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Overview of oil and gas
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OIL & GAS OPERATIONS, INDUSTRY AND BUSINESS PROCESSES: AN OVERVIEW Being paper presented by: Mr. Kayode Adebiyi MBA, FCA, ACTI MIoD to 400 level students of to 400 level students of DEPARTMENT OF ACCOUNTING, COVENANT UNIVESITY, OTA NOVEMBER 14, 2023 Mr. Kayode Adebiyi Managing Director HONEYROCK MULTICONSULT LTD 18B, BayoAjayi Street, Off Hakeem Balogun Street, Marwa Brooks Estate, Alausa, Ikeja, Lagos. 08033181225,07064078211 Email: hmlconsultancy@outlook.com
Crude Oil Characterization Main characteristics of crude oil and gas. Hidden underground Highly regulated Capital and Technology intensive High risk and uncertainty Strict regulation at all stages. Ready finance and cutting-edge technology Crude Oil Characterization
CompanyStructure Most oil and gas companies are segmented and organized according to business segment, assets, or function.
Generally, thisconsistsof: UPSTREAM MIDSTREAM DOWNSTREAM
Integrated/Supermajors (upstream anddownstream): Refinery http://www.npl.co.uk/upload/img_400/oilrig.gif Getting Raw Oil & Gas to the Refinery Getting Refined Products to the Consumers A Fully-Integrated OilCompany (Example:ExxonMobil)
Refining Exploration Production Marketing • This unit is on the Focus of Industry • Industry’s scope runs from finding oil and gas reservoirs to getting refined products to our customers 7
MAIN ASPECT OF ENERGY BUSINESS VALUE CHAIN MID STREAM POWER STREAM DOWN STREAM UPSTREAM • Pipeline • Trucking • Shipping • LNG terminals • Refining • LNG • Retail sales • Exploration • Production • Industry • Domestic • Each business owns a value chain • To operate in each of them gives an important position to a company compared to her competitors
The American Petroleum Institute divides the petroleum industry into fivesectors: • Upstream sector(exploration, development and production of crude oil or naturalgas); • Midstreamsector • Downstream (oil tankers, refiners, retailers andconsumers); • Pipeline sector;and • Service and supplysector THE AMERICAN PETROLEUM INSTITUTE CLASSIFICATION OFTHEPETROLEUMINDUSTRY
Theupstreamsegmentofthebusinessisalsoknownas the explorationandproduction(E&P)sector. Upstream=E&P
E&P encompasses activities related to searching for, recovering and producing crude oil and natural gas.
NIGERIAQIT CAMEROUN Abandonment Acreageacquisition LAGO S ReservoirMgt Operations QI L Basinanalysis E&P cycle Facilities installation Exploration and Production Life Cycle Prospectgeneration Facilities construction Facilities design Economicanalysis ATA Field development Wildcat Drilling Field Development Plan Economic analysis Appraisaldrilling 6
Exploration Appraisal Development Production Abandonment • Exploration : • Find a new oil & gas reservoir • Appraisal : • Ensure new finding is commercially feasible • Development : • Develop surface facilities to extract & process oil & gas from the reservoir • Production : • Produce oil & gas and maintain the facilities until end of field life / contract period • Abandonment : • Close the production and return the field into original condition
It’sall aboutthe WELLS. EKTINTERACTIVE.COM
Where to locate them, How deep and how far to drill them, How to design, construct, operate and manage them...
...to deliver the greatest possible return on investment with the lightest, safest and smallest operational footprint.
Exploration The explorationsector involves obtaining a lease and permission to drill.
Drillingis physically creating the “borehole” in the ground that will eventually become an oil or gas well. This work is done by rig contractors and service companies in the Oilfield Services business sector. Drilling
SimpleorComplex Wells can be drilled on land or in miles of water. They can be less than 100 feet (30 meters) deep and totally vertical, or 20,000 feet (6,000 meters) deep and horizontal.
Drilling There are even highly complex “J” and “S” configurations with numerous branches, or laterals, emanating from the original, or “mother”, hole.
Production The productionsector of the upstreamsegment maximizes recovery of petroleum from subsurface reservoirs. Production brings the oil to the surface.
Production- Decline Curve The inevitable fact of every oil or gas field is that production will eventually decline. The question is how fast?
DeepwaterDrilling Some of the largest oil and gas discoveries of the last decade have been found in deep water off the coasts of Africa and South America as well as the Gulf of Mexico.
UnbelievablyComplex The upstreamindustry is arguably the most complex of all the oil and gas business sectors.
Whoarethe Players? Independents, Majors, NOCs, Oilfield Services
Independents The companies that focus solely on Exploration and Production are called Independents.
Independentsareknownfortheirabilitytomakedecisions andmovequickerthanotherindustryparticipants. They arealsoconsideredearlyadoptersofthemore innovativedrillingand productiontechnologies.
Majors Major Oil Companies (also called Integrated Oil Companies - IOCs) also have assets in thedownstream- the refineries and service stations that bring the products to the end-user customers.
These companies have the prominent and advertisedbrands that you are familiar with:
NOCs National Oil Companies (NOCs) are those industry participants that are owned and managed by governments around the world.
OilfieldService The Oilfield Services sector of the Upstream segment consists of companies that build the infrastructure and provide the specialized equipment.
Exploration services Drilling services Well completion Production services Offshore TheOilfieldServicesindustryprovidesthefollowingsupport:
OilfieldServices Oilfield services and supply companies do not typically produce oil and gas or own the assets that contain them.
At a typical drilling well site, there could be 25-30 different oilfield service companies handling the mechanical, technical and analytic operations needed to successfully complete a well. OilfieldServices
OilReserves Reserves,Reservoirs,Types ofCrudeOil EKTINTERACTIVE.COM
OilReserves The vast amounts of crude oil and natural gas trapped underground are referred to as reserves.
OilReserves Proven reserves are the estimated quantities which geological and engineering data demonstrate can be recovered in future years from known reservoirs, assuming existing economic, technical and operating conditions.
Oil&Gas ReservoirCharacteristics Oil and gas are not found in easy-to-access underground pools or puddles but, instead, are trapped in various rock formations and geological structures.
Oil&Gas ReservoirCharacteristics There are four key types of geological formations needed to have oil and gas reserves in place
Reservoir – where oil or gas reside, having migrated through microscopic structures in the surrounding rock
Seal – which is impermeable and stops the migration of the oil and gas
Types ofCrudeOil: Heavy,Light,Sweet,Sour EKTINTERACTIVE.COM
TypesofCrudeOil There are hundreds of different grades of crude oil that come out of the ground. Most commonly, the crude will be described as light or heavy and sweet or sour.
E&PProjectsLifeCycle Thelife-cycleofanE&Pprojectcouldbeshownsimplyinfigurebelow andneeddecisionforeachstage:
