Companies Involved in Oilfield Services

From Wikipedia, the free encyclopedia

Diversified Oilfield Services Companies

These companies deal in a wide range of oilfield services, allowing them access to markets
ranging from seismic imaging to deep water oil exploration.

Schlumberger
Halliburton
Baker
Weatherford International

Oilfield Equipment Companies

These companies build rigs and supply hardware for rig upgrades and oilfield operations.

Yantai Jereh Petroleum Equipment&Technologies Co., Ltd.

National-Oilwell Varco
FMC Technologies
Cameron Corporation
Weir SPM Oil & Gas
Zhongman Petroleum & Natural Gas Corpration
LappinTech LLC
Dresser-Rand Group Inc.

Oilfield Services Disposal Companies

These companies provide saltwater disposal and transportation services for Oil & Gas..

Frontier Oilfield Services Inc. (FOSI)

Oil Exploration and Production Services Contractors

These companies deal in seismic imaging technology for oil and gas exploration.

ION Geophysical Corporation

CGG Veritas
Brigham Exploration Company
OYO Geospace

These firms contract drilling rigs to oil and gas companies for both exploration and production.

Transocean
Diamond Offshore Drilling
Noble

Hercules Offshore
Parker Drilling Company
Pride International
ENSCO International
Atwood Oceanics
Union Drilling
Nabors Industries
Grey Wolf
Pioneer Drilling Co
Patterson-UTI Energy
Helmerich & Payne
Rowan Companies

Oil and Gas Pipeline Companies

These companies build onshore pipelines to transport oil and gas between cities, states, and
countries.

Enbridge
Kinder Morgan
Transcanada Pipelines
Enterprise Products Partners L.P.
Plains All American Pipeline, L.P. (PAA)

Oil and Gas Maritime Transportation Companies

These companies supply the tankers and service staff needed to get large quantities of oil and gas
across the ocean.

Tsakos Energy Navigation

Frontline
Overseas Shipholding Group
General Maritime
Ultrapetrol (Bahamas)
Teekay Shipping
Tidewater (TDW)

Oilfield Services Overview

Oilfield services companies provide the equipment and services used in the exploration for and
extraction of oil and natural gas. Companies that provide oilfield services such as Blowout
Preventer (BOP) Testing include K & K Energy Services, LLC and others.

Seismic Imaging

Seismic imaging bounces concentrated sound waves off of underground rock formations and
picks up the returning wave patterns; computers then analyze the data to "see" below the surface
of the earth. These imaging techniques are useful for determining if there is oil or gas in the
ground and, sometimes, how much of it there is - all without causing the environmental damage
and racking up the day rate costs that come with exploratory drilling.
Oil Well Equipment and Services

Most oil and gas companies don't build their own drilling rigs; for this, oil well equipment
companies offer drill bits, lubricants, pumping equipment, subsea "trees", and even entire rigs for
purchase and contract. For example, Blowout Preventer Testing is generally done by contractors
and not the drilling company.
Rigs

There are a number of companies that provide onshore and offshore drilling equipment for
conventional, unconventional, and deep water oil exploration. These "rigs" are used for a variety
of purposes, though most often they are used to try and "strike" oil (exploration) and to get down
to it once it's been found (production).
Onshore drilling rigs are usually pretty simple; they are drills attached to platforms that can
usually be towed from place to place. Increasingly, as easy-access onshore reserves are being
sucked dry, contractors are outfitting their land rigs with drills, drill bits, controls, and fluids that
allow the drills to be maneuvered through trickier geology, which is how regions previously
thought to be mature, like the Middle East, are seeing increasing productive activity.
The offshore sector is much more diversified, as there are many types of offshore drilling rigs.

Jack-ups are rigs that are suspended above the water by retractable legs that are "jacked down"
to the sea floor when putting the rig into operation.
Semisubmersibles are rigs that are suspended above the water by large legs that are connected
to pontoons suspended below the water level.
Drill ships are simply large boats that have been modified with drilling equipment.
Floaters are platforms that float, are outfitted with drilling equipment, and are anchored to the
ocean floor with chains.

Currently, the emerging difference between these types of offshore drilling rig is whether or not
they can easily be used for deep water drilling. Those that float without being anchored down
(semisubmersibles, drill ships) are much more likely to be outfitted with high-cost, high-risk,
high-yield deep water and ultra-deep water drills (which can go as deep as 9,111 ft of water) than
rigs that must somehow be attached to the ocean floor.

Rig Equipment

While many rig contractors build their own machines, oil rigs are far too complex for any one
company to develop every single part required for them to work effectively. Furthermore, a
contractor could have rig equipment that is outdated, and might want to spend on upgrades
instead of building a new ship. For this reason, rig contractors often turn to equipment suppliers
purchase a range of rig parts, including:

Drill pipes: Drill pipes are the "drills" on oil rigs - they connect the drill bit, which cuts into the
earth, to the rig itself. After the rig platform, the drill pipe is the second most important part of a
rig; it is also the part of the rig that is second most likely to get damaged, after the drill bit,
because it is constantly in contact with the area being worked on. Because of this, when
demand for drilling increases, so does demand for drill pipes, though a current decline in land rig
capital expenditure means that the positive effect a booming offshore drilling business will have
on the drill pipe market will be offset.
Drill bits: Drill bits are the part of the drill that bore into the rock protecting the rich resources
underneath. Companies that produce drill bits are benefiting from growth in drilling markets
with increasingly complex geology, like Russia and the Middle East, as touch rock and tricky
formations mean more broken drill bits - and more replacement sales. Eventually, however,
exploring companies are going to get tired of purchasing new drill bits, in which case producers
of versatile, high-efficiency bits will benefit.
Fluids: Fluids grease the drill bit, drill pipe, drill machinery - anything that comes in contact with
anything else. They are used to keep the drilling equipment lubricated, cool, and moving
smoothly, in order to reduce the incidence of damaged hardware. Growth in the market for any
other high-contact drilling equipment would necessarily mean growth in the market for drilling
fluids.

Completion and Production Equipment

Once oil has been found and a well has been drilled, oil and gas companies must extract it
without losing spills, and without incurring environmental damages that could subject them to
costly fines. To this end, oilfield services companies provide the technology needed to prepare a
well (completion) to get oil and gas out of the ground quickly and efficiently (extraction). Some
of the equipment needed for proper completion and extraction includes:

Pumps: Oil companies use pumping equipment to "suck" the hydrocarbons out of a well. A
common method of doing this involves pumping a high-pressure gas into the reserve to
decrease the weight of the oil and increase the pressure in the well - a technique known as
"pressure pumping".
Flow Control Equipment: Once the oil/gas in a reserve has been pressured and is ready leave
the well, its flow much be controlled to prevent spilling and accidents while maximizing output.
Flow control equipment consists of a complicated series of pumps, pipes, valves, and monitoring
devices that are connected from the well to wherever the extracted hydrocarbons are stored. In
offshore wells, these setups are call "Christmas trees".

Oil and Gas Transportation

Once oil and natural gas have been extracted, they must be transported from the rigs to refineries,
and then from refineries to distribution centers. At sea, they are transported in supersized tankers
operated by a number of maritime transportation companies. On land, it is transported through
pipelines that can span entire continents, built by companies that rent pipe space to oil and gas
vendors.

Oilfield Services Trends and Forces

As companies report their 4Q earnings, CEOs provide an outlook stressing oil and natural
gas prices

Strong international drilling activity as well as a rebound North America contributed to the rise
in earnings for all of the largest oilfield service firms. Rising oil prices led to the rise in global
drilling activity and also helped improve the margins of oilfield service firms as well. Some of
the top earners in the final quarter of 2010 include:

Schlumberger N.V. (SLB): Earnings of $1.16 billion, a 42% year-on-year increase

Halliburton Company (HAL): Earnings of $625 million, a 29% year-on-year increase
Baker Hughes (BHI):Earnings of $335 million, a 300% year-on-year increase

The Gulf Moratorium is likely to detriment the 2010 earnings of offshore companies

For companies that rent offshore rigs, the temporary ban on drilling in the Gulf of Mexico has
the potential of reducing revenues from the area for the remainder of 2010. The stock prices of
rig contractors like ENSCO International (ESV), Transocean (RIG), and Noble Energy (NBL)
have all dropped from April to July 2010 because they have all lost business in the second
quarter of 2010 as a result of the moratorium.[21] However, analysts are predicting that the full
impact of the ban is likely to be felt after the initial six-month stoppage ends.[22] Not only does it
take time for rigs to obtain permits and run the necessary tests, but analysts expect rig costs to
remain permanently higher due to potential taxes and safety regulations.[23] As a result, the
impact of the moratorium is likely to continue into the third and fourth quarters of 2010.[24] For
companies that have strong land service operations, the ban is unlikely to hurt earnings or stock
price as much.[25] Companies like Halliburton Company (HAL) and Baker Hughes (BHI) have
benefited in the second quarter from higher oil and gas prices, which have led to a higher
demand for drilling.[26] Companies with large portions of earnings coming from onshore services
have the potential of gaining a competitive edge in terms of future revenues and contract
opportunities over their offshore competitors.[27]

Financial results for first half of 2009 show signs of recovering international drilling activity

For both Schlumberger and Haliburton, international operations showed signs of recovery as
drilling activity begins to stabilize in the second quarter of 2009. Schlumberger's oilfield services
revenue slumped 31% in North America but dropped 3% internationally.[28] Haliburton and
Weatherford reported similar earnings.[29] Although prices are far below 2008's highs, the rise in
prices has led oil producers to resume drilling. International drilling increased especially in
countries with developing economies such as Russia, Mexico, Norway and China.[30]
Internationally, oil and natural-gas prices rose in the second quarter, and rig counts increased
slightly in June. More drilling activity outside of the U.S. has the potential of benefiting
international oilfield services companies like Schlumberger, Haliburton, and Weatherford.[31]
However, North America produces primarily natural gas and has not experienced that same
increases in drilling activity due to low natural gas prices.[32] Drilling activity has the potential of
remaining low as long as natural gas decline.[33]
According to economists at Schlumberger, rig count and drilling activity in the second and third
quarter of 2009 suggest oilfield drilling has the potential of recovering as soon as the fourth
quarter of 2009. Latin America and Russia have the potential of experiencing the biggest
recovery from 2008 in terms of rig count.[34] A recovery in drilling activity means a larger need
for the equipment, technology, and services that oilfield service companies provide.[35] However,
the economists also noted that growth in oilfield activity is likely to remain slow in 2010 and oil
production has the potential of remaining well below its 2008 peak. As a result, spending by
service providers is going to be about the same level or slightly up from 2009.[36]
Obtaining a stable workforce also has the potential of effecting the industry in the long-run.
According to Gould, the number of young recruits hired to replace older petroleum engineers has
declined over the past 10 years.[37] Hiring difficulty has the potential of stymieing
Schlumberger's and the industry's ability to expand. As a possible remedy, more engineers are
coming from schools located in China, India, and Indonesia.[38]
Baker Hughes and BJ Services Company (BJS) merger has the potential of being one of many
as service companies seek to diversify their operations

The $5.5 billion dollar deal is the first major merger since oil prices collapsed in July 2008 and
the largest merger in the oilfield services sector since 1999.[39] Through the merger, Baker
Hughes' pressure pumping operations have the potential of comprising 20% of the company's
annual revenue. In the first half of 2009, pressure pumping accounted for 1% of Baker Hughes'
revenue.[40] The two companies struck the deal at a time when North American onshore shale gas
prices are dropping despite rising prices for other commodities. While the deal expands the
number of services offered by Baker Hughes, it also expands BJ Services' international presence;
73% of BJ revenue comes from operations in North America.[41] With oil prices and production
rising, several other oilfield service companies have the potential of merging in order to diversify
the services they offer and expand their geographical presence.[42]
In February 2010, executives at Schlumberger and Smith International announced a mergeragreement between the two companies.[43] Out of the acquisition, Schlumberger hopes to

improve the engineering and design parts of its operations. Schlumberger, which is the largest
oilfield service provider in terms of revenue, hopes to combine its advanced measurement and
steering equipment with Smith's engineered drilling systems.[44] According to Schlumberger, the
merger has the potential of generating incremental pretax synergies--after integration costs--of
approximately $160 million in 2011 and approximately $320 million in 2012.[45] In March 2010,
Schlumberger acquired Geoservices for $1.07 billion.[46] Geoservices, a French oilfield services
company, specializes in mud logging technology, which is used to extract evidence of oil and
natural gas from the drilling fluid as the well's total depth increases.[47]
In particular, Oil & Gas Drilling & Exploration companies are spending billions of dollars in
2009 to uncover deep water oil fields in the Gulf of Mexico, Brazil, the North Sea, and West
Africa. As a result, larger service companies like Schlumberger, Weatherford, and Haliburton are
looking to acquire or merge with small niche players in order to increase their presence in these
deep water hot spots.[48] Many of the small companies are cash strapped and unable to acquire
additional lines of credit.[49] The Baker Hughes and Schlumberger mergers illustrate two trends
that have the potential of playing a significant role in future mergers. Adverse economic
conditions and tighter credit markets in 2007, 2008, and 2009 have the potential of making
smaller oilfield service companies more financially attractive to acquire.[50] However, technology
also has played a significant role in 2009 and 2010's acquisitions.[51] The increased complexity of
horizontal and multilateral drilling are making niche service companies strategically valuable to
companies like Schlumberger and Baker Hughes. Through mergers and acquisitions, a large-cap
oilfield service company is capable of bringing several complementary technologies under one
provider.[52] As a result, mergers have the potential of reducing drilling and operation costs.[53]
Oil discovery had reached its peak around the year of 1960. Most of the of the largest oilfields
had been discovered, and what have lefted are the smaller ones. Many of the larger oilfield have
been in production for more than 40 years, and their depletion rate is increasing in a faster rate
year after year. In order to meet the increasing global oil demand, oil company will have to keep
drilling in a faster rate from the smaller oilfields and from the more challenging unconventional
sources such as shale oil. The service intensity will have to increase because the depletion rate
from those smaller oilfields are much greater than the depletion rate of the larger ones. That is
going to be a long term trend which a few of the big oil service company such as Schlumberger
will be benefited from such higher intensity and technologically more challenging service
environment.
Drilling Decline Has Forced Oilfield Service Companies to Lower Rates and Layoff Employees

For drilling and exploration companies, the cost of producing oil has declined substantially since
the beginning of 2009. While lower steel and diesel prices have contributed to declining drilling
costs, the most significant factor has been the reduced demand for drilling equipment.[54] In
response to declining demand for drilling equipment, the rates oilfield service companies charge
have fallen 30% on average.[55] Companies like Schlumberger N.V. (SLB) and Halliburton
Company (HAL) have laid off employees and reduced their capital expenditures budgets.
Although oilfield service companies have lowered their rates, only about half of U.S. rigs are
operating.[56]

Schlumberger N.V. (SLB), Baker Hughes (BHI), and Halliburton Company (HAL) combined
have cut about 10,000 jobs already since January 2009.[57] Although oil prices have risen 35%
since the start of May, and the number of rigs in the U.S. rose in June 2009, the number of rigs
operating in the U.S. is down by more than a 1,000 from a year ago.[58] As a result of lower
energy demand, many oilfield service companies have begun cutting costs by reducing the size
of their operation.[59]
Production Companies Sell Debt in 2009 to Fund Drilling as International Rig Count Rises

Although rig counts in July 2009 are less than half of their levels a year earlier, U.S. rig counts
have increased 5% in July 2009 since hitting a low in June 2009. There is more need for rigs
because oil producers have the potential of increasing their revenue from oil prices that rose 25%
during June and July.[60] On the other hand, natural gas rigs have remained relatively flat in 2009.
Many oil producers have financed additional drilling operations by issuing debt, selling shares,
or selling assets.[61] While increased rig counts have the potential of benefiting oilfield service
companies, higher oil inventories are capable of reducing oil prices.[62]
Drilling activity has increased outside the U.S. as well. Russia, Mexico, Norway and China all
experienced double-digit growth in drilling in the second quarter 2009.[63] Additionally, longterm deepwater drilling has also been increasing internationally.[64] Growth in drilling activities
internationally has the potential of increasing sales for companies that operate internationally like
Halliburton Company (HAL) and Schlumberger N.V. (SLB).[65]
Oil Prices, Supply, and Demand

On April 22, 2009 the Energy Information Association reported that crude inventories had
reached 361.1 million barrels.[66] At this level, oil stocks are 14.3% above their 2008 level and
are 1 million barrels short of their highest level since 1990.[67] In addition to the global recession
beginning in 2007, high inventory levels are partially responsible for low 2009 crude prices. In
order to reduce inventory levels in order to improve crude prices, many oil and gas producers
reduced their crude oil production during the first four months of 2009.[68] Although the crude
inventories and crude oil production vary from region to region, the overall decline in crude
production has the potential to hurt the revenues of oil service companies that provide crude
producers with equipment.[69]
According to several analysts, the demand for oil-field services and oil rigs has the potential to
drop farther than analysts or oil service companies expected during the first three months of
January.[70] The decline in the oil services sector is a result of the decline in oil prices beginning
in 2008 and overall lower consumption levels of energy.[71] The number of active oil and naturalgas rigs fell 47% between September 2008 to March 2009.[72] Additionally, Schlumberger N.V.
(SLB) reported that several of its clients have tried to negotiate current contract prices lower.[73]
Lack of Rigs

Worldwide, 93% of jackups, 97% of semi-submersibles, and 100% of drill ships are currently
being utilized, with very few new offshore rigs coming online in 2008[74]. This makes significant

offshore growth in 2008 relatively unlikely, as capital is already being used almost to capacity.
With oil prices so high, rising demand will drive up oilfield services rates, as oil and gas
companies must compete for oilfield services business. ,
Age of Rigs

The average drilling rig found anywhere in the world is about 25 years old[75]; while this
technology may have been appropriate for extracting the easy-access oil that was right below the
surface, as these reserves dry up companies are looking to deeper water and more complicated
technology. Rig contractors and exploration companies worldwide are beginning to invest in
building new rigs or upgrading old ones, taking advantage of the high margins caused by the
current oil price level's effect on day rates to spend on expensive technology. This spending has
been met with high demand, as oilfield equipment companies are increasingly seeing recordlevel orders and backlogs[76] for new and upgraded rigs.
Deep water Oil Exploration

The hot new trend that has recently arisen in the oil industry is deep water drilling - with
shallower wells yielding less and less, and with potential profits through the roof thanks to high
prices, oil and gas companies are paying the big bucks to oilfield services companies who can
drill where they couldn't drill before. Though deep water success rates have only averaged
around 30% since 1985 (before which they averaged 10%)[77], newer technology means these
numbers are increasing, and with oil prices so high, exploratory drillers have the pocket money
to fund such risky ventures. There are currently a limited number of deep water and ultradeepwater drills in the world, putting a premium on their contract prices; companies that own
and contract deep water rigs, as well as those that build them, are seeing prices, revenues, and
backlogs skyrocket as oil and gas companies dig deeper into their wallets to drill deeper into the
seabed.
Mature Well Extraction

Many companies are attempting to extract more oil than before from existing wells, using
complex new technologies - this is the primary driver of increased investment in Middle Eastern
oilfields. Most of the more accessible reserves in the region have already been developed, but
companies are now looking to get more out of them, and to extract from more difficult terrain.
This has driven demand for oilfield equipment that can access and extract from the more
complex geological formations that made draining a reserve previously impossible. Though these
technologies were previously too expensive for oil companies to take interest in, the current level
of oil prices means that there is enough cash flooding the industry to fund investment in this
hardware.
Seasonality

Whenever rigs are set up in regions that have turbulent storm seasons, they are at risk of
receiving costly damages. Furthermore, oil and gas companies often cut back on production
when storms are passing through to avoid worker injuries and other problems, lowering revenues

for oilfield services companies. Third-quarter income for companies with rigs in the Gulf of
Mexico tends to lag when production is brought down to prevent damage from the hurricanes
that sweep the coast in late summer. Similar problems exist during the fourth quarter for
companies with rigs in the turbulent North Sea, as well as in the snowier regions of Russia.
Renewable Energy Threat

Whether its because of climate change fears, the uncertainty surrounding the price of oil, or the
desire to separate energy needs from terrorist regimes, people are slowly becoming disillusioned
by the world's dependence on oil and gas. Many developed, politically-progressive regions like
Europe are beginning to transition away from these sources of energy, and towards renewable
energy. The recession of 08 and 09 is only a temporary setback. The new American president has
made clear his support for renewable energy,[78] and oil prices are expected to steadily recover.
In emerging markets like China and India, the drive for economic growth supersedes
environmental concerns, but growing popular and legislative support for renewables in these
regions threatens oil's long-term dominance. China has announced its intention to increase
nuclear energy production in its country 455% by 2020, and 1677% by 2030.[79] Any decline in
oil demand will lead to a decline in oil prices - and a decline in demand for oilfield services.
Terrorism and Political Turbulence

Turbulence in the Middle East poses a threat to many oilfield services companies because the
region is a smoldering hotbed of drilling activity. Oil rigs, as "western establishments", would be
likely targets for terrorist attacks. Aside from harming the employees at such facilities, terrorist
attacks could slow production and effect costly damages to expensive equipment - all leading to
declines in regional profitability. Political instability in many oil producing regions also threatens
the operations of oilfield services companies through the possibility of violence or asset
nationalization; the latter was seen recently when Hugo Chavez of Venezuela seized the assets of
multiple oil majors (Exxon Mobil, ConocoPhillips, Royal Dutch Shell) in 2007.

Major Oil Companies Environmental Record

From Wikipedia, the free encyclopedia

Ex. BP Environmental record

Position on global warming

In 1997 BP became the first multinational outside the reinsurance industry to publicly support
the scientific consensus on climate change, which Eileen Caussen, President of the Pew Center
on Global Climate Change described as a transformative moment on the issue.[294] Prior to 1997,
BP was a member of the Global Climate Coalition an industry organisation established to
promote global warming scepticism but withdrew in 1997, saying "the time to consider the
policy dimensions of climate change is not when the link between greenhouse gases and climate
change is conclusively proven, but when the possibility cannot be discounted and is taken
seriously by the society of which we are part. We in BP have reached that point.".[295] In March

2002, Lord John Browne, the group chief executive of BP, declared in a speech that global
warming was real and that urgent action was needed.[296]
Hazardous substance dumping 19931995

In September 1999, one of BP's US subsidiaries, BP Exploration Alaska (BPXA), pleaded guilty
to criminal charges stemming from its illegally dumping of hazardous wastes on the Alaska
North Slope, paying fines and penalties totaling $22 million. BP paid the maximum $500,000 in
criminal fines, $6.5 million in civil penalties, and established a $15 million environmental
management system at all of BP facilities in the US and Gulf of Mexico that are engaged in oil
exploration, drilling or production. The charges stemmed from the 1993 to 1995 dumping of
hazardous wastes on Endicott Island, Alaska by BP's contractor Doyon Drilling. The firm
illegally discharged waste oil, paint thinner and other toxic and hazardous substances by
injecting them down the outer rim, or annuli, of the oil wells. BPXA failed to report the illegal
injections when it learned of the conduct, in violation of the Comprehensive Environmental
Response, Compensation and Liability Act.[297]
Air pollution violations

In 2000 BP Amoco acquired ARCO, a Los Angeles-based oil group.[73] In 2003 Californias
South Coast Air Quality Management District (AQMD) filed a complaint against BP/ARCO,
seeking $319 million in penalties for thousands of air pollution violations over an 8-year
period.[298] In January 2005, the agency filed a second suit against BP based on violations
between August 2002 and October 2004. The suit alleged that BP illegally released air pollutants
by failing to adequately inspect, maintain, repair and properly operate thousands of pieces of
equipment across the refinery as required by AQMD regulations. It was alleged that in some
cases the violations were due to negligence, while in others the violations were knowingly and
willfully committed by refinery officials.[299] In 2005 a settlement was reached under which BP
agreed to pay $25 million in cash penalties and $6 million in past emissions fees, while spending
$20 million on environmental improvements at the refinery and $30 million on community
programs focused on asthma diagnosis and treatment.[300]
In 2013, a total of 474 Galveston County residents living near the BP Texas City Refinery filed a
$1 billion lawsuit against BP, accusing the company of "intentionally misleading the public
about the seriousness" of a two-week release of toxic fumes which began on November 10, 2011.
"BP reportedly released Sulfur Dioxide, Methyl Carpaptan, Dimethyl Disulfide and other toxic
chemicals into the atmosphere reads the report. The lawsuit further claims Galveston county has
the worst air quality in the United States due to BP's violations of air pollution laws. BP had no
comment and said it would address the suit in the court system.[301][302][303][304][305]
Colombian farmland damages claim

In 2006, a group of Colombian farmers reached a multimillion dollar out-of-court settlement

with BP for alleged environmental damage caused by the Ocensa pipeline.[306] An agreed
statement said: "The Colombian farmers group are pleased to say that after a mediation process
which took place in Bogot in June 2006 at the joint initiative of the parties, an amicable

settlement of the dispute in relation to the Ocensa pipeline has been reached, with no admissions
of liability." The company was accused of benefiting from a regime of terror carried out by
Colombian government paramilitaries to protect the 450-mile (720 km) Ocensa pipeline; BP said
throughout that it has acted responsibly and that landowners were fairly compensated.[307]
In 2009, another group of 95 Colombian farmers filed a suit against BP, saying the company's
Ocensa pipeline caused landslides and damage to soil and groundwater, affecting crops,
livestock, and contaminating water supplies, making fish ponds unsustainable. Most of the land
traversed by the pipeline was owned by peasant farmers who were illiterate and unable to read
the environmental impact assessment conducted by BP prior to construction, which
acknowledged significant and widespread risks of damage to the land.[308]
Canadian oil sands

In Canada, BP is involved in the extraction of oil sands, also known as tar sands or bituminous
sands. The company uses in-situ drilling technologies such as Steam Assisted Gravity Drainage
to extract the oil.[214][309][310] Members of US and Canadian oil companies say that using recycled
groundwater makes in situ drilling an environmentally friendlier option when compared with oil
sands mining.[311]
Members of Canada's Cree Nation have criticized BP's involvement in the Canadian project for
the impacts oil sands extraction has on the environment.[312] NASA scientist James Hansen has
stated that the exploitation of Canadian oil sands would mean "game over for the climate".[313] In
2010, activist shareholders asked BP for a full investigation of the project, but were defeated.[314]
In 2013 shareholders criticized the project for being carbon-intensive.[315]

Safety and health violations

Citing conditions similar to those that resulted in the 2005 Texas City Refinery explosion, on
April 25, 2006, the U.S. Department of Labor's Occupational Safety and Health Administration
(OSHA) fined BP more than $2.4 million for unsafe operations at the company's Oregon, Ohio
refinery. An OSHA inspection resulted in 32 per-instance willful citations including locating
people in vulnerable buildings among the processing units, failing to correct de-pressurization
deficiencies and deficiencies with gas monitors, and failing to prevent the use of non-approved
electrical equipment in locations in which hazardous concentrations of flammable gases or
vapors may exist. BP was further fined for neglecting to develop shutdown procedures and
designate responsibilities and to establish a system to promptly address and resolve
recommendations made after an incident when a large feed pump failed three years prior to 2006.
Penalties were also issued for five serious violations, including failure to develop operating
procedures for a unit that removes sulfur compound; failure to ensure that operating procedures
reflect current operating practice in the Isocracker Unit; failure to resolve process hazard analysis
recommendations; failure to resolve process safety management compliance audit items in a
timely manner; and failure to periodically inspect pressure piping systems.[316][317]
In 2008 BP and several other major oil refiners agreed to pay $422 million to settle a class-action
lawsuit stemming from water contamination tied to the gasoline additive MTBE, a chemical that

was once a key gasoline ingredient. Leaked from storage tanks, MTBE has been found in several
water systems across the United States. The plaintiffs maintain that the industry knew about the
environmental dangers but that they used it instead of other possible alternatives because it was
less expensive. The companies will also be required to pay 70 percent of cleanup costs for any
wells newly affected at any time over the next 30 years.[318][319]
BP has one of the worst safety records of any major oil company that operates in the United
States. Between 2007 and 2010, BP refineries in Ohio and Texas accounted for 97 percent of
"egregious, willful" violations handed out by the U.S. Occupational Safety and Health
Administration (OSHA). BP had 760 "egregious, willful" violations during that period, while
Sunoco and Conoco-Phillips each had eight, Citgo two and Exxon had one.[320] The deputy
assistant secretary of labour at OSHA, said "The only thing you can conclude is that BP has a
serious, systemic safety problem in their company."[321]
A report in ProPublica, published in the Washington Post in 2010, found that over a decade of
internal investigations of BP's Alaska operations during the 2000s warned senior BP managers
that the company repeatedly disregarded safety and environmental rules and risked a serious
accident if it did not change its ways. ProPublica found that "Taken together, these documents
portray a company that systemically ignored its own safety policies across its North American
operations -- from Alaska to the Gulf of Mexico to California and Texas. Executives were not
held accountable for the failures, and some were promoted despite them."[322]
The Project On Government Oversight, an independent non-profit organization in the United
States which investigates and seeks to expose corruption and other misconduct, lists BP as
number one on their listing of the 100 worst corporations based on instances of misconduct.[323]
1965 Sea Gem offshore oil rig disaster
Main article: Sea Gem

In December 1965, Britain's first oil rig, Sea Gem, capsized when two of the legs collapsed
during an operation to move it to a new location. The oil rig had been hastily converted in an
effort to quickly start drilling operations after the North Sea was opened for exploration. Thirteen
crew members were killed. No hydrocarbons were released in the accident.[324][325]
Texas City Refinery explosion
Main article: Texas City Refinery explosion

Fire-extinguishing operations after the Texas City refinery explosion

In March 2005, the Texas City Refinery, one of the largest refineries owned then by BP,
exploded causing 15 deaths, injuring 180 people and forcing thousands of nearby residents to
remain sheltered in their homes.[326] A 20-foot (6.1 m) column filled with hydrocarbon
overflowed to form a vapour cloud, which ignited. The explosion caused all the casualties and
substantial damage to the rest of the plant.[327] The incident came as the culmination of a series of
less serious accidents at the refinery, and the engineering problems were not addressed by the
management. Maintenance and safety at the plant had been cut as a cost-saving measure, the
responsibility ultimately resting with executives in London.[328]
The fallout from the accident clouded BP's corporate image because of the mismanagement at
the plant. There had been several investigations of the disaster, the most recent being that from
the US Chemical Safety and Hazard Investigation Board[329] which "offered a scathing
assessment of the company." OSHA found "organizational and safety deficiencies at all levels of
the BP Corporation" and said management failures could be traced from Texas to London.[326]
The company pleaded guilty to a felony violation of the Clean Air Act, was fined $50 million,
the largest ever assessed under the Clean Air Act, and sentenced to three years probation.[330]
On 30 October 2009, the US Occupational Safety and Health Administration (OSHA) fined BP
an additional $87 million, the largest fine in OSHA history, for failing to correct safety hazards
documented in the 2005 explosion. Inspectors found 270 safety violations that had been
previously cited but not fixed and 439 new violations. BP appealed the fine.[326][331] In July 2012,
the company agreed to pay $13 million to settle the new violations. At that time OSHA found
"no imminent dangers" at the Texas plant. Thirty violations remained under discussion.[332] In
March 2012, US Department of Justice officials said the company had met all of its obligations
and subsequently ended the probationary period.[333]
In November 2011, BP agreed to pay the state of Texas $50 million for violating state emissions
standards at its Texas City refinery during and after the 2005 explosion at the refinery. The state
Attorney General said BP was responsible for 72 separate pollutant emissions that have been
occurring every few months since March 2005. It was the largest fine ever imposed under the
Texas Clean Air Act.[334][335]
Prudhoe Bay
Main article: Prudhoe Bay oil spill

Aerial view of prudhoe bay

In March 2006, corrosion of a BP Exploration Alaska (BPXA) oil transit pipeline in Prudhoe
Bay transporting oil to the Trans-Alaska Pipeline led to a five-day leak and the largest oil spill on
Alaska's North Slope.[18] According to the Alaska Department of Environmental Conservation
(ADEC), a total of 212,252 US gallons (5,053.6 bbl; 803.46 m3) of oil was spilled, covering 2
acres (0.81 ha) of the North Slope.[336] BP admitted that cost cutting measures had resulted in a
lapse in monitoring and maintenance of the pipeline and the consequent leak. At the moment of
the leak, pipeline inspection gauges (known as "pigs") had not been run through the pipeline
since 1998.[337][338][339][340] BP completed the clean-up of the spill by May 2006, including
removal of contaminated gravel and vegetation, which was replaced with new material from the
Arctic tundra.[336][341]
Following the spill, the company was ordered by regulators to inspect the 35 kilometres (22 mi)
of pipelines in Prudhoe Bay using "smart pigs".[342] In late July 2006, the "smart pigs"
monitoring the pipelines found 16 places where corrosion had thinned pipeline walls. A BP crew
sent to inspect the pipe in early August discovered a leak and small spill,[342][343] following
which, BP announced that the eastern portion of the Alaskan field would be shut down for
repairs on the pipeline,[343][344] with approval from the Department of Transportation. The
shutdown resulted in a reduction of 200,000 barrels per day (32,000 m3/d) until work began to
bring the eastern field to full production on 2 October 2006.[345] In total, 23 barrels (3.7 m3) of oil
were spilled and 176 barrels (28.0 m3) were "contained and recovered", according to ADEC. The
spill was cleaned up and there was no impact upon wildlife.[346]
After the shutdown, BP pledged to replace 26 kilometres (16 mi) of its Alaskan oil transit
pipelines[347][348] and the company completed work on the 16 miles (26 km) of new pipeline by
the end of 2008.[349] In November 2007, BP Exploration, Alaska pled guilty to negligent
discharge of oil, a misdemeanor under the federal Clean Water Act and was fined
US$20 million.[350] There was no charge brought for the smaller spill in August 2006 due to BP's
quick response and clean-up.[337]
On 16 October 2007, ADEC officials reported a "toxic spill" from a BP pipeline in Prudhoe Bay
comprising 2,000 US gallons (7,600 l; 1,700 imp gal) of primarily methanol (methyl alcohol)
mixed with crude oil and water, which spilled onto a gravel pad and frozen tundra pond.[351]

In the settlement of a civil suit, in July 2011 investigators from the U.S. Department of
Transportations Pipeline and Hazardous Materials Safety Administration determined that the
2006 spills were a result of BPXAs failure to properly inspect and maintain the pipeline to
prevent corrosion. The government issued a Corrective Action Order to BP XA that addressed
the pipelines risks and ordered pipeline repair or replacement. The U.S. Environmental
Protection Agency had investigated the extent of the oil spills and oversaw BPXAs cleanup.
When BP XA did not fully comply with the terms of the corrective action, a complaint was filed
in March 2009 alleging violations of the Clean Water Act, the Clean Air Act and the Pipeline
Safety Act. In July 2011, the U.S. District Court for the District of Alaska entered a consent
decree between the United States and BPXA resolving the governments claims. Under the
consent decree, BPXA paid a $25 million civil penalty, the largest per-barrel penalty at that time
for an oil spill, and agreed to take measures to significantly improve inspection and maintenance
of its pipeline infrastructure on the North Slope to reduce the threat of additional oil
spills.[352][353]
2008 Caspian Sea gas leak and blowout

On 17 September 2008, a gas leak was discovered and one gas-injection well blown out in the
area of the Central Azeri platform at the Azeri oilfield, a part of the AzeriChiragGuneshli
(ACG) project, in the Azerbaijan sector of Caspian Sea.[354][355][356] The platform was shut down
and the staff was evacuated.[354][355] As the Western Azeri Platform was being powered by a
cable from the Central Azeri Platform, it was also shut down.[357] Production at the Western
Azeri Platform resumed on 9 October 2008 and at the Central Azeri Platform in December
2008.[358][359] According to leaked US Embassy cables, BP had been "exceptionally circumspect
in disseminating information" and showed that BP thought the cause for the blowout was a bad
cement job. The cables further said that some of BP's ACG partners complained that the
company was so secretive that it was withholding information even from them.[356][360][361]
2010 Chemical leak

BP has admitted that malfunctioning equipment lead to the release of over 530,000 pounds
(240,000 kg) of chemicals into the air of Texas City and surrounding areas from 6 April to 16
May 2010. The leak included 17,000 pounds (7,700 kg) of benzene, 37,000 pounds (17,000 kg)
of nitrogen oxides, and 186,000 pounds (84,000 kg) of carbon monoxide.[362][363] In June 2012,
over 50,000 Texas City residents joined a class-action suit against BP, alleging they got sick in
2010 from the 41-day emissions release from the refinery. Texas has also sued BP over the
release of emissions. BP says the release harmed no one.[364]

Deepwater Horizon well explosion and oil spill

Anchor handling tugs combat the fire on the Deepwater Horizon while the United States Coast Guard
searches for missing crew

On 20 April 2010, the semi-submersible exploratory offshore drilling rig Deepwater Horizon
located in the Macondo Prospect in the Gulf of Mexico exploded after a blowout, killing
11 people, injuring 16 others. After burning for two days, the rig sank and caused the largest
accidental marine oil spill in the history of the petroleum industry, estimated to be between 8%
and 31% larger in volume than the earlier Ixtoc I oil spill.[19][366][367] Before the well was capped
on 15 July 2010, an estimated 4.9 million barrels (780103 m3) of oil was spilled and 1.8 million
US gallons (6,800 m3) of Corexit dispersant was applied.[368][369]
The spill had a strong economic impact on both BP and the Gulf Coast's economy sectors such as
fishing and tourism. In late 2012 local fishermen reported that crab, shrimp, and oyster fishing
operations had not yet recovered from the oil spill and many feared that the Gulf seafood
industry will never recover. [370]
Environmental impact

The greatest impact was on marine species. The spill area hosted 8,332 species, including more
than 1,200 fish, 200 birds, 1,400 molluscs, 1,500 crustaceans, 4 sea turtles and 29 marine
mammals.[371][372][372] In the summer of 2010, scientists reported immense underwater plumes of
dissolved oil[373] in addition to an 80-square-mile (210 km2) "kill zone" surrounding the blown
well. [374] Researchers reported that the oil and dispersant mixture, including polycyclic aromatic
hydrocarbons (PAHs), permeated the food chain through zooplankton.[375][376][377]
Environmental impacts continue, and research is ongoing. [378] According to the United States
Department of Justice, oil spills are known to cause both immediate and long-term harm to
human health and ecosystems and can cause long-term effects years later even if the oil remains
in the environment for a relatively short period of time.[352] In 2013, researchers found that oil on
the bottom of the seafloor does not seem to be degrading, and observed a phenomenon called
"dirty blizzard": oil caused deep ocean sediments to clump together, falling to the ocean floor at
ten times the normal rate in an "underwater rain of oily particles." The result could have longterm effects on both human and marine life because oil could remain in the food chain for
generations. [379] The same research suggested that as much as one-third of the oil remains in the

Gulf.[379] Three years after the oil spill the residual effects are still apparent, with tar balls still
found on the Mississippi coast, and an oil sheen along coastal marshland. Oil remains in affected
coastal areas as well[380]and erosion has increased due to the death of mangrove trees and marsh
grass.[381][382]
Health effects

In August 2011 the Government Accountability Project (GAP) began an investigation of the
health issues associated with the oil spill cleanup. Witnesses reported a host of ailments,
including "eye, nose and throat irritation; respiratory problems; blood in urine, vomit and rectal
bleeding; seizures; nausea and violent vomiting episodes that last for hours; skin irritation,
burning and lesions; short-term memory loss and confusion; liver and kidney damage; central
nervous system effects and nervous system damage; hypertension; and miscarriages." [383]
Studies discussed at a 2013 conference found that a "significant percentage" of Gulf residents
reported mental health problems such as anxiety, depression and PTSD. These studies also
showed that the bodies of former spill cleanup workers carry biomarkers of many chemicals
contained in the oil.[384] A study that investigated the health effects among children in Louisiana
and Florida living less than 10 miles from the coast found that more than a third of the parents
reported physical or mental health symptoms among their children. [384]
Criminal prosecutions

On March 11, 2011, the US Department of Justice formed the "Deepwater Horizon Task Force"
to consolidate several federal agencies' investigations into possible criminal charges stemming
the explosion and spill.[385] On 14 November 2012, the DOJ announced that BP and the DOJ had
reached a $4 billion settlement of all federal criminal charges related to the explosion and spill,
the largest of its kind in US history. Under the settlement, BP agreed to plead guilty to 11 felony
counts of manslaughter, two misdemeanors, and a felony count of lying to Congress and agreed
to four years of government monitoring of its safety practices and ethics. BP also paid $525
million to settle civil charges by the Securities and Exchange Commission that it misled
investors about the flow rate of oil from the well.[21][386] As part of the announcement of the
settlement, BP said it was increasing its reserve for a trust fund to pay costs and claims related to
the spill to about $42 billion.[21] On the same day, the US government filed criminal charges
against three BP employees; two site managers were charged with manslaughter and negligence,
and one former vice president with obstruction.[21] Near the end of November 2012, the U.S.
Government temporarily banned BP from bidding any new federal contracts, citing the
companys lack of business integrity. [387] As of February 2013, criminal and civil settlements
and payments to the trust fund had cost the company $42.2 billion.[388]
Civil proceedings

On December 15, 2010, The US Department of Justice filed a civil and criminal suit against BP
and other defendants for violations under the Clean Water Act in the U.S. District Court for the
Eastern District of Louisiana.[389][390]:70 The case was consolidated with about 200 others,
including those brought by state governments, individuals, and companies under Multi-District
Litigation docket MDL No. 2179, before U.S. District Judge Carl Barbier.[391][392] Judge Barbier

is trying the case without a jury, as is normal in United States admiralty law.[393][394] The Justice
Department contends that BP committed gross negligence and willful misconduct, which BP
contests, and is seeking the stiffest penalties possible.[395] A ruling of gross negligence would
result in a four-fold increase in Clean Water Act penalties, which would cause the penalties to
reach approximately $17.6 billion, and would increase damages in the other suits as
well.[24][25][26] Any fines from gross negligence would hit BP's bottom line very hard, because
they would not be tax-deductible.[396] The company paid no federal income tax to the U.S.
government in 2010 because of deductions related to the spill.[397]
The consolidated trial's first phase began on February 25, 2013, to determine the liability of BP,
Transocean, Halliburton, and other companies, and to determine whether the companies acted
with gross negligence and willful misconduct.[398][399] [23] The second phase, scheduled in
September 2013, will focus on the amount of oil spilled into the gulf and who was responsible
for stopping it. The third phase will focus on all other liability that occurred in the process of oil
spill cleanup and containment issues, including the use of dispersants.[400][401] Test jury trials will
follow to determine actual damage amounts.[393]

Political influence
Release of Lockerbie bomber

BP lobbied the British government to conclude a prisoner-transfer agreement which the Libyan
government had wanted to secure the release of Abdelbaset al-Megrahi, the only person
convicted for the 1988 Lockerbie bombing over Scotland, which killed 270 people. BP stated
that it pressed for the conclusion of prisoner transfer agreement (PTA) amid fears that delays
would damage its "commercial interests" and disrupt its 900 million offshore drilling operations
in the region, but it said that it had not been involved in negotiations concerning the release of
Megrahi.[402][403]
Political contributions and lobbying

According to the Center for Responsive Politics, BP was the United States' 136th-largest donor
to political campaigns, having contributed more than US$6.6 million since 1989, 70% and 29%
of which went to Republican and Democratic recipients, respectively.[404]
In February 2002, BP's then-chief executive, Lord Browne of Madingley, renounced the practice
of corporate campaign contributions, saying: "That's why we've decided, as a global policy, that
from now on we will make no political contributions from corporate funds anywhere in the
world."[405] When the Washington Post reported in June 2010 that BP North America "donated at
least $4.8 million in corporate contributions in the past seven years to political groups, partisan
organizations and campaigns engaged in federal and state elections", mostly to oppose ballot
measures in two states aiming to raise taxes on the oil industry, the company said that the
commitment had only applied to contributions to individual candidates.[406]

During the 2008 US election cycle, BP employees contributed to various candidates, with Barack
Obama receiving the largest amount of money,[407] broadly in line with contributions from Shell
and Chevron, but significantly less than those of Exxon Mobil.[408]
In 2009 BP spent nearly $16 million lobbying the US Congress.[409] In 2011, BP spent a total of
$8,430,000 on lobbying and hired 47 lobbyists.[410]

Market manipulation investigations and sanctions

The US Justice Department and the Commodity Futures Trading Commission filed charges
against BP Products North America Inc. (subsidiary of BP plc) and several BP traders, alleging
they conspired to raise the price of propane by seeking to corner the propane market in
2004.[411][412][413] In 2006, one former trader pleaded guilty.[412] In 2007, BP paid $303 million in
restitution and fines as part of an agreement to defer prosecution.[414] BP was charged with
cornering and manipulating the price of TET propane in 2003 and 2004. BP paid a $125 million
civil monetary penalty to the CFTC, established a compliance and ethics program, and installed a
monitor to oversee BPs trading activities in the commodities markets. BP also paid $53 million
BP into a restitution fund for victims, a $100 million criminal penalty, plus $25 million into a
consumer fraud fund, as well as other payments.[415] Also in 2007, four other former traders were
charged. These charges were dismissed by a US District Court in 2009 on the grounds that the
transactions were exempt under the Commodities Exchange Act because they didn't occur in a
marketplace but were negotiated contracts among sophisticated companies. The dismissal was
upheld by the Court of Appeals for the 5th Circuit in 2011.[413]
In November 2010, US regulators FERC and CFTC began an investigation of BP for allegedly
manipulating the gas market. The investigation relates to trading activity that occurred in
October and November 2008.[416][417] At that time, CFTC Enforcement staff provided BP with a
notice of intent to recommend charges of attempted market manipulation in violation of the
Commodity Exchange Act. BP denied that it engaged in "any inappropriate or unlawful activity."
In July 2011, the FERC staff issued a "Notice of Alleged Violations" saying it had preliminarily
determined that several BP entities fraudulently traded physical natural gas in the Houston Ship
Channel and Katy markets and trading points to increase the value of their financial swing spread
positions.[418]
BP's London offices, along with those of Royal Dutch Shell and Statoil, were raided in May
2013 by regulators from the European Commission, beginning an investigation into allegations
the companies reported distorted prices to the price reporting agency Platts, in order to
"manipulate the published prices" for several oil and biofuel products. The EC is probing
allegations the companies colluded to rig prices for more than a decade.[419][420][421][422][423][424]
EPSA/DPSA

QP's strategy of conducting hydrocarbon exploration and development are through Exploration
and

Production Sharing Agreements (EPSA) and Development and Production Sharing Agreements
(DPSA)

concluded with major international oil and gas companies.

An Oil and Gas Exploration Agreement, or Lease, establishes the legal relationships between an
oil and gas

exploration company, which seeks to explore for and produce discovered hydrocarbons, and the
owner of

the subsurface oil and gas interests (mineral rights). In most countries, the owner is a government
entity;

however, in some countries, like the United States, Canada, United Kingdom and Germany,
individual

landowners may own the mineral rights as part of their ownership of private property. Where this
is the case,

an Oil and Gas Lease must be negotiated with each individual landowner within the area to be
explored.

Whether negotiated with an individual landowner or a government entity, these agreements,

known most

commonly as Oil and Gas Leases, Host Country or Exploration Agreements, cover more than
just exploration.

They generally include all activities that the oil and gas company may wish to undertake, from
early

exploration to final abandonmentessentially the Exploration and Exploitation (Development,

Production and

Abandonment) Periods.

There are over 200 different countries that currently invite exploration companies to negotiate
one or more

forms of these agreements. A given country may have different agreements for onshore, shallow
offshore

and deep offshore exploration because each has different risks and capital commitments.
Governments may
offer acreage through scheduled lease sales or bidding rounds or companies may initiate
negotiations on

an ad hoc basis.

The fiscal terms of these agreements are generally designed to allocate the costs and risks to the
Exploration
Company (generally referred to as the Contractor) and to share the profits in an equitable
manner between

the Contractor and the host country or individual landowner. Although host country agreements
are designed

to encourage companies to explore and develop a country's petroleum basins, those countries that
have had

no oil and gas discoveries, like Lebanon, will offer more attractive fiscal terms than those that
have

demonstrated exploration success like Nigeria, Venezuela and Indonesia.

Exploration and Production Licences :

In the United Kingdom, the secretary of State for Energy is empowered, on behalf
of the Government, to invite companies to apply for exploration and production
licences on the United Kingdom Continental Shelf (UKCS). Exploration
licences may be awarded at any time but Production licences are awarded at specifi c
discrete intervals known as licencing Rounds. Exploration licences do not allow
a company to drill any deeper than 350 metres (1148ft.) and are used primarily to
enable a company to acquire seismic data from a given area, since a well drilled to
1148 ft on the UKCS would not yield a great deal of information about potential
reservoirs.
Production licences allow the licencee to drill for, develop and produce hydrocarbons
from whatever depth is necessary. The cost of fi eld development in the North Sea
are so great that major oil companies have formed partnerships, known as joint
ventures , to share these exploration and development costs (e.g. Shell/Esso).

Geological studies and seismic surveys can point the way to a hydrocarbon prospect. But there is
only one

way to know if that prospect contains oil or gas, and that is to drill a well.

Drilling projects are team undertakings. They encompass a wide range of disciplines and job
functions, from

geology, geophysics and engineering to operations, support and logistics, safety and regulatory
compliance,

management and administration. Project teams are often part of alliances that include:

The oil or gas company (also known as the operating company or operator), along with any
joint venture

partners having an interest in the well;

An outside drilling contractor who provides the drilling rig and the personnel to run it; and
One or more service companies that provide specialized equipment and expertise at various
stages of the

project. The largest of these service companies may offer integrated project management
services that

include contract drilling.

The working relationships that characterize a drilling project depend on the well's location, the
arrangements

between the companies involved in the project and the number of personnel involved. A small
onshore rig

may be crewed by no more than five contractor employees and managed by just one or two
contractor and

operator representatives, while some large offshore drilling operations may have several rig
crews and groups

of specialists totaling 50 or more persons, along with dozens of land-based technical and support
personnel.
Exploration, Development and Abandonment:
Before drilling an exploration well an oil company will have to obtain a production
licence. Prior to applying for a production licence however the exploration geologists
will conduct a scouting exercise in which they will analyse any seismic data they
have acquired, analyse the regional geology of the area and fi nally take into account
any available information on nearby producing fi elds or well tests performed in the
vicinity of the prospect they are considering. The explorationists in the company
will also consider the exploration and development costs, the oil price and tax
regimes in order to establish whether, if a discovery were made, it would be worth
developing.
If the prospect is considered worth exploring further the company will try to acquire
a production licence and continue exploring the fi eld. This licence will allow the
company to drill exploration wells in the area of interest. It will in fact commit
the company to drill one or more wells in the area. The licence may be acquired
by an oil company directly from the government, during the licence rounds are
announced, or at any other time by farming-into an existing licence. A farm-in
involves the company taking over all or part of a licence either: by paying a sum of
money to the licencee; by drilling the committed wells on behalf of the licencee, at

its own expense; or by acquiring the company who owns the licence.
Before the exploration wells are drilled the licencee may shoot extra seismic lines,
in a closer grid pattern than it had done previously. This will provide more detailed
information about the prospect and will assist in the defi nition of an optimum drilling
target. Despite improvements in seismic techniques the only way of confi rming the
presence of hydrocarbons is to drill an exploration well. Drilling is very expensive,
and if hydrocarbons are not found there is no return on the investment, although
valuable geological information may be obtained. With only limited information
available a large risk is involved. Having decided to go ahead and drill an exploration
well proposal is prepared. The objectives of this well will be:
To determine the presence of hydrocarbons
To provide geological data (cores, logs) for evaluation
To fl ow test the well to determine its production potential, and obtain fl uid
samples.
The life of an oil or gas fi eld can be sub-divided into the following phases:
Exploration
Appraisal
Development
Maintenance
Abandonment
Geological studies and seismic surveys can point the way to a hydrocarbon prospect. But there is
only one way to know if that prospect contains oil or gas, and that is to drill a well.

Drilling projects are team undertakings. They encompass a wide range of disciplines and job
functions, from geology, geophysics and engineering to operations, support and logistics, safety
and regulatory compliance, management and administration. Project teams are often part of
alliances that include:

The oil or gas company (also known as the operating company or operator), along with
any joint venture partners having an interest in the well;
An outside drilling contractor who provides the drilling rig and the personnel to run it;
and
One or more service companies that provide specialized equipment and expertise at
various stages of the project. The largest of these service companies may offer integrated
project management services that include contract drilling.

The working relationships that characterize a drilling project depend on the well's location, the
arrangements between the companies involved in the project and the number of personnel
involved. A small onshore rig may be crewed by no more than five contractor employees and
managed by just one or two contractor and operator representatives, while some large offshore
drilling operations may have several rig crews and groups of specialists totaling 50 or more
persons, along with dozens of land-based technical and support personnel.

Overview Field Development Plan

Sudan - Oil Blocks

Sudan - Rawat Basin (Block 7 concession size 10,000 sq.km)

Sudan - Block 7 Data

Exploration: Based on known information consisting of geophysical and geological data

including 2D (6,071 line kms) 3D (430 sq km) seismic extending over the oil discovery
structure, plus three discovery wells in three separate fields.
Discovery Wells: The 3 new oil fields in Block 7 are approximately 1,500 meters.
Estimated Production and Blue Sky: An analogous oilfield called Heglig/Unity is located in
the Abu Grabra Rift (SW of Rawat Basin) has produced 50% of its estimated recoverable oil
reserves of 2 billion barrels.
Sudan - Hydrocarbon Potential

Sudan Block 7 Geology

The Rawat Basin is an easily accessible area. A Central Processing Facility (CPF) for Block 7 is
located 60 km away. It is also an entry point for the main export oil pipeline to Port Sudan.
The basin is part of an elongated White Nile Rift System. It lies between two major basement
structural highs. It corresponds to the northern extension of the Melut Basin. The sedimentary
environment is Fluvio-deltaic lacustrine and is highly comparable with the Malut Basin. Rock
evaluation data indicate the presence of excellent oil prone lacustrine source rock (Type 1
Kerogen). Reservoir rock is sandstone with shales, with excellent reservoir parameters.

Sudan was producing 460,000 bop/d before the country separated into North and South Sudan on July
9, 2011

Integrated operations
From Wikipedia, the free encyclopedia
Jump to: navigation, search

In the Petroleum industry, Integrated operations (IO) refers to new work processes and ways of
performing oil and gas exploration and production, which has been facilitated by new
information and communication technology. Multi-discipline collaboration in plant operation is
one example. IO has in a sense also taken the form of a movement for renewal of the oil and gas
industry. In short IO is collaboration with production in focus.

Contents

1 Contents of the term

2 Incentives
3 Critique
4 Naming conventions
5 See also
6 References
7 External links

Contents of the term

The most striking part of IO has been the use of always-on videoconference rooms between
offshore platforms and land-based offices. This includes broadband connections for sharing of
data and video-surveillance of the platform. This has made it possible to move some personnel
onshore and use the existing human resources more efficiently. Instead of having e.g. an expert
in geology on duty at every platform, the expert may be stationed on land and be available for
consultation for several offshore platforms. It's also possible for a team at an office in a different
time zone to be consulting the night-shift of the platform, so that no land-based workers need
work at night.
Splitting the team between land and sea demands new work processes, which together with ICT
is the two main focus points for IO. Tools like videoconferencing and 3D-visualization also
creates an opportunity for new, more cross-discipline cooperations. For instance, a shared 3Dvisualization may be tailored to each member of the group, so that the geologist gets a
visualization of the geological structures while the drilling engineer focuses on visualizing the
well. Here, real-time measurements from the well are important but the downhole bandwidth has
previously been very restricted. Improvements in bandwidth, better measurement devices, better
aggregation and visualization of this information and improved models that simulate the rock
formations and wellbore currently all feed on each other. An important task where all these
improvements play together is real-time production optimization.

In the process industry in general, the term is used to describe the increased cooperation,
independent of location, between operators, maintenance personnel, electricians, production
management as well as business management and suppliers to provide a more streamlined plant
operation.
By deploying IO, the petroleum industry draws on lessons from the process industry. This can be
seen in a larger focus on the whole production chain and management ideas imported from the
production and process industry. A prominent idea in this regard is real-time optimization of the
whole value chain, from long term management of the oil reservoir, through capacity allocations
in pipe networks and calculations of the net present value of the produced oil.
A focus on the whole production chain is also seen in debates about how to organize people in an
IO organisation, with frequent calls for breaking down the Information silos in the oil companies.
A large oil company is typically organized in functional silos corresponding to disciplines such
as drilling, production and reservoir management. This is regarded as inefficient by the IO
movement, pointing out that the activities in any well or field by any of the silos will involve or
affect all of the others. While some companies focus on their inhouse management structure,
others also emphasize the integration and coordination of outside suppliers and collaborators in
offshore-operations. For instance, it is pointed out that the oil and gas industry is lagging behind
other industries in terms of Operational intelligence.[1]
Ideas and theories that IO management and work processes build on will be familiar from
operations research, knowledge management and continual improvement as well as information
systems and business transformation. This is perhaps most evident in the repeated referral to
"people, process and technology"[2][3][4] in IO discussions. As bullet-points this mirror many of
the aforementioned fields.

Incentives
Common to most companies is that IO leads to cost savings as fewer people are stationed
offshore and an increased efficiency. Lower costs, more efficient reservoir management and
fewer mistakes during well drilling will in turn raise profits and make more oil fields
economically viable. IO comes at a time when the oil industry is faced with more "brown fields",
also referred to as "tail production", where the cost of extracting the oil will be higher than its
market value, unless major improvements in technology and work processes are made. It has
been estimated that deployment of IO could produce 300 billion NOK of added value to the
Norwegian continental shelf alone.[5] On a longer time-scale, working onshore control and
monitoring of the oil production may become a necessity as new fields at deeper waters are
based purely on unmanned sub-sea facilities.
Moving jobs onshore has also been touted as a way to keep and make better use of an aging
workforce, which is regarded as a challenge by western oil and gas companies. As the average
age of the industry workforce is increasing with many nearing retirement, IO is being leveraged
for knowledge sharing and training of younger workforce. More comfortable onshore jobs
together with "high-tech" tools has also been fronted as a way to recruit young workers into an
industry that is seen as "unsexy", "lowtech" and difficult to combine with a normal family life.

Critique
The security aspect of reducing the offshore workforce has been raised. Will on-site experience
be lost and can familiarity with the platform and its processes be attained from an onshore
office? The new working environment in any case demands changes to HSE routines. Some of
the challenges also include clear role and responsibility definitions and clarifications between the
onshore & offshore personnel. Who in a given situation has the authority to take decisions, the
onsite or the offshore staff. The increased integration of the offshore facilities with the onshore
office environment and outside collaborators also expose work-critical ICT-infrastructure to the
internet and the hazards of everyday ICT. As for the efficiency aspect, some criticize the
onshore-offshore collaboration for creating a more bureaucratic working environment.

Naming conventions
Both the exact terms and the content used to describe IO vary between companies. The oil
company Shell has traditionally branded the term Smart Fields,[6] which was an extension of
Smart Wells that only referred to remote-controlled well-valves. BP uses Field of the future,[7]
Chevron has i-field and Schlumberger terms it Digital Energy.[8] The latter term, understood as
referring to oil and gas, is adopted in the title of the digital energy journal.[9] This term could
have several meanings, as GE Digital Energy for instance, do not appear to use it in the IO sense.
Other terms include e-Field, i-Field, Digital Oilfield, Intelligent Oilfield, Field of the future
and Intelligent Energy.[10] Integrated operations has been the preferred term by Statoil, the
Norwegian Oil Industry Association (OLF), a professional body and employer's association for
oil and supplier companies[11][12] and vendors such as ABB.[13] Intelligent Energy is the dominant
term in publications revolving around the biannual SPE Intelligent Energy conference,[14] which
has been one of the major conferences for the IO movement, along with the annual IO Science
and Practice conference[15] which obviously supports the IO term.

National oil company

From Wikipedia, the free encyclopedia
Jump to: navigation, search

A national oil company (NOC) is an oil company fully or in the majority owned by a national
government. According to the United States Energy Information Administration, NOCs
accounted for 52% global oil production and controlled 88% of proven oil reserves in 2007.[1]
Due to their increasing dominance over global reserves, the importance of NOCs relative to
International Oil Companies (IOCs), such as ExxonMobil, BP, or Royal Dutch Shell, has risen
dramatically in recent years. NOCs are also increasingly investing outside their national borders.

National oil company

From Wikipedia, the free encyclopedia
Jump to: navigation, search

A national oil company (NOC) is an oil company fully or in the majority owned by a national
government. According to the United States Energy Information Administration, NOCs
accounted for 52% global oil production and controlled 88% of proven oil reserves in 2007.[1]
Due to their increasing dominance over global reserves, the importance of NOCs relative to
International Oil Companies (IOCs), such as ExxonMobil, BP, or Royal Dutch Shell, has risen
dramatically in recent years. NOCs are also increasingly investing outside their national borders.
1.

Benchmarks

Argus Sour

Bonny Light

Brent

Dubai

Indonesian

Isthmus-34 Light

Japan Cocktail

OPEC Reference Basket

Tapis

Urals

West Texas Intermediate

Supermajors

Companies and
organisations

Major
petroleum
companies

National oil
companies

BP

Chevron

ConocoPhillips

ExxonMobil

Royal Dutch Shell

Total

ADNOC

CNOOC

CNPC

Gazprom

Iraq National Oil Company

Indian Oil Corporation

Kuwait Petroleum Corporation

Nigerian National Petroleum

Corporation

NIOC

ONGC

Other

Orlen

PDVSA

Pemex

Pertamina

Petrobras

PetroChina

Petronas

Qatar Petroleum

Rosneft

Saudi Aramco

Sinopec

SOCAR

Sonangol

Sonatrach

Statoil

YPF

Anadarko

Apache

BG Group

Cenovus Energy

Cepsa

Devon

Eni

Galp Energia

Hess

Husky Energy

Imperial Oil

Major services
companies

Lukoil

Marathon Oil

Nippon Oil

Occidental

OMV

Reliance Industries

Repsol

Suncor Energy

Surgutneftegas

TNK-BP

Tullow Oil

Tpra

AMEC

Baker Hughes

Cameron

CGGVeritas

CH2M HILL

Chicago Bridge & Iron Company

China Oilfield Services

Enbridge

Ensco

GE Oil & Gas

Halliburton

Naftiran Intertrade

National Oilwell Varco

Petrofac

Saipem

Other

Schlumberger

Snam

Technip

TransCanada

Transocean

Weatherford

Wood Group

International Association of Oil & Gas Producers

International Energy Agency

International Petroleum Exchange

OPEC

Society of Petroleum Engineers

World Petroleum Council

Core sampling

Geophysics

Integrated asset modelling

Petroleum engineering

Exploration

Reservoir simulation

Seismic to simulation

Petroleum geology

Petrophysics

Reflection seismology
o

Seismic inversion

Seismic source

Blowouts

Completion

Exploration and
production

Drilling

Squeeze job

Differential sticking

Directional drilling
o

Geosteering

Drilling engineering

Drilling fluid

Production

Drilling fluid invasion

Drill stem test

Lost circulation

Measurement

Tracers

Underbalanced drilling

Well logging

Petroleum fiscal regime

Concessions

Production sharing agreements

Artificial lift
o

Pumpjack

Submersible pump (ESP)

Gas lift

World oil reserves, 2009.

Downstream

Enhanced oil recovery (EOR)

o

Steam injection

Gas reinjection

Midstream

Petroleum product

Pipeline transport

Refining

Upstream

Water injection

Well intervention

XT

The distribution of oil and gas reserves among the world's 50 largest oil companies. The reserves of the
privately owned companies are grouped together. The oil produced by the "supermajor" companies
accounts for less than 15% of the total world supply. Over 80% of the world's reserves of oil and natural
gas are controlled by national oil companies. Of the world's 20 largest companies, 15 are state-owned
companies.

Petroleum industry
From Wikipedia, the free encyclopedia
Jump to: navigation, search

The distribution of oil and gas reserves among the world's 50 largest oil companies. The reserves of the
privately owned companies are grouped together. The oil produced by the "supermajor" companies
accounts for less than 15% of the total world supply. Over 80% of the world's reserves of oil and natural
gas are controlled by national oil companies. Of the world's 20 largest companies, 15 are state-owned
companies.

World oil reserves, 2009.

The petroleum industry includes the global processes of exploration, extraction, refining,
transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest
volume products of the industry are fuel oil and gasoline (petrol). Petroleum (oil) is also the raw
material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides,
and plastics. The industry is usually divided into three major components: upstream, midstream
and downstream. Midstream operations are usually included in the downstream category.
Petroleum is vital to many industries, and is of importance to the maintenance of industrial
civilization in its current configuration, and thus is a critical concern for many nations. Oil
accounts for a large percentage of the worlds energy consumption, ranging from as low of 32%
for Europe and Asia, up to a high of 53% for the Middle East.
Other geographic regions consumption patterns are as follows: South and Central America
(44%), Africa (41%), and North America (40%). The world consumes 30 billion barrels
(4.8 km) of oil per year, with developed nations being the largest consumers. The United States
consumed 25% of the oil produced in 2007.[1] The production, distribution, refining, and retailing
of petroleum taken as a whole represents the world's largest industry in terms of dollar value.
Governments such as the United States government provide a heavy public subsidy to petroleum
companies, with major tax breaks at virtually every stage of oil exploration and extraction,
including for the costs of oil field leases and drilling equipment.[2]

Contents

1 History
o 1.1 Natural history
o 1.2 Early history
o 1.3 Modern history
2 Industry structure
3 Environmental impact and future shortages
4 Petroleum industry in popular culture
5 See also
6 References
7 Further reading
8 External links

History
Natural history

Petroleum is a naturally occurring liquid found in rock formations. It consists of a complex

mixture of hydrocarbons of various molecular weights, plus other organic compounds. It is
generally accepted that oil is formed mostly from the carbon rich remains of ancient plankton
after exposure to heat and pressure in the Earth's crust over hundreds of millions of years. Over
time, the decayed residue was covered by layers of mud and silt, sinking further down into the
Earths crust and preserved there between hot and pressured layers, gradually transforming into
oil reservoirs.[citation needed]
Early history

Petroleum in an unrefined state has been utilized by humans for over 5000 years. Oil in general
has been used since early human history to keep fires ablaze, and also for warfare.
Its importance in the world economy evolved slowly, with whale oil used for lighting into the
19th century and wood and coal used for heating and cooking well into the 20th Century. The
Industrial Revolution generated an increasing need for energy which was fueled mainly by coal,
with other sources including whale oil. However, it was discovered that kerosene could be
extracted from crude oil and used as a light and heating fuel. Petroleum was in great demand,
and by the twentieth century had become the most valuable commodity traded on the world
markets.[3]
Modern history
See also: Baku oil boom and The Petroleum Trail International Tourist Trail

Galician oil wells

Imperial Russia produced 3,500 tons of oil in 1825 and doubled its output by mid-century.[4]
After oil drilling began in what is now Azerbaijan in 1848, two large pipelines were built in the
Russian Empire: the 833 km long pipeline to transport oil from the Caspian to the Black Sea port
of Batumi (Baku-Batumi pipeline), completed in 1906, and the 162 km long pipeline to carry oil
from Chechnya to the Caspian.
At the turn of the 20th century, Imperial Russia's output of oil, almost entirely from the
Apsheron Peninsula, accounted for half of the world's production and dominated international
markets.[5] Nearly 200 small refineries operated in the suburbs of Baku by 1884.[6] As a side
effect of these early developments, the Apsheron Peninsula emerged as the world's "oldest
legacy of oil pollution and environmental negligence."[7] In 1878, Ludvig Nobel and his
Branobel company "revolutionized oil transport" by commissioning the first oil tanker and
launching it on the Caspian Sea.[5]
The first modern oil refineries were built by Ignacy ukasiewicz near Jaso (then in the
dependent Kingdom of Galicia and Lodomeria in Central European Galicia), Poland from 1854
56.[8] These were initially small as demand for refined fuel was limited. The refined products
were used in artificial asphalt, machine oil and lubricants, in addition to ukasiewicz's kerosene
lamp. As kerosene lamps gained popularity, the refining industry grew in the area.
The first commercial oil well in Canada became operational in 1858 at Oil Springs, Ontario (then
Canada West).[9] Businessman James Miller Williams dug several wells between 1855 and 1858
before discovering a rich reserve of oil four metres below ground.[10][11] Williams extracted 1.5
million litres of crude oil by 1860, refining much of it into kerosene lamp oil.[9] Some historians
challenge Canadas claim to North Americas first oil field, arguing that Pennsylvanias famous
Drake well was the continents first. But there is evidence to support Williams, not least of which
is that the Drake well did not come into production until August 28, 1859. The controversial
point might be that Williams found oil above bedrock while Edwin Drakes well located oil
within a bedrock reservoir. The discovery at Oil Springs touched off an oil boom which brought
hundreds of speculators and workers to the area. The first gusher erupted on January 16, 1862,
when local oil man John Shaw struck oil at 158 feet (48 m).[12] For a week the oil gushed
unchecked at levels reported as high as 3,000 barrels per day.

The first modern oil drilling in the United States began in West Virginia and Pennsylvania in the
1850s. Edwin Drake's 1859 well near Titusville, Pennsylvania, is typically considered the first
true modern oil well, and touched off a major boom.[13][14] In the first quarter of the 20th century,
the United States overtook Russia as the world's largest oil producer. By the 1920s, oil fields had
been established in many countries including Canada, Poland, Sweden, the Ukraine, the United
States, Peru and Venezuela.[14]
The first successful oil tanker, the Zoroaster, was built in 1878 in Sweden, designed by Ludvig
Nobel. It operated from Baku to Astrakhan.[15] A number of new tanker designs were developed
in the 1880s.
In the early 1930s the Texas Company developed the first mobile steel barges for drilling in the
brackish coastal areas of the Persian Gulf. In 1937 Pure Oil Company (now part of Chevron
Corporation) and its partner Superior Oil Company (now part of ExxonMobil Corporation) used
a fixed platform to develop a field in 14 feet (4.3 m) of water, one mile (1.6 km) offshore of
Calcasieu Parish, Louisiana. In early 1947 Superior Oil erected a drilling/production oil platform
in 20 ft (6.1 m) of water some 18 miles[vague] off Vermilion Parish, Louisiana. It was Kerr-McGee
Oil Industries (now Anadarko Petroleum Corporation), as operator for partners Phillips
Petroleum (ConocoPhillips) and Stanolind Oil & Gas (BP), that completed its historic Ship Shoal
Block 32 well in October 1947, months before Superior actually drilled a discovery from their
Vermilion platform farther offshore. In any case, that made Kerr-McGee's well the first oil
discovery drilled out of sight of land.[16][17]
After World War II ended, the countries of the Middle East took the lead in oil production from
the United States. Important developments since World War II include deep-water drilling, the
introduction of the Drillship, and the growth of a global shipping network for petroleum relying
upon oil tankers and pipelines. In the 1960s and 1970s, multi-governmental organizations of oil
producing nations OPEC and OAPEC played a major role in setting petroleum prices and policy.
Oil Spills and their cleanup have become an issue of increasing political, environmental, and
economic importance.

Industry structure
The American Petroleum Institute divides the petroleum industry into five sectors:[18]

upstream (exploration, development and production of crude oil or natural gas)

downstream (oil tankers, refiners, retailers and consumers)
pipeline
marine
service and supply

Oil companies used to be classified by sales as "supermajors" (BP, Chevron, ExxonMobil,

ConocoPhillips, Shell, Eni and Total S.A.), "majors", and "independents" or "jobbers". In recent
years however, National Oil Companies (NOC, as opposed to IOC, International Oil Companies)
have come to control the rights over the largest oil reserves; by this measure the top ten

companies all are NOC. The following table shows the ten largest national oil companies ranked
by reserves[19] and by production.[20]
Top 10 largest world oil companies by reserves and production
Total
Worldwide Worldwide Reserves in
Liquids Natural Gas
Oil
Rank Company
Reserves
Reserves Equivalent
9
(10 bbl)
(1012 ft3) Barrels (109
bbl)

Company

Production
(106 bbl/d)

Saudi
Aramco

260

254

303

Saudi
Aramco

11.0

National
Iranian Oil
Company

138

948

300

National
Iranian Oil
Company

4.0

Qatar
Petroleum

15

905

170

Kuwait
Petroleum
Corporation

3.7

Iraq
National Oil
Company

116

120

134

Iraq National
Oil Company

2.7

Petrleos
de
Venezuela

99

171

129

Petrleos de
Venezuela

2.6

Abu Dhabi
National Oil
Company

92

199

126

Abu Dhabi
National Oil
Company

2.6

Petrleos
Mexicanos

102

56

111

Petrleos
Mexicanos

2.5

Nigerian
National
Petroleum
Corporation

68

Nigerian
National
Petroleum
Corporation

2.3

36

184

Libya NOC

41

50

50

Libya NOC

2.1

10

Sonatrach

12

159

39

Lukoil

1.9

Most upstream work in the oil field or on an oil well is contracted out to drilling contractors and
oil field service companies.[citation needed]
Midstream operations are sometimes classified within the upstream sector, but these operations
compose a separate and discrete sector of the petroleum industry. Midstream operations and
processes include the following:

Gathering: The gathering process employs narrow, low-pressure pipelines to connect oil- and
gas-producing wells to larger, long-haul pipelines or processing facilities.[21]

Processing/refining: Processing and refining operations turn crude oil and gas into marketable
products. In the case of crude oil, these products include heating oil, gasoline for use in vehicles,
jet fuel, and diesel oil.[22] Oil refining processes include distillation, vacuum distillation, catalytic
reforming, catalytic cracking, alkylation, isomerization and hydrotreating.[22] Natural gas
processing includes compression; glycol dehydration; amine treating; separating the product
into pipeline-quality natural gas and a stream of mixed natural gas liquids; and fractionation,
which separates the stream of mixed natural gas liquids into its components. The fractionation
process yields ethane, propane, butane, isobutane, and natural gasoline.

Transportation: Oil and gas are transported to processing facilities, and from there to end users,
by pipeline, tanker/barge, truck, and rail. Pipelines are the most economical transportation
method and are most suited to movement across longer distances, for example, across
continents.[23] Tankers and barges are also employed for long-distance, often international
transport. Rail and truck can also be used for longer distances but are most cost-effective for
shorter routes.

Storage: Midstream service providers provide storage facilities at terminals throughout the oil
and gas distribution systems. These facilities are most often located near refining and processing
facilities and are connected to pipeline systems to facilitate shipment when product demand
must be met. While petroleum products are held in storage tanks, natural gas tends to be stored
in underground facilities, such as salt dome caverns and depleted reservoirs.

Technological applications: Midstream service providers apply technological solutions to

improve efficiency during midstream processes. Technology can be used during compression of
fuels to ease flow through pipelines; to better detect leaks in pipelines; and to automate
communications for better pipeline and equipment monitoring.

While some upstream companies carry out certain midstream operations, the midstream sector is
dominated by a number of companies that specialize in these services. Midstream companies
include:

Aux Sable

Bridger Group
DCP Midstream
Enbridge Energy Partners
Enterprise Products Partners
Genesis Energy
Gibson Energy
Inergy Midstream
Kinder Morgan Energy Partners
Oneok Partners
Sunoco Logistics
Targa Midstream Services
TransCanada
Williams Companies

Environmental impact and future shortages

Some petroleum industry operations have been responsible for water pollution through byproducts of refining and oil spills.
The combustion of fossil fuels produces greenhouse gases and other air pollutants as byproducts. Pollutants include nitrogen oxides, sulphur dioxide, volatile organic compounds and
heavy metals.
As petroleum is a non-renewable natural resource the industry is faced with an inevitable
eventual depletion of the world's oil supply. The BP Statistical Review of World Energy 2007
listed the reserve/production ratio for proven resources worldwide. The study placed the
prospective life span of proven reserves in the Middle East at 79.5 years, Latin America at 41.2
years and North America at only 12 years.
The Hubbert peak theory, which introduced the concept of peak oil, questions the sustainability
of oil production. It suggests that after a peak in oil production rates, a period of oil depletion
will ensue. Since virtually all economic sectors rely heavily on petroleum, peak oil could lead to
a partial or complete failure of markets.[24]
According to research by IBIS World, biofuels (primarily ethanol, but also biodiesel) will
continue to supplement petroleum. However output levels are low, and these fuels will not
displace local oil production. More than 90% of the ethanol used in the US is blended with
gasoline to produce a 10% ethanol mix, lifting the oxygen content of the fuel.[25]

Petroleum industry in popular culture

The Petroleum industry is a favorite subject in contemporary fiction. Films with oil-industry
themes include There Will Be Blood (2007) set around Southern California's oil boom of the late
19th and early 20th centuries, and Syriana (2005) set in present-day Middle-East.

Oil & Gas Industry Overview

outline overview

Overview
Crude Oil and Natural Gas: From Source to Final Products
o Chemistry of Hydrocarbons
o Origins of Crude Oil and Natural Gas
o Petroleum Migration and Accumulation
o Petroleum Reservoirs
o Separation and Treatment of Produced Oil and Gas
o Gas Handling and Processing
o Crude Oil Refining
o Petrochemicals
Measurement Units and Conversion Factors
o Crude Oil Measurement
o Oil Quality: API Gravity
o Natural Gas Measurement
o Gas Liquids and Petroleum Product Measurement
o Energy Content and Equivalency
o Thermal Energy Equivalency:
o Hydrocarbon Price Equivalency:
o Conversion Table and Electronic Calculator
Oil and Gas Value Chain
o Upstream Sector
o Negotiation of Upstream Agreements
o Exploration
o Field Development
o Long-term Production
o Wholesale Hydrocarbon Markets
o Midstream Sector
o Crude Transportation
o Refining of Crude Oil

o
o
o
o
o

Midstream Natural Gas Value Chain

Gas Processing
Natural Gas Pipeline Transportation and Storage
Downstream Sector
Downstream Natural Gas Value Chain
Main Global Players in the International Petroleum Industry
o OPEC
o Vertically Integrated Global Companies
World Primary Energy Markets and the Role of Hydrocarbons
o Energy Supply and Demand Fundamentals
o Energy Demand
o Energy Supply
o Crude Oil Supply, Demand and Cross-border Trade
Natural Gas Reserves
o Natural Gas Supply, Demand and Cross-border Trade
o Natural Gas Prices
o Emerging Commodity Price
o Final Thoughts
Important Oil and Gas Statistical References
Websites of Importance
Acknowledgments

Upstream Oil & Gas Agreements

Petroleum Geology & the Exploration Process

outline overview

Overview
Fundamentals of Petroleum Geology
o Building of Sedimentary Basins
o Sedimentary Environments
o Sedimentary Rock Properties: Porosity and Permeability
o Formation of Crude Oil and Natural Gas

o
o
o
o

Petroleum Migration and Accumulation

Petroleum Reservoirs and Reservoir Traps
Reservoir Seals
Summary
The Exploration Process
o Broad Surveying Techniques
o Existing Well Data
o Geophysical Surveying and the Seismic Reflection Method
o Conducting a 2D Seismic Survey
o Seismic Survey of the Pam Basin
o 3D and 4D Seismic Surveys
o Economics of the Pam Basin Prospect
o Summary
References

Drilling & Well Completions

outline overview

Overview
o Drilling Objectives
o Surface and Subsurface Environments
o Rig Counts
o Drilling Technology
o Phases of Well Construction
Well Planning
o Initial Steps
o Authorization for Expenditure (AFE)
o Environmental and Regulatory Considerations
o Support and Logistics
o Drilling Rig Procurement
o Drilling Contracts
Well Design
o Subsurface Pressure and Temperature
o Hole Sections
o Well Trajectory
Deviation Control

Directional Drilling
Horizontal Drilling
Geosteering
Multilateral Wells
Drilling Operations
o Rig Systems and Equipment
Hoisting and Rotating Systems
Circulating System
Well Control System
Power Generation and Transmission System
o Types of Drilling Rigs
Onshore (Land) Rigs
Offshore Rigs
o Subsurface Drilling Equipment
Drill String Components
Drill Bits
o Drilling Procedures
o Drilling Problems
o Remote Monitoring and Operations Support
Formation Evaluation and Testing
Well Completion
o Completion Design
o Well Stimulation
o Production Tubing
o Wellhead and Surface Flow Control Equipment
Summary
References
Additional Resources
Acknowledgments

Oilfield Development

outline overview

Overview
Stage One: Identification and Assessment of Opportunities
o Obtaining Company Approval to Negotiate the Host Country Agreement

Nicola Case Study Opportunity

Opportunity Fundamentals
o Nicola Prospecting License Activity
o Estimating Prospective Resources
o Estimating Exploration and Field Development Economics
o The Nicola Exploration Program
o Adding a Joint Venture Partner (Farm-in)
Stage Two: Analyze Alternative Development Options
o The Preliminary Subsurface Plan and Optimization Studies
Building the Static Reservoir Model
Dynamic Reservoir Performance
Pressure Maintenance
Enhanced Oil Recovery Methods (EOR)
Artificial Lift
Reservoir Drive Mechanism for the Nicola Discovery
Type Wells and Stimulation Process
Well Type and Stimulation Method for the Nicola Discovery
o Surface Facilities Conceptual Plan for the Nicola Discovery
o Project Economics for the Nicola Discovery
o Approval of Partners and the Ministry of Energy
Stage Three: Optimizing the Preferred Development Plan
o Subsurface Lockdown for the Nicola Discovery
Finalizing Well Count and Wellhead Locations
Intelligent Well Completions
Surface Facilities Development Plan and FEED for the Nicola Discovery
Subsea Flow Equipment and Control
Flexible Risers and Umbilicals
FPSO and Crude Transfer Facilities
Crude Offloading System
Topsides
o Front-End Engineering Design (FEED)
FEED for the Nicola Discovery
o Final Investment Decision (FID)
Stage Four: Execution of the Field Development
o Project Management Requirements
o Construction of Nicola Facilities
Drilling and Completion of Development Wells
Construction of the FPSO
Construction and Assembly of the Topsides
Subsea Trees and Control Equipment
Subsea Pipelines and Risers
Progress Monitoring and Reporting
Recruitment, Assignment, and Training of Operational Personnel
Hook-up and Commissioning
Finalizing Crude Marketing Plans
Stage Five: Manage Field Performance over Its Life Cycle
o Management of Production
o Management of Reservoir and Well Performance

o
o
o
o
o
o

Management of Crude Production

Management of Stakeholder Relations
Develop a Nicola Workforce
Develop and Maintain a Culture of Safety and Environmental Awareness
Measure and Report Performance to Stakeholders
Achieving the Vision
References

Upstream Gas: From Exploration to Wholesale Markets

outline overview

Overview
Basic Gas and Gas Liquid Properties and Terminology
o Gas and gas liquids composition and properties
o Definition of industry terms: LNG, LPG, NGLs, CNG
Gas Industry Value Chain with Emphasis on the Upstream Sector
Upstream Petroleum Project Management Stages and Workflow
Background on two gas exploration prospects
o Location
o Landowner or Host Country Exploration Agreements
o Technical Support for the Prospect
o Potential Gas Markets
Demand, Timing, Sale Point, Prices and Contract Terms
o Project Planning and Economics
Exploration and Field Development Plan and Schedule
Reserves, Production, Rates, CAPEX, OPEX, IRR
Permits and Authorizations Required. HSE Issues
Risk Analysis:Exploration, Development, Production, Market, Government
Partner Issues
Exploration of gas prospects
o Gas Exploration Basics
Exploration Plan: Costs and Schedule
Exploration well plan, evaluation and expected costs
Results of Exploration
Review of Reserves
Wholesale Gas Markets and Project Market Options

Project Economics
Authorization to Move to Next Stage
Planning Gas Field Development
o Review of Alternative Subsurface Development Plans
o Optimization of Subsurface Development Plan
o Preparing Surface Facilities Plan
o Environmental and Social Impact Report
o Sources of Project Capital: Debt and Equity
o Project Partner Agreements
o Finalizing Gas Sales Contract
o Obtaining Government and Other Permits
o Project Management Plans
o Authorization to Move to Development
Development of New Discoveries
o Implementing the Development Plan
o Project Management Issues: Scope, Schedule, Cost, Quality, Communications, Risks and
Procurement
o Engineering, Procurement and Construction Agreement
o Final Costs and Timing
Managing the Production Cycle
o Managing the Field Production Life Cycle
o Operations and Maintenance of Facilities
o Monitoring Well and Reservoir Performance
o Adding Wells and Compression
o Reservoir Management
o Managing Sales and Customer Relations
o Financial and Partner Reporting
o Summary of the Outcome of the Two Prospects
Summary of Case Studies and Drivers of Upstream Gas Success
References

Marketing & Trading of Crude Oil

outline overview

Overview
Changing Nature of the Crude Oil Market

o
o
o

Control of the Market by the "Majors"

Shared Control
The Opec Transition
Price Shock of 1973
World Recession
Nationalization, Market Transformation and New Discoveries
Price Shock of 1979
Falling Demand
Market-Related Crude Pricing
o Advent of Spot Markets
Crude Oil Pricing Today
o Marker Crudes
o Crude Oil Assay
o Price Reporting
o Pricing of Other Crudes
o Use of the Futures Markets for Price Formation
o The Role of OPEC in Price Formation
Fundamentals of a Physical Crude Oil Contract
o Seller / Buyer Relationship
o Title Transfer Arrangements / Point of Sale
o Other Contract Terms
o Typical Price Setting
Negotiation of Physical Contracts
o Stages in the Negotiation of a Crude Contract
o Contract Examples
Colombia Crude Sale to Unspecified End User
Sale of Crude to a Refiner in the Caribbean
Nigerian Crude Sale to Trader
Fundamentals of Financial Derivatives
o Forward and Future Contracts
o Crude Contracts Offered by Financial Exchanges
o How a Futures Contract Works
o General Features of the Oil Futures Market
Use of Derivatives in Price Risk Management
o Hedges: Buy or Sell Crude Oil
o SWAPS: Convert Variable Price to a Fixed Price
o Options: Setting a Floor or Ceiling Price
o Typical Players In The Petroleum Derivatives Markets
Trading of Crude Oil: Using Both Physical and Financial Contracts
Summary
References
o Exhibits

Crude Oil Transportation & Storage

outline overview

Overview
Crude Oil Pipelines
o System Components
o Examples of International Pipelines
o Phases of Pipeline Development
Pipeline Operations
Pipeline Tariffs
Batching
o Pipeline Maintenance
Pigging
Pipeline Inspection
Corrosion Prevention
o Pipeline Safety
Crude Oil Storage
o Temporary Storage of Crude Oil
o Strategic Storage of Crude Oil
Nicola Case study: Pipeline and Storage Decisions
Oil Tankers
o Tanker Sizes
o Tanker Classifications
o Trade Routes
Chokepoints
o Demand and Supply
o Development of the World Tanker Trade
o Ownership and Hiring of Tankers
o Tanker Rates
Worldscale Calculation
o Tanker Safety
Nicola case study: Shipping Decision
Other Forms of Crude Oil Transportation
References

Acknowledgments

Midstream Gas: Gas Processing, Transportation & Load Balancing

outline overview

Overview
Gas Processing
o Gas Processing Terminology
o Properties of Natural Gas & Natural Gas Liquids
o Surface Facilities
o Key Products of Natural Gas Processing
Ethane
Propane
Iso-Butane
Normal Butane
Natural Gasoline
o Gas Processing Options
o Gas Processing Systems
o Markets for Gas Liquids
o Global Supply and Demand
Natural Gas Pipelines
o Gas Pipeline History and Milestones
o Global Pipeline Infrastructure
North America
South America
Europe
Former Soviet Union
Asia
Australia
o Pipeline Design
Wall Thickness
Composite Reinforcement
Capacity vs. Diameter
Capacity vs. Operating Capacity
o Transmission System Design
o Pipeline Economics Development Process

Onshore
Offshore
o Pipeline Tariff Structure
Regulated Market
Deregulated Market
History of the United States
History of the United Kingdom
Liquified Natural Gas
o LNG Value Chain
o LNG History and Milestones
o LNG Process
Liquifaction
LNG Trains
Transporation
Regasification
o LNG Economics
o LNG Markets & Trade
Load Balancing & Underground Gas Storage
o Load Balancing Applications
o Load Duration Curve
o Winter Flow Pattern
o Underground Storage Options
Underground Storage Capacity & Trends
Thomas Corners Gas Storage Case Study
o Surface Storage Options
o LNG Peakshaving
o Interruptible Customers
o Pore Storage Withdrawal
Summary
References

Refining & Product Specifications

outline overview

Overview
Crude Oil Characteristics

Crude Oil Chemistry

Paraffins (Alkanes)
Olefins and Aromatics
Naphthenes
Heating Value of Hydrocarbons
Boiling Points of Hydrocarbons
o Volume Changes during Refining
o Crude Quality: API Gravity and Sulfur Content
API Gravity
Sulfur Content
Marker Crudes and Pricing Benchmarks
o Crude Quality: Yield of Petroleum Fractions
The Refining Process
o Crude Yields and Product Demand
o Functions of a Refinery
o Hydroskimming Refinery
o Cracking Refinery
o Deep Conversion Coking Refinery
o Refinery Complexity
o Non-Refined Petroleum Supply/Blend Streams
Ethanol
Bio-Diesel
Gas-to-Liquids
Refining Economics
o Cost of Crude Oil and Value of Petroleum Products
o Impact of Refining Complexity on Refining Margins
o Impact of Refining Capacity on Refining Margins
o Refinery Case Study: Addition 100,000 b/d Delayed Coker
o Future Trends
Health, Safety and Environmental Considerations
o Health and Safety
o Environment
Summary
References

Marketing & Distribution of Petroleum Products

outline overview

Overview
Petroleum Products and Services
o Fuels for Transportation and Heating
o Gasoline and Diesel
Composition
Performance Characteristics
o Kerosene (Aviation)
o Fuel Oils (Marine)
o Heating Fuels
o Liquefied Petroleum Gases (LPGs)
o Developments in Fuels, Bio-Fuels and Fuel Cells
o Non-fuel Specialty Products and Streams
Lubricants and Greases
Engine Lubricants
Transmission Lubricants
Industrial Oils
Greases
o Bitumens
o Chemicals and Solvents
o Other Products
The Marketplace for Petroleum Products
o Retail Customers
o Commercial Customers
o Basics of Marketing Petroleum Products
o Marketing Segmentation and Customer Focus
Retail Sector
Commercial Sector
o Mobil Case Study Synopsis
o Worldwide Demand and Pricing for Petroleum Products
Products Markets in Europe
Product Markets in North America

Products Markets in Asia Pacific

The Downstream Value Chain: From Refinery to Final Sale
o Manufacturing of Petroleum Products
o Product Transportation, Storage and Distribution
Importing Products Using Product Carriers
Intermediate Bulk Storage
Regional Transportation, Additives and Branding
Product Pipelines
Barges
Rail Transportation
Truck Transportation
Market Outlets:Wholesale, Commercial and Retail
o Downstream Petroleum Examples Spain and New England
CLH Distribution System
Globals Value Chain
Pricing Along the Downstream Value Chain
o Product Market Complexity and Competition
o Petroleum Distribution Costs and Margins
o Profit Margins at the Retail Service Station
o The Modern Gasoline Station
Health, Safety and Environmental Considerations
Summary
References

Downstream Gas: Gas Distribution, Marketing & Trading

outline overview

Overview
Gas Distribution
o LDC Distribution System
Regulation
Deregulation
LDC Supply System Model
Distribution Operations
Gas Service Functions
Technologies in Gas Distribution

LNG

Receiving & Vaporization Facility

LNG Truck
Local LNG Storage
Gas Distribution Markets
o Identification of Markets
Major Classes of Gas Markets
Assessing Market Demand
Sources of Market Information
o Gas Supply Economics
Natural Gas Pricing
o Direct Markets
Power Generation
Industrial
o Retail Markets
Residential
Commercial
Vehicle Fuel
Petrochemicals
Power Generation
Industrial
Gas Trading
o Regulation
o Deregulation
o Convergence
o "Open Access"
Henry Hub
Gas Daily Index
o Basic Deal Types
Physical Gas and Measure Exposure
Hedging Fixed-Price Risk
Hedging Basis Risk
Exchange and OTC Trading
Summary
References

Overview of Petrochemicals

outline overview

Overview: What are Petrochemicals?

Characteristics of the Petrochemical Industry
o Global Nature of the Industry
o Common Specifications for most Products
o Readily Available Technology
o Large Scale, Capital Intensive
o Key to Success
The Seven Basic Petrochemical Building Blocks
o Product Families and End-Uses
o Methane
Ammonia
Methanol
Gas-to-Liquids (GTL)
o Olefins
Ethylene
Propylene
Butadiene
o The Aromatics
Benzene
Toluene
Xylenes
Petrochemical Plant Economics
o Components of Capital Investment
Owners Project Costs
Total Fixed Investment
o Components of Production Costs
Variable costs
Fixed Costs
Cash Cost of Production
Depreciation
Total Cost of Production
Return on Capital Investment
Required Plant Gate Price
o Economics of a Mega-Methanol Project
o Why Invest in Petrochemical?
Price Setting Mechanisms
Demand Limited Scenario
Production Limited Scenario
Profitability Cycles
o Major Industry Issues
Feedstock Costs
Globalization and International Competitiveness
Environmental Regulations
Case Studies and Project Decriptions
References
o Books

o
o
o

Associations
Selected Petrochemical Consulting Companies
Selected Internet Sites with Petrochemical Industry Information
Acknowledgments

Oil & Gas Business Game

Nicola, a dynamic Business Simulation Game, is used to integrate the subject matter of each
"Content Module" to recreate the challenge of discovering, producing, and marketing oil and gas
to learn where value, in the form of financial performance, is created along the value chain.

Seven Sisters (oil companies)

From Wikipedia, the free encyclopedia
Jump to: navigation, search
For other uses, see Seven Sisters (disambiguation).

The "Seven Sisters" was a term coined in the 1950s by businessman Enrico Mattei, then-head of
the Italian state oil company Eni, to describe the seven oil companies which formed the
"Consortium for Iran" cartel and dominated the global petroleum industry from the mid-1940s to
the 1970s.[1][2] The group comprised Anglo-Persian Oil Company (now BP); Gulf Oil, Standard
Oil of California (SoCal) and Texaco (now Chevron); Royal Dutch Shell; and Standard Oil of
New Jersey (Esso) and Standard Oil Company of New York (Socony) (now ExxonMobil).[3] [4]
Prior to the oil crisis of 1973, the members of the Seven Sisters controlled around 85% of the
world's petroleum reserves, but in recent decades the dominance of the companies and their
successors has declined as a result of the increasing influence of the OPEC cartel and stateowned oil companies in emerging-market economies.[1][5]

Contents

1 Composition and history

2 The "New Seven Sisters"
3 See also
4 References
5 Further reading

Composition and history

In 1951 Iran nationalised its oil industry, then controlled by the Anglo-Iranian Oil Company
(now BP), and Iranian oil was subjected to an international embargo. In an effort to bring Iranian
oil production back to international markets, the U.S. State Department suggested the creation of
a "Consortium" of major oil companies.[6] The "Consortium for Iran" was subsequently formed
by the following companies:

Anglo-Persian Oil Company (United Kingdom) : This subsequently became Anglo-Iranian Oil
Company and then British Petroleum. Following the amalgamation of Amoco (which in turn was
formerly Standard Oil of Indiana) and Atlantic Richfield into British Petroleum, the name was
shortened to BP in 2000.
Gulf Oil (United States) : In 1984 most of Gulf was acquired by SoCal and enlarged SoCal entity
became Chevron.[7] The smaller parts of Gulf Oil was acquired by BP and Cumberland Farms. A
network of service stations in the northeastern United States still bears the Gulf name.
Royal Dutch Shell (Netherlands/United Kingdom)
Standard Oil of California (SoCal) (United States) : This subsequently became Chevron in 1984
when SoCal acquired Gulf Oil.
Standard Oil of New Jersey (Esso) (United States) : This subsequently became Exxon, which
renamed itself ExxonMobil following the acquisition of Mobil in 1999.
Standard Oil Co. of New York (Socony) (United States) : This subsequently became Mobil, which
was acquired by Exxon in 1999 to form ExxonMobil
Texaco (United States) : This was acquired by Chevron in 2001.

The head of the Italian state oil company, Enrico Mattei sought membership for the Italian oil
company Eni, but was rejected by what he dubbed the "Seven Sisters" - the Anglo-Saxon
companies which largely controlled the Middle Easts oil production after World War II.[1][8]
British writer Anthony Sampson took over the term when he wrote the book The Seven Sisters in
1975, to describe the shadowy oil cartel, which tried to eliminate competitors and control the
worlds oil resource.[9]
Being well-organized and able to negotiate as a cartel, the Seven Sisters were initially able to
exert considerable power over Third World oil producers. However, in recent decades the
dominance of the Seven Sisters and their successor companies has been challenged by the
following trends:[1]

the increasing influence of the OPEC cartel (formed in 1960),

a declining share of world oil & gas reserves held by OECD countries and
the emergence of powerful state-owned oil companies in emerging-market economies.

As of 2010, the surviving companies from the Seven Sisters are BP, Chevron, ExxonMobil and
Royal Dutch Shell, which form four members of the "supermajors" group.

The "New Seven Sisters"

The Financial Times has used the label the "New Seven Sisters" to describe a group of what it
argues are the most influential national oil and gas companies based in countries outside of the
OECD.[10][11][1] According to the Financial Times this group comprises:

China National Petroleum Corporation (China)

Gazprom (Russia)
National Iranian Oil Company (Iran)
Petrobras (Brazil)
PDVSA (Venezuela)
Petronas (Malaysia)
Saudi Aramco (Saudi Arabia)

Sudapet
From Wikipedia, the free encyclopedia
Jump to: navigation, search

The Sudan National Petroleum Corporation, also known as Sudapet, is a state-owned oil
company based in Sudan. It was founded in 1997 and is 100% owned by the Ministry for Energy
and Mining.
As of 2006 Sudapet is not active in oil exploitation, but rather serves to manage revenues the
Sudanese government receives from its concessions to foreign operators. At the same time there
have been efforts within the government and among the company's principles to develop the
resources and know-how to transform Sudapet into a fully self-sufficient enterprise in the oil
exploitation space.

Supermajor
From Wikipedia, the free encyclopedia
Jump to: navigation, search

"Supermajor" is a name used to describe the world's five or six largest publicly owned oil and
gas companies.[1][2][3]

The supermajors are considered to be BP plc, Chevron Corporation, ExxonMobil Corporation,

Royal Dutch Shell plc and Total SA, with ConocoPhillips Company also sometimes described as
forming part of the group

History
The history of the supermajors traces back to the "Seven Sisters", the seven oil companies which
formed the "Consortium for Iran" cartel and dominated the global petroleum industry from the
mid-1940s to the 1970s.[4][5]
The Seven Sisters were:

Anglo-Persian Oil Company (now BP);

Gulf Oil, Standard Oil of California (Socal) and Texaco (now Chevron);
Royal Dutch Shell; and
Standard Oil of New Jersey (Esso) and Standard Oil Company of New York (Socony) (now
ExxonMobil).

Before the oil crisis of 1973 the members of the Seven Sisters controlled around 85% of the
world's oil reserves.
The supermajors began to emerge in the late-1990s, in response to a severe fall in oil prices.
Large petroleum companies began to merge, often in an effort to improve economies of scale,
hedge against oil price volatility, and reduce large cash reserves through reinvestment.[6]
The following major mergers and acquisitions of oil and gas companies took place between 1998
and 2002:

BP's acquisitions of Amoco in 1998 and of ARCO in 2000;

Exxon's merger with Mobil in 1999, forming ExxonMobil;
Total's merger with Petrofina in 1999 and with Elf Aquitaine in 2000, with the resulting company
subsequently renamed Total S.A.;
Chevron's acquisition of Texaco in 2001; and
the merger of Conoco Inc. and Phillips Petroleum Company in 2002, forming ConocoPhillips.

This process of consolidation created some of the largest global corporations as defined by the
Forbes Global 2000 ranking, and as of 2007 all were within the top 25. Between 2004 and 2007
the profits of the six supermajors totaled US$494.8 billion.[7]

Composition and present status

Trading under various names around the world, the supermajors are considered to be:[1]

BP plc (United Kingdom);

Chevron Corporation (United States);
ExxonMobil Corporation (United States);

Royal Dutch Shell plc (Netherlands and United Kingdom); and

Total SA (France).

ConocoPhillips Company (United States) is also sometimes described as forming part of the
group.[3] As of 2011 ExxonMobil ranked first among the supermajors measured by market
capitalization, cash flow and profits.[8][9]
As a group, the supermajors control around 6% of global oil and gas reserves. Conversely, 88%
of global oil and gas reserves are controlled by the OPEC cartel and state-owned oil companies,
primarily located in the Middle East.[10] A trend of increasing influence of the OPEC cartel,
state-owned oil companies[4][11] in emerging-market economies is shown and the Financial Times
has used the label "The New Seven Sisters" to refer to a group of what it argues are the most
influential national oil and gas companies based in countries outside of the OECD, namely
CNPC (China), Gazprom (Russia), National Iranian Oil Company (Iran), Petrobras (Brazil),
PDVSA (Venezuela), Petronas (Malaysia), Saudi Aramco (Saudi Arabia).[12][13]

"Big Oil"
Petroleum and gas supermajors are sometimes collectively referred to as "Big Oil", a term that
emphasizes their economic power and perceived influence on politics, particularly in the United
States. Big Oil is often associated with the Energy Lobby.
Usually used to refer to the industry as a whole in a pejorative or derogatory manner, "Big Oil"
has come to encompass the enormous impact crude oil exerts over first-world industrial society

Sudan International Onshore/Offshore Bid Round 2012

The Republic of Sudans Oil Exploration and Production Authority (OEPA), part of the Governments Ministry of Petroleum,
announced that a Licensing Round will be launched in early 2012 offering six exploration blocks.
International Oil Companies hoping to participate in the round must have completed a Letter of Intent (LOI) to participate by 30
December 2011. The round will subsequently be launched on 15 January 2012, following which access to a data room will be
granted and companies will be invited to meet with the Ministry of Petroleum.
Companies will be bidding for an Exploration and Production Sharing Agreement (EPSA) over blocks 8, 10, 12B, 14, 15 and 18,
in which they will partner with Sudapet, Sudans National Oil Company. The blocks on offer cover approximately 640,000
square kilometres and are located throughout the Republic of the Sudan. Little exploration has been seen in these areas, with the
exception of wells drilled in Block 8, in the Blue Nile Rift Basin, and Block 15, located on the coast of the Sudanese Red Sea.

Locations of the blocks on offer in the Republic of Sudans 2012 International Bid Round.

Statesmans management team combines extensive commercial and technical

expertise with a track record of exploration success.
Statesman, via its subsidiary Statesman Africa Limited, was award of a seventy five per cent (75%)
working interest and Operator-ship in Block 14 Exploration & Production Sharing Agreement with the
Government of the Republic of the Sudan. This is a result of Statesmans successful participation in the
recent Sudan International Onshore/Offshore Bid Round. Express Petroleum & Gas Company Ltd has
been awarded a 15% participating interest and The Sudan National Petroleum Corporation (Sudapet)
has a 10% carried interest in the EPSA.
2

Block 14 is 100,000 km and hosts the Mourdi Basin (a sub-basin of the Kufra Basin) and southern
portion of the Mesaha Basin. Statesman will take the operational lead as Operator and has entered an
agreement with Agri Energy Limited in which Agri agreed to acquire a 49.9% shareholding of Statesman
Africa Limited. The minimum gross expenditure commitment over first 3 year commitment period is $12
million. The EPSA has two 1.5 year options for future exploration and a total of 6 years to declare a
discovery.
The regional geology suggests that lower Silurian and Devonian Shales (which are the source rocks to
the most prolific petroleum systems in northern Africa) may be present and mature within the block. The
seismic and gravity studies outlined the Mourdi Sub-Basin and Mesaha Basin extensions from Libya and
Egypt. Statesman believes the Mourdi Sub-basin is closely analogous to the Murzuq and Ghadames
basins in Libya. Statesman believes the Mesaha Basin is analogous to the Komombo, Northern Egypt
and Sirte Basins and contains a second cretaceous source rock formation.

Block 14 is still in the early stages of exploration. Previous exploration on Block 14 includes around 1,200
km (13 lines) of 2D seismic plus microbial, geochemical gravity and magnetic surveys. The acquired
seismic suggests a good structural environment for the presence of reservoir strata with good potential for
traps and seals. The previous operator identified a substantial lead inventory. Statesman is currently
reviewing the lead inventory and preparing a high resolution gravity and 2D seismic acquisition program
to upgrade the highest ranked leads.

CRS Report for Congress: The Role of National Oil

Companies in the International Oil Market

August 21, 2007

Robert Pirog
Specialist in Energy Economics and Policy
Resources, Science, and Industry Division
The national oil companies

Summary
In the United States, the term big oil companies is likely to be taken to mean
the major private international oil companies, largely based in Europe or America.
However, while some of those companies are indeed among the largest in the world,
by many important measures, a majority of the largest oil companies are state-owned,
national oil companies. By conventional definitions, national oil companies hold the
majority of petroleum reserves and produce the majority of the worlds supply of
crude oil. Since national oil companies generally hold exclusive rights to exploration
and development of petroleum resources within the home country, they also can
decide on the degree to which they require participation by private companies in
those activities.
The national oil companies typically do not operate strictly on the basis of
market principles. Because of their close ties to the national government, in many
cases their objectives might include wealth re-distribution, jobs creation, general
economic development, economic and energy security, and vertical integration.
Although these objectives might be desirable from the point of view of the nations
government, they are unlikely to be equivalent to the maximization of shareholder
value, the stated objective of the private international oil companies.
Differing objectives might be considered to be important only if they lead to
different characteristics and outcomes, which is the case for the national oil
companies. Many of these companies have been found to be inefficient, with
relatively low investment rates. They tend to exploit oil reserves for short-term gain,
possibly damaging oil fields, reducing the longer term production potential. Some
also have limited access to international capital markets because of poor business

practices and a lack of transparency in their business deals. High oil prices since late
2003 have masked the effect of some of these characteristics in the flow of oil
revenues. However, if the price of oil moderates, the potential supply constraint
related to the inefficient operations of the national oil companies may be a
destabilizing factor in the world oil market.
A wide variety of policy directions can be taken to mitigate the potential
challenge posed by the dominance of national oil companies. Demand management
policy can reduce the U.S. dependence on imports. The U.S. government can use its
political influence to try to encourage nations not to use national oil companies to
forward the aims of the government, but to follow commercial practices to maximize
revenue flows. An expanded supply of oil could be encouraged as a condition for
trade and aid agreements in some cases. Finally, promoting international trade and
recognized commercial practices could be encouraged.

Adnoc is the state-owned company of the United Arab Emigrates

CNOOC is a 71% state-owned company of China
INOC is the state-owned company of Iraq
KPC is the state-owned company of Kuwait
Libya NOC is the state-owned company of Libya
NIOC is the state-owned company of Iran
NNPC is the state-owned company of Nigeria
ONGC is the 71.4% state-owned company of India
PDVSA is the state-owned company of Venezuela
Pemex is the state-owned company of Mexico
Pertamina is the state-owned company of Indonesia
PetroChina is the 90% state-owned company of China
Petronas is the state-owned company of Malaysia
QP is the state-owned company of Qatar
Rosneft is the 75.16% state-owned company of Russia
Saudi Aramco is the state-owned company of Saudi Arabia
Sonatrach is the state-owned company of Algeria
Statoil is the 70.9% state oil company of Norway

Conclusion
Given projections of demand growth of about 50% by 2030, constrained
supply might imply sharply rising oil prices.
Venezuela provides an early example of how the political influence of a
government can affect the supply of oil, disturb existing market partnerships, both
with companies and with the United States, and forward the interests of U.S.
competitors. The private international oil companies are unlikely to be able to
counter national oil companies to preserve their own profit-seeking interests as well
as those of the U.S. market, which requires adequate physical supply at moderate

prices.

Characteristics of National Oil Companies

Because national oil companies may be motivated by different objectives than
private oil companies, their performance characteristics are also likely to be different.
Efficiency. Productive efficiency is normally defined as maximizing the
output associated with any given level of inputs. Measuring productivity in the oil
industry, compared to a typical manufacturing industry, is difficult because
geological factors enter into the process on the input side and may not be controllable
by management in the normal sense. However, comparative econometric productivity
studies within the oil industry do exist.13

Table 5. Relative Technical Efficiency of the Top Ten Oil Companies, 20022004

Source: Empirical Evidence on the Operational Efficiency of National Oil Companies, Eller, Stacy
L., Hartley, Peter, Medlock III, Kenneth, Table 5, p. 19.

International private oil companies were near the top of the study efficiency
rankings, and the national oil companies tended to be near the bottom of the rankings.
The average efficiency score in the seventy-six firm sample was 0.40. The five
major international oil companies (ExxonMobil, BP, Shell, Chevron, and
ConocoPhillips) average score was 0.73, and the average for the national oil

companies in the sample was 0.27.

Efficiency in producing revenues, as defined in EHM, is likely affected by the
national oil companies objectives that in general include a greater range of
motivating factors than value maximization. Subsidized sales and wealth distribution
are unlikely to be favorable to maximizing revenues, and in fact, when adjusted for
degree of vertical integration and government share of revenues, most of the apparent
inefficiency of Saudi Aramco, PDVSA, and Pemex is explained. NIOC and
PetroChina retain efficiency scores near the bottom of the sampled firms even with
the specified adjustments. The addition of vertical integration and government share
as explanatory variables suggest that the former is a desirable goal for national oil
companies, and the latter suggests that the national oil companies would be more
profitable without government participation. However, that outcome is unlikely.
Inefficiency is a problem not only for the national oil companies themselves but
for the world oil market as a whole. If the most inefficient firms tend to be in control
of the majority of the worlds exploitable oil reserves and the market demand is
projected to expand by approximately 30% by 2030, it would seem more likely that
the expansion could be accomplished by more efficient firms.14 However, those
firms, the international oil companies, hold a shrinking fraction of the worlds reserve
base.

Investment. Because of the demands of the government and national

treasuries, national oil companies may have a shorter time horizon for operational
decisions than the international oil companies. The national oil companies may have
an undue focus on earning current revenues and maximizing current production.
This could result in mis-management of existing fields, which allows a smaller
recovery percentage than theoretically possible, and a neglect of exploration and
development. In the longer term, damage to the world oil market could be enhanced
by the dominant position the national oil companies have in terms of potential
reserve access.

Table 6. Top Companies

Upstream Capital Expenditures, 2006
(billions of dollars)

Source: Energy Intelligence Research, The Energy Intelligence Top 100:

Ranking the World's Oil Companies, 2007 edition.

Reserves and Production. The non-commercial objectives of the national

oil companies could lead to constraints on their ability to replace reserves and expand
oil and gas production. The top ten companies in terms of oil reserve replacement
ratios do not include any of the top ten oil companies as shown in Table 1. More
importantly, the list does also not include any of the companies in Tables 2 or 3 that
list the top holders of oil reserves and the top oil producers. This implies that the
national oil companies, while holding the largest reserve base, as well as drawing
from that base at the highest production rate, are not restoring their positions through
exploration and discovery. The highest ranking attained by a national oil company
was PetroChina at number 26, having replaced 101% of produced reserves.
The inability of the industry to replace reserves implies that absent significant
technological innovation, it will be increasingly difficult to maintain, let alone
increase, oil production levels in the future. Only part of the problem may be due to
the limitations of the industry, however. It is likely, from a geological viewpoint, that
the largest oil reserve pools have already been discovered. The future may hold only
smaller deposits to be discovered, meaning that many more discoveries must be made
each year to replace ever-increasing levels of production.
Access to Capital. The International Energy Agency has estimated that over
the period 2001 to 2030, the world will need to invest $16 trillion in energy
infrastructure to meet the needs of projected demand. The oil sector is expected to
account for $3 trillion of the total.17 To accomplish this level of investment, it is
likely that the industry will need to draw on many sources of financial capital.
Since 2004, the international oil companies have had record-setting profit
performances. This financial strength allows them substantial latitude in accessing
financial resources. Because their own cash reserves have risen, internal financing
has become a viable option. Because of their strong balance sheet and income

statements, it is likely that they can access world capital markets for financing on
relatively favorable terms.18
National oil companies are in a weaker position with respect to the capital
markets. Their relative inefficiency in turning oil into revenues as discussed in this
report makes them less likely to receive favorable terms from international capital
markets. Their obligations to the national treasury to finance domestic welfare
programs, along with the below market price sale of their products at home, make it
less likely that they will have access to enough retained internal earnings to finance
optimal levels of exploration and development of oil resources. To the extent that
such companies experience a shortage of financial capital, it could result in higher
prices and the potential for physical shortages in the future.
If national oil companies do gain wide-spread access to the world financial
markets, this might not only spur upstream capital investment but might also provide
benefits to the companies and their interface with the global market. Compliance
with international accounting standards, more business transparency, as well as
certain basic standards of corporate responsibility might result from the national oil
companies exposure to international financial markets.

Policy Analysis19
Recognition of national oil companies growing dominance of the world oil
market has led some experts to view this as an energy security issue. The growing
strength of the national oil companies implies, at least in a relative sense, the
diminished importance of the private international oil companies. This dynamic
could transform the reaction of the market to demand and supply signals. Since a
major thread of current policy toward oil is let the market take care of it, a change
in the way the market works might call for significant adjustments in the policies of
oil-consuming nations.
Some of the policy options presented below have been extensively debated in
the past as features of broadly based energy strategies, while others are controversial
and would likely be difficult to implement. Others, such as the creation of a U.S.
national oil company are extremely unlikely to be considered while the world oil
market continues to function as a viable market.

Demand-Based Policy
The success of many economic policy measures designed to alter market outcomes
requires consideration of likely actions by both those who demand the product as
well as those who supply it. As a result, if oil-importing countries believe that the
growing importance of national oil companies are a potential threat to their ability to
gain access to desired supplies, not only should importers seek to change the
behavior of national oil companies, but they might also change their own energy
strategies. The key elements in such a demand-side policy are well known. They
include diversifying the supply base, so that potential political problems are less
likely to result in economic damage through reduced oil supply. In addition,
conservation that reduces demand, or at least reduces the growth in demand, perhaps
through taxes on imported oil or petroleum products, for example, might serve to
reduce the potential influence that oil-based actions have on the domestic economy.

Supply-Based Policy

Oil importing nations might also use their political influence to try to encourage
the national oil companies and their governments to alter their behaviors. The
companies might be encouraged to improve their efficiency and respond to market
signals more like privately owned firms. If the national oil companies find a need to
access international capital markets more regularly, this result might be achieved as
a natural result of exposure to the requirements of lenders. On a more political level,
governments might try to encourage the governments of national oil companies to
reduce their intervention in the operational decisions of the companies. This might
be difficult to achieve in countries like Venezuela under the Chavez government, but
progress likely can be made in more democratic environments. The clearest example
might be Statoil and Norway, which operates largely on market principles.

Objectives and Characteristics

of National Oil Companies
Objectives
In the oil industry, maximization of shareholder value is taken to mean that the
value of oil resources should be maximized through managing production,
exploration, and development activities to assure a functioning market. To ensure
the long-term viability of the company, reserve replacement is necessary. For the
company to grow, it must have the ability to expand production and sales to meet
demand growth in newly developing economies as well as in developed areas.
Technical efficiency in all parts of the supply chain leads to cost minimization as
well as improvements in product performance and environmental integrity.
Wealth Distribution. National oil companies may be involved in
redistributing the oil wealth of the nation to the society in general. This
redistribution can be accomplished through fuel subsidies, employment policies, and
social welfare programs among other programs. Fuel subsidies are common,
reducing the price of gasoline in Venezuela to $0.11 per gallon, $0.21 per gallon in
Iran, and $0.64 per gallon in Saudi Arabia.7 In contrast, gasoline had an average
price of $5.77 in Norway, one of the higher observed price levels in the world. While
subsidized fuel prices reduce energy prices to the general population, enhance
industrial and transportation resources, and protect the domestic economy from the
damaging effects of volatile world petroleum prices, the downside is that they are
very expensive in terms of lost potential revenues for the national oil company. The
artificially low price encourages demand growth, corruption, inefficient use of fuels,
and even arbitrage-based smuggling schemes. The expanded use of fuels
domestically leads to reduced exports and tightens supply in world markets, leading
to higher prices in the oil-importing countries. Examples of subsidy programs with
these effects include those observed in Iran, Nigeria, and Indonesia among others.8
Jobs Programs. Although the results vary with the demographic of the
country, national oil companies can be viewed as jobs programs for the domestic
economy. Table 4 shows that private oil companies have varying levels of

employment for each one million barrels of oil equivalent produced, but the degree
of variation is higher for the national oil companies. The data shows Saudi Aramco
with the lowest ratio of employees to oil produced. The low ratio may be the result
of efficiency within the organization, the large quantities of oil produced, or it may
reflect the small population and overall wealth of Saudi Arabia that minimizes the
need for a jobs program. The two Chinese national oil companies, CNOOC and
PetroChina, are near the lowest and also the highest in terms of number of employees
per barrel of oil equivalent produced. This outcome is likely the result of different
operational requirements, or different treatment of the companies by the government.

Table 4. Total Employees per Million Barrels Equivalent

Produced, 2004

Source: Ann Myers Jaffe, The Changing Role of National Oil Companies, Introduction and Summary
Conclusions, James A. Baker III Institute for Public Policy, March 1, 2007.

Economic Development. National oil companies are also used by their

governments as tools in the overall process of economic development. In some
nations, the petroleum industry is the first large economic sector opened to the world
economy. As such, the petroleum industry may be the first to introduce concepts of
international investment contract and property law, as well as accepted accounting
and financial standards, all necessary for economic development to proceed. The
industry may serve as a conduit for technology transfers to the larger economy. Local
content rules may be imposed to ensure the development of ancillary service
businesses to spread development dollars. The national oil company may also be
required to supply subsidized fuels to industries targeted in the nations development
plans.

Foreign Policy. National oil companies can also be used by their national
governments as a tool to achieve foreign policy goals, leading to direct alliances as
well as national oil company to national oil company ties that can pave the way to
political relationships. Oil is a strategic commodity in the world economy, and its
production and use can foster strategic relationships. For example, Saudi Aramcos
decision to raise oil output in the wake of the Iraqi invasion of Kuwait, and Chinas
oil-based relationships with Iran, Venezuela, Russia, and others can be viewed as
partly politically motivated.
Iran has used the possibility of oil cut-offs to the West as a threat, and possible
deterrent, in the controversy over its pursuit of nuclear weapons. Russia has
interrupted natural gas deliveries to Europe as a result of its conflicts with members
of the former Soviet Union over supply prices and transport fees.
Energy Security. Broadly based energy security is among the objectives of
the national oil companies. Security on the demand side means not allowing one
consumer to become critical to the national oil company. For example, PDVSA has
recently tried to direct its oil sales away from the United States in the hope of
reducing U.S. economic influence, and as a way to develop other consuming markets
for Venezuelan crude oil. However, in some cases technological factors make this
strategy difficult. A long-standing relationship between an oil exporter and importer
may lead to the investment in more-or-less specialized facilities that facilitate the use
of the exporting nations oil. In the United States-Venezuela case, Venezuela
produces relatively heavy crude oils, especially from the Orinoco basin projects. The
United States has refineries designed to use this crude oil. As Venezuela seeks to
diversify its customer base, it must find locations with refinery capacity suited to its
crude oil.
In other cases, energy security objectives for national oil companies are defined
in terms of security of supply. Supply security objectives in the well-functioning
world oil market are usually defined in terms of the diversity of producers and the
security of oil supply lanes. For some countries and their national oil companies, oil
supply security means the ownership, or exclusive rights to, desired supplies of oil.
Some analysts have identified China as a nation following this type of strategy. The
attempted purchase of Unocal, the U.S. based oil and natural gas company, by
CNOOC in 2006 likely was of interest to the Chinese mainly to gain access to natural
gas fields in southeast Asia, controlled by Unocal.
Vertical Integration. Although national oil companies in oil-producing
nations have their roots in upstream operations, some are striving to achieve vertical
integration.12 On an economic level, vertical integration allows the national oil
company to capture the value added from producing and selling petroleum products.
PDVSAs acquisition of Citgo in the United States provided refining as well as retail
marketing outlets for Venezuelan oil. In addition, demand security was enhanced
through gaining a position in the large U.S. gasoline market. In other cases, national
oil companies might be able to gain access to markets otherwise not available to
them. The national oil companies may also be able to achieve a greater degree of

diversification and mitigation of risk through vertical integration. Oil prices have
tended to be volatile. Profits may accrue to different parts of the supply chain at
different times and during various market conditions. Vertical integration may
enhance the ability of national oil companies to be profitable in changing markets.

The Market Position of National Oil Companies4

Rankings of companies can be accomplished using a number of different
criteria. In the oil industry, based as it is on current production to generate current
earnings and on reserve positions to ensure the future viability of the enterprise,
several standards need to be applied to assess the evolving nature of the companies
in the industry. Additionally, investment, in the form of exploration and
development expenditures, serves as a link between the present and the future,
ensuring an ongoing continuity for the company so that reserves are not unduly
depleted by current activities.

Table 1. Comparative Ranking of the Top Ten Oil Companies

Source: Energy Intelligence Research, The Energy Intelligence Top 100: Ranking the
World's Oil Companies, 2007 and 2001 editions.

Table 2. World Liquid Petroleum Reserves Holdings

Source: Energy Intelligence Research, The Energy Intelligence Top 100: Ranking the World's Oil
Companies, 2007 and 2001 editions.

Table 3 shows the ten leading producing companies in the world. A companys
ability to produce crude oil depends on access to oil deposits, but it also depends on
access to modern technology. The private international oil companies generally have
access to state-of-the-art technologies, which are less easily available to some other
firms. Gaining access to the best technology for exploration, development, and
production is one of the key motivations oil producing nations have for entering
production-sharing agreements with the private international oil companies.

Table 3. World Petroleum Liquids Production

(thousands of barrels per day)

Source: Energy Intelligence Research, The Energy Intelligence Top 100: Ranking the World's Oil
Companies, 2007 and 2001 editions.