Understanding Oil

& Gas Business

Upstream and Downstream

Oilfield

Processing
Transportation of oil and gas
Gas Processing
Refinery
Petrochemicals
Power Plants and other gas
based industries

UPSTREAM

DOWNSTREAM

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.
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.
Traps are formed by deformation of the rocks,
deposition of rocks or by creation of faults
due to movement of rock strata.

Types of Structural Traps

Exploration for Oil and Gas

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:
Licensing
and
agreement
from
the
governments concerned.
Geological
surveys
including
aerial
photography, satellite images to examine nature
of rocks and soil strata and interpretation of
such data.
Geophysical surveys such as seismic surveys.
Interpretation
of data and geological
modeling.
Identifying hydrocarbon resources and their
location based on the interpreted data.

 Economic

evaluation

of

the

located

reserves.
Exploratory
drilling
to
establish
commercially viability.
Preparation of field development plan.
Commercially exploiting them by setting
up necessary drilling and production
infrastructure.

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:
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.
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.

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

Magnetic Survey - to determine the strength of the

Earth's magnetic field at a specific location.
Gravity Survey - to determine the strength of the
Earth's gravity at a location.
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.