Through the early 1900s, finding oil and gas was largely a matter of luck. Early explorers looked for oil seeps to the surface, certain types of rock outcrops, and other surface signs that oil might exist below ground. This was a hit-or-miss process.
Technology moves forward
But science and technology quickly developed to improve the industry’s ability to determine what lies belowground. Seismic technology uses the reflection of sound waves to identify subsurface formations. A crew working on the surface sets geophones at intervals along a straight line. Then a loud noise is created at the surface. The noise moves throughout the ground and reflects off of underground formations. How quickly and loudly that sound is reflected to the geophones indicates what lies below ground. This process is repeated many times. Different types of formations reflect sound differently, providing a picture of the types of rocks that lie below. If the geophones are laid out in straight lines, the results are called two-dimensional seismic. If they are in a grid pattern, the result is called three-dimensional seismic. Reading 2D seismic images to find possible traps and reservoir rocks was as much art as science. Today, sophisticated technology and high-speed computers help geo-physicists process massive amounts of seismic data. From these data, they can develop 3D underground maps that significantly improve the industry’s ability to locate possible oil or gas deposits. But until a well is drilled, it is impossible to know for certain whether the resource is there, whether it is oil or gas, and whether it can be recovered in commercial quantities.
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. Aggregate capital costs for exploration and development of some deep water oil and natural gas projects can exceed $1 billion during a period of as much as seven years before production first occurs. [1]
And costs keep increasing. The costs of major oil and gas production projects have risen more than 53 percent in the past two years, and no significant slowing is in sight, according to a new benchmark index developed by IHS and Cambridge Energy Research Associates (CERA). [2] Companies must analyze all of the available information in determining whether, and where, to drill an exploration well.
Before the technology advances of the past few decades, the best place to put a well was directly above the anticipated location of the oil or gas reservoir. The well would then be drilled vertically to the targeted oil or gas formation. Technology now allows the industry to drill directionally from a site up to 5 miles (8 km) away from the target area. Computers on the drilling rig and steering equipment in the drill-bit assembly enable guiding the wellbore with such accuracy that it can target an area the size of a small room more than a mile underground. This directional drilling technology means that the industry can avoid placing wells in environmentally sensitive areas or other inaccessible locations, yet still access the oil or gas that lies under those areas. Advanced drilling technologies, linked with satellite communications, mean that an engineer can monitor and guide drilling operations in Peru, in real time, from an office in Houston.
How does the industry find oil and gas?
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