Oil! A Primer on Petroleum Exploration & Production

Perhaps it's time for an update on oil exploration and production.

Let's say, just for instance, that an underwater oil well develops a little leak, and suppose no shutoff valve was installed.

How does it get capped? How long would it take?

How bad can we expect the spill to be?

How many of these wells are there?

How fragile are they?

 

You are referring to the Deepwater Horizon incident, of course

I have a bit of experience with deep water oil extraction, and this "incident" doesn't pass the Smell Test. Something is very odd about it

A Blowout Preventer is installed as part of the drilling process. The depth of that particular field is about 35,000 feet beneath the ocean floor, unsure of pressure but can imagine it quite high.

Sometimes with very high pressures the valves can "flutter" until they seat. Sometimes you can get a situation very similar to water hammer in home plumbing, causing leaks in the riser.

With the rig destroyed, the only way to even try to operate the blowout preventer is remotely, with deep sea robotic submersible craft. I am unsure if the ROV is capable of operating the blowout preventer

This can't be "capped" in the conventional sense. A relief well will have to be drilled, apparently another rig is already onsite. It could take at least a month to do such an operation though

In the Gulf alone there are almost 4,000 medium to deep platforms. Worldwide there are many thousands of such platforms

Extreme weather can take out a platform. So can an explosion on the platform.

I find it interesting that not only have shares in oil exploration companies gone down a bit, but I would have expected oil futures to really spike. Odd how that didn't happen

 

Yes, I am.

I've heard nasty rumours this well didn't have one. Does BP stand for British Petroleum or Blowout Preventer?

You'd think this sort of thing would be tested before installation.

Let's see...5,000 barrels a day, times 30 days (BP's saying maybe 90), times 4,000 rigs...a 20 billion dollar a year shrimp fishery...what's the insurance payment on a multi-trillion dollar policy?

BP has lost 25 billion in share value. So far.

It's bad enough this could happen by accident with no safeguards in place. And the eco-terrorist angle doesn't make sense. But...economic terrorists? I'd rather not think about it.

 

You have to remember that there was a blowout. That may very well have damaged the preventer (if it exists, which I currently believe it does).

jayman what are you saying is odd about it? That the preventer didn't function correctly?

 

Investigators with the U.S. Minerals Management Service raised concerns three years ago about oil rig blowouts associated with cementing wells, noting that accidents were continuing with regularity, most in the Gulf of Mexico.

Though the cause of last week's explosion on the Deepwater Horizon remains under investigation, officials with Transocean have said a blowout within the deep oil well was likely to blame for the deadly blast. At the time of the accident, crews were �cementing,� or installing casing to secure the walls of the well.

A 2007 MMS study found that although blowouts with offshore drilling operations were becoming less frequent, less deadly and less polluting, cementing-associated troubles persisted.

Cementing problems were associated with 18 of 39 blowouts between 1992 and 2006, and 18 of 70 from 1971 to 1991. There were 17 blowouts in the earlier period where contributing factors weren't identified.

Nearly all the blowouts examined occurred in the Gulf of Mexico...

�Cementing' wells tied to oil rig blowouts | Deepwater Horizon | Chron.com - Houston Chronicle

 

I do find it odd the BOP was damaged. There is video of an ROV attempting to operate the manual controls on the BOP, but I am unsure if a ROV is capable of this

In hindsight, deep ocean floor BOP's should be designed to be easily operated by ROV's that are certified to operate at that ocean depth.

I still find it odd how cementing is continuing to cause so many issues. I was under the impression this problem was solved years ago

 

this 5,000 barrel a day figure is a result of a miscalculated original estimate of 1,000 barrels a day???

well, i sure hope that is the case. but personally, we all know about the "leak in the Dam" mechanism?? i think the leak was much slower at first, but has escalated and i would not be surprised to see a much much higher revised estimate.

all of this is not boding well for me at all. i guess worrying about 2012 is a waste of time. looks like we wont make it that far

 

AP released a YouTube of the modified coffer dam being lowered:

What is instructive is to see the water lap up on the white surface leaving behind the oil stain.

Bob Wilson

 

Some pretty interesting videos from BP can also be found here, along with an interesting article on "mud".

Safety fluid was removed before oil rig exploded in Gulf | NOLA.com

 

The downloadable PDF helps and is complemented by this latest Detroit Free Press article:

Gulf oil trap set in place | freep.com | Detroit Free Press

This makes a lot of sense. I've experienced the heat cement makes when setting. Meanwhile, at those depths, the salt water is terribly cold and very high pressure. But any oil would be saturated with methane, like a soda bottle. Warm it up and a very small bubble of gas starts the chain reaction. As it rises, it rapidly expands into a huge volume on the surface. It was the weight of the drilling mud that kept the methane in solution in the oil.

The more interesting question is how do they get the oil from 18,000 ft below sea level to even 5,000 ft below sea level without a similar problem happening? The pressure at 18,000 ft along with probably some amount of heat relative to the deep sea temperature is a curious problem. The reason the sea water at the bottom is so cold is water is densest at 39F and sinks. But we know the earth gets warmer the deeper we drill. The physics are interesting and forces intense.

Bob Wilson

 

Oil extraction from extreme ocean depths represent unique hazards and difficulties. Just the temp vs pressure is enough to throw out the window most "common sense" surface exploration techniques

 

An interesting update: Green Car Congress: Opinion: Global Oil Supply More Fragile Than You Think

And many companies are also recalculating the oil price needed for new drilling projects to make financial sense. For example, according to the Wall Street Journal, BP is assuming an oil price of $60 per barrel moving forward. Royal Dutch Shell is a little more pessimistic, using $50 per barrel as their projection. For now, projects that need $100+ per barrel will be put on ice indefinitely. The oil majors have cancelled or delayed a combined $200 billion in new projects as they seek to rein in costs, according to Wood Mackenzie.

But the delay of 46 major oil and gas projects that have 20 billion barrels of oil equivalent in reserves mean that global production several years from now could be much lower than anticipated. Due to long lead times, decisions made today will impact the world’s production profile towards the end of this decade and into the 2020s. It makes sense for companies to cut today, but collectively that could lead to much lower supplies in the future.
. . .
Shale production has surged in recent years, but it could be a fleeting phenomenon. Precipitous decline rates from shale wells mean that much of a well’s lifetime production occurs within the first year or two. Moreover, after the best spots are drilled, the shale revolution could start to come to a close. The IEApredicts that U.S. shale will plateau and begin to decline in the 2020s. That means it would not be able to keep up with rising demand. Add in the fact that oil wells around the world suffer from natural decline rates on the order of 5 percent per year (with very wide variation), and it becomes clear that major new sources of oil will need to come online.
. . .
That is no longer the case. Today OPEC has only 1.6 mb/d of spare capacity, the lowest level since before the 2008 financial crisis. So while Saudi Arabia is currently flooding the market with crude, it has exhausted its spare capacity, leaving few tools to come to the rescue in a pinch.​

Hummm, you'd think they ain't makin' fossil fuels any longer.

Bob Wilson

 

smart money is on $5,000. off new prius now, sell for same in 2-3 years.

 

Would put my money here:

James Hamilton, Ph.D., Professor of Economics at the University of California, San Diego (areas of research include energy markets):

OPEC and world oil supplies | Econbrowser
(link with charts/graphs)

There’s been a remarkable surge in world oil production over the last year. And the United States is only part of the story.

World oil production basically stagnated over most of the last decade. From January 2005 to April of last year, daily production of crude oil and condensate increased by less than half a million barrels annually. But over the last 12 months, the figure is up 3.1 mb/d.

The surge in U.S. shale production, dramatic as it has been, accounts for only a little over a third of that increase. I hope to say more about the prospects for U.S. production in a subsequent post. Canada also made a noticeable contribution to the world total; I discussed reasons why Canadian oil production would increase despite the falling price of West Texas Intermediate last March. But the really astonishing change over the last year has been OPEC production. OPEC production was virtually the same in April of last year as it had been at the beginning of 2005. But it is up 1.3 mb/d over the last 12 months.

And the story of increased OPEC production is not, as many people seem to assume, that the Saudis have opened the floodgates in an effort to discipline North American competitors. Saudi production is not up much from where it stood a year ago. A much bigger story is Iraq, where the ambitious new projects that the country has been pursuing for some time are finally showing some impressive results. Iranian production is also up, and significant increases could lie ahead as sanctions are lifted. Libya is still a very unstable place, but slightly less so than in the spring of last year, and that is another reason why OPEC production today is higher than it was a year ago.

Here’s a longer-term perspective on what’s been happening in OPEC. The sanctions on Iran and turmoil in places like Libya and Iraq were important factors in the overall stagnation of OPEC production over the last decade. If Iraq, Iran and Libya can return to some kind of normalcy, we could soon see an additional million barrels/day increase from those three countries. And if the precarious status quo in other troubled areas such as Nigeria can be maintained, that would mean that the surge in OPEC production has only begun.

It’s hard for me to believe reading the news that peace and stability are about to break out in the Middle East and North Africa. But for now, more oil seems to be flowing from those troubled regions, and further big increases could lie ahead.​

 

Wishing ewhanley hadn't vanished ½decade ago - would love to have heard him dialogue on fracking - wellpad life expectancy etc. Oh well - day to day life getting in the way ~
.

 

shale oil companies on the verge of bankruptcy, with thousands of layoffs to follow.

 

Oil prices don't seem to be heading up in the foreseeable future, and even more oil has started coming online to world markets:

OPEC Challenges Shale Afresh as Iraq Crude Floods U.S. Market - Bloomberg Business


Even with depressed oil prices over the last 6-12 months, U.S. oil production has been holding steady for the last few months:

Weekly U.S. Field Production of Crude Oil (Thousand Barrels per Day)


But with Brent and WTI currently descending to new lows (Energy & Oil Prices: Natural Gas, Gasoline and Crude Oil - Bloomberg), it's not looking good.

Bad news for Prius sales, alternative fuels, Russia, Venezuela, Gulf State Economies, to name a few

 

How about that price of oil? Still trending down: WTI ~$38.25 USD/bbl and Brent ~$41.5 USD/bbl at the moment. Yikes.

 

wow, you're digging deep enough today to hit some oil yerself!

 

We need an update:

I grew up in Oklahoma and witnessed first hand how it works at the state level.

Bob Wilson