casing and hope the slits line up with the producing formation when it was run into the well. The first perforating guns used simple bullets, which left debris in the formation. After World War II, shape charges were used to perforate the casing, which left little debris in the well bore or the formation.

A form a fracing was used in some of the open hole completion wells when a process called, “Shooting,” was used. A charge of nitro glycerin was lowered into the well and when it was opposite what was thought to be the producing formation, a triggering mechanism was dropped, causing the nitro glycerin to explode and breaking up the face of the rock formation near the well bore. Halliburton developed a process of cementing casing in the well and the casing could be permanently set at an exact depth by cementing it.

Concerns have been expressed about fracing shale and other wells. Electric logs are now run in almost all wells. Casing is run in the well prior to fracing. The casing is cemented in the well and a cement bond log is run to make sure the cement adequately covers the zone to be fraced. and zones above and below the zone to be fraced. If something happened and cement did not go as planned, the well may be perforated and cement squeezed above or below to ensure frac fluid stays in the intended formations. Tracers are frequently used in the frac fluid to check where it goes. The fracing process is monitored closely and if anything abnormal develops it is immediately stopped. Hydraulic fracturing is simply forcing liquid into the subsurface formation under high pressure to create fractures in the producing formation and placing sand in the created fractures to hold them open so the hydrocarbons may more easily flow into the well bore. The process has been in use for many years in the oil field.

Produced products have to be moved to a market once production is established. Oil production requires building lease storage tanks and gas production requires gas pipelines that end up at a market. If an oil pipeline is nearby, a better price can normally be had for the oil if it is marketed through the pipeline, avoiding trucking charges. Oil lease storage facilities need to be built regardless. The oil storage tanks may be bolted steel tanks or welded steel tanks. Smaller tanks may be assembled off location and trucked to the location, but larger tanks are assembled at the location, whether they are bolted or welded. If the oil is trucked, probably more storage will be required than if marketed by pipeline. The storage requires the tanks to be built within a retaining wall that will contain more than the capacity of the storage tank, or tanks, within the retaining wall. The retaining wall will need drainage valves to allow for removal of rain water accumulation.

Gas pipelines may need to be built some distance to a market and it may take several gas wells to make the pipeline economical. For this reason, most leases have shut in royalty clauses, where the royalty owner is paid so much although the well is not being produced. Oil wells often produce gas with the oil and regulations generally require that gas also be moved to a market.

There are two types of pipelines, common carriers and more or less private pipelines. Common carrier pipelines carry products of multiple producers and are regulated by the government. Private pipelines are regulated, but in a different manner. When a lease is negotiated, it normally provides for construction of a pipeline to move the products within the lease by pipeline. If it is necessary to move those products off the lease by pipeline, separate right of way will be required for that pipeline. All transcontinental pipelines are common carriers as are many local ones. Common carrier pipelines carry products of multiple producers and may carry those products to a market or to another common carrier pipeline. If the pipeline off the lease is a common carrier, the owner will try to negotiate a right of way with the land owner for the pipeline. If the common carrier pipeline owner is not successful in negotiating a right of way, the pipeline owner may go to court and exercise what is called imminent domain to require the land owner to grant the pipeline a right of way for a fee commensurate with that paid nearby land owners. A private pipeline may not use imminent domain to obtain pipeline right of way, but must deal with each land owner individually.

Gas pipelines cover the United States, providing natural gas to almost all homes and markets. Cities and private companies purchase natural gas from the pipelines and distribute it through their own systems to homes, factories and industries. The pipeline companies frequently do not own the gas, they simply transport it for a fee. Natural gas may be compressed and moved, but the only practical way to move large quantities is through pipelines.

Oil may be trucked, moved on rail cars or by pipelines, but the least expensive and safest way to move oil is by pipelines. Gas pipelines need periodic compressor stations to move the gas long distances and oil pipelines need pump stations. These facilities are normally placed away from populated areas.

With the exception of a few very short lease pipelines, pipelines require heavy equipment while they are being constructed. Trucks or rail cars haul the pipe to a location and then trucks distribute the pipe along the pipeline right of way which has been determined by a surveyor. A ditching machine digs a ditch in which to bury the pipeline that is sufficiently deep to avoid contact with plows or other surface uses of the land. Welders then weld each joint of pipe together. The welds and pipe are inspected by X-Ray to make sure there are no leaks. After inspection of the welds and pipe, it is coated and wrapped to try to prevent rust and deterioration prior to burying in the ground. The pipeline is lifted into the trench with special handling equipment that does not damage the coating. Where pipelines cross under roads, they are placed inside another pipeline so if a leak should develop, whatever is leaking will be noticeable beyond the highway and the leaking pipe can be removed, repaired and not cause damage to the highway. Boring machines are now used to drill a hole under highways so the road surface is not disturbed.

Plants to extract natural gas liquid, butane and propane, are normally built along gas pipelines. They may be part of a compressor station or free standing. If a sufficient quantity of gas is available on a lease, a plant may be built on the lease to extract butane and propane before the gas enters the pipeline on the way to a market. Butane and propane are used as a replacement for natural gas in areas where natural gas is not readily available. Butane, Propane and compressed natural gas may also be used as fuel in trucks, tractors and other motor vehicles.

Oil pipeline either terminate at refineries or at oil tanker loading facilities at some port, Very little U. S. oil is exported, but large amounts are imported from around the world. Mexico and Canada are the largest foreign suppliers of oil to the United States. Incidence, such as threats to shut down the Suez Canal, do not affect the supply of oil to the U. S., but do affect the price because prices in the U. S. are largely determined by world prices. Oil refineries also consume large quantities of natural gas in processing the oil.

Oil refining is a complicated operation. Crude oil is stored at the refinery so the process may operate continuously over an extended period of time without interruption. The crude oil first enters the distillation tower where heat is applied to begin the process of producing a variety of end products. Heavier products like petroleum coke and asphalt base will be bled off of the distillation column and remaining hydrocarbon products will enter a cracking unit or a coker to be further refined. Heavier products coming out of the coker may be lubricating oil, industrial fuel, jet fuel and diesel fuel. Lighter components coming from the cracking unit are motor gasoline and liquefied petroleum gas. Diesel fuel, jet fuel, gasoline, and liquefied petroleum gas may also be produced as lighter products in the distillation tower. The gasoline may be further processed in a reformer. Naptha may also be produced as a very light product in the reformer or the distillation tower. Nothing is wasted in the refining process. All of the components of crude oil are used some place. Gasoline, diesel fuel and jet fuel are just the primary products produced from a barrel of oil.

A high percentage of these three products reenter pipelines when they leave the refineries for distribution. Some is trucked to local markets and some is shipped by tankers to distant markets, but the majority is moved to markets by pipelines. Some refined products are imported, but the majority of refined products are produced in the United States. Gasoline is shipped to tank farms where it is stored until picked up and trucked to stations by wholesalers known as, “Jobbers.” Jet fuel is shipped to airports where it is stored and trucked directly to airplanes by supplies at the airport. Oil may be packaged at the refinery or delivered to a plant where it is packaged for distribution.

Gasoline is sold through company owned and independently owned stations. The gasoline may bear the name of the refiner or the marketer. When buying gasoline, it is difficult to know where or who refined the gasoline or where the oil was produced from which the gasoline was refined. There are independent refiners as well as major company refineries and when buying gasoline at a service station or convenience store, it is difficult to know where it was refined or where the oil was produced from which it was refined.

When oil goes through the refinery, it is all mixed together and when gasoline goes to the retailer, it is frequently from more than one refiner. The jobber buys his gasoline where he gets the best price at the time he buys it and mixes it with what is on hand. When it is delivered, it is delivered from storage.