Feature Report: Exploring for Oil and Gas Deposits

6 items of content in this feature report

Exploring

Close-up

Exploration, a Multi-Stage Process

Exploring for oil and gas deposits is a lengthy, complex, expensive process performed by multidisciplinary teams of specialists: geologists, engineers, technicians, economists and advisors in international negotiations.

Boreholes drilled during exploration operations in Murchison Falls National Park in Uganda. © L. ZYLBERMAN / TOTAL

The Licensing Round

It usually starts with an international licensing round organized by the government of a country that wants to unlock the value of its natural resources. It uses this method to select oil companies offering the best terms.

The company selected — either alone or in a joint venture or consortiumA consortium is an association of individuals, companies, organizations, governments ... with others — is awarded an exploration license that it will either execute or sell or swap in a global market (See Close-Up: "It all starts with an oil exploration license").

The first phase of exploration of the prospectA potential hydrocarbon deposit. Explorationists seek to locate prospects, determine their configuration and size..., or potential depositThe potential hydrocarbon reserves that could be extracted from a deposit. , consists of scanning the subsurface. Seismic waves, generated by thumper trucks onshoreRefers to land-based oil exploration and production operations, as in "onshore seismic data acquisition" or "onshore drilling". or airguns offshoreRefers to sea-based oil exploration and production operations, as in "offshore license" or "offshore drilling"., are sent through the subsurface. Reflected at different speeds by each rock layer they encounter, the waves are analyzed to produce 2D or 3D images. This technique, seismic reflectionGround waves (vibrations) caused by an explosion or weight drop are sent from a transmitter..., has become increasingly precise thanks to the significant strides in information technology (See Close-Up: "Locating a potential oil or gas deposit").

However, seismic imaging is never 100% accurate or reliable. The data acquired are supplemented by available surveys of the regional geology and the results of neighboring drillingThe process of boring a hole into the ground using special equipment... sites. While all these data help to reduce uncertainty about whether or not a prospect exists, the decision to drill a well is always a difficult one.

Costs Borne by the Companies

It costs at least €3 million to €4 million to drill an exploration well onshore, and ten times more offshore. The average success rate is just one in three. The companies bear all costs. If the exploration results in a commercial hydrocarbonOrganic compound consisting of carbon and hydrogen. Hydrocarbons are the principal constituents of crude oil, natural gas and petroleum products. discovery, the investment pays a return. But if it does not, the company loses its investment.

This is where economists come in, to calculate the value of the potential deposit by factoring data such as the price of oil and the tax system in the country concerned. If their simulation is negative, the prospect will not be drilled (See Close-Up: "To drill or not to drill").

Exploration and Appraisal Drilling

Then comes exploration drilling, in which a drill bitDrilling tool that crushes or cuts rock to increase the depth of the borehole... bores into the subsurface, bringing with it a string of drill pipes screwed together. Meticulously prepared drilling mud brings up rock cuttings and hydrocarbon samples that will confirm — or not — the discovery of a depositAn accumulation of natural resources, such as oil, natural gas, coal, uranium, metal ore or another commodity... and will provide additional information about whether the reservoirs can be developed. During drilling, the reservoir study is fine-tuned by measuring the porosity of the rock, subsurface fluids and even the natural radioactivity of the rock (See Close-Up: "How exploration drilling works").

A number of appraisal wells are usually drilled on the same site to accurately delineate the reservoir and check its properties, as well as select the best location for future production wells.

All these steps are critical to determine whether the deposit is commercial and calculate its profitability (See Close-Up: "An array of observations and measurements during drilling").