Hydrocarbons - crude oil and natural gas - are found in certain layers of rock that are usually buried

deep
beneath the surface of the earth. In order for a rock layer to qualify as a good source of hydrocarbons, it
must meet several criteria.

RESERVOIR ROCK

For one thing, good reservoir rocks (a reservoir is a formation that

contains hydrocarbons) have porosity. Porosity is a measure of the
openings in a rock, openings in which petroleum can exist. Even though a
reservoir rock looks solid to the naked eye, a microscopic examination
reveals the existence of tiny openings in the rock. These openings are
called pores. Thus a rock with pores is said to be porous and is said to
have porosity (Figure 1).

Figure 1 :porosity

Another characteristic of reservoir rock is that it must be

permeable. That is, the pores of the rock must be connected
together so that hydrocarbons can move from one pore to
another (Figure 2). Unless hydrocarbons can move and flow
from pore to pore, the hydrocarbons remain locked in place and
cannot flow into a well. In addition to porosity and permeability
reservoir rocks must also exist in a very special way. To
understand how, it is necessary to cross the time barrier and
Figure 2: Permeability take an imaginary trip back into the very ancient past.

Imagine standing on the shore of an ancient sea, millions of years ago. A small distance from the shore,
perhaps a dinosaur crashes through a jungle of leafy tree ferns, while in the air, flying reptiles dive and
soar after giant dragonflies. In contrast to the hustle and bustle on land and in the air, the surface of the
sea appears very quiet. Yet, the quiet surface condition is deceptive. A look below the surface reveals
that life and death occur constantly in the blue depths of the sea. Countless millions of tiny microscopic
organisms eat, are eaten and die. As they die, their small remains fall as a constant rain of organic matter
that accumulates in enormous quantities on the sea floor. There, the remains are mixed in with the ooze
and sand that form the ocean bottom.

As the countless millennia march inexorably by, layer upon layer of sediments build up. Those buried the
deepest undergo a transition; they are transformed into rock. Also, another transition occurs: changed by
heat, by the tremendous weight and pressure of the overlying sediments, and by forces that even today
are not fully understood, the organic material in the rock becomes petroleum. But the story is not over.

For, while petroleum was being formed, cataclysmic events were occurring elsewhere. Great earthquakes
opened huge cracks, or faults, in the earth’s crust. Layers of rock were folded upward and downward.
Molten rock thrust its way upward, displacing surrounding solid beds into a variety of shapes. Vast blocks
of earth were shoved upward, dropped downward or moved laterally. Some formations were exposed to
wind and water erosion and then once again buried. Gulfs and inlets were surrounded by land, and the
resulting inland seas were left to evaporate in the relentless sun. Earth’s very shape had been changed.

Meanwhile, the newly born hydrocarbons lay cradled in their source rocks. But as the great weight of the
overlying rocks and sediments pushed downward, the petroleum was forced out of its birthplace. It began
to migrate. Seeping through cracks and fissures, oozing through minute connections between the rock
grains, petroleum began a journey upward. Indeed, some of it eventually reached the surface where it
collected in large pools of tar, there to lie in wait for unsuspecting beasts to stumble into its sticky trap.
However, some petroleum did not reach the surface. Instead, its upward migration was stopped by an

1
impervious or impermeable layer of rock. It lay trapped far beneath the surface. It is this petroleum that
today’s oilmen seek.

Petroleum Traps
Geologists have classified petroleum traps into two basic types: structural traps and stratigraphic traps.
Structural traps are traps that are formed because of a deformation in the rock layer that contains the
hydrocarbons. Two common examples of structural traps are fault traps and anticlines.

An anticline is an upward fold in the

layers of rock, much like an arch in a
building. Petroleum migrates into the
highest part of the fold, and its
escape is prevented by an overlying
bed of impermeable rock (A).

A fault trap occurs when the

formations on either side of the fault
have been moved into a position that
prevents further migration of
petroleum. For example, an
impermeable formation on one side
of the fault may have moved opposite
the petroleum-bearing formation on
the other side of the fault. Further
migration of petroleum is prevented
by the impermeable layer (B).

Stratigraphic traps are traps that

result when the reservoir bed is
sealed by other beds or by a change
in porosity or permeability within the
reservoir bed itself. There are many
different kinds of stratigraphic traps.
In one type, a tilted or inclined layer
of petroleum-bearing rock is cutoff or
truncated by an essentially
horizontal, impermeable rock layer
(C).

Figure 3:Traps and Anticlines

Or sometimes a petroleum-bearing formation pinches out; that is, the formation is gradually cut off by an
overlying layer. Another stratigraphic trap occurs when a porous and permeable reservoir bed is

2
surrounded by impermeable rock. Still another type occurs when there is a change in porosity and
permeability in the reservoir itself. The upper reaches of the reservoir may be impermeable and
nonporous, while the lower part is permeable and porous and contains hydrocarbons.

SECURING LEASES

Once a likely area has been selected, the right to drill must be secured before drilling can begin. Securing
the right to drill usually involves leasing the mineral rights of the desired property from the owner. The
owner may be the owner of all interest in the land, or just the mineral rights. As payment for the right to
drill for and extract the oil and gas, the owner will usually be paid a sum call a "lease bonus" or a "hole
bonus" for every well drilled on the leased land. He will also retain a royalty on the production, if any, of
the leased property. The royalty is the right to receive a certain portion of the production of property,
without sharing in the costs incurred in producing the oil, such as drilling, completion, equipping and
operating or production costs. The costs are borne by the holder of the right to drill and extract the
mineral, which right is usually referred to as the working interest.

Drilling
Once an area has been selected and the right to drill thereon has been
obtained, actual drilling may begin. The most common method of
drilling in use today is rotary drilling. Rotary drilling operates on the
principle of boring a hole by continuous turning of a bit. The bit is the
most important tool. The rest of the rig ( a derrick and attendant
machinery) is designed to make it effective. While bits vary in design
and purpose, one common type consists of a housing and three
interlocking movable wheels with sharp teeth, looking something like a
cluster of gears. The bit, which is hollow and very heavy, is attached to
the drill stem, composed of hollow lengths of pipe leading to the
surface. As the hole gets deeper, more lengths of pipe can be added
at the top. Almost as important as the bit is the drilling fluid. Although
known in the industry as mud, it is actually a prepared chemical
compound. The drilling mud is circulated continuously down the drill
pipe, through the bit, into the hole and upwards between the hole and
the pipe to a surface pit, where it is purified and recycled. The flow of
mud removes the cuttings from the hole without removal of the bit,
lubricates and cools the bit in the hole, and prevents a blow out which
could result if the bit punctured a high pressure formation. (See the
drilling rig to the right.)

The cuttings, which are carried up by the drilling mud, are usually continuously tested by the petroleum
geologist in order to determine the presence of oil.

Drilling To Total Depth

The final part of the hole is what the operating company hopes will be the
production hole. But before long, the formation of interest (the pay zone,
the oil sand, or the formation that is supposed to contain hydrocarbons) is
penetrated by the hole. It is now time for a big decision. The question is,
"Does this well contain enough oil or gas to make it worthwhile to run the
final production string of casing and complete the well?"

3
EVALUATING FORMATIONS

Examining Cuttings

To help the operator make his decision, several techniques have been
developed. One thing that helps indicate whether hydrocarbons have been
trapped is a thorough examination of the cuttings brought up by the bit. The
mud logger or geologist (Remember him? He's been there all along,
monitoring downhole conditions at the location.) catches cuttings at the flow
ditch and by using a microscope or ultraviolet light can see whether oil is in
the cuttings. Or he may use a gas-detection instrument.

Well Logging
Another valuable technique is well logging. A logging company is called to the well while the crew trips
out all the drill string. Using a portable laboratory, truck-mounted for land rigs, the well loggers lower
devices called logging tools into the well on wireline. The tools are lowered all the way to bottom and then
reeled slowly back up. As the tools come back up the hole, they are able to measure the properties of the
formations they pass. Electric logs measure and record natural and induced electricity in formations.

Some logs ping formations with sound and measure and record sound reactions. Radioactivity logs
measure and record the effects of natural and induced radiation in the formations. These are only a few of
many types of logs available. Since all the logging tools make a record, which resembles a graph or an
electrocardiogram (EKG), the records, or logs can be studied and interpreted by an experienced geologist
or engineer to indicate not only the existence of oil or gas, but also how much may be there. Computers
have made the interpretation of logs much easier.

Coring
In addition to these tests, formation core samples are sometimes taken. Two methods of obtaining cores
are frequently used. In one, an assembly called a "core barrel" is made up on the drill string and run to the
bottom of the hole.

As the core barrel is rotated, it cuts a cylindrical core a few inches in diameter that is received in a tube
above the core-cutting bit. A complete round trip is required for each core taken. The second is a sidewall
sampler in which a small explosive charge is fired to ram a small cylinder into the wall of the hole. When
the tool is pulled out of the hole, the small core samples come out with the tool. Up to thirty of the small
samples can be taken at any desired depth. Either type of core can be examined in a laboratory and may
reveal much about the nature of the reservoir.

to the rig, making it possible to mix large quantities of cement at the

site. The cementing crew mixes the dry cement with water, using a
device called a jet-mixing hopper. The dry cement is gradually
added to the hopper, and a jet of water thoroughly mixes with the
cement to make a slurry (very thin water cement).

Special pumps pick up the cement slurry and send it up to a valve called a cementing head (also called a
plug container) mounted on the topmost joint of casing that is hanging in the mast or derrick a little above

4
the rig floor. Just before the cement slurry arrives, a rubber plug (called the bottom plug) is released from
the cementing head and precedes the slurry down the inside of the casing.

The bottom plug stops or "seats" in the float collar, but continued pressure from the cement pumps open
a passageway through the bottom plug. Thus, the cement slurry passes through the bottom plug and
continues on down the casing. The slurry then flows out through the opening in the guide shoe and starts
up the annular space between the outside of the casing and wall of the hole. Pumping continues and the
cement slurry fills the annular space.

A top plug, which is similar to the bottom plug

except that it is solid, is released as the last of the
cement slurry enters the casing. The top plug
follows the remaining slurry down the casing as a
displacement fluid (usually salt water or drilling
mud) is pumped in behind the top plug.
Meanwhile, most of the cement slurry flows out of
the casing and into the annular space. By the time
the top plug seats on or "bumps" the bottom plug
in the float collar, which signals the cementing
pump operator to shut down the pumps, the
cement is only in the casing below the float collar
and in the annular space. Most of the casing is full
of displacement fluid. After the cement is run, a
waiting time is allotted to allow the slurry to
harden. This period of time is referred to as waiting
on cement or simply WOC.

After the cement hardens, tests may be run to

ensure a good cement job, for cement is very
important. Cement supports the casing, so the
cement should completely surround the casing;
this is where centralizers on the casing help. If the
casing is centered in the hole, a cement sheath
should completely envelop the casing.

Cement also seals off formations to prevent fluids from one formation migrating up or down the hole and
polluting the fluids in another. For example, cement can protect a freshwater formation (that perhaps a
nearby town is using as its drinking water supply) from saltwater contamination. Further, cement protects
the casing from the corrosive effects that formation fluids (as salt water) may have on it.

Perforating
Since the pay zone is sealed off by the production string and cement, perforations must be made in order
for the oil or gas to flow into the wellbore. Perforations are simply holes that are made through the casing
and cement and extend some distance into the formation.The most common method of perforating
incorporates shaped-charge explosives (similar to those used in armor-piercing shells).

5
Shaped charges accomplish penetration by creating a jet
of high-pressure, high-velocity gas. The charges are
arranged in a tool called a gun that is lowered into the well
opposite the producing zone. Usually the gun is lowered in
on wireline (1). When the gun is in position, the charges
are fired by electronic means from the surface (2). After
the perforations are made, the tool is retrieved (3).
Perforating is usually performed by a service company that
specializes in this technique.

Acidizing
Sometimes, however, petroleum exists in a formation but is unable to flow readily into the well because
the formation has very low permeability. If the formation is composed of rocks that dissolve upon being
contacted by acid, such as limestone or dolomite, then a technique known as acidizing may be required.

Acidizing is usually performed by an acidizing service company

and may be done before the rig is moved off the well; or it can
also be done after the rig is moved away. In any case, the
acidizing operation basically consists of pumping anywhere from
fifty to thousands of gallons of acid down the well. The acid
travels down the tubing, enters the perforations, and contacts the
formation. Continued pumping forces the acid into the formation
where it etches channels - channels that provide a way for the
formation’s oil or gas to enter the well through the perforations.

Fracturing
When sandstone rocks contain oil or gas in commercial quantities but the
permeability is too low to permit good recovery, a process called fracturing
may be used to increase permeability to a practical level. Basically, to
fracture a formation, a fracturing service company pumps a specially
blended fluid down the well and into the formation under great pressure.
Pumping continues until the formation literally cracks open. Meanwhile,
sand, walnut hulls, or aluminum pellets are mixed into the fracturing fluid.
These materials are called proppants. The proppant enters the fractures in
the formation, and, when pumping is stopped and the pressure allowed to
dissipate, the proppant remains in the fractures. Since the fractures try to
close back together after the pressure on the well is released, the proppant
is needed to hold or prop the fractures open. These propped-open fractures
provide passages for oil or gas to flow into the well. See figure to the right.

ARTIFICIAL LIFT

After the well has been perforated, acidized or fractured, the well may not produce by natural flow. In
such cases, artificial-lift equipment is usually installed to supplement the formation pressure.

6
Sucker-Rod Pumps
The artificial-lift method that involves surface pumps is known
as rod pumping or beam pumping. Surface equipment used in
this method imparts an up-and-down motion to a sucker-rod
string that is attached to a piston or plunger pump submerged
in the fluid of a well. Most rod-pumping units have the same
general operating principles.

Injection Wells
In the ordinary producing operation only a portion
of the oil in place is recoverable by primary
production methods. Such methods include free-
flowing wells and production maintained by pumps.
As oil is extracted from a reservoir or sands the
pressure which brings the oil to the well is
reduced. Secondary recovery methods are
intended to increase the recoverable percentage of
the oil in place by injecting a substance such as
gas or water into the producing formation. The
injected substance is intended to increase the
pressure on the oil in the formation and drive it
toward the well-bore.
A well, called an injection well or water injection well, is usually drilled in order to inject the substance.
Sometimes a previously drilled, abandoned well can be reworked as an injection well. When water is
used as the injectant it is often produced on the property itself. Excess water produced by operating wells
may be diverted to the injection well and used as the injectant. This method of water disposal usually
alleviates the need for a separate water disposal well. If the water from the producing wells does not
provide enough injectant to provide proper pressure for secondary recovery, a water supply well may be
required to provide an adequate supply of water.

OIL PRODUCTION

Once an accumulation of oil has been found in a porous and permeable

reservoir, a series of wells are drilled in a predetermined pattern to
effectively drain this "oil pool". Wells may be drilled as close as one to
each 10 acres (660 ft. between wells) or as far apart as one to each 640
acres (1 mile between wells) depending on the type of reservoir and the
depth to the "pay" horizon. For economic reasons, spacing is usually
determined by the distance the reservoir energy will move commercial
quantities of oil to individual wells.The rate of production is highest at the
start when all of the energy from the dissolved gas or water drive is still
available. As this energy is used up, production rates drop until it becomes
uneconomical to operate although significant amounts of oil still remain in
the reservoir. Experience has shown that only about 12 to 15 percent of
the oil in a reservoir can be produced by the expansion of the dissolved
gas or existing water.

Secondary Recovery
Waterflooding is one of the most common and efficient secondary recovery processes. Water is injected
into the oil reservoir in certain wells in order to renew a part of the original reservoir energy. As this water
is forced into the oil reservoir, it spreads out from the injection wells and pushes some of the remaining oil

7
toward the producing wells. Eventually the water front will reach these producers and increasingly larger
quantities of water will be produced with a corresponding decrease in the amount of oil. When it is no
longer economical to produce these high water-ratio wells, the flood may be discontinued.As mentioned
previously, average primary recoveries may be only 15% of the oil in the reservoir.

Properly operated waterfloods should recover an additional 15% to 20% of

the original oil in place. This leaves a substantial amount of oil in the
reservoir, but there are no other engineering techniques in use now that
can recover it economically.In most cases, oil reservoirs suitable for
secondary recovery projects have been produced for several years. It takes
time to inject sufficient water to fill enough of the void spaces to begin to
move very much oil. It takes several months from the start of a waterflood
before significant production increases take place and the flood will
probably have maximum recoveries during the second, third, fourth, and
fifth years after injection of water has commenced. The average flood
usually lasts 6 to 10 years.

Operation
When all equipment is in place, the oil may begin to flow into the holding tanks to await pick up. It can be
expected that a well will not be in production for certain times due to adverse weather conditions,
mechanical malfunctions and other unforeseen circumstances. After the production period commences, it
is necessary to incur certain costs in order to bring the oil to the surface. These costs include normal
maintenance on the pump and other equipment, replacement of any pipe or tanks as needed,
compensation to the operator of the pump, and payment of any incidental damages to the owner of the
surface rights of the leased property. In some cases, the oil in a pay zone will be mixed with salt water. In
such cases, the oil must be separated from the salt water and the salt water disposed of in a manner
which is not harmful to the environment. The water may be hauled away by tank truck but often this
phenomenon requires the drilling, nearby the oil producing well, of another well into which the salt water
will be pumped. The cost of this water disposal well is normally considered to be a cost of operation.
Finally, there may be additional costs incurred in opening up a new pay zone when any presently
producing pay zone becomes economically unfeasible. Because opening a new pay zone involves the
installation of very little, if any, new equipment, the costs involved therein usually are not very substantial.

Sale of oil
Once the oil is out of the ground and into the holding tanks, it must be sold. In most cases each holder of
a working interest has the right to take his portion of production in kind, therefore, make his own
arrangements for its sale. It is not uncommon, however, for all the holders of a working interest of a well
to enter into the same arrangement with the same buyer of the oil production.

These sale contracts are normally entered into for periods

of not longer than a few months but in no case longer than
one year. The buyer of the oil will generally be advised by
the operator of the working interest as to the identity and
extent of ownership of each of the holders of the working
interest, as well as the identity of the royalty holders and
the amount of their interests. The information will be
compiled on division orders which are the basis upon which
the buyer of the oil can divide the proceeds of sale among
the various holders.

The buyer of the oil will pick up the oil from the holding tanks at periodic intervals, gauge it and remit the
remaining proceeds in the proper amounts to the holders of the working interest and the royalties.

8
9