I find it fascinating that the Oil Field Life Cycle has a lot of similarities to the Mineral Resources Development Cycle. Likewise the oil process is neither an easy or quick one with a lot of technical stages and processes that need to take place before a company can start extracting natural resources. In the coming days we will be explore the different stage to the oil life cycle and today merely serves as an introduction.
First thing first, maybe a good point to start is to look where Oil originated from. So how did crude oil form and accumulate and become a billion dollar industry? Well, hundreds of millions years ago natural plant matter was suppressed deep beneath the ground, for example at the bottom of the ocean, and covered in clay, sand and rock. With pressure and heat such elements are buried and place underground resulting in crude oil & natural gas.
The life cycle of an oil field starts the moment an oil company is given permission to explore, which is known as the exploration stage. In order for a company to start exploring the prospective resource they need to be given permission and awarded licenses by authorities within the country concerned. It is in this stage that the operating company receives the license rounds which allow part-owners to also operate under their license with the necessary permission from authorities.
The second stage is geological surveys involving two prime methods used in order to detect oil namely, seismic surveys and measuring magnetic fields. A collection of stratigraphic data obtained by creating shockwaves through the rock layers by means of explosive charges is a seismic survey. The recordings of the shockwave is analysed in order to determine feasibility of the surveyed area. Measuring Magnetic fields allows geologists to determine potential oil detection through the study of diagrams as well as maps. This stage can lasts for about 3 – 5 years.
Exploration drilling is the third phase and lasts for about 4 – 10 years. In this phase drilling is performed in areas where the geological surveys detected oil discovery. To start with the drilling, an appraisal well needs to be drilled, during which testers are continually examined for feasible oil & gas findings. If the reserve is successful in discoveries, a fringe well is then drilled in order to define the extent in value. Oil volumes found are analysed in order to determine production feasibility.
Following exploration is the production and development plan and lasts for about 1 year. In this stage reduced cost is crucial in determining the development and operating solutions a company is going to be using due to the fact that the oil field must be able to produce oil for several years and in times when the oil prices drop. If a company can keep the cost low, it results in better cost-effectiveness and in turn releases cost for increased developments. If the plan is approved a development license is granted by the authorities.
To follow the approval of the development license a company can move forward with the development of the oil field. The development of an onshore oil field can take about 1 year and for an offshore field between 3 – 7 years. In order to develop an oil field successfully you need to have the following in place and/or installed; materials, services and systems for transporting the successfully produced oil. The development continues by drilling up to 40 vertical and horizontal productions wells that are tested and modified to achieve optimal production levels.
We now move on to our second last stage namely production and sales which can last anything from 10 – 30 years. Oil production flows through the typically life cycle of a natural resource by starting off slowly, moving forward quickly, reaching its peak production and naturally declining towards the end of its life span.
Closedown of the oil field is the last and final step. Once an oil field has reached its full life span the operation company is required to nurture the land back to its natural state before any production occurred. Closedown of the oil field can take up to a year.
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