Chapter 4 - Searching for and Evaluating Oil and Gas Flashcards
The ownership or control of an area of interest (onshore or offshore) may rest with a government, a business entity, or an individual. For that reason, and E&D firm must do what?
Enter into a business arrangement that will define the rights and obligations of all parties before exploratory drilling begins.
Two kinds of license arrangements are commonly used by the oil and gas industry around the world:
Production-sharing agreement and service or production contracts
Define Production Sharing Agreement.
The production-sharing agreement (PSA; also called a production-sharing contract [PSC]) is the most widely used business arrangement. Under a PSA, a government awards to a company the right to explore for and to produce hydrocarbons. The oil company bears the technical and financial risk of the initiative as it undertakes exploration, development, and ultimately production.
Under a Production Sharing Agreement, what happens if the efforts are successful?
If the efforts are successful, the company is allowed to use the money from sale of the produced oil to recover capital and operational expenses. The remainder is spit between the government and the company according to a predetermined ratio. Under some PSAs, changes in international oil and gas prices or production rates can affect the share of production awarded to the company.
Define Service Contract.
Under a service contract, an E&D company acts as a contractor for the host government and is paid to produce the hydrocarbons.
Define Production Contract.
Under a production contract, a company takes over an existing or underdeveloped field, works to improve production, and is paid an amount based on an agreed-to portion of the increased production.
In some production contract cases, what happens?
In some cases, a government will claim a royalty interest on any oil that a company produces. This gives the government the right to collect a stream of future payments, typically a percentage of the value of the oil produced. In addition, the government may impose taxes on profits realized by the company as a result of the oil production. A government may also demand payment of various bonuses and fees. One example is a signature bonus, to be paid by the company at the start of the license.
Exploration Activities: Define Geologic methods.
The geologic techniques involve mapping and sampling of rock formations that outcrop at the earth’s surface. Geologic information about an area is sometimes available from geologic agencies, based on earlier drilling activities for such resources as water, brine, coal, and minerals. These data can provide clues about fluid content, porosity, permeability, age and formation sequence (layering) of subsurface rocks.
Exploration Activities: Define Geochemical methods.
Visible surface features-oil or natural gas seeps on the ground, or specific geological features on the seafloor-sometimes indicate the presence of deep or shallow hydrocarbon deposits. Geochemical methods can evaluate the chemical and bacterial properties of the soil above suspected oil and gas reservoirs, looking for changes induced by the slow escape and upward migration of hydrocarbons.
Exploration Activities: Define Geophysical methods.
Geophysical analysis can help to determine subsurface strata depth, thickness, and rock properties.
List the geophysical procedures.
Gravimetry
Magnetrometry
Seismography
Which geophysical procedure is most widely used.
Seismographic techniques are widely used because they yield the most useful information about rock structures. In particular, they can identify traps capable of containing oil and gas.
Survey methods: Define Gravimetric survey.
In a gravimetric survey, geophysicists measure variations in gravitational force. These variations give clues about the properties and extent of subsurface structures.
Survey methods: Define Magnetic survey.
A magnetic survey measures minute variations in the strength and direction of the earth’s magnetic field. This can also provide information about subsurface rock structures.
Survey Methods: Define Seismic survey.
Seismographic or seismic surveys create and then study shock waves as they are refracted (bent) and reflected by subsurface rock interfaces. Seismic methods can routinely assess structures at depths of up to 20,000 feet, with accuracy of 10-20 feet.
What instruments are used to detect shock waves?
Geophones, or seismometers
Seismic survey: Define passive seismic survey.
A passive seismic survey detects natural, low frequency movements (up to 10 cycles per second) of the earth’s crust. Geophones are placed at multiple measurement points, typically several hundred yards apart, listen for periods lasting from sever hours to several days.
Seismic survey: Define active seismic survey.
In an active (or seismic reflection) survey conducted on land, researchers direct sound waves into the subsurface by using large, truck-mounted mechanical thumpers, or by setting off small, controlled explosions.
How are active seismic surveys conducted offshore?
Offshore, and active seismic survey is conducted by a specially designed vessel that tows two kinds of equipment as it moves slowly across the water. The first type is a sound source (typically, an air gun), mounted close to the stern that directs sound energy towards the ocean floor. The second type is a long plastic tube, called a streamer that can stretch up to five miles behind the vessel.
What is attached to the streamer in active seismic surveys conducted offshore?
A streamer is designed to float 20-50 feet below the water’s surface and to hold 200-300 carefully spaced vibration detectors, called hydrophones.
In cases where towing long streamers is not possible, a method called a seafloor seismic survey is typically used. Explain.
In this arrangement, one or more hydrophone streamers are laid out in fixed positions on the ocean floor and the seismic vessel with its sound source moves above them.
Define Seismic Imaging.
Advanced computer technology has enabled three-dimensional (3D) seismic imaging. This approach may increase the likelihood of successful locating a reservoir by as much as 50%. The seismic imagery can be presented to one or more analysts (sometimes wearing special goggles) in a true 3D environment. Images can be moved and rotated as desired, and the analysts in some cases can actually walk around inside the image itself.
