Upstream Exploration and Production of Petroleum

Course: Petroleum Engineering

Class: EPT2-M1

Docent

__________________________________
Arlindo Jamba – 20222182
Carlos Pope – 20221914
Emanuel Kanyanga – 20220006
Inês Nengo-20220442
Lília Janeiro – 20221562
Milza Marques – 20220300
INTRODUCTION .............................................................................................................................. 4
Drilling........................................................................................................................................................ 6

The Oil Exploration Process ........................................................................................................................ 8

Upstream Oil and Gas Production ............................................................................................................ 10

Examples of upstream companies ............................................................................................................ 11

Conclusão ....................................................................................................... Error! Bookmark not defined.

INTRODUCTION
The oil and gas industry is divided into three main segments: Upstream, Midstream and Downstream.
In this work, we will focus on the upstream segment, which encompasses activities related to oil and
gas exploration and production.
The objective of the upstream is to identify and extract hydrocarbon reservoirs, using advanced
techniques and specialized technologies. In this work, we will explore the main steps of the upstream
process and discuss its importance in petroleum engineering.
DEVELOPMENT

Upstream is an English term used to express a certain step in a management process? In Portuguese,
the literal translation would be "upstream", but its meaning can be interpreted according to the context
to which it is inserted.
When a company needs to develop a project, it must make the planning of the same is very well
elaborated, so that its execution happens without any kind of problem.
Thus, a series of issues that need to be discussed before "getting the hands of the mass", such as the
resources that will be used, how will be the production, who will be responsible, the objective of the
project and its importance, what will be the expenses, expenses, goals and so on.
When we talk about Upstream, it is very common for the term to be associated with the oil industry.
Making a quick analogy, the Upstream of the oil industries are based on the exploration and production
of resources, while the Downstream corresponds to the logistics of commercialization.
Thus, the first part of the process is destined to the activities necessary for the harvest of the oil in the
wells, as well as the transformation of the product into raw material to be used or marketed in this
same way.
Some questions need to be raised for everything to go well, such as the exact location of the wells, to
what extent it is possible to drill them, what the projection of this action is, its construction, operation,
management and so on.
Upstream is a term for the stages of operations in the oil and gas industry that involve exploration and
production. Upstream companies primarily deal with the exploration and early production stages of
the oil and gas industry.
Oil and gas companies can generally be divided into three segments: upstream, midstream, and
downstream.
Many large oil companies are called "integrated" because they combine upstream activities with
midstream and downstream operations, which occur after the production phase to the point of sale.
The upstream sector of the oil and gas industry includes all the steps involved, from preliminary
exploration to resource extraction. Upstream companies can be involved in all stages of this phase of
the oil and gas industry's life cycle, or they can only be involved in part of the upstream sector.
In extractive industries, upstream refers to the early stages of operation, such as exploration, drilling,
and mining. "Upstream costs" refers to the costs of drilling and pumping mineral resources before
sending them to the next stage of the production process.
 Drilling

Initially, before drilling, some studies need to be done by geology and geophysics professionals to
locate the possible oil deposit.
Once the site has been selected, scientists survey the area to determine its boundaries and conduct
environmental impact studies if necessary. The oil company may need lease agreements, titles, and
right-of-way accesses before drilling the land. For off-shore locations, legal jurisdiction must be
determined.
After the legal issues are resolved, the team prepares the ground:
 The terrain must be cleared and level, and access roads can be built.
 Since water is used in drilling, there must be a water source nearby. If there is no natural source, the
crew drills a water well.
 The crew digs a reserve pit, which is used to dispose of rock piles and drilling mud during the drilling
process, and plastic lines to protect the environment. If the site is an ecologically sensitive area, such
as a swamp or virgin forest, then seedlings and mud should be disposed of off-site – taken by truck
instead of being placed in a hole
Once the earth has been prepared, the crew digs several holes to make way for the platform and the
main hole. A rectangular well called abasement is dug around the location of the actual drill hole. The
cellar provides a workspace around the hole for workers and drilling accessories. The crew begins
drilling the main hole, often with a small drilling truck instead of the main equipment. The first part
of the hole is larger and shallower than the main part and is lined with a large diameter conductive
tube. The team extracts additional holes to the side to temporarily store the equipment – when these
holes are completed, the rig equipment can be placed and assembled.
Source: Internet

Figure 1-

Depending on the remoteness of the drilling site and its access, it may be necessary to bring equipment
by truck, helicopter or barge. Some platforms are built on ships or barges for work in inland waters
where there is no foundation to support a platform (such as in swamps or lakes).
The team installs the rig and begins drilling operations. First, from the initial hole, the team drills a
hole in the surface to a predefined depth, which is somewhere above where they think the oil trap is
located.
Once they reach the pre-set depth, they must run and cement the housing - place the sections of the
lining pipe in the hole to prevent it from collapsing on itself. The casing tube has spacers around the
outside to keep it centered in the hole.
The crew of the casing places the casing tube in the hole. Cement crew pumps fix the casing pipe using
a bottom plug, a cement paste, an upper plug, and drilling mud. The pressure of the drill mud causes
the cement mud to move through the housing and fill the space between the outside of the housing and
the hole. Finally, the cement is allowed to harden and then tested for properties such as hardness,
alignment and a proper seal.
Another name for the upstream oil sector, which is actually more representative of what occurs at this
stage of development of an oil and/or natural gas asset, is the exploration and production (E&P) sector.
The E&P segment which is the first part of the oil and gas production process.
The exploration stage involves the search for hydrocarbons, which are the main components of oil and
natural gas. Topographic surveys are carried out to help identify the most promising areas. The goal is
to locate specific minerals underground in order to estimate the amount of oil and gas reserves before
drilling. Geologists study rock formations and layers of sediment within the soil to identify if there is
oil or natural gas.
The process may involve seismology, which uses substantial vibrations as a result of machines or
explosives to create seismic waves. The way seismic waves interact with a reservoir containing oil and
gas helps identify the location of the reservoir. Once it has been determined that there appear to be
reserves under the ground, the test drilling process can begin.
However, the main element of the upstream process is the geological analysis and exploitation of oil
reserves.
In geological analysis, mini-earthquakes are artificially triggered to generate data on the composition
of the subsoil, based on the speed differences of the shock waves. This data is then evaluated with
geophones. Seismic reflection is used to produce three-dimensional images of the subsurface, even at
great depth, to identify potential oil deposits. The quality and quantity of the oil well are then
determined by exploratory drilling, and in one of the final steps of the process, the oil is extracted.
Thus, the upstream services sector includes horizontal directional drilling, development of sensors for
acquisition of measurements during drilling (MWD), special software for evaluation of the collected
data and construction of drilling engines.
Although technology in the oil production sector has seen great strides in recent years, locating and
extracting oil remains an expensive and risky business today.

The oil exploration process

Oil and gas exploration is an important part of the upstream sector. Oil exploration requires very
sophisticated techniques, and the technology available for oil exploration is advancing rapidly.
Oil and gas exploration encompasses the processes and methods involved in locating potential sites
for oil and gas drilling and extraction. Early oil and gas explorers relied upon surface signs like natural
oil seeps, but developments in science and technology have made oil and gas exploration more
efficient. Geological surveys are conducted using various means from testing subsoil for onshore
exploration to using seismic imaging for offshore exploration. Energy companies compete for access
to mineral rights granted by governments by either entering a concession agreement, meaning any
discovered oil and gas are the property of the producers, or a production sharing agreement, where the
government retains ownership and participation rights. Exploration is high risk and expensive,
involving primarily corporate funds. The cost of an unsuccessful exploration, such as one that
consisted of seismic studies and drilling a dry well, can cost $5 million to $20 million per exploration
site, and in some cases, much more. However, when an exploration site is successful and oil and gas
extraction is productive, exploration costs are recovered and are significantly less in comparison to
other production costs.
Source: Internet

Figure 2: detection of petroleum reserves by the seismic method

Proven reserves measure the extent to which a company thinks it can produce economically
recoverable oil and gas in place, as of a certain point in time, using existing technology. The estimates
for proven reserves are updated over the life of a lease, based on regular reassessments. Technology
can impact the estimates: For example, the advances in hydraulic fracturing and horizontal drilling
caused the U.S. Geological Survey to increase its proven reserves estimate for the Marcellus Shale by
40 times the original value. In addition to technology, prices and existing infrastructure influence
reserves estimates.
Typically, exploration begins in an area that has a high potential to store a resource, usually due to
local geology and known nearby oil deposits. In an area of high potential, further exploration is
completed to delineate a resource. Geophysical and geochemical analysis is done using techniques that
include induced polarization (IP) surveys, drilling and testing, electric currents, and so on.

In the exploration phase, the goal is to locate and estimate the potential of a resource. If an area shows
potential to host a resource, exploratory wells are drilled to test the resource. In the oil and gas sector,
test drilling is an important component of the exploration phase. If the exploratory well is successful,
the next step is to build wells and extract the resource. Upstream companies also operate the wells that
bring crude oil or natural gas to the surface.
Upstream oil and gas production

Upstream oil and gas production is driven by companies that identify, extract, or produce raw
materials.
Upstream oil and gas production and operations identify deposits, drill wells, and recover raw materials
underground. They are also often called exploration and production companies. This sector also
includes related services such as platform operations, feasibility studies, machinery leasing and
extraction of chemical supplies. Many of those employed in the upstream part of the industry include
geologists, geophysicists, and service rig operators, engineering firms, drilling and seismic scientists
and contractors. These people are able to locate and estimate reserves before any actual drilling activity
begins.
Oil and gas production is one of the most capital intensive industries: It requires expensive equipment
and highly skilled labors. Once a company identifies where oil or gas is located, plans begin for
drilling. Many oil and gas companies contract with specialized drilling firms and pay for the labor
crew and rig day rates. Drilling depths, rock hardness, weather conditions and distance of the site can
all affect the drilling duration. Tracking data using smart technologies can help with drilling efficiency
and well performance by providing real-time information and trends. While every drilling rig has the
same essential components, the drilling methods vary depending on the type of oil or gas and the
geology of the location.
Onshore In onshore drilling facilities, the wells are grouped together in a field, ranging from a half
acre per well for heavy crude oil to 80 acres per well for natural gas. The group of wells are connected
by carbon steel tubes which sends the oil and gas to a production and processing facility where the oil
and gas are treated through a chemical and heating process. Onshore production companies can turn
on and off rigs more easily than offshore rigs to respond to market conditions.
Offshore drilling uses a single platform that is either fixed (bottom supported) or mobile (floating
secured with anchors). Offshore drilling is more expensive than onshore drilling, and fixed rigs are
more expensive than mobile rigs. Most production facilities are located on coastal shores near offshore
rigs.
Hydraulic Fracturing Fracking, or hydraulic fracturing, is a technique using a high pressure liquid to
extract oil or gas from geologic formations. While the technology has existed since the 1940s, it
became more economical in the late 1990s when George Mitchell's Mitchell Energy & Development
Corporation patented slick water fracturing. The use of fracking has led to recovering gas, followed
by oil, from previously inaccessible parts of drilled wells in addition to extractions from coaled wells,
tight sand formations and shale formations. Fracking is now used in 90% of new U.S. oil wells,
especially as the number of conventional reservoirs has decreased.
Examples of upstream companies

Upstream oil and gas production and operations identify deposits, drill wells and recover raw materials
from underground, and are involved in exploration and extraction. Many of those employed in the
upstream part of the industry include geologists, geophysicists, service rig operators, engineering
firms, scientists, and seismic and drilling contractors.
China National Offshore Oil Corporation and Schlumberger (SLB) are examples of large companies
that focus on upstream services.
Today, most of the world's oil giants have upstream and downstream activities, and are known as
integrated oil companies. Many of the largest upstream operators today are therefore large diversified
oil and gas companies such as Exxon-Mobil, BP and Chevron.
CONCLUSION

In summary, the upstream sector plays a crucial role in the global supply chain by providing essential
natural resources. However, it faces ongoing challenges due to complex operations, environmental
issues, and changing societal demands and expectations. Adapting to these challenges is key to
ensuring a sustainable and responsible industry capable of meeting present and future energy and
resource needs
REFERENCES

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