Learning about oil and gas industries makes me realize that the industry is not that simple. I used to think oil and gas industry is about to take the oil and gas out of the well and processed them into gasoline or something else. I was wrong. Oil and gas business is very wide. It involves many activities from downstream until upstream.
On this post, I'll share you basic understanding of oil and gas industries.
Formation of Reservoir
How is oil formed? Crude oil and natural gas are naturally occurring substances present in rock amidst the earth's crust. The origin of oil and gas is organic material - the remains of animals and plants - compressed in sedimentary rock. It is trapped and preserved in sediments, then buried deeply and slowly 'cooked' to yield oil and gas.
Because oil and gas are less dense than water, oil and gas migrate through relatively porous sedimentary source rock toward the earth's surface. When the hydrocarbons are trapped beneath relatively less porous cap rock, an oil and gas reservoir is formed. These reservoirs, which contains large quantities of oil and gas, are source of crude oil and gas.
Exploration and Drilling
A well must be drilled through the cap rock and into the reservoir to bring the hydrocarbon to the surface.
Before an oil company can explore underground for oil and gas, permission must be obtained. Once the exploration and production company is ready to move forward and begin drilling, the site must be prepared for drilling. The land is cleared and leveled and access roads are constructed if necessary. A water source is necessary for drilling. The final step is to dig the reservoir pits to hold the rock cuttings, drilling fluids, and mud that come out of the ground.
Once the site is ready, the exploration company will contract out the drilling work to a company who specializes in drilling and hire a rig and their labor crew by paying their day rates to accomplish the work.
References:
- Oil and Gas Industry Primer. http://www.investopedia.com/articles/07/oil_gas.asp#axzz2AYWeIkZU
- Understanding the Oil and Gas Part 2. http://blog.sherware.com/index.php/2011/06/27/understanding-the-oil-and-gas-industry-part-2/
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