Petroleum – Oil and Natural Gas
Drilling Costs
Once a company identifies where the oil or gas may be located, it then begins planning to drill an exploratory well. Drilling a well is expensive: Shallow offshore wells or deep onshore wells can cost more than $15 million each to drill!
Getting the Oil Out
Locating a suitable site for drilling is just the first step in extracting oil. Before drilling can begin, companies must make sure that they have the legal right to drill, and that the impact of drilling on the environment is acceptable. This can take years. Once they finally have the go ahead, drilling begins. The exact procedure varies, but the idea is first to drill down to just above where the oil is located. Then they insert a casing of concrete into the newly drilled hole to make it stronger. Next, they make little holes in the casing near the bottom, which will let oil in, and top the well with a special assembly of control and safety valves called a “Christmas tree.” Finally, they may send down acid or pressurized sand to break through the last layer of rock and start the oil flowing into the well. (Source: Oil and Natural Gas, Society of Petroleum Engineers, Richardson, TX.)
In the petroleum industry, production is the phase of operation that deals with bringing well fluids to the surface and preparing them for their trip to the refinery or processing plant. Production begins after drilling is finished.
The first step is to complete the well – that is, to perform whatever operations are necessary to start the well fluids flowing to the surface. Routine maintenance operations, such as replacing worn or malfunctioning equipment – known as servicing – are standard during the well’s producing life. Later in the life of the well, more extensive repairs – known as workovers – may also be necessary to maintain the flow of oil and gas. The fluids from a well are usually a mixture of oil, gas, and water, which must be separated after coming to the surface. Production also includes disposing of the water and installing equipment to treat, measure, and test the oil and gas before they are transported away from the wellsite.
So production is a combination of operations: bringing fluids to the surface; doing whatever is necessary to keep the well producing; and taking fluids through a series of steps to purify, measure, and test them. (Source: Fundamentals of Petroleum, Petroleum Extension Service, The University of Texas at Austin, Austin TX)
