Oil & Gas

From exploration to distribution

Week 1 V04 Introduction to E&P
Jean-Claude Heidmann

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IFPEN - IFP School 2015 / TOTAL SA 2015 / IFP Training 2015

Introduction
We will discuss the following points,
first, the role of the exploration and production industry
then, a few details about the context related to resources
and finally the overall cycle of the exploration and production activities.

Role of the Exploration-Production industry

Exploration and production, or E&P, is also called the upstream segment of the oil and gas
industry as Arash told you in a previous lecture.
The role of the E&P industry is to find and produce hydrocarbons which means oil, or
petroleum, and gas. These will then be delivered first, to the refineries then, to the
consumers.
The aim of this part of the course is to provide you with the fundamental technical
information needed to understand the various activities involved in finding and producing
hydrocarbons.

Source : freepik, Neyro, Macrovector

Oil and Gas resources

Everything starts with the understanding of the worldwide oil and gas resources and their
estimation.
What do we mean by resources?
We call resources the identified part of the amount of oil and gas still buried underground.
We are not talking about reserves which implies both technology and economy for the
resources to be developed and produced.

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IFPEN - IFP School 2015 / TOTAL SA 2015 / IFP Training 2015

There are large uncertainties around the evaluation of resources but a recent estimate of
ultimate resources indicates that there are still sufficient resources for about 90 years of
liquid production and 140 years of gas production.
What are the different categories of resources underlying this estimate ?
On the diagram: Below the horizontal line you find, in red, the hydrocarbon volumes
already produced since the beginning of the industrial era.
Above the line you will find, stacked, the different types of resources starting with the
resources already identified in the ground and relatively well-known.
Moving up, towards more uncertain resources, there is a category of potential additional
hydrocarbons that we could recover, from existing developed fields, with new technologies.
We call it EOR for Enhanced Oil Recovery.
Moving to a more and more uncertain domain we have the exploration potential.
This is the oil and gas volumes which have not yet been found and will be the result of the
exploration activity - what we call the "yet to be found" hydrocarbons!
For example, exploration activity will target unknown domains such as the Deep and Ultradeep offshore - with water depths ranging from 3000 to 5000 meters.
The last category of potential resources includes huge resources located in unexploited
geological targets, the so called unconventional resources.
They include different types of deposits, for example, the well-known Shale Gas and Shale oil
deposits.
Their characteristics will be presented and discussed by Professor JP Deflandre in the next
lecture.

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IFPEN - IFP School 2015 / TOTAL SA 2015 / IFP Training 2015

Each type of resource will face specific challenges to make it accessible.

To transform all these different resources into producible reserves, significant investments in
exploration, technology and research and development will be needed.
The era of the so-called easy barrels is over, the future barrels will be technological.
Therefore the amount of resources available will be closely dependent on the Oil/Gas price.

Overall cycle of EP activities

The Upstream industry is characterized by very long cycles which requires long-term vision
and decisions. The life cycle of a hydrocarbon field can last for 3 to 5 decades.
It is subdivided into several phases separated by a series of GO/no GO steps.
These major decision steps are crucial as they are directly related to the following major
constraints:
the reduction of the level of uncertainties related to the uniqueness of each field
the huge investments tied up in each new phase
the technological challenges and know-how required to move to the next step.
Ironically, the field is really only fully understood at the end of its life.

We can subdivide a fields life into three major phases: Exploration, Development, and
Production, all of which have specific objectives.
Each phase involves numerous competencies that we can classify in several major specific
technical professional disciplines such as: Geologist, geophysicist, reservoir engineer,
driller, petroleum engineer etc.
In addition to these technical domains - like in many other industries there is also a need
for other skills and jobs like economists, lawyers, Human Resources, HSE specialists, etc. ...

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IFPEN - IFP School 2015 / TOTAL SA 2015 / IFP Training 2015

The objective of the exploration phase is to discover hydrocarbons in commercial

quantities.
How do we start? With an idea, an initial geological concept generated by geologists and
geophysicists - also called explorationists - using their experience and studying all available
existing data and knowledge.
Large regions of the globe need to be evaluated, for many years, trying to reconstruct the
geological history of the basins. Why? To identify potential attractive zones.
If successful, this phase results in the application for mining rights for a specific area. This is
why we call this part the Regional evaluation.

What comes next? Once the exploration acreage is obtained, detailed studies can be
initiated, including the acquisition of new data such as seismic data, outcrop analysis,
satellite data, laboratory analysis, etc. This work is done in the part called exploration.

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IFPEN - IFP School 2015 / TOTAL SA 2015 / IFP Training 2015

The results of all these studies can lead to the definition of a prospect, always unique, that
will or will not be drilled. Geologists and Geophysicists work together with Drilling Engineers
to prepare the drilling campaign.
Several exploration wells can be drilled, targeting and testing different objects and
geological concepts. This phase, which can last from 2 to 5 years, could lead to a discovery.
How do we define success?
Success in exploration is: finding a significant or economic amount of hydrocarbon.
A typical chance of success of an exploration well is around 10 to 20% in under-explored
areas.
And just keep in mind the order of magnitude of the cost, of one deep offshore exploration
well: around 100 million dollars.

Once a discovery is made, another evaluation process starts, dedicated to the appraisal of
the size and characteristics of the discovery. Several appraisal wells can be drilled. A
multidisciplinary team composed of geologists, geophysicists, drillers, reservoir engineers
will then assess:
the extent of the reservoir rock,
the volume of recoverable reserves
and the production potential.
This phase can last around 2 to 4 years and ends with the decision to develop the field or
not. This decision is a very important step as it will be a commitment for huge investments.
Details of this overall exploration phase will be developed by professors Jean Pierre
Deflandre and Anne Jardin in the following courses.
The second major phase after Exploration is development. The field development phase
is the construction of the fields production facilities, involving all types of professional
disciplines but mostly reservoir and petroleum engineers.
At the end of this phase, which can last around 3 to 6 years, production can start - this is also
called first oil.
Just to give you an order of magnitude , a single offshore Floating Production Surface and
Offloading vessel - also called FPSO - could cost around 10 Billion dollars.
This phase will be presented during weeks 2 and 3 by Professors Vladimir Choque Flores,
Isabelle Rey-Fabret and Jean Marie Voirin.

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Finally the third major phase in the life of a field is production.

A fields typical production life includes:
A ramp-up
related to the increasing number of production wells being drilled and
connected
A plateau which corresponds to the maximum of the fields production potential
And a decline.
This production phase can last 20 to 30 years but is different for each field.
What happens at the end of the economic production life of the field?
The site is restored and/or rehabilitated. This can last 1 to 3 years depending on the size of
the installations.

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IFPEN - IFP School 2015 / TOTAL SA 2015 / IFP Training 2015