Understanding O&G-MDSO 801 (1st Vol)

MDSO - 801 (Vol.
1)
UNDERSTANDING OIL & GAS BUSINESS
EMBA - Oil & Gas Management
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COLLEGE OF MANAGEMENT AND ECONOMIC STUDIES (CMES)
Course Code: MDSO - 801 (Vol. 1) Course Name: Understanding Oil & Gas Business UNIVERSITY OF PETROLEUM & ENERGY STUDIES
Contents
Unit 1 Unit 2 Unit 3 Unit 4
Basic Concepts ..................................................................................................... 1 The Micro-System .............................................................................................. 28 The Exploration of Oil ....................................................................................... 55 Oilfield Processing ............................................................................................. 79
Unit 1
Basic Concepts
Objectives
After reading this unit, you will be able to: y Understand what is petroleum, what are its constituents, and their significance. y Know about composition and characteristics of oil and gas. y Understand what are the main products from oil and gas and their uses. y Get familiar with some of the common concepts, definitions and terminologies used with respect to oil and gas.
1
Notes
Introduction
Oil industry is perhaps the most exciting industry in the history of civilization. Although the history of oil traces back to seepages of oil as early as 3000 B.C., the real thrill of it started with the oil boom in the USA. When Rockefeller was asked to tell very briefly how people get rich, he replied Some people find oil, some don't. It's amazing how much oil and gas has penetrated into our lives today. The toothbrush we use to start the day, the suit we wear, the fuel we use in our cars to drive to office, the car interiors, back home with cozy furniture, tapestry, and mattress of the bed we sleep on - all are petrochemicals i.e. chemicals from petroleum. Fig. 1.1 Petrochemicals in our Lives
Polyester Clothing
Nylon Can
PVC Pipes
Acrylic Carpet
Understanding Oil & Gas Business
2 Notes
Oil business has been responsible for prosperity, war, intrigues and adventure. Search of oil and gas leads us to some of the most exotic forests, deserts, and ocean. Perhaps some of the most beautiful man made sights in the world are offshore platform in deep ocean, array of offshore rigs in a remote desert or jungle or an illuminated petrochemical complex at night.
Fig. 1.2 Offshore Jackup Rig
Let us understand the importance of oil and gas industry by looking at its share in the energy supply to the world (Fig. 1.3). More than 60 % of the energy needed in the world is provided by oil and gas. Fig. 1.3 Distribution of Energy Supply
UNIT 1 Basic Concepts
And it is not really as expensive as it sounds (Fig. 1.4). Fig. 1.4 Price Comparison
3 Notes
To understand oil and gas business, one needs to understand a whole spectrum of activities from oil well to petrochemicals. It is also important to understand the trend and future of the industry in terms of technology, economics and pricing of energy resources. Energy price is very important for the economy of any country. As stated earlier, oil and gas provide over sixty percent of the energy requirement of the world. Oil had been the dominant component of the mix. Oil prices have been controlled from time to time to a high level by the petroleum exporting countries (OPEC). But one positive development is that now natural gas is overtaking oil. During the year 2000, the increase in the energy consumption of the world was 180 Million Tons of oil equivalent. Out of this, share of oil was 20%, share of gas was 55% and that of coal was 15%. Its is expected that gas will replace oil as dominant energy provider in near future. It is cleaner, cheaper and new discoveries and reserves of gas field are coming up in many parts of the world including India. Very often the question comes up how long the hydrocarbon resources (oil and gas) will last. Many predict oil and gas will start depleting in another 20 to 30 years.
4 Notes
But the world is keeping on adding new hydrocarbon finds and developing technology to recover more hydrocarbons from existing oil and gas fields. Also major R&D work is going on to find how to exploit huge reserves of Methane Hydrates i.e. an unstable compound of water and methane, lying untapped deep below the ocean in many parts of the world including coastal areas of India. It is a fact that although the oil and gas industry will continue to dominate for several decades from now, at some point of time other forms of energy will take over. Oil and gas industry generates wealth, and a part of the wealth is being put into R&D to innovate for the future. We shall cover the topic in a later section on future trends. Let us not call the industry just oil and gas industry - it is energy industry. Let us start on the path of understanding oil and gas business. The first step is to understand what is oil and what is gas, how it originated and what we get out of it. Unit 1 focuses on getting to understand the basics.
What is Petroleum
Petroleum is a word derived from the Latin words Petra (rock) and Oleum (oil). It essentially comprises of naturally occurring hydrocarbons i.e. compounds made of carbon and hydrogen atoms. These hydrocarbons are trapped below the surface of the earth, in porous rocks, in the form of oil and gas. From where did the hydrocarbons come? There are various theories. The most accepted theory is the organic theory: 6 Hydrocarbons came from remains of the bodies of prehistoric land based animals, marine organisms (plankton) and vegetation, which were washed away and buried below the earth during upheavals on the earth's surface millions of years ago. 6 In the course of time the buried organic matters decomposed and the carbon and hydrogen present in these reacted under heat and pressure to form various compounds, generally hydrocarbons. 6 The hydrocarbons got trapped in the porous rocks and were covered by hard sedimentary rocks that formed over it. They acted as cap or seal to prevent hydrocarbons from escaping. As explained later, carbon and hydrogen atoms can join together to form molecules of various sizes and structures. Hydrocarbons could be a small molecule with combination of one or a few carbon atoms with hydrogen (e.g. Methane CH4 , Ethane - C2H6). Or it could be very large molecule by combination of dozens of carbon and hydrogen atoms (e.g. Wax - C20H42) or even thousands of carbon and hydrogen atoms (e.g. Polythene). Petroleum is essentially composed of hydrocarbons with some other impurities. The words petroleum, oil and gas and hydrocarbon are all used synonymously in the oil and gas industry.
5 Activity 1a
What is the difference between crude oil and vegetable oil in terms of composition and properties?
6 Notes
Hydrocarbons in petroleum could be in gaseous, liquid or solid form depending on the type and size of hydrocarbon molecule:
6 It can be in gaseous form as natural gas, which can be
associated with oil in an oil field or found free of oil in a gas field.
6 It can be in liquid form as crude oil (dark and viscous), or
condensate (clear and volatile like motor gasoline).

6 The solid and semi-solid forms of petroleum are called
asphalt and tar. Petroleum as a general term is used for all three mentioned above. Table 1.1 Light and Heavy Hydrocarbon Molecules Name Methane Hexane Octane Wax Formula CH4 C6 H14 C8 H18 C20 H42 Phase Gas Liquid Liquid Solid
Reservoir, Well and Well Fluid

Through the burial and decomposition of organic material, huge amount of hydrocarbons are formed below the earth's surface. Movements and convulsions below the earth's surface resulted in different types of geological formations , where the hydrocarbons are trapped. In these formations, the hydrocarbons are contained by porous rocks known as source rock, covered with strata of hard sedimentary rocks known as cap rock which settled over them. When huge quantity of recoverable hydrocarbon is trapped in rock formations below the earth, it is called Reservoir. Fig. 1.5 depicts a typical formation of a reservoir. The surface on earth above the reservoir is called oilfield or gas field or condensate field depending on what it produces.
Fig 1.5 Hydrocarbon Formation

Well pipe
Earth Surface
Sediments forming impervious layer called Cap Rock.
7 Notes
Water
Earth movements cause folds in earth crust. Gas Oil Hydrocarbons trapped by the Cap Rock, in the pores of sedimentary rock act as a reservoir.
It must be noted that the reservoir in an oil field is not like a pool of liquid or a container filled with gas. It is oil or gas trapped in pores of porous sedimentary rocks, covered by impervious cap rock. To produce oil from the reservoir, wells are drilled through the surface of the earth. A well is then perforated at right location from where the oil or gas enters the well pipe and rushes out because of high pressure. Formation of reservoir structure is explained in greater detail in Unit - 3. What is Well Fluid? The fluid that comes out of the well in an oilfield or gas field is called well fluid. Well fluid is a mixture of crude oil, natural gas and saline water along with small amounts of sand and sludge. The water is called formation water or produced water. Points to Remember If the crude oil had been just made of hydrocarbons, processing to get the final products would have been easy and at low cost. But a number of undesirable components come out with the well fluid, which increases the processing blocks and processing cost.
8 Activity 1 b
Is Helium a useful chemical? What are its uses?
6 Other components like sulfur compounds, carbon dioxide, nitrogen, traces of metals are also present. Their removal constitutes part of processing. 6 Proportion of oil, water and gas may vary widely from one field to other. It changes substantially with time during production. 6 Normally, well fluid comes out on its own pressure, which depletes with time. Artificial methods of recovery are used in later stages of production.
Crude Oil and Natural Gas

The first processing step in an oilfield is separation between crude oil, natural gas and produced water. What is Crude Oil? Crude oil is a mixture of about 500 organic chemicals, predominantly hydrocarbons (molecules made of carbon and hydrogen). It is recovered from underground reservoirs, normally 1000 - 5000 meters down the earth. Crude oil can be of wide variety and characteristics. It could be very fluid, very viscous or semisolid. The colour could be black, dark brown, amber or light brown. It is also called Petroleum. What is Natural Gas? Natural gas is a mixture of the lightest hydrocarbons like methane, ethane, propane and butane. It also contains water to its saturation limit. It may also contain hydrogen sulphide (H2S), carbon dioxide (CO2), nitrogen (N2) and occasionally small amounts of helium (He). When natural gas comes out of the well along with crude oil, it is called associated gas. Associated gas is produced along with crude in a field which is essentially an oil producing field.
When the well produces mainly gas with very little liquids, it is called free gas. Free gas production can be shut when we do not want it. When acid gases like CO2 and H2S are present in substantial quantity, the gas is called sour gas. Otherwise it is called sweet gas. Various Forms of Natural Gas There often exists a lack of understanding regarding the various terminologies or nomenclature used in the industry in describing components or forms of natural gas. The most commonly used ones are NGL, LPG, LNG, and CNG. Let us understand what are these and how they differ from natural gas. NGL: During production or transportation of gas, the heavy components such as pentane or hexane, condense due to natural cooling and separate out as liquids. This is called NGL (Natural Gas Liquids). As the name suggests, this is not really a gaseous component, but volatile liquid. LPG: The propane/ butane component of the natural gas is liquefied under moderate pressures and is supplied as cooking gas fuel. This is called LPG (Liquefied Petroleum Gas) LNG: Natural gas in bulk is liquefied under very low (cryogenic) temperature for transportation in large quantities by marine tankers. This is bulk of the natural gas in liquefied form and is re-vaporized after receiving it at its destination from tankers, to be used as natural gas. The objective of converting the gas to LNG is transportation in large quantities or export by marine tankers. This is called LNG (Liquefied Natural Gas).
9 Notes
10 Notes
CNG: Natural gas is compressed to high pressures for use as automotive fuel or for transportation in small quantities. This is natural gas in highly compressed form but not liquefied. It is called CNG (Compressed Natural Gas).
Elementary Concepts on Hydrocarbons

Now that we know crude oil is made of around 500 components, mainly hydrocarbons and natural gas is mainly light hydrocarbons, it becomes important to understand a little basic about hydrocarbon molecules. The whole petroleum and petrochemical industry revolves around 6 Starting with the hydrocarbon molecules as produced naturally from the well. 6 Rebuilding them into valuable products by various types of processing. What is Hydrocarbon? Hydrocarbons are compounds made of carbon and hydrogen. The hydrocarbon molecules are formed by6 Bonding of hydrogen atoms to carbon atoms. 6 Bonding of a number of carbon atoms to form chain or cycle or a combination of chain and cycle. 6 The number of carbon atoms bonded together can be a few or many, in various combinations, creating numerous chemicals. 6 The bonding of carbon atoms could be in the form of a straight chain, branched chain or cyclic manner.
Typical hydrocarbon structures are depicted in Fig. 1.6. Fig. 1.6 Hydrocarbon Structure
Straight Chain Hydrocarbon Cyclic Hydrocarbon
11 Notes
H H H H H H | | | | | | H - C- C- C- C- C- C - H | | | | | | H H H H H H
(C6H14)
Toluene C 7H 8
The phase (solid, liquid or gas) of the hydrocarbon depends on the number of carbon atoms joined together in a chain e.g. CH4 (METHANE) C6H6 (BENZENE) C20 H42 (WAX) : : : GAS LIQUID SOLID
Crude oil is made of a mixture of more than 500 components, mainly Hydrocarbons, which are the desired components. Crude oil contains from light components as dissolved gases (LPG) , light liquids (Petrol, diesel) to heavy stock like wax, tar and resins. The more carbon atoms a hydrocarbon molecule has, 6 the "heavier" it is (the higher is its molecular weight). 6 and the higher is its boiling point.
Composition of Crude Oil

Crude oil is predominantly made of hydrocarbons. It is composed of three main hydrocarbon groups: 6 Paraffins 6 Naphthenes 6 Aromatics It also contains unstable hydrocarbons called olefin. Paraffins are straight chain compounds, chemically stable. Lighter ones (CH4 , C2H6) are gas. Heavier molecules are liquid (oil) or solid (wax).
12 Activity 1d
Write down structural formula of seven hydrocarbons made of six carbon atoms
Naphthenes consist of carbon rings, with/without side chains. Saturated with hydrogen, naphthenes are also chemically stable. Lighter naphthenes are liquids and heavier ones could be solid. Aromatics are compounds having a ring of six carbon atoms with alternating double and single bonds and six hydrogen atoms. They are relatively unstable. Olefins are double bonded hydrocarbon chains, normally produced during high temperature processing of petroleum. Olefins are unstable and polymerize easily i.e. a large number of olefins can combine together easily to form large gummy or plastic molecules.
Fig. 1.7 Types of Hydrocarbons
Paraffins Olefins
Methane CH4
Ethane C 2H 6
Propane C 3H 8
Propylene C 3H6
Normal Butane nC4H10
Isobutane
Aromatics
Cyclohexane C6H12
Dimethyl Cyclopentane C7H14
Naphthenes
Benzene C 6H 6
Toluene C 7H 8
Xylene C8H10
Some Important Concepts on Crude Oil

Carbon Numbers The hydrocarbons are often referred in terms of number of carbon atoms rather than whole formula. Example: C1 = Methane C4 = Mixture of Butane and hydrocarbons with 4 carbon atoms C7 = Mixture of all hydrocarbons with 7 carbon atoms. For further clarity let us put down some of the paraffin hydrocarbons the symbol (-) indicating carbon to carbon bonds: Methane Ethane Propane Butane CH4 C 2H 6 C 3H 8 C4H10 CH4 CH3 - CH3 CH3CH2CH3 CH3 - CH2 - CH2 - CH3 (normal butane or n-butane) Butane structure can also be branched chain type as given below: CH3 - CH - CH3 CH3 (Isobutane or i-butane) Both the structures of butane have same number of carbon atoms and same number of hydrogen atoms i.e. C4H10. The only difference is how the carbon atoms are bonded with each other. This makes them different chemical entities but with very similar and close physical properties like boiling point and vapor pressure. The branched chain hydrocarbons of same carbon numbers, same number of hydrogen atoms and same chemical formula are called isomers.
13 Notes
14 Notes
Now let us look at Pentane. Pentane C5H12 CH3 - CH2 - CH2 - CH2 - CH3 (n-pentane)
Pentane can have quite a few isomers: CH3 - CH - CH2 - CH3 CH3 CH3 - CH - CH3 CH2 CH3 Thus one can have more and more isomers as the number of carbon atoms in the chain increases. In addition to the numerous isomers, there are other types of hydrocarbons like olefins (double bonded or triple bonded hydrocarbons). C5 and higher hydrocarbons can have cyclic structures (naphthenes and aromatics) and there could be molecules with combination of cyclic and straight chain hydrocarbons. For example C6 hydrocarbon can be compounds of 6 Normal paraffinic chain structure (e.g. normal hexane) 6 Isomers (iso-hexanes) 6 Olefinic structures or structures with double bond (hexenes) 6 Cyclic structure (benzene) Thus just saying C6 means a number of hydrocarbons with six carbon atoms put together in various forms. That explains: 6 How innumerable varieties of hydrocarbon molecules are possible. 6 How with same number of carbon atoms, say C8, numerous hydrocarbon compounds are possible. Higher the number of carbon atoms, more numerous is the possible hydrocarbon compounds.
Classification of Crude Oil Various crude oils are often referred by their API Gravity. API Gravity is expressed as (141.5/ Sp. Gravity - 131.5). As specific gravity is in the denominator, API Gravity is higher for lighter crude and lower for heavier crude. A comparative idea of this gravity unit can be obtained by comparison with water: Water: 10 API
15 Activity 1e
Calculate API Gravity of crude oils with specific gravity of 0.8, 0.9 and 0.95
Typical API Gravity figures for crude oil are Mumbai High Crude : Arabian Crude : Venezuelan Crude : 40 API - Light Crude 34 API - Medium Crude 15 API - Heavy Crude
There could be sub-categorization as Medium Heavy or Light Medium. Another common classification is based on Characterization Factor, which depends on API Gravity and Boiling Point. The crude oils are also classified in terms of chemical nature e.g. 6 Paraffinic base 6 Asphaltic base 6 Intermediate base 6 Naphthenic base Crude oils for which the residue after distillation contains paraffin wax is called paraffinic. If the residue contains asphalt, it is called asphaltic base and so on. Refinery processing scheme and product yields depend on type of crude in terms of chemical nature and gravity. It also indicates the type of product it can yield.
16 Notes
As typical example: 6 Paraffinic base crude do not yield good bitumen (road tar) and is not good for lubricating oil manufacture. But it is good for diesel. 6 Light crude contains more of gasoline. 6 Medium crude is good for diesel production. 6 Heavy crude may give better bitumen. 6 Naphthenic crudes are good for lubricating oil. Cut or Fraction Crude Oil and its products are mixtures of several components. Each component has a boiling point. It is interesting to examine what would be the boiling point of mixture of several liquids. Q - What is the boiling point of a mixture of two liquids A and B mixed 50-50, A and B having a boiling points of 70oC and o 80 C respectively? Q - What is the boiling point of a mixture of four liquids in equal parts having boiling points of 100,200,300 and o 400 C? None of the above mixtures will have a single boiling point. If you start boiling such a mixture, it will start boiling close to the boiling point of the lightest component. The lightest component will start vaporizing faster and as it gets removed (along with some of heavier components), the boiling temperature will keep rising. Towards end the last bits of the heaviest component will be left behind and will boil at close to its boiling point. Thus mixtures do not have a single boiling point, it has a boiling range - from the initial boiling point to the final boiling point.
Liquid mixtures are identified with their boiling range. Crude oil being a mixture, has a boiling range. Each product like gasoline or kerosene are also mixtures and have a boiling range. Cuts, Fractions and Carbon Numbers Crude oil is a mixture of over 500 components. It has a boiling range of around 40-600oC. Each product from Crude oil is also mixture of several components (hydrocarbons). The hydrocarbons range from C1 to C65 in terms of carbon numbers. Product of a particular boiling range taken out of crude is defined as cut or fractions. The products are identified as cuts from crude of certain boiling ranges and carbon numbers. Table 1.2 Petroleum Product Cuts and Carbon Numbers Product / Cut Natural Gas Gasoline Kerosene Diesel (Gas Oil) Jet Fuel (ATF) Lube Oil Bitumen/Tar Boiling Range <20 oC 40 - 200 oC 180 - 250 oC 240 - 350 oC o 170 - 240 C o 350 - 450 C 450 oC+ Carbon Number C1- C4 C5 - C10 C10 - C15 C14 - C20 C10 - C15 C20 - C30 C30 ++
17 Notes
Petroleum Products Crude oil (Oil) and natural gas (Gas) mixed along with water, comes out of the well as well fluid. Crude oil and natural gas together can be broadly referred as petroleum. Petroleum is just a raw material. Let us see what products we get from oil and gas that comes out from well head.
18 Notes
Well Head to Energy and Petrochemicals

There are two distinct uses of well head oil and natural gas as fuel and as high value products. Primary use of the petroleum products in the early days of its exploration has been as fuel. But later with the development of petrochemical area (plastics, fibers etc.), emphasis has shifted to greater valorization of the raw material. Let us look at the table below to understand this. Table 1.3 Petroleum as Fuel and as Value Products
Fuel and Products
Calorific Value (Kcal/Kg)
Price US Dollars/Ton
Coal Crude Oil Fuel Oil Motor Gasoline Polythene Polystyrene
6,500 10,400 10,000 11,000 Not fuel Not fuel
80 150 120 180 500 550
The high calorific value of the petroleum products, its low cost in the past and its suitability for use as relatively clean fuel created incentive to consume as fuel. But in the current economic scenario, valorization to higher value products has become integral part of oil and gas industry. It is important to note that besides producing fuel and automotive products like gasoline or diesel, both crude oil and natural gas provide feed stock for petrochemicals. Feed stocks are component of crude oil and natural gas that are converted into high value petrochemical products like polythene, polyester, synthetic rubber and synthetic fiber etc. It is apparent from the table above, there is substantial valorization once the oil or gas is converted to petrochemicals. The macro-system from well head to Petrochemicals has been dealt in detail in the next section. For an initial understanding of the petroleum products let us have a look at the simple block diagram given in Fig. 1.8.
Fig. 1.8 Petroleum Utilization Blocks

Oil Reservoir Oil field Processing Transportation Gas Oil Naphtha
19 Activity 1f
Gas
Refinery Petrochemical Complex Power Generation
Refinery Products Petrochemical Product
Gas Processing
Petrochemical Feed stock (Ethane / Propane) Gas
Name five items of daily use made from petrochemical source and name the petrochemical e.g. Toothbrush is made from nylon.
Power
The various blocks in overall system are: 6 Well fluid is processed at the oilfield first. Oil and gas are separated, made transportable and despatched to the Refinery and Gas Processing Facility respectively. 6 Refinery produces products like petrol, diesel oil, lubricating oil etc. It also produces feed stock (Naphtha) for petrochemical (plastic, fiber etc.) manufacture. 6 Gas Processing Facility purifies the gas from undesirable components and separates feedstock for petrochemical production. 6 Petrochemical feed stocks from Gas Processing or Refinery or both are sent to a Petrochemical Complex for production of petrochemical. 6 The balance gas is used as fuel for power generation or as industrial fuel. Each individual block in the above diagram could be a separate company. And each of these blocks could be located far away from each other in the same or different countries. This makes the oil and gas industry a real global industry.
20 Notes
Some important terms often used in oil and gas industry with respect to the block diagram Offshore : Oil or gas field situated in the sea / ocean. Onshore : Land based oil or gas field. Upstream :The blocks covering reservoir, production, processing and transportation of oil and gas is referred as upstream blocks. Downstream:Gas Processing, Refinery and Petrochemical Facilities are referred as downstream blocks. Products from Natural gas The natural gas is made mainly of the four lightest hydrocarbons i.e C1 (Methane), C2 (Ethane), C3 (Propane) and C4 (Butane). As gas separates out of the crude oil, it pulls out a little bit of heavier hydrocarbons like C5, C6 etc. Table 1.4 shows the typical composition of gas and use of various components towards high value product. Table 1.4 Gas Composition and Utilization
Component Methane (C1) Ethane (C2) Propane (C3) Butane (C4) Composition Utilization Volume % 50-96 Fuel, Petrochemical feedstock, power generation 2-15 Petrochemical feedstock 1-12 Petrochemical feedstock, LPG 0.5-3 Petrochemical feedstock, LPG 0.1-1 Refinery blending stock, petrochemical feedstock 0-15 Toxic, corrosive and undesirable component 0-30 No fuel value, corrosive, undesirable component 0-30 No fuel value, corrosive, undesirable component Saturated Undesirable component 100
Heavies (C5+) (NGL) Hydrogen Sulfide (H2S) Carbon Dioxide (CO2) Nitrogen Water Total
The points to note here are that: 6 There is a wide range of gas composition, varying from field to field and well to well. 6 Only consistent trend is the reducing pattern of the hydrocarbon constituents from the lightest to the heavier ones e.g methane followed by ethane and heavier hydrocarbons. 6 Utilization of gas as fuel is the easiest but lowest in the value chain. 6 Utilization of gas to make petrochemicals is the highest in the value chain. Hence very often the components of the gas are separated by gas processing to be used for manufacture of petrochemicals. While Table 1.4 gives a range for gas composition, typical gas composition are given in Table 1.5. Table 1.5 Typical Gas Composition
Component (Volume%) Methane (C1) Ethane (C2) Methane rich Associated gas Sweet Gas (mildly sour) 94.5 2.8 1.0 0.2 Traces Nil 1.5 Nil Saturated 100.0 76.5 12.2 6.5 1.8 1.0 Nil 2.0 300 ppm Saturated 100.0 Sour gas Gas with high N2 71.5 10.2 5.7 1.0 0.5 3.5 7.6 Nil Saturated 100.0 62.5 4.2 2.5 0.5 0.1 Nil 5.4 24.8 Saturated 100.0
21 Notes
Propane (C3) Butane (C4)
Heavies (C5+) (NGL)
Hydrogen Sulfide(H2S) Carbon Dioxide Nitrogen Water Total
Obviously each of these gases will have different processing techniques and problems in the Gas Processing Plant. These will be dealt with later. But let us look at the obvious 6 The methane rich gas will have very little feedstock for petrochemicals. 6 The associated gas is rich in petrochemical feedstock and LPG. 6 The sour gas will need treatment to remove highly toxic and corrosive Hydrogen Sulfide. 6 The nitrogen rich gas will have low calorific value.
22 Notes
Products from Crude Oil The five hundred odd components mostly hydrocarbon ranging from C1 to C65 gives wider range of products. Each of the product by itself is a composite of numerous hydrocarbons. The crude oil is processed in the refinery to separate the base stock (raw products) by distillation into 'cuts'. Then the various product base stocks are processed and treated to meet specifications. Table 1.6 Products from Crude Oil Refining Product
LPG Naphtha Motor gasoline Kerosene Aviation Turbine Fuel Diesel oil Fuel oil Lubricating oil Bitumen (asphalt) Paraffin Wax
Use
Domestic fuel, Petrochemical feedstock Petrochemical feedstock Automotive fuel Domestic fuel, lighting Aero plane fuel Automotive fuel Industrial fuel Industrial lubricants Road tar Medicine, cosmetics
Key Specifications
Vapor Pressure Boiling range, composition Octane number Smoke point Freezing point Cetane number Viscosity Viscosity Penetration Index Pharmaceutical specs.
The important petroleum products produced in bulk in a refinery are presented in Table 1.6. Each of the products has to meet certain performance specifications. Only one typical specification is stated in the table for a preliminary understanding of its significance with respect to the usage. It must be remembered that besides performance specifications, there are strict specifications to meet environment and emission norms. These are related to polluting components like sulfur, aromatics etc.
Petrochemical Products / Petrochemicals What are petrochemicals? Petrochemicals are usually plastic products and chemicals that are derived from petroleum and natural gas and are made on a large scale (approximately >10,000 tons per annum upwards). As indicated in the earlier sections, certain components from gas processing plants and refinery are used as feedstock for manufacture of petrochemicals (e.g ethane, propane, naphtha). Petroleum products from refinery and natural gas, supply over 50% of the feedstock for the entire chemical industry and more than 50% of organic chemicals. As you can see in the next table, petrochemical products have permeated into every facet of our lives. A vast majority of them are polymers, whose molecules are tailored by reaction process to suit specific characteristics or properties. Table 1.7 Petrochemicals
Types Plastics Bulk Petrochemicals Polythene Polypropylene Polystyrene PVC Polycarbonate Polyesters Polypropylene Nylon Polyurethane Cellulose Polyacrylonitrile Use Bags, laminates, boxes, shoes, fibers, toys, electronic goods, engineering items, numerous items of daily use
23 Activity 1a
Fibers
Fabric, clothing, bags, ropes, carpets, and numerousother irtems
Units Specifically Used in Oil and Gas Industry

Oil industry uses certain specific units for production rates and volumes which will be bused frequently in our text. Due to past history of oil and gas industry which is predominantly the history of exploitation of hydrocarbon resources by the companies of American origin, the American units are more often used in the industry rather than Metric Units. Here are some important units commonly used with which one must get familiar.
24 Notes
6 Crude-oil volume is usually measured in barrels. 6 One barrel holds 42 gallons (159 liters). 6 Weight or mass of crude in India is in metric tons (tonne). 6 A barrel of average crude oil weighs 0.150 ton, as a thumb rule. It must be remembered that it depends on the density of the crude oil. 6 Million Barrels of Oil Equivalent (MBOE) means amount of gas or any other fuel whose calorific value or heating value is equivalent of one million barrels of crude oil. 6 Oil production capacity or refinery capacity are often expressed in Barrels Per Day (BPD) or Barrels Per Standard Day (BPSD). Roughly 20,000 BPSD is equivalent to 1 Million Tons per year of crude, taking an average density of crude. [Note: It obviously will depend on density of crude oil.] 6 Some typical conversion figures used in the oil industry are given in Table 1.8. Table 1.8 Commonly Used Measurement Units in Petroleum Industry
Unit Weight or Volume 1 Metric Ton (Tonne) 1 Barrel (Bbl) Conversion Factor = 7.33 Barrels = 1.165 Cubic Meters = 0.136 Tonnes = 0.159 Cubic metres = 1 Kilo Liter (KL) = 0.858 Tonnes = 6.289 Barrels = 1.111 Billion CuM of Natural Gas = 39.2 Billion Cubic Feet Natural Gas = 0.805 Million Tonnes LNG = 0.90 Million Tonnes Crude Oil = 0.73 Million Tonnes LNG = 1.38 Billion CuM of Natural Gas = 1.23 Million Tonnes Crude Oil = 20,000 Barrels per standard day of crude
1 Cubic Meter (CuM) 1 Million Tonne of Crude
1 Billion CuM of natural gas 1 Million Tonne of LNG 1 Million Tons Per Year of crude
Summary
In this section we talked about the origin of petroleum (oil and natural gas) and its composition. Oil and gas are made mainly of hydrocarbons that originated from decomposed organic material buried under earth's surface. Elementary chemistry was touched upon to clearly define what is hydrocarbon. We defined the various forms in which gas is used like LPG, LNG, NGL or CNG. Also the various products from oil and gas were identified. Petrochemical products were defined and how oil and gas provides the feedstock for manufacturing valuable petrochemical products was explained. We learnt the definition and concepts regarding:
Reservoir Well Fluid Associated Gas NGL Boiling Range Offshore Reservoir Rock Crude Oil Free Gas LNG Cuts Onshore Cap Rock Natural Gas Sweet Gas LPG Fractions Platform Trap Produced Water Sour Gas CNG FPSO
25 Notes
Besides common terminologies, commonly used units for measurement of weight and volume of petroleum was explained.
Questions
Since this section explains elementary concepts about crude oil and defines certain basic terminologies used in the industry, an objective type questionnaire or quiz is the best way to judge the competence attained by the participants.
Objective type questions

Please circle the correct answer or answers. Each question has one or more correct answers.
26 Notes
No.
1
Question
Total number of chemical components in crude oil isThe predominant components in crude oil are known as Reservoir or hydrocarbon deposits below the earth surface are found as huge lakes or sea of oil. LPG is made of
Answer
(a) (b) (c) (a) (b) (c) (a) (b) (c) (a) (b) (c) (a) (b) (c) (a) (b) (c) (a) (b) (c) (a) (b) (c) 100 500 250 Paraffin Aromatics Hydrocarbon True False Partly true Propane and Ethane Propane and Butane Butane LPG Ethane Methane Marshy lands Shallow waters Deep waters Above 100 Between 85 and 95 Below 85 Floating Process System Offshore Floating Production and Storage Offshore Floating Production & Storage Offloading LPG CNG NGL Reservoir Rock Cap Rock 20,000 Barrels per day 100,000 Barrels per day 75,000 Barrels per day Naphtha Kerosene LPG Ethane All of above Insulating Material for furnaces Optical Lens Pressure Vessels Gas Turbine blades 15 to 35 US$/Barrel 22 to 35 US$/Barrel 15 to 25 US$/Barrel 15 to 22 US$/Barrel Making Petrochemical Transportation of Gas To generate power Motor Gasoline Ethylene Naphtha Propylene Lube Oil Polypropylene Transcontinental pipeline Marine Tankers CNG
The largest constituent of natural gas is FPSO is preferred for use in
Octane number of petrol used in cars in India is FPSO stands for
Arrange the following in decreasing density i.e from heaviest downwards. Oil and gas are contained in 5 Million Tons per year of crude means
10 11
(a) (b) (c) (a) (b) (a) (b) (c)
12
Which of the following is used as feedstock to make Petrochemicals
13
Which of these items can not be made from Petrochemicals
(a) (b) (c) (d) (e) (a) (b) (c) (d) (a) (b) (c) (d) (a) (b) (c) (a) (b) (c) (d) (e) (f) (a) (b) (c)
14
Crude oil price during the current year has been in the range -
15
Conversion of Gas to LNG is made for Which are the products from a Petroleum Refinery
16
17
To transport gas from Qatar to Japan, use is made of
18
Naphthenes are
(a) (b) (c) (d)
19
MTOE means
(a) (b) (c)
20
The most predominant component of natural gas is
21
Which of the following gases is heavier than air LPG contains mainly Which of the following is heavier
22 23
(a) (b) (c) (d) (a) (b) (c) (a) (b) (a) (b)
24
LPG is used as domestic fuel because
(a) (b) (c)
25
Which is the heaviest crude of the three
(a) (b) (c)
Hydrocarbons Straight Chain Hydrocarbons Non-hydrocarbons Hydrocarbons with cyclic structure Million Tons of Oil Export Metric Tons of Oil Equivalent Million Tons of Oil Equivalent Methane Ethane Propane Butane Nitrogen Ethane Butane Methane Butane 1 cubic Meter of gas at 2 bar and 30 deg C 0.2 cubic Meter of same gas at 20 bar and 30 deg. C It is liquid at atmospheric pressure It is gas at ow l pressure It is liquid at moderate pressure 45 API 35 API 37 API
27 Notes
Unit 2
The Macro-system
Objectives
After reading this unit, you will be able to: y Understand the oil and gas chain from oil well down to the petrochemical industry. y Get an overview of business environment in each block of the chain. y Get an overview of the major players in the chain.
28 Notes
From Wellhead to Petrochemicals

A block diagram representation of the entire industry is given in Fig. 2.1. The first step in the block is oilfield processing. The well fluid is processed in or in the vicinity of the oilfield. The processing steps here are: 6 Separation of crude oil, natural gas and water which comes as mixture in the form of well fluid. 6 Oil and gas are treated to meet specifications for transportation and any customer specification. Oil is normally treated to remove water, and then it is pumped and metered before putting it through pipeline. 6 Similarly gas is dehydrated, compressed and metered before putting it through pipeline. Separated water (called produced water) is treated to meet environment specifications for discharging it. 6 Sometimes the produced water is re-injected into the reservoir. In such case it is treated to meet reservoir quality specifications. Separated gas is sent by pipeline to the gas processing plant, which may be located away from the field. Transportation of oil and gas, which are raw material, is done by pipeline, marine tankers or rail/road tankers. Transportation by itself is a huge business sector.
29 Notes
The gas is first treated to remove impurities like sulfur. Then cryogenic (low temperature) processing is carried out to liquefy and separate by distillation, the components like ethane, propane and LPG. The separated components are utilized to make higher value products: 6 Methane, which is bulk of the gas, is a good raw material for manufacture of urea fertilizer, chemicals like methanol or can be used as fuel to generate power. 6 Ethane and propane are sent to the petrochemical plants as feedstock to crack them into ethylene/propylene, which are polymerized into plastics (polythene, polypropylene). 6 LPG (propane and butane mix) is bottled in cylinders and sent for domestic consumption. 6 The heavier hydrocarbons (C5+), which are present in the gas condenses as Natural Gas Liquids (NGL). NGL is sent to the refinery to be processed as blending stock for gasoline or it is sent to a petrochemical complex as feedstock. 6 If the gas is to be transported to another country by marine tankers, it is liquefied as LNG. The oil from the oilfield processing block is pumped (or taken by tanker) to the refinery. Oil refining is a composite of several processing steps. The first step is separation of raw products by distillation. There are subsequent process steps to meet certain specification of the products. Then there are processing to meet environment related specifications. Also there is processing to crack the heavy part of the crude into lighter products like gasoline, kerosene and diesel. The finished products that we get from the refinery are summarized in Fig. 2.1. Each of the blocks of gas processing and processing of oil in the refinery generates feedstock for Petrochemical Complex.
Fig.2.1 The Oil and Gas Chain

C1
Industrial Fuel
C1,C2,C3,C4,C5+
GAS
Urea
NGL
GAS PROCESSING
POWER PLANT
Power
FERTILIZER PLANT
C3,C4
WELL FLUID
OILFIELD PROCESSING
LPG
C2, C3 NGL
UNIT 2 The Macro-system
Polymer Plastic
Rubber, Foam Fiber & Yarn
TREATED WATER
OIL (C5+)
PETRO CHEMICAL COMPLEX
Detergents
Chemicals LPG Gasoline
DISPOSAL
OIL
NAPHTHA
OIL/ GAS WELL

NGL (C5+)
Re-injection
Kerosene / ATF
REFINERY
Diesel Lube oils Fuel oil Wax Bitumen
.
30 Notes
31 Notes
Naphtha is the main feedstock for petrochemical manufacture generated in the refinery. Even the kerosene and gas oil (raw diesel cut) can be used as feedstock. Methane, ethane, propane, butane and the NGL component of the gas can be used as feedstock. Most of the petrochemical processes are conversion of the molecules of feedstock by: 6 Cracking the feedstock i.e. breaking bigger molecules into smaller molecules. In Petrochemical Processes cracking of feedstock like ethane, propane or naphtha is done to generate smaller olefin molecules like ethylene or propylene. 6 Polymerization of the olefins i.e. joining together of the olefin molecules several thousand fold producing large molecules which are called polymers. Olefins tend to polymerize easily making resinous or plastic material like polythene or polypropylene. Very often a non-hydrocarbon or inorganic component can be brought into the reaction process to generate other petrochemical products. For example nitrogen becomes an essential raw material besides methane as feedstock, for synthesis of urea fertilizer. Similarly for making PVC (polyvinyl chloride), vinyl chloride is first formed by reaction of chlorine with ethylene. With any of the feedstock mentioned, numerous petrochemical products are made. Starting with ethane as feedstock, configuration of a typical petrochemical complex is shown in Fig. 2.2. Ethylene is made by cracking ethane. Vinyl chloride is made by reaction of ethane with chlorine. Plastic end products like Polythene and PVC are made by polymerization of ethylene and vinyl chloride. Part of the ethylene undergoes processing with benzene (originating from naphtha as feedstock) and produces polystyrene as end product. Fig. 2.3 shows a typical petrochemical complex.
Fig. 2.2 Petrochemical Building Blocks
The Ethylene Chain

Steam Cracking Ethylene Polythene Polymerization
Ethane
Naphtha
Ox-chlorination Oxy-chlorination
Vinyl Chl. Monomer
HCl, O2 Polymerization
Aromatics Recovery Benzene
Alkylation Dehrodrogenation Styrene Polymerization
PVC
Polystyrene
32
Notes
33 Notes
Fig. 2.3 View of a Petrochemical Complex
Upstream and Downstream These two terms are very frequently used in the petroleum industry. Let us look in to the broad category of processing blocks we described 6 Oilfield Processing 6 Transportation of oil and gas 6 Gas Processing 6 Refinery 6 Petrochemicals 6 Power Plants and other gas based industries Of course another large industry not mentioned earlier is the storage, transportation and logistics of numerous products that come out of processing of oil and gas. The first two businesses i.e. oilfield processing and transportation activities are known as Upstream. The others are referred as Downstream. Now we shall touch upon brief history of development of oil and gas industry. Then the Indian oil and gas industry with reference to the macro-system, upstream and downstream will be described.
34 Notes
History of Oil and Gas Industry

Oil and Gas from Seepages and Brine Wells Use of petroleum dates back to more than three thousands years BC. But it was sourced from natural oil seepages that occurred on the earth's surface. Asphalt from natural oil seeps is known to have been used around 3000 BC in Mesopotamia They used it for construction of roads. Egyptian mummies were known to be wrapped in asphalt-soaked clothing. Application of asphalt was also made for the construction of pyramids.
35 Notes
Natural gas seeps were known in the Baku region of Azerbaijan, Iran, India and other countries. Some of them caught fire and burnt for thousands of years. Use of petroleum as medicine was made in China. The first effort for production of petroleum by digging wells were reported in China in the year 600 BC. Crude oil is reported to have been produced during digging of brine wells. Those days the technique for search of oil was limited to looking for oil or gas seeps and trying to locate an adequate source nearby. The search for oil and gas today is much more complicated. Industrial Revolution and the Search for Oil During the eighteenth century, the industrial revolution created the demand of lighting, fuel and lubricating oils for the machineries. This intensified the search for oil (exploration) and it resulted in the development of the technology for oil exploration. In the middle of the nineteenth century oil from coal (named kerosene) was being used to satisfy the demand of lighting oils lamps. Whale oil and coal oil were also used for lubrication of the machines. Kerosene from the petroleum produced from natural seepage started shortly afterwards. During the period 1850 to 1870, drilling of wells to produce oil started the oil boom in the USA. Those days often oil was found at depths of 30 to 100 meters. Today the depth of oil wells are a few thousand meters to several Kilometers. Development of the exploration and drilling technology moved faster with the companies getting cash rich with the oil boom. Some of the largest and financially strong oil companies emerged in the USA. The landmark events in the history of oil and gas industry are: In 1870, John D. Rockefeller founded the Standard Oil Company, which soon gained a near monopoly on oil production and became one of the largest companies in the world.
Till 1900, fuel oil, kerosene and lubricating oils were the main products from petroleum. Then came the advent of cars and the demand for gasoline. During the early part of the twentieth century, gasoline-fueled cars became popular; locomotive and ship engines were converted from coal to oil; and the airplanes using aviation gasoline started flying. The demand for gasoline went up and with the advent of electric power, the demand for kerosene for lighting went down, bringing change in refinery technology. Search and production of oil became more technology oriented since early twentieth century. Rotary drills were used to dig wells for oil. The first offshore wells were drilled in California in 1896. In 1948 the first platform was used to drill an offshore well in Louisiana. In the first half of the twentieth century, the discovery of large oilfields spread to the other parts of the world. New fields were discovered in erstwhile USSR, the Middle East and other locations. USSR became a major producer of oil under state ownership of the various oil reservoirs. With the participation in major discoveries and ownership worldwide, some of the pioneering American companies like Standard Oil, Texaco, Mobil became giants. In India, the oilfield in Digboi was discovered during the later part of nineteenth century. Till 1970, oilfields in Assam and Gujarat were the major producers. In the seventies, Mumbai High was developed into a major producer. The Middle East came into the picture in the 1930s. In 1932, the first crude oil discovery in Bahrain was made by Standard Oil. In 1936, Standard Oil of California joined with other American majors to form Arabian American Oil Company (ARAMCO). Aramco made a major oil discovery in Saudi Arabia in 1938. North Sea oil field were discovered and developed during the late sixties and seventies. During the eighties and nineties, some of the Latin American countries (Mexico, Venezuela) made major oil field discoveries and development. During the nineties, Asia Pacific countries like China and Indonesia became major producers.
36 Activity 2 a
Find out which fuels are used in automobile engines besides gasoline.
37 Notes
Oil Scenario Worldwide

The regions having the largest proven oil reserves today are given in Fig. 2.4 below. Fig. 2.4 Region-wise Hydrocarbon Reserves
1200 1,100
Established Reserves (BBOE)
1000 800 600 600 400 190 200 0 175 160 30 The USA Russia Asia Middle and CIS Canada Pacific East Countries South America Europe South Asia 450
Regions
It is important to know that India's proven reserves are meager compared to the size and potential of the country. The oil producing countries are divided into two groups those who are members of Organization of Petroleum Exporting Countries (OPEC) and those who are not. The significance of OPEC will be explained later. The top oil producing countries of the world are presented in Table 2.1 Table 2.1 Top Ten Oil Producing Countries (Year 2001)
[Source: The World Oil Market -Mohan G. Francis]
No.
Country
Production Production OPEC Million Million TPY Membership Bbl/Day 9.0 8.7 7.3 3.8 3.6 3.4 3.3 3.1 2.8 2.6 No Yes No Yes No No No Yes No No
1 2 3 4 5 6 7 8 9 10
USA Saudi Arabia Russia Iran Mexico Norway China Venezuela Canada United Kingdom
These top ten are closely followed by Iraq, Nigeria, Kuwait and U.A.E, all of whom are OPEC members. Some important features of OPEC and non-OPEC countries are: 6 Proven crude reserves are concentrated in OPEC countries. Out of the world's 1.0 trillion barrels of proven reserves, 80% is held by OPEC. 6 80 to 90% of the oil produced by them are exported. 6 There is very little internal consumption indicating the economy to be oil export dependant. 6 OPEC countries have very high spare capacity for production. Non-OPEC countries hold approximately a combined 500,000 barrels per day (bbl/d) of spare oil production capacity, while OPEC spare production capacity is estimated to be as high as 8 million bbl/d. 6 The petroleum resources of OPEC countries are mostly owned by the State whereas in non-OPEC countries the ownership is generally in private hands. 6 Greater OPEC production as a proportion of world production will be seen in the future. With this kind of profile of OPEC countries, it is apparent that they are in a position to control the oil prices in the world, whenever they are united. There are a few important points to note in the global production and consumption pattern. There is not a single OPEC country in the top ten oil-consuming countries. This indicates that in terms of industrial development other than oil production, the OPEC countries are lagging behind. The only developing countries in the top ten oil consumers are China, Brazil and India. This indicates a growth of industry and infrastructure driven by oil and gas as sources of energy.
38 Activity 2 b
Make a list of all countries who are members of OPEC.
39 Notes
Major Oil Companies Major oil companies are very large transnational corporations. They rank among the largest corporations in the world. There has been a number of mergers recently to meet the crisis created by slowing down of the economy since the late nineties. As per survey done by Fortune magazine, five oil companies feature among the top fifteen companies in the world in terms of revenues (see Table 2.2). There has been a spate of mergers between major oil companies in the recent times. As apparent from the above table, some of the largest companies are result of merger of major oil companies of the world. The merger of Exxon and Mobil, and that of BP, Amoco and Arco happened during the last few years. Some more mergers are in the offing. The result has been detrimental to the consumers. USA has seen a rise in gasoline prices as a result of the mergers which has lessened competition. The cartel created by OPEC which is keeping oil prices around 28 to 30 Dollars per barrel and the recent mergers of oil majors has created a situation detrimental to the growth of oil importing countries.
Table 2.2 The Largest Oil Companies

[Source: FORTUNE, July 22, 2002 Data for 2001; Figures in US $ billions]
No. 1 2 3 4 5
Company Exxon - Mobil BP/Amoco/Arco Royal Dutch Shell Chevron Texaco Total Fina Elf
Annual Turnover US$ Billion 192 174 135 100 94
World rank 2 4 8 14 15
The Indian Perspective - Upstream

Oil exploration and production industry in India dates back to the late nineteenth century. The first commercial oilfield was struck at Digboi in North-Eastern India in the year 1890. Till the 1970s, petroleum production was mainly from oilfields in the North-Eastern region and Gujarat. The government owned companies known as Public Sector Units (PSU) earlier dominated the upstream oil and gas industry. The two companies - Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Ltd (OIL) were the main players. They were responsible for exploration and production. Bombay High (now known as Mumbai High) was discovered in the 1970s and was one of the largest finds in the world at that point of time (albeit not enough for a large country like India). The government felt the need for liberalizing participation of foreign companies for exploration and production. In 1991 various offshore blocks were offered for licensing. The government policy now allows joint as well as private sectors to participate in this sector. The government has leased a number of blocks of potential fields to both Indian and multinational companies. As a result of these measures the number of players in the upstream industry has gone up substantially. Reliance Petroleum became owner of a few major oilfields in the Mumbai High region. A number of Indian and overseas private operators explored and produced oil from newly developed fields in Krishna Godavari and Kaveri basin. ONGC is still the biggest player upstream due to historical reasons. The proven oil and gas resources are still meager for Indias size and requirement. Oil and Gas Field Fig. 2.5 shows the producing and proven oil and gas reservoirs in India. The locations of the various reservoirs is only indicative. They do not show the map and size of the fields. Some of the major gas and oil pipelines are also shown in Fig. 2.5.
40 Notes
41 Notes
Fig. 2.5 Location of Producing and Proven Reservoirs
Delhi Mathura North Gujarat Cambay Bijaipur Barauni Jagdishpur
Naharkatiya Digboi
Hazira
Mumbai High
Haldia
Uran
Krishna Godavary Basin
Oil Pipeline Gas Pipeline Oil / Gas Field

Cauavery Basin
Let us understand the oil and gas infrastructure of India by looking into a few of the systems with the macro-system block diagram of Fig. 2.1 in mind. Mumbai High is the largest oil and gas producer in India. It is located offshore about 200 Km. away from the coast off Mumbai. As seen in the map an oil pipeline and a gas pipeline are laid below the sea reaching landfall point at a place called Uran south of Mumbai. Up to this point, it can be called the upstream and is owned by ONGC. The oil is distributed to the refineries (BPCL) near Mumbai. LPG is extracted out of gas at Uran. Also ethane and propane are extracted out of gas in the gas processing facility located at Uran. The balance gas goes to nearby power plant and fertilizer plants at Thal (Maharashtra). The ethane and propane extracted from gas at Uran goes to petrochemical complex at Nagothane (Maharashtra).
Technomanage
Another major pipeline originating from Mumbai High area is a gas pipeline laid below the sea up to landfall point at a place called Hazira. Bulk of the gas comes from a gas field offshore near Mumbai High called South Bassein Field. This gas is sour gas (Hydrogen sulphide bearing). A major gas processing complex is located at Hazira where sweetening (removal of sulfur from gas) and recovery of LPG are carried out. Hazira is the originating point of Indias longest gas pipeline network called HBJ Pipeline (Hazira Bijaipur Jagdishpur pipeline). HBJ Pipeline is a network of over 2000 Km. of pipeline extending from Hazira to northern part of India. It provides feedstock to numerous fertilizer plants, power plants and petrochemical plants on its route. In addition the balance gas provides fuel to the industries. From Hazira onwards ownership of the pipeline and gas distribution facilities changes from ONGC to Gas Authority of India Ltd. (GAIL). Fig. 2.5 also shows a few major oil pipelines. From the North-Eastern oil fields of India, the first major cross country pipeline was laid starting from Nahorkatiya in Assam to Barauni and Haldia. This pipeline feeds oil to all major refineries in the North-Eastern and eastern India including Barauni refinery and Haldia refinery (see Fig. 2.6 for refinery locations). Major Player Upstream The major player of upstream are given in Table 2.3. Table 2.3 Major Players Upstream
No. Company
1 Oil & Natural Gas Corpn.
42 Activity 1c
In a photocopy of the block diagram, start with Mumbai High Field and put down the names of various companies utilizing the oil and gas in the various processing blocks shown
Exploration & Production Areas Other activities

Bombay High, South Bassein, Heera and other western offshore Oilfields, Oil and Gas Pipeline KG basin, Assam, Gujarat, Rajasthan Neelam, Panna, Krishna Godavari Basin Assam, Rajasthan Cauvery Basin Ratna Oilfield Development Oil Exploration, Gas Pipeline Downstream Refinery Petrochemicals Downstream refineries & petrochemicals, Pipeline
2 3
4
Reliance India Ltd. Oil India ltd. Cairn Energy India Essar Oil Gas Authority of India
5 6 7 8 9
Hindustan Oil Exploration Co. KG Basin (PY3), Cambay Basin Videocon Petroleum Niko Resources KG Basin (Ravva Offshore) Cambay Basin
43 Notes
The domestic oil production and consumption are presented in Table 2.4. It can be seen that we are grossly insufficient in our hydrocarbon resources and dependant on imports of oil and gas. Table 2.4 Oil production & consumption in India (Million tons per year)
[Source: Indian Economic Survey 2000-2001 / Centre for Monitoring Indian Economy http://petroleum.nic.in/oil.htm]
Item
Crude Oil Production Crude Oil Consumption Domestic Production as % of Consumption
1999 - 2000
32 100.0 32.0
2000 - 2001
32.4 103.5 31.5
2001 - 2002
32.0 107.3 29.9
2003 - 2004
32.0 110.0 29.1
Natural Gas The production of natural gas in the country during 20012002 has been around 80 million standard cubic meters per day (SCMD). The demand of gas has been projected by various estimates depending on assumed user pattern at figures between 150 to 200 million SCMD. Major consumption of Natural Gas in India will be in the Power and Fertilizer sectors. Natural Gas consumption in other industries, such as petrochemicals, town gas, or as Compressed Natural Gas (CNG) in the automobile sector, are also considered in the projections. This leaves a wide gap in the supply demand balance for Natural Gas in the country. The India Hydrocarbon Vision 2025 * has projected that the demand for Natural Gas will go up to about 230 million standard cubic meters per day by 2007, to more than 310 million standard cubic meters per day by 2011, finally reaching a level of 390 million standard cubic meters per day by 2025. In the long term policy statement, the Government of India has visualized Hydrate reserves and coal bed methane, as potential indigenous resources.
Earlier plan was to meet the future gas requirements by import of LNG. Recent hydrocarbon discoveries of Reliance and ONGC are expected to bridge the gap to a certain extent. Future Perspective The per capita energy consumption in India is very low at the level of 226 Kg of Oil Equivalent compared to 7759 Kg Oil Equivalent in the USA. With a low base, the energy supply in India has been growing @ 6% annually compared to an average of 1.5% worldwide. It is projected that the growth rate of Indian economy may go up to 7-8% in the near future. This will further increase the energy requirement for the future. Obviously the future energy needs has to be planned keeping hydrocarbon, coal, hydroelectric power, nuclear energy and unconventional sources of energy into consideration. The hydrocarbon resources are expected to be enhanced in the following manners. 6 Increased search of hydrocarbon resources in India by the policy of liberalization and leasing out prospective hydrocarbon basins. 6 Prospecting for hydrocarbons overseas by Indian companies (e.g. ONGC investing in Vietnam and other prospective regions). 6 Import and distribution of LNG. Petronet, a public sector LNG distribution company was set up for this activity. 6 Linking hydrocarbon resources from countries like Bangladesh, Iran by cross country pipeline to India. 6 Exploitation of hydrate resources in coastal sea bed. 6 Exploitation of coal bed methane reserves. A comprehensive energy study and planning with above resources and other resources like coal, hydro-electric,, nuclear and non-conventional energy is needed for long term planning of energy needs.
44 Activity 2 d
Make a list of existing and proposed LNG projects in India.
45 Notes
The Indian Perspective - Downstream

The refinery industry also dates back to over one hundred years. India's first refinery was built at Digboi in 1901 by British Petroleum. In the late '50s and early '60s multinational oil companies such as Shell, Caltex and Esso invested in refineries in India. Indian Refineries Ltd., the first state owned (public sector) refinery was built in Guwahati in the early sixties. Later it became Indian Oil Corporation. India nationalized the refining and product marketing sector in 1976. Regulatory regime was introduced on production, distribution and pricing of crude oil and petroleum products. State owned companies such as Indian Oil Corporation , Bharat Petroleum and Hindustan Petroleum were the largest companies in the refinery sector. The Administered Pricing Mechanism implemented in the seventies subsidized prices for products like kerosene and LPG. Charging higher prices for other products like gasoline and aviation fuel generated part of the subsidy. Diesel prices were kept neutral. The Administered Pricing Mechanism was based on fixed 12% post-tax return on net worth deployed for refining, distribution and marketing. The Refining Industry India has one of the largest and fastest expanding Petroleum Refinery industry in Asia with over 110 Million tons per year installed capacity. During the year 2001-02, the installed capacity is around 114 Million tons per year. The petroleum products' demand is expected to be 150 Million tons per year by the year 2006-07. The stress will be on revamp, expansion and de-bottlenecking as well as new refineries. The installed capacity of the refineries in India during 2001 is reported in the Table 2.5. The location of various refineries is shown in the Fig.2.6. Additional refining capacity of 70 - 80 MMT per annum will be required by the year 2010 for domestic consumption alone.
Table 2.5 Oil Refining Companies in India (2002)

Capacity (million tons/year) 6.9 2.4 6.5 0.5 7.5 5.5 13.5 8.0 6.0 4.2 4.6 1.0 0.7 7.5 9.6 3.0 27.0 114.4
[Source: Annual Reports & Industry Data, Oil Company Websites]
46 Notes
Name of the Oil company Bharat Petroleum Bongaigaon Refineries Chennai Petroleum Chennai Petroleum Hindustan Petroleum Hindustan Petroleum Indian Oil Indian Oil Indian Oil Indian Oil Indian Oil Indian Oil Indian Oil Kochi Refineries Mangalore Refineries and Petrochemicals Limited Numaligarh Refineries Reliance Petroleum Total
Principal Shareholders Govt. of India Indian Oil Corp. Indian Oil Corp. Indian Oil Corp. Govt. of India Govt. of India Govt. of India Govt. of India Govt. of India Govt. of India Govt. of India Govt. of India Govt. of India Bharat Petroleum Hindustan Petroleum /Aditya Birla Group Bharat Petroleum Reliance Industries, its subsidiaries and associates
Location of refineries Mahul Bongaigaon Chennai Narimanam Vizag Mahul Vadodara Mathura Panipat Barauni Haldia Guwahati Digboi Kochi Mangalore Numaligarh Jamnagar
With the de-regulation of the oil economy initiated in the early nineties, a number of private players emerged. The Reliance refinery at Jamnagar became the biggest refinery in India and one of the biggest in the world. Other players like Mangalore Refineries and Petrochemicals Ltd emerged in the private sector. Privatization of some of the public sector refineries are also on the cards but presently held up in the legalities.
47 Notes
Fig. 2.6 Refinery Locations
Panipat Digboi Mathura Barauni Jamnagar Bongaigaon Numaligarh Guwahati
Vadodra Haldia
Mahul (Mumbai) Vishakhapatanam
Mangalore Chennai Nagippattinam Kochi
Technomanage
In the early nineties, India started the process of deregulation and liberalization of the economy to make the economy market driven. This already has created impact and structural changes in the hydrocarbon sector. In 1997, the Government of India firmed up a plan for de-regulation of the oil industry by year 2002, with respect to all aspects of pricing, imports and exports of crude and petroleum products. Generally de-regulation has been achieved as per the plan. The private sector can now carry out refining as well as marketing of a limited number of petroleum products e.g. LPG, naphtha, aviation fuel, fuel oil etc., which have been taken out of Administrative Pricing Mechanism. Divestment of some of the State owned companies also has taken place. Emergence of The Reliance Group has been a major development in the private sector of oil industry. Today Reliance has the largest refinery and the largest
petrochemical complex in India, which are also among the largest in the world. The Petrochemical Industry In the Petrochemical sector also, the initial big players were the multinational companies in the private sector. National Organic Chemical Industries Ltd. (NOCIL) and Union Carbide plant at Mumbai were the first two major petrochemical plants in India. The Indian Petrochemical Corporation Ltd. (IPCL) at Vadodara was the first major petrochemical complex set up under state ownership in the mid '70s. This was followed by another major petrochemical complex at Nagothane in Maharashtra under IPCL. India has also a large and growing Petrochemical industry with one of the largest integrated petrochemical complexes in the world and several other petrochemical complexes. India has the second largest fertilizer production capacity in the world. There is abundance of small and medium size petrochemical and chemical plants badly needing improvements through revamp for increasing their efficiencies. Many of them are old and revamp of the plants pose a challenging opportunity. In the Petrochemical Sector, the major players are: 6 6 6 6 Reliance Industries Ltd Reliance Industries Ltd National Organic Chemical Industries Ltd Indian Petrochemical Corporation Ltd. now acquired by Reliance 6 Haldia Petrochemicals Ltd. 6 Gas Authority India Ltd. (RIL) (RIL) (NOCIL) (IPCL) (HPL) (GAIL)
48 Notes
49 Notes
Except GAIL, which is Government owned company (PSU), the rest are private holdings listed in the stock exchange. HPL is held jointly by Government and Private entities.
Transportation Infrastructure
India has major ports for handling of oil and products (export and import) at Jamnagar, Mumbai, Mangalore, Cochin, Chennai, Vizag and Haldia. Inland transportation of crude from the production sites or ports is primarily undertaken via pipelines. Transportation of refined products is carried out through multiple options - pipelines, the rail system, road tankers and coastal shipping using marine tankers. A very broad and approximate distribution of load on various modes of transportation of petroleum products is: 6 Pipelines: 42 % 6 Marine transportation: 10 % . 6 Rail transportation: 38 % 6 Road transportation: 10 % Thus railways carry almost as much load as pipelines as far as product transportation is concerned. With greater investments coming in pipeline, in future the balance will be in favor of pipeline. Pipelines A few of the major pipeline systems in the country is shown in Fig. 2.5. A vast network of oil, gas, LPG and petroleum product pipelines exist all over the country. Rail system About 40 Million tons of petroleum products are moved from refineries to storage terminals or depots in other various cities and towns by the railway network.
Future Vision for Indian Oil and Gas Industry

While the large gas finds in the Eastern Coast alleviates the shortage of petroleum resources in India, a long term vision is needed to attain self-sufficiency in the energy sector. ONGC is aggressively going ahead with investment in exploration and production overseas. It has already investment and production sharing arrangement in Vietnam offshore. It is acquiring exploration and production rights in counties like Sudan, CIS countries. The government has created a Hydrocarbon Vision 2025 policy document to achieve growth and self sufficiency in this sector. Hydrocarbon Vision 2025 Agenda For Implementation 6 Achievement of 100% coverage of unexplored basins in a time bound manner to enhance domestic availability of oil and gas. 6 Secure acreages** in identified countries having high attractiveness for ensuring sustainable long term supplies. 6 Pursue projects to meet the deficit in demand and supply of natural gas, and facilitate availability of LNG. 6 Maintain adequate levels of self-sufficiency in refining (90% of consumption of middle distillates). 6 Establish adequate strategic storage of crude and petroleum products in different locations. 6 Create additional infrastructure for distribution and marketing of oil and gas. 6 Open up the hydrocarbon markets so that there is free and fair competition between public sector enterprises, private companies and other international players.
50 Activity 2 e
Prepare a list of major oil, gas, LPG and product pipelines in India.
51 Notes
6 Create a policy framework for cleaner and greener fuels. 6 Have a rational tariff and pricing policy, which would ensure the consumer getting the petroleum products at the most reasonable prices and requisite quality, eliminating adulteration. 6 Announce a long-term fiscal policy to attract required investment in the hydrocarbon sector. 6 Restructure the oil sector PSUs with the objective of enhancing shareholder value and disinvest in a phased manner in all the oil sector PSUs. 6 To develop regulatory and legislative framework for providing oil/gas security for the country. The Opportunities The picture of growth in demand and investments coupled with economic liberalization offers tremendous opportunities. To highlight the opportunities [Source: Petrotech 1999] the hydrocarbon sector offers6 India is looking for large and sustained investments of US $ 100 billion in upstream, downstream and infrastructure development in the next ten years. 6 Exploration, production, refining and marketing sectors have been opened up to the private and foreign companies. With economic liberalization, the foreign investment is expected to go up substantially. 6 Indian oil and gas industry offers one of the highest growth rates in the world.
Summary
In this section, the total macro-system from oil well to petrochemicals was explained in the form of block diagram. Flow of various components of gas and oil in to the manufacturing blocks of refinery and petrochemicals leading to final products was highlighted. Indications were given how at each step of processing the oil and gas get valorized in to higher priced products. Having explained the macro-system, a brief history of oil and gas industry was presented. Major players in the world and specifically in India were identified. Hydrocarbon infrastructure in India was presented with maps. The high growth potential of oil and gas business and future opportunities were highlighted.
52 Notes
Review Questions
(1)
Draw a block diagram showing the flow of gas and its components from a gas field offshore to further processing and generation of ethylene based petrochemicals. Name three of the largest oil companies in the world. In a blank map of India, mark the location of major oilfields and major refineries. Name three of the upstream oil companies in India. Name four major refining companies in India with approximate refining capacity owned by them.
(2) (3)
(4) (5)
Group Tasks (1) Starting with Mumbai High oilfield, trace in the form o f a block diagram the following: 6 How oil and gas are transported to shore 6 Where do the sub-sea oil and gas pipelines terminate 6 To which refineries the oil is transported by pipeline
53 Notes
6 What happens to the gas after it reaches shore 6 How is the gas distributed 6 What are the Petrochemical Complexes and fertilizer plants based on Mumbai High Gas (2) Carry out a similar exercise for the oil, gas, refinery and petrochemical facilities of Reliance Petroleum.
Quizzes Circle the correct answer or answers. Each question has one or more correct answers.
No. 1 Question The materials that goes as feedstock for manufacture of petrochemicals are Answer (a) (b) (c) (d) (e) (f) (a) (b) (c) (a) (b) (c) Ethane Propane Jet Fuel Naphtha Motor gasoline NGL Refinery Gas Processing Plant Offshore Platform True False Partly true
LPG is produced as one of the products in It is techno-economically most attractive to use oil and gas as industrial fuel. Which of these are not petrochemical products?
Identify the countries which are not members of OPEC
The number of refineries in India are
The major oil producing companies in India are
(a) Polythene (b) Synthetic Rubber (c) Diesel Oil (d) Nylon (e) Ethane (a) Russia (b) Venezuela (d) Saudi Arabia (e) U.K. (f) Iran (g) UAE (a) 5-10 (b) 10-15 (c) 15-20 (d) 20-25 (a) BPCL (b) ONGC (c) Reliance (d) IOCL
The largest refinery in India is owned by The highest refining capacity in India is with
(a) (b) (c) (a) (b) (c) (d) (a) (b) (c) (a) (b) (c) (d) (a) (b) (c) (d)
IOCL Reliance HPCL IOCL HPCL MRPL Reliance Refineries Petrochemical Plant Oilfield processing 10-25 20-25 25-35 35-40 30-40 40-70 70-100 100-120
54 Notes
10
11
Which of these industry segments is referred as upstream ? Total oil production in India in terms of Million Tons per year is between Total refining capacity in India in terms of Million Tons per year is between
12
13
Major oil and gas fields in (a) U.P. Indian lie in (b) Gujarat (c) Karnataka (d) Assam (e) Andhra Pradesh
Unit 3
The Exploration of Oil
Objectives
After reading this unit, you will be able to: y Understand how hydrocarbons (oil and gas) were formed and trapped below the surface of the earth. y Understand how hydrocarbons are explored, located and assessed for commercial viability y Get an overview of primary production methods and enhanced oil recovery methods.
55 Notes
Formation of Oil Traps

It is important to have an elementary understanding on how hydrocarbon is formed and trapped in the rocks below the earth. It was explained in Unit-1 that according to the widely accepted organic theory, oil and gas were originated from huge masses of organisms, animals and vegetation that got buried under the earth and were covered by sedimentary rocks. Layers of rock formed over it and the formation and trapping of the hydrocarbons took place in the following stages over millions of years. Formation of Hydrocarbons : The hydrocarbon formation took place by decomposition in various layers of rock called source rock. The decomposition took place 0 under high pressure and temperatures between 50 C and 0 170 C at depths between 1500 meters and 6000 meters. At lower temperatures (normally at lower depths) heavier oil was formed and higher temperatures lighter oil was formed. Migration of Hydrocarbons: Due to lighter gravity of hydrocarbon formed compared to water which is always present below earth's surface and due to high pressures below the earth, oil and gas migrated slowly through the gaps in subsurface rocks with high permeability. During the migration, the oil and gas got into densely packed sedimentary rocks of very high porosity known as reservoir rocks. Sandstone and limestone are common reservoir rocks. Fig 3.1 shows typical indicative sketch of permeable rocks and Fig 3.2 shows an indicative sketch of porous reservoir rocks.
56 Notes
Fig. 3.1 Migration of Hydrocarbons Through Rocks Having Permeability
Technomanage
Fig. 3.2 Porous Reservoir Rocks

UNIT 3 The Exploration of Oil
Technomanage
57 Notes
58 Notes
Formation of Traps: Migration of the oil and gas stopped at traps which were formed due to various reasons like sedimentation and convulsions that took place on earth's strata. A typical trap is covered with non-permeable hard rock called cap rock. Traps are formed by deformation of the rocks, deposition of rocks or by creation of faults due to movement of rock strata. The common types of structural traps are anticlines and domes or a fault. Fig. 3.3 shows some typical traps.
Fig. 3.3 Traps

Nonporous rock
Technomanage
Gas
Porous rock
Faults
Nonporous rock
Technomanage
Gas
Porous rock
Anticline
In the trap, the gas being the lightest rises to the top. The oil settles below the gas, and the water, which is heaviest, settles at the bottom. Due to high pressure, a lot of gas remains dissolved in the oil. A large formation of rocks of this nature bearing hydrocarbons is called reservoir. The earth surface above a reservoir from which commercial exploitation takes place, is called oil, gas or condensate field depending on what it produces. The term hydrocarbon reserves refers to the estimated amount of oil, gas or condensate that is expected to be produced in the future from wells in known fields. The search for hydrocarbons is called prospecting or exploration of oil or hydrocarbons.
59 Activity 3a
Carry out search of literature and internet for different types of structural traps and faults.
Exploration for Oil and Gas

As stated in the previous section, early oilfields were discovered through locating seepages. It is said that the first oil field in India, at Digboi was identified after oil was seen on the mud carried with footsteps of elephants in the jungles of Assam. With such easily locatable and shallow oilfields having been exhausted and the demand for energy having gone up by leaps and bounds, the search for oil is a different ball game today. It is very technology oriented, yet uncertainties and risks are still heavy. A commonly used terminology in oil companies, Exploration & Production (E&P), comprises of search, discovery and production of oil and gas by undertaking the following activities: 6 Licensing and agreement from the governments concerned. 6 Geological surveys including aerial photography, satellite images to examine nature of rocks and soil strata and interpretation of such data. 6 Geophysical surveys such as seismic surveys.
60 Notes
6 Interpretation of data and geological modeling. 6 Identifying hydrocarbon resources and their location based on the interpreted data. 6 Economic evaluation of the located reserves. 6 Exploratory drilling to establish commercially viability. 6 Preparation of field development plan. 6 Commercially exploiting them by setting up necessary drilling and production infrastructure. The range of activities outlined take several years of teamwork between Geologists, Geophysicists, Reservoir Engineers, Chemical Engineers, Petroleum Economists and other disciplines. Here we shall cover the exploration part. Infrastructure for commencing commercial production will be covered in Unit 4. Licensing and Agreement: The first step in exploration of oil obviously is entering into contract, lease agreement or obtaining licenses from the governments. Normally the government of the country carries out a lot of surveys (see next item) to define a block for exploration and invites bids. The selected bidder then enters into agreement with the government. There are two types of arrangements: 6 Licenses to the exploring company to explore and produce oil and gas with license fees, royalties (per unit production) and taxes payable to the state. 6 Production sharing contracts, in which the state or a state owned company, is made a partner in the venture. Normally the initial exploration costs are borne by the licensee. Revenues earned on production are first set-off against the costs incurred by the licensee and the balance amount is shared in an agreed percentage. Once the agreement is reached, the exploration starts.
Geological and Geophysical Surveys: Geologists try to develop a model or a map where hydrocarbon might occur, based on geological principles. The map is based on a wide variety of geological information. They try to locate anticlines and domes by mapping rock layers coming out of earth's surface. They use very conventional tools like hand-held compass, telescope etc. to determine the orientation of the rock layers. With these instruments geologists generate drawings and maps of the position and size of the rock protrusions. Other tools used by Geologists are aerial photographs and satellite pictures of the earth's surface. When exploratory wells are drilled, geologists examine the rock samples and other well data to make subsurface maps of the reservoir rocks. Matching up rock layers between wells allows geologists to draw cross sections in order to find petroleum traps. Geophysicists measure the properties and patterns of sub-surface rock strata by three types of surveys 6 Magnetic Survey - to determine the strength of the Earth's magnetic field at a specific location. 6 Gravity Survey - to determine the strength of the Earth's gravity at a location. 6 Seismic Survey - to draw subsurface maps using sound waves. In seismic survey explosive charges are detonated in holes drilled by truck mounted rigs at specific points in the survey area. This rig is called Thumper Truck. The energy waves are picked up by geophones laid out on the surface and recorded on magnetic tape by seismographs, the same instruments that are used to measure the earth-quakes.
61 Notes
62 Notes
By knowing the velocity at which energy travels through rocks of different types, and by measuring the time it takes for the energy to be reflected to the surface, seismologists are able to construct approximate relief maps of deeply buried rock layers. Computers are used to enhance the subsurface picture formed from sound waves. Fig 3.4 depicts a seismic survey being done with a Thumping Truck and a Recording Truck. The geo-phonic data is processed by computers into seismic lines. The seismic lines are two-dimensional displays that resemble cross-sections of the rock strata. The seismic data helps to develop the geometry and size of the "trap" formation, where hydrocarbon exists under the trap and decide whether an exploratory well is to be drilled. Two-dimensional lines (2-D) are created as seismic data by laying the geophones in single line. Three dimensional seismic lines can be created by collecting geo-phonic data as an intersecting grid of seismic lines. 3-D seismic data can help to create 3-D geometric model of the reservoir. Fig. 3.4 Seismic Survey
Thumper Truck Seismographic Recording Truck
Transmitted Sound Waves
Reflected Sound Waves
Technomanage
Drilling After geological and geophysical studies are carried out, the possibility of presence of hydrocarbon deposits worth further exploration is established. Once an exploration target is defined a drilling contractor is hired to drill exploratory wells. Exploratory well: An exploratory well is required to confirm the existence of oil or gas in a basin identified through geological and geophysical surveys. The first exploratory well drilled in a field is called wildcat. The first successful well showing hydrocarbon presence during wildcat is called discovery well. Points to note are: 6 It may or may not produce oil and is abandoned if it does not produce oil. The well is called dry hole. 6 A lot of information is generated by logging some of the properties of the well and analyzing the fluids and rocks that come out during drilling. This data helps in defining the geological history and the properties of the reservoir. The information interpreted from the well logs is used for decision making on whether the well is to be used for production or is to be abandoned for being not viable economically. The information is also used to update the geological models. Drilling is a continuous effort in a field even after discovery and production of hydrocarbons. Drilling of additional well after discovery to define the size of the reservoir is called delineation. Development wells are drilled into a known reservoir to increase production. Oil wells are being drilled all over the world in diverse geographical areas. Very often they are in remote areas like deserts, forests or oceans (offshore). On land (onshore) the well site must be cleared and access roads are constructed. A typical drilling rig onshore is shown in Fig.3.5.
63 Activity 3 b
Make a list of various types of well with definition.
64 Notes
Fig. 3.5 Drilling Rig
Crown block
Hoisting System Derrick or Mast
Mud hose Rotary Table Pumps Generator / Engines
Technomanage
Blowout preventers
Mud Pit
Casing
Drill Pipe
Drill Bit
Drilling the Well Drilling rigs of special design are used to drill wells for exploration. The basic system involves a rotary mechanism, a circulation mechanism and a hoisting / lowering mechanism as shown in the Fig. 3.5. The rotary system includes diesel based power and a rotating wheel assembly that causes the drill pipe to turn thus activating the drill in the hole. The hoist is also powered by a diesel engine and is used to raise and lower the drill stem to change the bit. The circulation system includes a pump to force a mixture of water and mud down the inside of the drill stem to: 6 keep the drill bit cool 6 bring fragments of broken rock to the surface 6 keep the drill bit lubricated 6 to prevent any accidental blow-out meaning sudden eruption of oil and gas through the well pipe. As the mast is raised, the equipment is placed in position, it is called Rigging Up. As the drilling the well is begun, it is known as Spudding In. Drilling is a 24 hours a day operation. Shallow wells on land may be drilled very quickly, e.g. 500 meters in 3 to 4 days. Deep wells (3000 -4000 meters) offshore can take several weeks depending on depth of sea, weather etc. Each time the drilling bit is changed, the entire length of pipe in the hole must be brought up, disconnected and stacked. This is called Making a Trip. The mud circulates down the inside of the drill pipe through the bit and up the outside of the pipe. Blow-out Preventers ( B.O.P.) are located at the surface. These are valves which automatically close if a sudden increase in pressure occurs. A blow out can cause explosion and fire with severe loss of life. Getting the fire out and controlling the well is a major problem.
65 Notes
66 Notes
Horizontal Drilling Horizontal drilling is an important technology which makes oil production more economic. Wells are usually drilled vertically or slanted from a platform. Modern drilling technology can produce a 90 degree turn in a short distance. This is due to methods and tools that control the drillbit, flexible pipe and innovative engineering design. A horizontal well is first drilled vertically to a target then angled to a path parallel to the formation to penetrate the reservoir. This improves recovery and economics. Offshore Drilling Offshore or marine rig is positioned by tugs. The type of rig selected depends on depth of the sea. The different types of offshore rigs are shown in Fig. 3.6. The various types of offshore drilling rigs are: (i) Jack-Up Rig is floated to it's the well location. At the location huge legs are cranked down to reach the sea floor. Then the hull is raised above sea level. It normally stands on four legs resting on the sea bed. Its use is limited to water depths of upto a few hundred meters. A Drill Ship is like any other ship but has a mast located centrally and is therefore a very mobile drilling rig. Submersible Rigs have hulls on which it floats while being towed to the site. On location the hulls are flooded and the hulls come to rest on the bottom. Used for shallow water drilling only. Semi-Submersible Rigs are similar to submersible rigs but when the hulls are flooded they do not sink to the bottom.
(ii)
(iii)
(iv)
Once a reservoir is found to be commercially viable, a development well program is carried out from a platform anchored to the sea bed. This is converted to a production platform as described in Unit 4. The rigs must not be confused with offshore platforms, which is normally permanently piled in the sea bed. Fig. 3.6 Jack-up and Semi-submersible Rigs
67 Notes
Field Development Plan: If the results of an exploratory drill indicates the possibility of commercially viable oil or gas find then a field development plan is created and an economic viability report based on the plan is prepared. The field development plan is a project report containing: 6 Projected production profile based on reservoir simulation 6 Pressure, temperature and well production data 6 Recovery techniques 6 Optimal recovery rate over a period of time 6 Life of the field
68 Notes
6 Enhanced Oil Recovery methods needed in future 6 Number and type of wells proposed and drilling technique 6 Field layout with location of wells and other facilities 6 Facilities required for production and processing at oilfield 6 Transportation and distribution infrastructure 6 Environmental impact 6 De-commissioning costs 6 Logistics support required at the oil or gas field 6 Total investment, production cost, maintenance cost and cost of material and logistics for production An economic evaluation is made, based on contractual terms, and taking into account the risks involved. The viability of the project is worked out by discounting the estimated cash flows at suitable discount rates. De-Commissioning of Wells: In most of the countries, it is mandatory to decommission the wells and bring back the land to its original state after the field is abandoned. Exploration and Production Costs: The costs incurred for production of oil and gas comprise of the following: 6 Exploration Costs 6 Development Costs 6 Operating Costs
Exploration costs include the cost of seismic surveys and exploratory drilling and varies between US$ 1 per bbl in prolific oilfields to more than US$ 12 per bbl, where the environment is difficult and production per well is low. The finding costs have reduced significantly over a period of time to US$ 4-6 per bbl on average. This is due to the technological evolutions like6 Developments of 3-D seismic surveys, which give more precise location of wells. 6 Development of horizontal drilling 6 Development of FPSO 6 Development of sub-sea production system Development and operating costs include the cost of production, maintenance, processing, transportation, infrastructure etc. It varies from US$ 1 per bbl in Middle East to as high as US$ 20 per bbl in certain locations. On an average, the cost of oil exploration, development and operation comes around US $ 10-12 per bbl.
69 Notes
Oil Industry is a Risk Business The cost of exploration for hydrocarbon resources is very high. In spite of technological developments in establishing oil finds, the uncertainties involved in finding commercial quantities of oil and gas is large. Several millions of dollars are often spent without discovering a viable field. The successful ventures have to generate sufficient profits for the unsuccessful ones to keep the business going.
70 Activity 3 c
The risks exist because: 6 In spite of high level of technology involved, methods are not precise.
Prepare a flow chart of activities involved from decision to explore a prospect to production of oil.
6 Methods are indirect and they do not indicate the presence of petroleum itself. They only indicate geological situations with probability of oil find. 6 We can not see what is happening below the earth. We conclude only by interpretation of the data. Variables are numerous and the interpretation may go wrong. 6 Thus many dry holes are drilled. Oil companies balance the risk with rewards.
Oil Production - A Challenging Task

Once the exploration and assessment stage is over and the reservoir is found suitable for commercial exploitation, decision is taken for commercial exploitation. The method of production depends on: 6 6 6 6 6 6 6 6 Location of the field Field life Size of the field Quality of oil and gas Production profile over the field life (for oil, gas and water) Pressure/ Temperature profile over the field life Use of artificial methods of production Customer specification of oil and gas, market location and method of transportation.
Location of the Field Most hydrocarbon deposits today are found in remote areas. For example, they are found more often in the deserts or dense forests (onshore) or below the ocean (offshore). Earlier the hydrocarbon finds and production offshore was limited to shallow or moderate depth locations (a few meters to a few hundred meters). With today's exploration and production technology, we have shifted to deeper seas (thousand meters water depth).
Field Life It could be from a few years to a few decades. Fields with low production profile and short life are referred as marginal fields. Size of the Field Area over which a field exists (measured over the earth's surface) could be as small as 50 to 100 square Km to a few thousand square Km. Quality of Oil and Gas Oil could be light, medium, heavy or it could be even condensate. It could be sour (high sulfur bearing) or sweet. The gas could be high calorific value (methane rich), low calorific value (carbon dioxide or nitrogen bearing), sweet or sour. Ratio of gas to oil known as Gas Oil Ratio (GOR) can vary widely from field to field and over the field life. Production Profile Normally the oil production starts at a low level, it increases to a peak level called plateau level and then tapers off. The gas and water production also changes with field life depending on characteristics of the reservoir. Typical production profile of an oilfield is given in Fig. 3.7. Fig. 3.7 Production Profile
71 Notes
Production Rate Million Tons/Year
Oil
Gas Water
Field Life Years
72 Notes
Production - An Overview of Methods

In the beginning of field life, unless the pressures are very low, the well fluid comes out of the wells on its own pressure. This kind of production of oil on its own pressure is called Primary Production. A primary production facility comprises of: 6 Manifold on top of the well, called Christmas Tree (see Annexure) 6 Equipment and systems for separation of oil, gas and water. 6 Equipment and systems to make the oil and gas as free of water as specified by the customer (dehydration of oil and gas). 6 Equipment and systems for measurement and transportation of oil and gas to the customer. 6 Equipment and systems to treat water for disposal.
During primary production, 25-30 percent of the oil in the reservoir can be recovered by the natural reservoir drive. Other techniques are used to recover some of the remaining oil. Secondary and Tertiary methods of recovery of hydrocarbons are used for maximum extraction of hydrocarbons from the reservoir. These methods are summarized in Table 3.1. These are also known as Enhanced Oil Recovery (EOR) methods. Sometimes the pressures of the reservoir are low at the early stages of production. In such cases artificial methods are used even during primary production. A very popular method used for low-pressure shallow wells is Sucker Rod Pumps to pump out the oil (Fig. 3.8). These pumps having huge size of their drive system, which moves up and down, make a magnificent sight in the oilfield, where often an array of such pumps can be seen.
The plunger goes deep down the well moving up and down pumping out the oil. Fig. 3.8 Sucker Rod Pump
73 Notes
Gas Oil
s rou po n No k roc ous Por
k roc
np r us oro
k oc
No
Technomanage
Water Injection Water is first treated to meet reservoir specification for particulate content, dissolved solids content, oxygen content etc. Then it is injected around the periphery of the producing well as shown (Fig. 3.9). Fig. 3.9 Water Injection
Injection Well Injection Production Injection Well Well Well
Injection Well
Typical Water Injection Configuration Layout
Production Well
Oil out
Water
Water
Injection Well
Water
Water
Injection Well
Oil out
Gas
Oil
ck rous ro Nonpo k s roc Porou
r us oro p on
k oc
Technomanage
74 Notes
Use of water injection can boost the recovery by another 15-20% of the original oil in the reservoir, raising the recovery level to 40-45%. Water Injection is sometimes considered primary production method and falls under the category of artificial lift, meaning lifting the oil out of the well by artificial means rather than its own pressure. The essential equipments in water injection system are filters, de-oxygenating tower and chemical injection system.
Enhanced Oil Recovery (EOR) methods are tried after the water injection. It can further increase the recovery by another 15-20% leading to recovery of around 60% of the oil in the reservoir.
Table 3.1 Secondary and Tertiary Methods of Production

Method of Recovery WATERFLOODING Water Process Water is pumped into the reservoir through injection wells to force oil toward Production wells. Gas is injected to maintain formation pressure, to slow the rate of decline of natural reservoir drives. Under pressure, carbon dioxide becomes miscible with oil, vaporizes hydrocarbons, and enables oil to flow more freely. Often followed by injection of water. Use Method most widely used in secondary recovery.
IMMISCIBLE Natural GAS gas, flue INJECTION gas, nitrogen MISCIBLE GAS INJECTION Carbon, dioxide , Propane Ethane Nitrogen
,
Secondary recovery
Secondary recovery or tertiary recovery following water flooding .Considered especially applicable if carbon dioxide supplies located with a feasible distance.
CHEMICAL FLOODING
Polymer
Micellar polymer
Water thickened with polymers Used during secondary is used to aid water flooding by recovery to aid other improving fluid -flow patterns. processes during tertiary recovery. A solution of det ergent - like Almost always used during chemicals miscible with oil is tertiary recovery after injected into the reservoir secondary recovery by water flooding. Steam is injected continuously into heavy - oil reservoirs to drive the oil toward production wells. Used when oil is too viscous for water flooding. Tertiary recovery after secondary recovery by water flooding. Used with heavy-oil reservoirs during primary recovery when oil is too viscous to flow under normal reservoir conditions.
THERMAL RECOVERY
Steam drive
A part of the oil in the reservoir In - Situ Combus- is set on fire, and compressed air is injected to keep it burning. tion Gases and heat advance through the formation, moving the oil toward the production wells.
Steam Injection Steam is injected down injection wells to heat the heavy oil to reduce its viscosity and make it more fluid. The steam also produces drive to push the oil toward producing wells. Fig. 3.10 Steam Injection
75 Notes
High Pressure Boiler
Steam
Oil out
Injection Well
Steam
Production Well
Gas Oil
ck rous ro Nonpo k r s oc Porou
sr rou po n No
k oc
Oil out
Water
Technomanage
Main equipment are water treatment plant (for boiler quality water), and boiler. Rugged type of boilers are used to produce high-pressure steam (above reservoir pressure). In-situ Combustion This method of EOR is used for very viscous crude oils. It is also used as primary production method where crude oil is too viscous to flow up through the well on its own. In-situ combustion has been effectively used in North Gujarat Oilfield in India to produce very viscous crude oil, which is almost like semi-solid in the ambient temperature. In this process (Fig. 3.11), air and water are injected into the oil reservoir in alternate cycles. At first air is injected around the outer layer of the reservoir and the oil is ignited as a result of presence of oxygen (air). The heat generated raises the temperature of oil thus reducing the viscosity. But due to combustion, there is loss of some amount of crude oil. Once the desired temperature level in the reservoir is reached, air injection is stopped.
76 Notes
Fig. 3.11 In-situ Combustion
Air Injection System
Water Injection System Injection Well
Oil out
Production Well
Gas Oil
ck rous ro Nonpo k s roc Porou
Oil out
r us oro np o N
k oc
Water
Technomanage
The flame in the reservoir is quenched with injection of water. Water injection is stopped once the flame is quenched. As the temperature falls, injection of air and ignition of the oil is done again. This cycle goes on repeating according to the time cycle decided by reservoir engineers.: Gas Injection and Gas Lift It is important to note the difference between the two methods of recovery of hydrocarbons. Gas Lift is injection of gas in the well tubing to make the density of oil column in the well lighter. As a result the hydraulic head of the fluid in the well becomes less and oil flows out more easily. But Gas Injection involves injection of the gas directly to the reservoir to provide drive to push out oil. Both processes involve compression of the gas coming out in the field to high enough pressure to be put back either to the well or to the reservoir. These are some of the typical EOR processes. A team of reservoir engineers, geologists and geophysicists base the choice of EOR method and its design/operating parameters on a thorough simulation and study of the reservoir.
Summary
In this unit, at first the formation of hydrocarbon bearing structures was described. A description of hydrocarbon reservoir comprising of porous rocks containing the hydrocarbon in its pores and covered by a non-permeable cap rock was given. This was followed by description of the methods of oil exploration, identification of probable hydrocarbon bearing structures and drilling of exploratory wells. The risks and costs involved in search for oil was highlighted. An overview was given on various primary and secondary methods of oil and gas production.
77 Notes
Review Questions
(1) Describe how oil is formed and how it migrated and got trapped in certain locations below the surface of the earth. (2) Outline the major steps an oil company has to go through starting from the decision to explore for oil in ceratin area to the decision to start production of oil. (3) Give brief description with sketch for 6 Water Injection Process 6 In-situ combustion process (4) List down all the factors that can affect economics of production from an oil field. (5) What is the difference between gas injection and gas lift processes.
78 Notes
Quiz
Please circle the correct answer. There could be more than one correct answers in some cases. No. 1 Question Cap rock has Answer
(a) (b) (c) (d)
High porosity High permeability Low permeability No permeability Rock composition Oil composition Subsurface maps True False Partly true
Seismic survey generates Water is generally present along with hydrocarbons in a reservoir. Drill bit in a drilling rig is cooled by circulating Jack up rig is used for
(a) (b) (c) (a) (b) (c)
(a) Water (b) Oil (c) Mud (d) Water and mud (e) Water and oil (a) Onshore oil production (b) Offshore drilling (c) Offshore oil production (d) To jack up a platform (a) (b) (c) (d) Gas production Oil production Offshore fields Low pressure wells
Sucker rod pumps are used for
Insitu combustion is used to produce
(a) Low viscosity crude (b) High viscosity crude (c) Crude from deep wells
Unit 4
Oilfield Processing
Objectives
After reading this unit, you will be able to: y Get an overview of the configuration of facilities at the oilfield - offshore and onshore y Understand why processing of oil and gas is required at the oilfield itself. y Understand how oil and gas are gathered from many wells in the oilfield. y Understand what kind of processing is required at the oilfield and the technology involved. y Get an overview of various types of offshore production facilities like platforms, FPSO. y Understand the logistics involved in production of oil and gas.
79 Notes
Typical Field Configuration for Production:

A hydrocarbon producing field can be a few hundred to a few thousand Square Kilometers in area. Several wells need to be drilled in the area for optimal production. In a land based field (onshore), the wells could be in short distances (less than a Km) spread over the whole area. The well fluid from the wells are collected into Group Gathering Stations (GGS), where the oil, gas, and water are separated and processed. A typical onshore field configuration is shown diagrammatically in Fig. 4.1. Fig. 4.1 Onshore Field Configuration
Wells
GGS-1
GGS-2
Oil Gas
Flow Lines
80 Activity 4a
As shown, the well fluid is collected from the wells by flow lines into a GGS. There could be more than one GGS in an oilfield depending on the area of the field, number of wells and development plan of the field. After processing in the GGS, oil is stored in tank farms and sent to the consumer (refinery) through pipeline or tankers. The gas is compressed and sent by pipeline to the consumer (power plant or industry) or sent to a gas processing plant to produce LPG and separation of petrochemical feedstock. Certain other terminologies on gathering and processing/storage of hydrocarbons in the field are commonly used such as 6 Gas Collection Station (GCS - applicable for a gas field) 6 Central Tank Farm (meaning oil storage facilities at the oilfield) 6 Oil Collection Station (OCS) In an offshore field, the terminologies as well as the configuration differ from an onshore field. 6 The wells are normally drilled by Drill Ships of various types and well head may be installed in small fixed platforms called Well Platform . 6 Well fluid from different well platforms are gathered by sub-sea flow lines into a Production platform or Central Process Platform. The necessary oilfield processing is done at the Central Process Platform. There are other categories of platforms as well as floating production facilities (FPSO). With exploration and production going deeper into the sea (2000 meters or more), subsea production technology has developed with well and production facilities under water, installed on the sea bed. The configuration of offshore field is discussed later in this section.
Make a literature survey and internet survey to list down various types of offshore drilling rigs.
Table 4.1 Oil and Gas as Produced and as Desired

Item
Well Fluid 1% To 60% High Pressure Saturated with water 7lb/mmscf < 4 ppm (0.0004%) Depends 0% To 30% 0% To 30% < 10 Psi Crude Stabilization Gas Dehydration Gas Sweetening Gas Sweetening Below 1% Dehydration of Crude Separately Separation
As Produced
As Desired
Processing Required
Oil and Gas
UNIT 4 Oilfield Processing
Crude Oil Water Content
Crude Oil RVP (Reid Vapor Pr.)
Natural Gas Water Content
Natural Gas H2S Content
Natural Gas CO2 Content
81 Notes
82 Notes
Why Processing at Oilfield? Oil and gas as produced in the field is not transportable and does not meet customer specification. Before transportation to the buyer by pipeline or tanker, crude oil and natural gas must be separated and treated to meet certain customer specifications. Table 4.1 gives an idea of the quality of oil and gas as it comes out from the oil well and as desired by the customer. Processing of the well fluid and oil, gas and water is needed before we can bring them to the desired specification for sending to a customer. Thus some amount of processing at the oilfield itself is required, whether offshore or onshore, however remote the location may be. The configuration of an oil field is presented in Fig. 4.2 in block diagram format outlining the gathering scheme and minimum processing at the gathering station. This block diagram configuration of Group Gathering system (Fig. 4.2.) is to be seen in conjunction with oilfield configuration shown in Fig. 4.1. Flow lines carrying well fluid from the wells are all taken to a GGS. A Header or a manifold collects all the well fluid. As indicated in Fig. 4.2 the main processing blocks are: 6 Separation of oil, gas and water 6 Treatment of water before it can be discharged safely meeting environment requirements. 6 Dehydration of oil and gas to remove water 6 Metering and pumping of oil 6 Metering and compression of gas.
Fig. 4.2 Oilfield Facilities Configuration

83 Notes
84 Activity 4b
Prepare a report on various types of separators used for oil and gas production.
Fig. 4.3 Separation of Oil, Gas and Water
Natural gas
HP Separator
Well Fluid
Water
Oil (Liquid)
Description of Oilfield Processing

Well fluid is a mixture of oil, gas and water, coming out of well under high pressure. First, we need to separate them. This is done in an equipment called Separator, which is essentially a vessel having some internals to facilitate separation. A schematic diagram of separation and some details of Separator equipment is shown in Fig. 4.3. The separators are of many configuration and types such as horizontal, vertical, spherical, cyclonic type etc. Their selection and sizing part of engineering skill is not covered here. Oil (in the well fluid), which is at high pressure with dissolved gases, need to be brought to stable atmospheric pressure for storage. This is called Stabilization of oil. Instead of bringing down the pressure abruptly, it is stepped down slowly through a series of separators (Fig. 4.4). The simple configuration shows High Pressure (HP), Low Pressure (LP) and Atmospheric Pressure separation. Fig. 4.4 Crude Stabilization
Natural gas Well Fluid HP Separator LP Separator Atm. Storage
85 Notes
Water
Oil (Liquid)
Water
Further removal of water from crude oil is required before we transport the oil to refinery. This process is called crude oil dehydration. This is often carried out in an equipment known as Heater-Treater where heating the crude oil and coalescing the water particles by electrostatic force helps in bringing down the water content (See Fig. 4.7). Fig. 4.5 shows the processes mentioned above in the form of a simple flow diagram.
86 Notes
The water that is produced is either discharged or reinjected to the well. We need to treat effluent water to meet certain specifications before discharging or re-injecting. This process is called Water Treatment. A description of a typical facility for treating water is given later. Like crude oil, the natural gas that is produced also needs to be dried of water before it is put to the pipeline. This is to save the pipeline from corrosion. This process is called Gas Dehydration. A description of a typical facility for dehydration of gas is given in later part of this section. After processing as described above both oil and gas need to be metered and transported to the customer which could be a refinery or a gas processing plant owner. Often the customer could be several hundred Kilometers away and transportation could be through long distance cross country pipeline or by tanker. To meet transportation requirement, compressors are installed to meet pressure requirements in the pipeline and large oil pumps are used to pump the oil into the pipeline or a tanker. Often for greater efficiency of gas dehydration at higher pressures, compressors are placed ahead of the gas dehydration facility. Two more important items that form essential part of oilfield processing are Custody Transfer Meter: Most often the producer of the gas and oil and the customer are different companies or different profit centers under the same company. Accurate metering of oil and gas are required before they are despatched to the customer. Pig Launcher: An equipment called Pig, which are spherical or cylindrical objects of diameter close to the pipeline diameter, is pushed into the pipeline at certain intervals by the Pig Launcher. The objective is to clean and monitor inner surface of the pipeline.
Fig. 4.5 Flow Diagram of Oilfield Process System
Natural gas Gas Dehydrator Gas to Pipeline Compressor
Well Fluid
HP Separator LP Separator
Water
Oil (Liquid)
Water Treatment Water

Oil
Atm. Storage
Oil /Liquid Oil Pipeline Dehydration M Pump
Water discharge Or re-injection
87 Notes
88 Notes
Minimum Processing Requirement in Oilfield Oilfields being often in remote areas, only the minimum processing which is required for transporting and marketing the oil and gas is carried out in the oilfields. The minimum processing facilities necessary to be installed in an oilfield are: 6 Separation of oil, gas and water 6 Separation of sand and sludge 6 Stabilization of crude oil 6 Dehydration of crude oil 6 Dehydration of gas 6 Treatment of water 6 Pumping and metering of oil 6 Compression and metering of gas In addition a number of utilities and other facilities are needed like 6 Flare System 6 Chemical Injection System 6 Control System 6 Utilities like power generation Certain other facilities also may need to be installed in the field. These are: 6 Gas Sweetening: If hydrogen sulfide or carbon dioxide content in the gas is high enough to cause severe corrosion during processing and transportation. 6 Storage of Oil: It is based on logistics of operation. 6 Secondary and Tertiary Recovery: Requirement of Enhanced Oil Recovery comes up as the field ages.
Description of Oilfield Processing Equipment

Let us now give a look at all the equipment mentioned in Fig. 4.5 with a little more detail. For easier installation at remote oilfields, these are normally combined with necessary piping, instrumentation and control system. The whole equipment system with the ancillaries is mounted on easily transportable skid. These are known as Skid Mounted Oilfield Process Systems. Separators These are pressure vessels whose function is to separate oil, gas and water. A simple sketch of a separator was presented in Fig.4.3. The operating pressure of the separators could be very high (say 50 to 60 atmospheres) or lower depending on the reservoir pressure. Besides the simple design of separator shown in Fig. 4.3, there could be wide variety of designs, some of them of proprietary make: 6 Horizontal separator 6 Vertical separator 6 Cyclone type separator A skid mounted separation system is shown in Fig.4.6. Stabilization system for crude oil is a series of separators in sequence (normally 3 to 4) where pressure of the well fluid is brought down in each stage. Fig. 4.6 Skid Mounted Separators
89 Activity 4 c
Find out commonly used units for measuring pressure and conversion factors between the units.
90 Notes
Dehydration of Crude Oil The water in oil can be present in two forms 6 Free water - it is in droplet form and separates easily 6 Emulsion water - it is in emulsion form, often very tight Most of the free water comes out of the crude oil in the separators. But the emulsion water remains dispersed in the crude. There can be as high as 30 to 40% emulsion water in some crude oils after the separator. A special equipment called Electrostatic Treater or Heater Treater is used to dehydrate the crude oil to a level of below 0.5% water content. While Electrostatic Treater treats the crude by coalescing the water particles in emulsion by creating an electro static field, the Heater Treater also heats the crude oil in the same equipment reducing the viscosity of crude oil and facilitating dropping down of water particles. A sketch of Heater-Treater is shown in Fig. 4.7 . It has two chambers. First crude oil enters the heating chamber where it is heated by a fire tube which is fired with oil or gas burners. Some water droplets settle down in this chamber itself. Then the crude passes through the treater section where an electrostatic field is created by a high voltage transformer. Here the electrically charged emulsion water particles coalesce, settle down at the bottom and drained. Fig. 4.7. Heater Treater
Stack with Flame Arrester Crude oil with water Vent Gases Transformer Electrostatic Grid Treated Oil
Fire Tube Burner Water
Oil
Water Water
Heating Chamber
Treating Chamber
Dehydration of Gas There are a number of processes for dehydration of gas as described later. These could be Dry Bed Adsorbent process, where moisture is adsorbed on the porous surface of the drying medium, which are solid particles. For example beads of Silica Gel or Molecular Sieves are used as drying medium. Some of these processes are used to dry the gas to bone dry level. The other type of processes are based on absorption of the moisture from the gas by scrubbing (washing) the gas with a liquid drying agent, which is a good absorbent of moisture. These units are easier to operate but not suitable for getting the gas totally dry (bone dry). In oilfield, absorption type of process is more commonly used. Water is removed from the gas by contacting the wet gas with an absorbent liquid which absorbs the water (Fig. 4.8). Generally Glycols are used as absorbent. Tri-ethylene glycol (TEG) and ethylene glycol (EG) are the two most commonly used glycols in natural gas dehydration. TEG is used in about 95% of glycol dehydrators. Dehydration with TEG is most widely used in oil/gas field processing. Dehydration of gas takes place in a column (Absorber Column) with trays or packing inside to facilitate contact between glycol absorbent and the wet gas. The gas fed at the bottom part of the column goes up and the dry glycol (lean glycol) fed at upper part of the column comes down the column absorbing water out of the gas. Absorbent containing water absorbed from gas (rich glycol) is regenerated by heating and stripping out the water in the regeneration section of the unit. The regenerated absorbent is circulated back. Such systems are widely used in offshore and onshore fields for dehydration of gas. Gas dehydration unit is also skid-mounted with piping and ancillary equipment for easy installation in the field.
91 Notes
92 Notes
Fig. 4.8. Gas Dehydration Unit Using Glycol

Vent off-Gas Dry Natural Gas Burner Stripping Exhaust Gas
Absorber Still
Moist Natural Gas

Gas/Glycol Exchanger
Reboiler
Flash Gas to Vent, Fuel, or Stripping Gas
Surge Tank
Natural Gas
Lean Glycol Rich Glycol

Glycol
Filter Circulation Pump
Inlet Separator
Phase Separator
Hydrocarbon Liquids to Tank
Rich Glycol
Produced Water Treatment A simple schematic diagram of produced water treatment is given in Fig. 4.9. Produced water is separated from various separators and oil treaters in the oilfield. It has to meet specifications for discharge of water as per environment regulations. It contains oil and sand/silt which need to be removed. The water is taken to an oil skimmer first. Oil from the skimmer is transferred to a slop oil tank, from where it is pumped to the suction of Main Oil Line Pump (refer Fig. 4.5). Water passes through Cyclone to separate solid material like sludge. Fine emulsion of oil in water is still left in the produced water. Normally desired specification before discharge of the water is oil concentration of less than 20 ppm. This is achieved by an equipment called Induced Gas Floatation Unit. Low pressure gas is bubbled through a sparger in a floatation cell to separate the emulsion and coalesce the particles. Oil layer comes out from the top. Water is taken to a settling tank where the quality is monitored before discharging the water. In off-shore platforms water is sent to an equipment called Caisson. It resembles a cylindrical well dipped into the sea. This allows for an additional guard before the water goes into the sea. The last traces of water that separate out at the Caisson is pumped to the slop tank.
93 Notes
Fig. 4.9. Produced Water Treatment

Produced Water Skimmer Water Oil to slop tank Gas Water Solid Liquid Cyclone Sludge Sea Level Treated Water Caisson
Floatation Cell
Oil to slop tank
94 Notes
Flare System Flare system is an important facility in any plant processing oil or gas. It is essentially a tall stack made of steel pipe along with a flare tip (burner) at top and ancillary equipment. It burns out any hydrocarbon released during processing due to over-pressure in any of the equipment. Normally the plant facilities have safety release valves which release the contents of an equipment if the pressure rises beyond a safe operating limit. The flare system prevents such flammable hydrocarbon releases to get into the plant area and surroundings by burning out such releases. It is also used to burn out any excess gas produced. This situation can occur when a customer downstream suddenly stops taking the gas due to any operating problem in his plant. It may take some time for the oilfield operator to cut down the gas production. During this period the gas is diverted to flare, to avoid any kind of accident. Also in a field producing crude oil, the associated gas produced may be more than the gas demand in the market. Then the excess gas will need to be flared. Elevating the flare can prevent potentially dangerous conditions of high radiation at the operating area of the plant. The height and distance of the flare stack from the plant area is fixed to limit heat radiation within acceptable limits. Further, the products of combustion can be dispersed above working areas. This helps to reduce the effects of noise, heat, smoke, objectionable odors and limits ground level concentration of pollutants from flare. In the onshore production facility, a tall flare stack (structurally supported) is provided 50 to 100 meters away from the plant area as shown in Fig.4.10. In offshore production facility, flare is provided in two possible configurations:
6 An inclined structure directed away from the platform supports the flare at one edge of the platform. This is called flare boom (see Fig..4.12). 6 A separate flare tripod structure, away from the platform Fig 4.10. Onshore Flare Stack
95 Notes
Safety release or excess gas
Process
Chemical Injection System Oilfield facilities require a variety of chemicals to be injected to the oil and gas streams in small dozes (20-100 ppm):. 6 Corrosion inhibitors equipment and piping. to control corrosion in the
6 De-foamers are used to control foam. Some oils have tendency to foam as the gas bubbles through and separates out in the gas oil separators. This creates inefficiency in the separation system. 6 Demulsifier chemicals are used to break emulsions of water in oil or oil in water. 6 Bactericide is used to prevent growth of bacteria, fungi and sea weeds inside pipeline and equipment. 6 Oxygen scavenger is used for the same purpose. 6 Flow improver is used for viscous crude oil to improve transportation efficiency.
96 Notes
Production Configuration for Gas Field

The configuration of a gas field could be different. Here again there will be gathering or collection of gas from various wells to Gas Gathering Station (GGS) or Gas Collection Station (GCS) as the nomenclature may be according to the operating company's norms. Normally gas is associated with some amount of condensate in the reservoir. The processing done at the GGS (Fig. 4.11) are: 6 The well fluid is gathered from the wells by flow lines into a manifold at GGS. 6 Condensate (or NGL) is equipment. separated in Separator
6 Condensate is stabilized, stored and then despatched to the customer. 6 Gas is dehydrated, compressed and metered before being sent for gas processing. The gas processing complex could be several hundred Kilometers away from the gas field. The processing facilities at the gas processing plant have been described in detail later. The major units in the gas processing complex are: 6 Gas Sweetening if there is hydrogen sulfide in the gas. Gas sweetening is normally accompanied with conversion of hydrogen sulfide to sulfur. 6 Dehydration of gas - this is needed because sweetening process makes the gas wet with moisture again. Sweetening agents are normally in solution with water. 6 Fractionation of chilled and condensed gas to recover LPG and petrochemical feedstock (ethane and propane). 6 Conversion of the gas to LNG if needed for transportation purposes.
WELL 1
Fig. 4.11. Gathering and Processing of Gas
WELL 2
WELL 3
GAS GATHERING STATION -1
GAS Lean Gas to Power / Fertilizer Plant LPG C2 C3 NGL
WELL 4
WELL HEADS
WELL 5
Water
WELL 6
GAS PROCESSING COMPLEX (Generally Onshore) Condensate - Gas Sweetening - Gas Dehydration - Condensate Fractionation - LNG Plant - LPG/Ethane Recovery GAS
WELL 7
GAS GATHERING STATION -2
WELL 8
Water
Water Treatment and Disposal;
97 Notes
98 Notes
Offshore Production Facility

The oilfield facilities are installed in the oilfield whether it is an onshore or offshore field. So far we had focused on the configuration of onshore facilities. We explained how oil and gas are gathered in Group Gathering Stations and processed. The processing requirements and schemes in offshore field are very similar to onshore processing system. But in certain areas, the configuration and design of offshore facilities differ a lot: 6 Field configuration and terminologies used in offshore facilities are to a certain extent different. For example at onshore one can drill a number of wells spread all around the field. But offshore drilling is expensive. So a number of wells are drilled from a single drilling platform and a number of drilling platforms (also called well platform} are spread around the field. Gathering and processing are done at Production Platform or Central Process Platform. 6 Construction technology and operating philosophy in offshore facility are also different. 6 Due to cost of space created at offshore platform and its isolation from infrastructure, the layout (tight and compact) and safety considerations in design of the facilities are different. Both exploration and installation of production/processing facilities are more expensive offshore. Offshore Facilities Description Offshore installations could be fixed platform or floating facility (FPSO). Floating productions systems are getting more prevalent due to cost factors under certain conditions. FPSO (Floating Production, Storage and Offloading), generally a large tanker or vessel with production and storage facility, has found wide application today where putting up a platform is uneconomic. A descriptive picture of an offshore platform is given in Fig. 4.12.
Turbine Exhaust
Boat Landing
99 Activity 4 d
Flare Boom
Cellar Deck
Main Deck
Make a survey and compile pictures, sketches and description of different types of offshore installations.
Fig. 4.12. Offshore Platforms
Helideck
Crane
Living Quarters
Crane
Process Equipment
100 Notes
A number of fixed platforms, or floating facilities, subsea installations or a combination of them can make an offshore production complex . Platforms are named according to the type of processing or function it is meant for. The types of platform normally encountered at offshore are: Drilling and Well Platform - Normally more than one well is drilled from the well platform. Quite often 4 to 8 wells are drilled from a single platform. All the well heads are manifolded into a single pipe which goes down to the sea bed and leads to a Production Platform or Process Platform. Production Platform - Production platform contains certain minimum processing facility like separation and stabilization of crude oil. Process Platform - Process Platforms have the complete process facilities described with reference to Fig. 4.5. They are the biggest platforms in an offshore complex, which is equivalent to a GGS onshore. They are also referred as Central Process Platform. Utilities Platform - For large facilities the utilities like power generation, instrument air system etc. are installed in a separate platform. Living Quarters Platform - The production and maintenance personnel for an offshore facility stay for long periods of shifts (in terms of weeks) in an offshore platform. For safety, the living quarters for personnel are made in a separate platform. Flare Tripod - If the flare has a large gas flaring capacity, it is installed away from a platform to minimize heat radiation to the operating area of the platforms. It is installed in a tripod structure piled into the sea. Some times flare is put in the platform itself as an inclined flare boom directed away from the platform. Several other platforms are installed with the requirement
of Enhanced Oil Recovery as the reservoir pressure depletes. These could be Water Injection Platforms, Gas Injection Platforms and so on. Offshore platforms can be rigid structures that extend all the way from above the water surface and piled to the seabed. They can be supported on single leg (Monopod), three legs (Tripod), four legs, eight legs or multiple legs. In a common type of platform, the legs are piled into the sea bed. The platforms can be supported by steel or concrete structure. For bigger surface area at the top of the platform, more number of legs are provided. Some design of the platforms are not fixed into the sea bed. They float near the water surface. Table 4.2 Types of Platform
Type of Platform
Fixed-bottom
101 Notes
Connection to Seabed
Piles Gravity Tethers Catenary mooring lines
Example
Steel jacket Concrete Gravity Structure Tension Leg Platform (TLP) Semi - submersible, Spar
Floating
Building platforms in sea is very expensive and the well production rate has to be much higher than onshore field for economic justification. For example an onshore field can be justified with per well production rate of even a few hundred bbl/day. But in offshore field it has to be in thousands of bbl/day for economic exploitation. A well platform in Mumbai high costs anything between US$ 20 Million to 50 Million. A process platform costs around few hundreds of Million Dollars. In contrast a GGS onshore (albeit with much lower production) will cost around five Million Dollars only.
102 Notes
Configurations of a Major Offshore Field Production at offshore requires a fixed or floating facility or a subsea production system and means for transportation of oil and gas to the consumer at shore. The transportation of oil could be by offloading it to an oil tanker or by pipeline. But for gas, pipeline is normally the only option. Another option that has developed now is floating LNG Plants to liquefy and transport the gas directly by tanker from offshore. The configuration of an offshore facility could be developed based on any of above or a combination depending on the location, water depth and production profile. Study and decision of the optimum economic configuration is one of the prime skills in developing an offshore production facility. Fig. 4.13 shows a simple configuration of a small offshore production complex. This is a concept based on fixed platforms. It is similar to the concept of development of Mumbai High Field. In the first phase (Phase-1), when the potential of the field can not be predicted accurately, a few well platforms and a small production platform can be installed just to separate the oil and flare the gas. A storage tanker anchored next to it to store the oil produced. It offloads the oil to another shuttle tanker. Once the potential of the field is established, the Phase - 2 starts. More well platforms and Central Process Platforms are installed for gathering and processing the well fluid. Oil and gas pipelines are laid to the shore to transport them and the tanker becomes a standby option. Once the pressure of the reservoir drops, to boost production, a number of water injection platforms are installed and water injection well platforms are put around the periphery of the field. Later more platforms can crop up due to the changing production profile and EOR requirements.
Fig. 4.13 Offshore Field Confugaration

PHASE III
PHASE II PHASE I
103 Notes
104 Notes
FPSO Floating Production and Storage Offloading (FPSO) is one of the most popular systems for offshore production. The first floating system started production in North Sea in 1975. Its design has been adopted to wide variety of production situations and environment. FPSOs are operating today all over the world. It can operate down to 2000 meters of water depth. FPSOs have been effectively used in large producing fields, deep sea and marginal fields. It's economic advantage comes because: 6 It avoids need for large and costly fixed installation and infrastructure. This is particularly advantageous in deep sea, say at 1000 meters depth. 6 It can be modified easily for different production conditions by bringing it to the yard. 6 It has the flexibility to move from one field to another, unlike fixed platforms. It can be used for production from a number of marginal fields with short field life. Fig. 4.14 FPSO
Sea Level FPSO
Anchor with Piles
Flexible Flow Line
Flexible Flow Line
Sand Bed Well Head
Well Head
Normally large supertankers are converted to FPSO. The bare surface at the top of the tankers provides space for process equipment system and infrastructure. The storage capacity of the tanker is used to store oil. The oil is offloaded to a shuttle tanker from time to time. The gas can be connected to gas pipeline, sent to another floating unit with gas processing facility or flared. A typical configuration of an FPSO producing oil in deep sea is given in Fig. 4.14. The FPSO anchors in the selected location where, one or more subsea wells are already drilled and valved at the bottom of the sea. The well is connected to the production facilities on the deck of the FPSO by flexible well piping called umbilical. The wells are controlled by remote control from the FPSO through control cables going down below the sea to the wells. Offshore Platform Construction Technology Offshore construction is a challenging task, quite different from construction of an onshore plant. Let us look into the construction of a typical four legged platform. Legs can be of tubular structure of large diameter. A construction barge (Fig. 4.15) carries pieces of the leg to the selected location in deep sea for installation. The pieces are welded together, lowered till it reaches sea bed. Then piles are hammered through it into the sea bed to fix the legs on the sea bed. Fabrication of rest of the platform is done meanwhile in a shore based construction yard. A rectangular three dimensional piece of steel structure called jacket is fabricated to hold together the four legs. The finished structure is then skidded on to the transportation barge, taken to the location and placed on top of the legs to hold them together. Also the platform decks are fabricated in the yard, brought by the barge to the location and placed on top of the jacket. Process equipment along with piping and ancillaries are also fabricated in different shops on shore as modular skid mounted units. They can be placed on the decks beforehand at the yard itself or brought by barge to the location and placed by crane on top of the decks.
105 Notes
106 Notes
Fig. 4.15 Construction Barge Anchored Along Side Platform Under Construction
There are several interesting techniques of installation of such facilities. There is a lot of sub-sea construction work including welding under water is involved. An offshore facility requires the services of trained divers for construction as well as maintenance work below the sea. Concrete platforms are constructed in a different way. Construction is carried out in a dry dock near the sea. The concrete structure (hollow) is built vertically upwards. At a certain point, the dock is flooded, and the structure is floated. Further construction takes place while it is floating. It is then towed to the location, and filled with sea water so that it can sink down to its final position on the seabed. Such structures can weigh hundreds of thousand tons.
107 Notes
Fig. 4.16 Offshore Construction
108 Notes
Offshore Field Operation and Logistics

With several platforms in a remote offshore field, the operating philosophy and logistics support requirement is quite complex compared to any plant onshore. Operating Philosophy Special features of operating philosophy in offshore platform are: Safety: Being far away in a remote area, operating safety and emergency planning for containment of disaster and evacuation of personnel are important feature in design and operation of an offshore platform. This involves !Special safety instrumentation for safe shutdown of production facilities in case of emergency situation, redundancy of equipment and instrumentation wherever needed for safety reasons. !Special seaworthy Escape Capsules for operating personnel in case of emergency. !Safety training of the operators for working in marine environment and regular practice drills. Remote Control and Monitoring: In a large offshore complex, the process platforms may be fully manned but the well platforms are generally unmanned and remote operated. Several wells and other facilities need to be monitored from control room in the Central Process Platform. Also there is need for coordination between offshore facilities, pipeline operation, and onshore facilities like gas processing plant or crude storage terminal at shore. This is done by telemetering and telecontrol system known as Supervisory Control And Data Acquisition (SCADA). This involves remote transmission of operating data and computer based data acquisition and monitoring system by communication with optical fiber cables, microwave or satellite. Such systems will be covered in detail in the section on IT Applications in Oil and Gas Industry.
Shift Schedule: Onshore plants normally have three shifts of operators, changing every eight hours a day. In offshore the logistics problem for such rotation will be enormous if people have to be taken every eight hours to remote areas far away from town and brought back. The shift pattern in offshore vary from seven days to fifteen days in one shift. That means the operators have to live in the offshore platform for shift period of seven to fifteen days depending on the shift cycle decided by the management. After the period, operators for the next shift are flown by helicopter and the operators of the earlier shift return. That is why the platforms need to have safe and well equipped living quarters. Logistics: Logistics management is very important for successful operation of offshore production facility. Logistics support requirements are personnel related, maintenance related and equipment related. Logistics relate toMovement of operators and maintenance personnel. Movement of divers for sub-sea maintenance and operation. Catering, medical and other services for the personnel. Supply of maintenance equipment and spare parts as and when needed. Carrying out work-over operations on the wells in the well platforms. To provide for these, the production companies maintain an offshore supply base at shore and arrange contractors to operate fleet of supply boats and helicopters.
109 Notes
110 Notes
Summary
Certain amount of processing need to be done at the oilfield before the oil and gas are transported to refineries or gas processing plants. This unit described what are the processing done, schematics and equipment for such processing. Typical configuration of an oil field with wells, gathering of well fluid and processing stations were described for both onshore and offshore fields. How the concept of an oilfield at offshore changes and develops with time was described. from real life example.
Questions
6 An offshore field produces sour gas and a large amount of condensate. Draw a block diagram showing different process systems that need to be installed in the platform. 6 Make a list of various type of offshore production installations (platform etc.) with brief description of the same.

Understanding O&amp;G-MDSO 801 (1st Vol)

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UNDERSTANDING OIL & GAS BUSINESS

EMBA - Oil & Gas Management

COLLEGE OF MANAGEMENT AND ECONOMIC STUDIES (CMES)

Unit 1 Unit 2 Unit 3 Unit 4

Understanding Oil & Gas Business

Fig. 1.2 Offshore Jackup Rig

UNIT 1 Basic Concepts

Understanding Oil & Gas Business

UNIT 1 Basic Concepts

Understanding Oil & Gas Business

condensate (clear and volatile like motor gasoline).

Reservoir, Well and Well Fluid

UNIT 1 Basic Concepts

Fig 1.5 Hydrocarbon Formation

Understanding Oil & Gas Business

Is Helium a useful chemical? What are its uses?

Crude Oil and Natural Gas

UNIT 1 Basic Concepts

Understanding Oil & Gas Business

Elementary Concepts on Hydrocarbons

UNIT 1 Basic Concepts

Composition of Crude Oil

Understanding Oil & Gas Business

Normal Butane nC4H10

Dimethyl Cyclopentane C7H14

UNIT 1 Basic Concepts

Some Important Concepts on Crude Oil

Understanding Oil & Gas Business

UNIT 1 Basic Concepts

Understanding Oil & Gas Business

UNIT 1 Basic Concepts

Understanding Oil & Gas Business

Well Head to Energy and Petrochemicals

Calorific Value (Kcal/Kg)

Coal Crude Oil Fuel Oil Motor Gasoline Polythene Polystyrene

6,500 10,400 10,000 11,000 Not fuel Not fuel

80 150 120 180 500 550

UNIT 1 Basic Concepts

Fig. 1.8 Petroleum Utilization Blocks

Refinery Petrochemical Complex Power Generation

Refinery Products Petrochemical Product

Petrochemical Feed stock (Ethane / Propane) Gas

Understanding Oil & Gas Business

UNIT 1 Basic Concepts

Propane (C3) Butane (C4)

Heavies (C5+) (NGL)

Hydrogen Sulfide(H2S) Carbon Dioxide Nitrogen Water Total

Understanding Oil & Gas Business

UNIT 1 Basic Concepts

Fabric, clothing, bags, ropes, carpets, and numerousother irtems

Units Specifically Used in Oil and Gas Industry

Understanding Oil & Gas Business

1 Cubic Meter (CuM) 1 Million Tonne of Crude

UNIT 1 Basic Concepts

Objective type questions

Understanding Oil & Gas Business

The largest constituent of natural gas is FPSO is preferred for use in

Octane number of petrol used in cars in India is FPSO stands for

(a) (b) (c) (a) (b) (a) (b) (c)

Which of the following is used as feedstock to make Petrochemicals

Which of these items can not be made from Petrochemicals

To transport gas from Qatar to Japan, use is made of

Understanding O&G-MDSO 801 (1st Vol)

Understanding O&G-MDSO 801 (1st Vol)