Business
2. Energy
3.1 Geology and extraction
USA, Germany, UK and France are at the other end.
3. Oil
With a share of 35% in world primary energy consumption, oil remains the leading energy commodity, and has been so for at least the past four decades. Oil reserves currently amount to just over one and a quarter trillion barrels, over half of which are located in the Middle East. Latin America is the second largest reserve holder, with deposits mainly in Mexico, Venezuela and, more recently, Brazil. The other dominant reserve holder is the former Soviet Union, particularly Russia and Kazakhstan.
What is remarkable about the oil sector is its imbalance in terms of reserves. It has to be noted, however, that production by different countries has never been proportional to their reserves, as technology, investment capital, and finance are not freely available to all producers, and political conditions have often distorted economic principles of production.
surface rocks), to the use of orbiting satellites. Geochemical analysis is also used, in order to establish the presence of suitable material for the formation of oil deposits. The aim of all the above techniques, is to understand the geological structure and history of an area, and decide whether it is worthwhile to spend more money on exploring it.
The main geophysical technique used nowadays is the seismic survey, although gravimetric and magnetic surveys can also be used to identify underlying structures that are possibly oil-bearing. Seismic surveys involve the artificial generation of shock waves, using a variety of techniques, like controlled explosions, dropping of weights and vibration generators (see Figure 6). The aim is to record the reflections of those waves by the various geological strata. The data are recorded by geophones, which are similar to seismographs, and then transmitted and recorded.
The recording stage is followed by the processing of the data collected, which involves their enhancement by computers. Finally, the results are interpreted by experts, who build an image of the underground formations and the likely location of deposits. All three stages (recording, processing and interpretation) have been immensely improved by the use of enhanced computer technology.
The latter has allowed the advance from 2D to 3D seismic surveys, which use a lot more signal recorders and provide a far more accurate picture of underground formations. A traditional 2D seismic survey, until a few years ago, was shot along individual lines, at varying distances, producing ‘pictures’ of vertical sections of the underground formations. A 3D seismic survey, on the other hand, is shot in a closely spaced grid pattern and gives a complete, more accurate, picture of the subsurface.
The next stage in oil exploration is well drilling. To collect more accurate survey data, boreholes are drilled on top of the area suspected to contain oil reserves. Many of these wildcat drills end up as dry holes. The purpose of the boreholes is not only to extract the
Figure 6: Seismic vibrators in the desert
Source: Satellite Imaging Corp., www.satelliteimagingcorp.com
oil. For the purposes of well logging, rock cuttings, core samples and geophysical data are extracted from boreholes, giving scientists an idea of the local geological structure and, if any oil does exist, the history, nature and extent of the reservoir.
The boreholes that are successful eventually become oil wells. Neighbouring wells are normally grouped together to define an oil field. To date, there are over 30,000 known oil wells. Of these, 330 produce just over 50% of the world’s oil output, while just 17 of them produce over 30% of the same. Some of the wells are classified as giants – each holding over 0.5 billion barrels of reserves – while the biggest of wells and/or fields are also known as elephants. The largest of all oil fields, Ghawar, is located in Saudi Arabia, and is estimated to hold approximately 70 billion barrels of oil reserves. To put this in perspective, the Ghawar field accounts for more than a quarter of Saudi reserves (estimated at 260 billion barrels in 2006).
The discovery of oil deposits and the drilling of oil producing wells is not, of course, the end of the story. The entire production process has to be organised properly. This involves a detailed reservoir management plan; the well layout and design; design of production and evacuation facilities; and an implementation schedule covering the drilling of wells and construction and
installation of facilities.
The next step is to ensure that oil can be extracted in the most efficient way.
The reservoir’s own pressure is usually sufficient, at least initially, to drive the oil or gas to the surface. When recovery levels are low, however, secondary recovery enhancements can be used, whereby the reservoir’s natural drive is supplemented with the injection of water or gas. Finally, where both natural drive and secondary recovery are not producing the desired production levels, enhanced oil recovery (EOR) methods can be used. These techniques are considerably more expensive and must be justified by oil market conditions.
EOR methods include: the heating of oil by injecting hot water and/or steam, in order to increase its viscosity and flow; mixture of oil with a suitable gas or liquid solvent to reduce or eliminate residual oil trapped in the displacement process; and use of chemical additives, which modify the properties of the water that displaces the oil and which change the way water and oil flow through the reservoir rock.
Oil is not the only fuel produced by oil wells. Natural gas liquids (NGLs) are byproducts of oil extraction. NGLs include: a type of light oil called natural gasoline; a mixture of petroleum – or ‘wet’ – gases, like butane, propane and ethane; and sometimes natural – or ‘dry’ – gas, which is methane.
There are also “non-conventional” sources of oil. These include: kerogen, which consists of hydrocarbons not yet developed into oil; tar sands, which are impregnated with oil; and synthetic petroleum, which can be produced – rather expensively – from coal. Non-conventional hydrocarbons have remained largely unexploited due to the large costs involved in their processing. However, in recent years (since the early 2000s), the industry has shown renewed interest in developing them, especially tar sands, as their production becomes more economically viable in the light of oil prices fluctuating between $60–70 per barrel.