F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
Lecture 1Lecture 1
Exploration
Production
Refining
Marketing
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
A Fully-Integrated Oil CompanyA Fully-Integrated Oil Company
Getting RefinedProducts to
the Consumers
Getting RawOil & Gas tothe Refinery
Refinery
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F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
Components of the Upstream
• How to Get It Out– where, in detail, are the reserves?– what to build (facilities)?– will it be profitable?
• Find Oil & Gas ‘Pools’– which regions and basins?– which blocks?– where on the block?
• From the Ground, to the Refinery– how to manage the field?– how to deliver the ‘crude’?
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
Oil Company TargetsOil Company Targets
To maintain a healthy petroleum company, one would want to:
• Replace production (what you take out of the ground) with new reserves
Exploration Finds Volumes Produced
• Keep finding costs below $1 per barrel
Exploration Costs
New Barrels < $1/barrel
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
We Need to Drill Wisely
• Wells can be very expensive, some > $200 million, a lot even for a major oil company
• Well placement and well path can be critical to success
• So …..
How can we determine where to drill and predict what we will find BEFORE we start
drilling?This leads to the need for geologists, This leads to the need for geologists, geophysicists, and other specialists geophysicists, and other specialists
focused on imaging and interpreting the focused on imaging and interpreting the subsurfacesubsurface
This leads to the need for geologists, This leads to the need for geologists, geophysicists, and other specialists geophysicists, and other specialists
focused on imaging and interpreting the focused on imaging and interpreting the subsurfacesubsurface
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
G&G in Exploration
• Which basins throughout the world offer the most promise?
• Which blocks in those basins should we bid for?
• Where on the block should we drill?
• What should we expect from a particular well?– What type of HC: oil, gas, or condensate?
– What amount of HC will we recover: # barrels?
– What sort of flow rates can we expect?
– How risky is this well?
– etc.
Geoscientists are needed to answer questions such as:
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
Exploration’s Task
SuccessUneconomic
Drill Wildcats
AssessProspects
DropProspec
t
ConfirmationWell
SuccessFailureInterpret
Seismic Data
ProcessSeismic Data
AcquireSeismic Data
CapturePrime Areas
Identify Opportunities
To DevelopmentOr Production
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
An Exploration Success
The Bonanza Basin, offshore Somewhereia, was deemed to have high potential.
Block1
Block5
Block4
Block3
Block2
Block8
Block7
Block6
Somewhereia
Bonanza Basin
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
An Exploration Success
The Bonanza Basin, offshore Somewhereia, was deemed to have high potential.
We leased the two highest- ranked blocks in the last licensing round.
Block1
Block5
Block4
Block3
Block2
Block8
Block7
Block6
Somewhereia
Bonanza Basin
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
An Exploration Success
The Bonanza Basin, offshore Somewhereia, was deemed to have high potential.
We leased the two highest- ranked blocks in the last licensing round.
8 leads were identified, 3 passed economic screening and were matured into prospects.
Bonanza Basin
Block8
Block7
LeadA
LeadB
LeadC
Block8
Block7
Alpha Prospect
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
An Exploration Success
The Bonanza Basin, offshore Somewhereia, was deemed to have high potential.
We leased the two highest- ranked blocks in the last licensing round.
8 leads were identified, 3 passed economic screening and were matured into prospects.
We drilled a wildcat at the Alpha Prospect & found oil.
Alpha Prospect
Block7
Bonanza Basin
Discovery Well
Block8
SaltDiapir
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
An Exploration Success
The Bonanza Basin, offshore Somewhereia, was deemed to have high potential.
We leased the two highest- ranked blocks in the last licensing round.
8 leads were identified, 3 passed economic screening and were matured into prospects.
We drilled a wildcat at the Alpha Prospect & found oil.
A confirmation well proved that there are significant volumes of oil.
Alpha FIELD
EUR = 200 MBO .95 TCF
Block7
Bonanza Basin
Discovery Well
Confirmation Well
Block8
SaltDiapir
Our estimate of ultimate recovery is 200 MBO.
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
G&G in Development
• Can we refine our picture of the distribution of oil at Alpha?
• Is the reservoir a single unit, or is it segmented (separate regions to drain)?
• How many wells/where should they be drilled?
• What sort of facilities (platform?) will we need?
• How can we speed-up time to first oil?
• What uncertainties remain?
• Exploration has drilled a discovery and a confirmation well.
• The ultimate recover for Alpha is estimated to be 200 MBO, which greatly exceeds the economic threshold of 100 MBO
Questions:
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
We Need More Detail
Reservoir Mapat the end ofExploration
Reservoir Mapat the end ofDevelopment
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
We May Need Better Data
Data Used for ExplorationData Reprocessed or
Reshot for DevelopmentAnd Production
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
G&G in Production
• How should we manage the field so as to maximize our investments?
• Can we monitor how oil is being swept out of the reservoir?
• What about injection wells and enhanced recovery?
• Is there more oil in the vicinity – either at deeper depths or in nearby traps?
• Can we build a computer model of the field that matches existing production data? If so, we can test future recovery with different drilling scenarios.
• Production has begun at Alpha.
• The initial production rates are as expected.
Questions:
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
Reservoir Simulation
Geologic Model
Reservoir SimulationO
il P
rod
ucti
on
Time
HISTORY MATCH
F W Schroeder ‘04
L 1 - Focus of IndustryCourtesy of ExxonMobil
The Value of G&G to an Oil Company
• G&G work is done to add HC reserves (volumes) – New discoveries
– More from discovered producing zones
– Additional producing zones
• Get the most reserves at the lowest cost– Invest in the right basins
– Drill in the optimum locations
– Correctly assess what can be recovered
– Avoid unnecessary wells
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