MG672 Oil and Gas Management Week 1

Global oil & gas industry Oil and Gas formation &reserves

What is petroleum?
Petroleum: A general term for all naturally occurring hydrocarbons (hydrogen + carbon) Solid Hydrocarbons: Asphalt Liquid Hydrocarbons: Crude oil Gas Hydrocarbons: Natural Gas: methane, butane, propane, etc.

The simplest hydrocarbon is Methane (CH4)

1. Source Rocks
Organic Matter

Sedimentary rocks rich in organic matter

0.5 - 2% by weight

Most commonly microscopic marine material, but it can be land based material Organic material cannot decay too much
It has to keep its carbon

Petroleum source rocks

Petroleum source beds are fine grained, clayrich rocks (mudstones, shales) or dark coloured carbonate rocks (limestones, marlstones), which have generated and effectively expelled hydrocarbons.

Kerogen
The solid organic matter in source rocks which is insoluble in low-boiling organic solvents is called kerogen. Kerogen is partly formed by the accumulation of resistant macromolecular substances of biological origin such as cellular lipids, algae cell walls, membranes, cuticles, spores and pollen, etc.

Diagenesis
Other parts of kerogen are formed in sediments during a process called diagenesis:
The geochemical and mineralogical processes that occur within the topmost interval of a sedimentary column. Organic matter is synthesized by living organisms in the form of biopolymers such as carbohydrates, proteins, lignin, etc.

Kerogen is, however, not a polymer in a strict chemical sense, rather a complex mixture of high molecular weight substances.

van Krevelen diagram Evolutionary pathways

In this way, the great variety of kerogens occurring in nature can be classified into three broad categories referred to as type I-, type IIand type IIIkerogens.

 Fig. 4. Variation of elemental composition of naturally occurring kerogens in terms of their atomic H/C- and O/Cratios Classification of kerogens into three broad categories. Elemental composition of organic matter in freshly deposited sediments is plotted towards the upper right end of each field (diagenesis stage). With increasing burial, kerogen transformation proceeds during the catagenesis and metagenesis stages.

Schematic Representation of the Mechanism of Petroleum Generation and Destruction

Progressive Burial and Heating
Organic Debris Diagenesis Oil Reservoir Kerogen Catagenesis Thermal Degradation Oil and Gas Cracking Metagenesis Carbon
(modified from Tissot and Welte, 1984)

Initial Bitumen Migration

Methane

Comparison of Several Commonly Used Maturity Techniques and Their Correlation to Oil and Gas Generation Limits
0.2

65 70

Vitrinite Reflectance (Ro) %

0.5

0.6
0.7 0.8 0.9 1.2

Incipient Oil Generation

OIL Wet Gas

75

3 4 5 6 7 8 9 10

80

430 450 465

1.0 1.3 2.0 3.0

4.0

Max. Oil Generated

Dry Gas Max.

85 90

Oil Floor Wet Gas Floor Dry Gas Floor

Dry Gas Generated

95

(modified from Foster and Beaumont, 1991, after Dow and OConner, 1982)

Pyrolysis Tmax (C)

0.4

Spore Coloration Index (SCI)

0.3

Weight % Carbon in Kerogen

 Fig. 5. Diagram to illustrate the main conditions and processes for kerogen formation from biological precursor materials and kerogen transformation into petroleum products with increasing maturation

oil window
The temperature interval where oil generation is in progress is referred to as the liquid window or oil window. It extends over the temperature interval of about 80-150C.

Origin (6): Cooking

As Black Shale is buried, it is heated. Organic matter is first changed by the increase in temperature into kerogen, which is a solid form of hydrocarbon Around 90C, it is changed into a liquid state, which we call oil

Kerogen

Oil

Gas

Around 150C, it is changed into a gas A rock that has produced oil and gas in this way is known as a Source Rock

www.oilandgasgeology.com/oil_gas_window.jpg

Origin (8): Ancient Earth

Ron Blakey, Arizona Flagstaff

During mid-Mesozoic times around 150 million years ago, conditions were just right to build up huge thicknesses of Black Shale source rocks

Ancient Earth
The worlds main oil deposits all formed in warm shallow seas where plankton bloomed but bottom waters were deoxygenated

Why is there oil in Texas?

Where is there oil in North America?

II. A Strategic Natural Resource

National Geographic, 2002

2. Transform organic matter

Add heat and pressure by burying it (Maturation)

 If nothing stops oil from rising, it will reach surface

Ex: The La Brea tar pits

4. Traps

Traps can be rocks that do not allow fluids to pass through them, or folds and faults in the rock can trap petroleum Anticlinal Theory Petroleum Accumulates in Structural Closure

Migration of Petroleum (Traps)

Fig. 1. Main geological conditions and geochemical processes required for the formation of petroleum accumulations in sedimentary basins: 1) petroleum generation in source rocks; 2) primary migration of petroleum; 3) secondary migration of petroleum; 4) accumulation of petroleum in a reservoir trap; 5) seepage of petroleum at the Earths surface as a consequence of a fractured cap rock.

Origin of petroleum
As a general rule, the origin of petroleum is never in the reservoir accumulation from which it is produced. Instead, petroleums have experienced a long series of processes prior to accumulation in the reservoir.

Petroleum accumulation forms in sedimentary basins and can be discovered by exploration, if the following geological conditions are met: Occurrence of source rocks which generate petroleums under proper subsurface temperature conditions. Sediment compaction leading to expulsion of petroleum from the source and into the reservoir rocks (primary migration).

 Occurrence of reservoir rocks of sufficient porosity and permeability allowing flow of petroleum through the pore system (secondary migration). Structural configurations of sedimentary strata whereby the reservoir rocks form traps, i.e. closed containers in the subsurface for the accumulation of petroleum. Traps are sealed above by impermeable sediment layers (cap rocks) in order to keep petroleum accumulations in place.

Generation, Migration, and Trapping of Hydrocarbons

Fault (impermeable)

Oil/water contact (OWC) Migration route

Seal
Hydrocarbon accumulation in the reservoir rock Top of maturity Source rock

Reservoir rock

Cross Section Of A Petroleum System

(Foreland Basin Example) Geographic Extent of Petroleum System Extent of Play Extent of Prospect/Field O
Stratigraphic Extent of Petroleum System

Seal Rock Reservoir Rock Source Rock Underburden Rock

Pod of Active Source Rock

Petroleum Reservoir (O)

Basement Rock Fold-and-Thrust Belt (arrows indicate relative fault motion)

(modified from Magoon and Dow, 1994)

Top Oil Window Top Gas Window

Sedimentary Basin Fill

Essential Elements of Petroleum System

Overburden Rock

Review: Where does petroleum come from?

1. Source rocks rich in organic matter 2. Transform the organic material with heat and pressure to into petroleum (Maturation) 3. Carrier beds that allow the generated petroleum to move 4. Traps that keep the petroleum below ground 5. Adequate reservoir beds from which the petroleum can be extracted 6. Proper timing of events 1-5

The First Pipeline

Transporting the oil was also a problem. In 1865 Samuel Van Syckel, an oil buyer, began construction on a two-inch wide pipeline designed to span the distance to the railroad depot five miles away. The teamsters, who had previously transported the oil, didn't take to kindly to Syckel's plan, and they used pickaxes to break apart the line.

George Bissell Colonel Drake

In 1856, after seeing pictures of derrick drilling for salt, Bissell conceived of the idea of drilling for oil, rather than mining it. This was widely considered ludicrous at the time but on August 27, 1859, the company first succeeded in striking oil, on a farm in Titusville, Pennsylvania. Bissell invested heavily in the surrounding region and ended up becoming a wealthy business man. The company's agent, Edwin Drake, is sometimes credited with the "discovery" of oil.

Early Refining
By 1860 there were 15 refineries in operation. Known as "tea kettle" stills, they consisted of a large iron drum and a long tube which acted as a condenser. Capacity of these stills ranged from 1 to 100 barrels a day. A coal fire heated the drum, and three fractions were obtained during the distillation process.

 The first component to boil off was the highly volatile naphtha. Next came the kerosene, or "lamp oil", and lastly came the heavy oils and tar which were simply left in the bottom of the drum. These early refineries produced about 75% kerosene, which could be sold for high profits.

 Kerosene was so valuable because of a whale shortage that had began in 1845 due to heavy hunting. Sperm oil had been the main product of the whaling industry and was used in lamps. Candles were made with another whale product called "spermaceti".

 In 1862 John D. Rockefeller financed his first refinery as a side investment. Anyone could drill a well, and overproduction plagued the early industry. At times this overproduction meant that the crude oil was cheaper than water. Rockefeller saw early on, that refining and transportation, as opposed to production, were the keys to taking control of the industry. And control the industry he did!

 In 1870 he established Standard Oil, which then controlled 10% of the refining capacity in the country. Transportation often encompassed 20% of the total production cost and Rockefeller made under-the-table deals with railroads to give him secret shipping rebates.

 This cheap transportation allowed Standard to undercut its competitors and Rockefeller expanded aggressively, buying out competitors left and right. Soon Standard built a network of "iron arteries" which delivered oil across the Eastern U.S.

 This pipeline system relieved Standard's dependence upon the railroads and reduced its transportation costs even more. By 1880 Standard controlled 90% of the country's refining capacity. Because of its massive size, it brought security and stability to the oil business, guaranteeing continuous profits. With Standard Oil, John D. Rockefeller became the richest person in the World

What do we get from oil?

1 barrel = 42 gallons of crude oil 83% becomes fuel
Gasoline, diesel, jet fuel, heating oil, and liquefied petroleum gas (propane and butane)

17% other
Solvents, fertilizers, pesticides, plastics
* These add up to 44.6 gallons because volume is increased during the refining process.
US Energy Information Administration

How much oil do we use?

US oil consumption 1980-2006

US consumes 20,680,000 barrels of oil each day (2007) US motor gasoline consumption 9,286,000 b/d (390 million gallons/day) (2007) World consumes 83,607,000 b/d (2005)
US Energy Information Administration

Where do we get our oil from?

US Energy Information Administration

Oil exports by country

Barrels per day

US Energy Information Administration

Oil imports by country

Barrels per day

US Energy Information Administration

Are We Running Out of Oil?

Marion King Hubbert (1903-1989) Shell geophysicist Hubberts Peak and Curve

Global Oil Flows

BP Statistical Review, 2008