Oil and Gas 101

Hydrocarbons - crude oil and natural gas - are found in certain layers of rock that are usually buried deep beneath the surface of the earth. In order for a rock layer to qualify as a good source of hydrocarbons, it must meet several criteria:

  • Porosity: a measure of the openings in a rock, openings in which petroleum can exist.
  • Permeable: the pores of the rock must be connected together so that hydrocarbons can move from one pore to another.
  • Petroleum Traps: traps formed in various ways that hold the hydrocarbons upon layers of rock.

Once an area is selected, the right to drill must be secured usually by an operator which involves leasing the mineral rights of the desired property from the landowner.

Once an accumulation of oil has been found in a porous and permeable reservoir, a series of new wells are drilled in a predetermined pattern to effectively drain this "oil pool".

The rate of production is highest at the start when all of the energy from the dissolved gas or water drive is still available. As this energy is used up, production rates decrease through the years although significant amounts of oil still remain in the reservoir. Only about 12 -15% (so-called "reserves") of the total oil reservoir (so-called "oil in place") can be extracted by a particular production method. Such methods include free-flowing wells and production maintained by pumps.

Through other production methods and perforation into new formations, more extractions can be conducted on the same well which was previously producing (so-called "rework"). For example, hydraulic fracturing, or fracking, which involves pumping water, chemicals and sand at high pressures to break apart underground rock formations, is commonly used to extract more oil from the total oil reservoir.