Oil and Gas - Introduction

MD YAZID MANSOR
Industry Expert Petroleum Basin Studies Faculty of Geosciences & Petroleum Engineering University Technology PETRONAS
B Sc (Hons) Geology, 1984 UNIVERSITY OF KEELE STAFFORDSHIRE, ENGLAND WHARTON BUSINESS SCHOOL UNIV OF PENNSYLVANIA, USA
Adv Mgmt Prog#53, 2007
Career Positions: 2006 2013 Senior General Manager, Carigali Exploration International VP PMU Office, PETRONAS Dagangan Bhd, PETRONAS Carigali Exploration Division Skill Group SKG09 (Geoscience) Advisor 2002 - 2006 Senior Manager, Staff Exploration Geology, Senior Business Planner, VP E&P Office Corporate Strategy Studies 2002 1984 - 2002 Team Leader SK307 Exploration, Senior Exploration Geologist, Reservoir Geologist Wellsite Geologist / Business Planner Industry Secondments: SARAWAK SHELL, MIRI, 1985 ESSO MALAYSIA, KUALA LUMPUR, 1986 BRITISH GAS, ENGLAND, 1991 SABAH SHELL, LUTONG, 1993 MOBIL, DALLAS, 1994
MD YAZID MANSOR
Industry Expert Petroleum Basin Studies Faculty of Geosciences & Petroleum Engineering University Technology PETRONAS Development of PETRONAS-UTP Centre for Basin Studies Promote & secure Industry-UTP Joint Projects Development of industry related competency in faculty B Sc (Hons) Geology, 1984 UNIVERSITY OF KEELE STAFFORDSHIRE, ENGLAND WHARTON BUSINESS SCHOOL UNIVERSITY OF PENNSYLVANIA, USA
Adv Management Program #53, 2007 Career Positions: 2006 2013
Senior General Manager, Carigali Exploration International Exploration Special Projects, VP PMU Office, E&P. Senior General Manager, PETRONAS Dagangan Bhd, Senior General Manager, Carigali Exploration Division Skill Group SKG09 (Geoscience) Advisor Senior Manager, PMU Prospect Maturation Department, Staff Exploration Geology, PCSB Petroleum Geoscience Senior Business Planner, VP E&P Office Corporate Strategy Studies 2002, Domestic Exploration Team Leader SK307 Exploration, PETRONAS Carigali Sdn Bhd Senior Explorationist, PETRONAS Carigali Sdn Bhd Senior Geologist Regional Studies, PMU Wellsite Geologist / Business Planner / Reservoir Geologist
2002 - 2006
1984 - 2002
Industry Secondments: SARAWAK SHELL, MIRI, 1985 ESSO MALAYSIA, KUALA LUMPUR, 1986 BRITISH GAS, ENGLAND, 1991 SABAH SHELL, LUTONG, 1993 MOBIL, DALLAS, 1994
MD YAZID MANSOR
Industry Expert Petroleum Basin Studies Faculty of Geosciences & Petroleum Engineering University Technology PETRONAS (since April 2013 to date) Development of PETRONAS-UTP Centre for Basin Studies Promote & secure Industry-UTP Joint Projects Development of industry related competency in faculty B Sc (Hons) Geology, 1984 UNIVERSITY OF KEELE STAFFORDSHIRE, ENGLAND WHARTON BUSINESS SCHOOL UNIVERSITY OF PENNSYLVANIA, USA
Adv Management Program #53, 2007 Career Positions: 2011 2013 2010 2010 2009 2010 2006 - 2009
- Senior General Manager, PETRONAS Carigali Sdn Bhd PETRONAS Exploration International. - Head, Exploration Special Projects, VP PMU Office, E&P. - Senior General Manager, PETRONAS Dagangan Bhd, Supply and Distribution Division. - Senior General Manager, PETRONAS Carigali Sdn Bhd (PCSB) Exploration Division, E&P - Skill Group SKG09 (Geoscience) Advisor - Senior Manager, PMU Prospect Maturation Department, Petroleum Resource Assesment & Marketing, E&P - Staff Exploration Geology, PCSB Petroleum Geoscience Department - Senior Business Planner, VP E&P Office - Corporate Strategy Studies 2002, Domestic Exploration - Team Leader SK307 Exploration, PETRONAS Carigali Sdn Bhd - Senior Explorationist, PETRONAS Carigali Sdn Bhd - Senior Geologist Regional Studies, PETRONAS (PMU) Exploration Management Department - Wellsite Geologist / Business Planner / Reservoir Geologist PETRONAS (PMU) Exploration Department
2004 - 2006 2002 - 2004
2000 - 2002 1996 2000 1994 - 1996 1984 - 1994
Industry Secondments: SARAWAK SHELL, MIRI, 1985 ESSO MALAYSIA, KUALA LUMPUR, 1986 BRITISH GAS, ENGLAND, 1991 SABAH SHELL, LUTONG, 1993 MOBIL, DALLAS, 1994
PROFESSIONAL MEMBERSHIP Geological Society of Malaysia 2000-2009 Petroleum Geology Conference & Exhibition, Main Committee 2012 Forum Panel speaker AAPG # 10013257 2008-09 Industry Advisory Panel SEG
TECHNICAL PUBLICATION & PRESENTATION External publication (title; date; journal/book name) 1. Pre-drill predictions versus post-drill results: use of sequence stratigraphic methods in reduction of exploration risk, Sarawak Deepwater Blocks, Malaysia, 1999, Journal of Asian Earth Sciences 17. Using Sequence Stratigraphic Methods in High-Sediment Supply Deltas: Examples from the Ancient Mahakam and Rajang-Lupar Deltas, October 1996, Proceedings, Indonesian Petroleum Association.
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External technical presentations: oral &/or poster papers (title; date; conference name) 1. Pre-drill predictions versus post-drill results: use of sequence stratigraphic methods in reduction of exploration risk, Sarawak Deepwater Blocks, Malaysia, oral, 1997 Brunei International Workshop on Tectonics, Stratigraphy and Petroleum Systems of Borneo, University Brunei Darussalam. Stacked Hydrocarbon Reservoirs in a Low Relief Trap - Baram Delta, oral, October 2001 GSM, Kuala Lumpur, coauthor with Nasaruddin Ahmad, SK307Team Using Advance Workflows to Optimize Subtle 3D Prospect Interpretation and Reducing Uncertainty in Trap Definition - The Sarawak Prospect Experience, oral, October 2001 APTF, Hangzhou, China, co-author with Nasaruddin Ahmad, SK307 Team CHRONOSTRATIGRAPHIC CHART OF THE SEDIMENTARY BASINS OF MALAYSIA, Petroleum Geology Conference and Exhibition, 27-28th November, 2006 Kuala Lumpur Convention Center, Malaysia, co-author with Robert Wong Hin Fatt, Barry Boyce, Dr. William Krebs, Md. Yazid Mansor, Dr. Peter Barber, Dr. Robert J. Morley, Dr. Shamsudin B Jirim, Dr. Jaizan Hardi Mohamed Jais, Dr. M Jamaal B Hoesni, Robert Kirk, Gregory Meldrum, Martin Pott, Mazlan B. HJ Madon, Mansor Bin Ahmad. PCSB EXPLORATION JOURNEY : KEY ACCOMPLISHMENT TO DATE AND FUTURE ASPIRATIONS, Keynote Paper 2, Petroleum Geology Conference and Exhibition, 27-28th November, 2006 Kuala Lumpur Convention Center, Malaysia, by Md. Yazid Bin Mansor, Senior General Manager, Exploration Division, PETRONAS Carigali Sdn Bhd
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TEACHING / PROGRAMME EXPERIENCE
PG1 L3 Turbidite School in KLCC, Kota Kinabalu and Labuan: October/November 2002 for 11 participants, June 2002 for 12 participants. E&P Core Programme - delivered Block 1: February 2003 to 27 participants, March-April 2002 to 22 participants, October 2001 to 24 participants, Apr-May 2001. E&P Core Programme - Block 1 panel review in January 2003, Block 2 panel review in July 2002. Basin Analysis Level 1 Nov 1998, Mar 2000 Sequence Stratigraphy Levels 1 & 2 - May 2000, May 1999 Sequence Stratigraphy School (Coordinator & Assistant Lecturer), MOBIL/PETRONAS, KUALA LUMPUR, 17/07/1995 21/07/1995 UTM Scudai, FDP Seminar, August 2002 - presented and held rigorous discussions with 70 final year students on geoscience. Petrosains KLCC Career Day - Petroleum Geologist Career to school counselors and students: April 2003, August 2002, April 16 2002. Career in Geology/Geophysics at Institute of Technology PETRONAS, Permata, 1996. Career in Petroleum Industry for Residential School Students, 1995 - 96. Career in Geophysics at Universiti Sains Malaysia, Pulau Pinang, 1995. Exploration Methods for Kajang Teachers Co-curriculum Activity, 1994. Introduction to Petroleum Technology by Permata, PETRONAS, 1991 - 95.
PCB1012 Course Coordination

! Coordinator: Mr. Khaled Elraies, GPED ! Meeting by appointment, can be contacted through e-learning message or email ! Room: ! Extension number: ! Email: Khaled_elraies@petronas.com.my
Introduction to the Oil and Gas Industry & Sustainable Development
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Course Schedule
! Monday 8-10 am CE, CV, EE ! Friday 8-10 am ME, PE, PG, ICT, BIS ! Please select 1 representative from each program/ batch for coordination of tests/replacement class
Representatives to email hp numbers to Ms. Ani
! Lecture topics can be found on e-learning

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Course Evaluation
! 60% Final Examination ! 40% Coursework (tests, spot quizzes)
! ! Test 3 tests, MCQ Quizzes during random lectures !! only students present in the first half hour of the class will get the quiz paper. Answer sheets will be collected at the end of the lecture.

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Why should you be interested in the Oil & Gas Industry?

! You are now studying at PETRONAS University and need to be aware of the type of activities carried out by PETRONAS, the national oil company of Malaysia. ! Because of its affiliation with PETRONAS, UTP considers it an important mission to form high-quality skilled staff for PETRONAS and other industry players. ! Most, if not all disciplines taught at UTP may lead to careers in the oil and gas industry. ! Some of you may be interested in choosing to study a petroleum-related discipline.
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Course Coverage
! Several modules taught by specialists in the various disciplines involved in each step of the petroleum life cycle:
!!Geoscientists who will introduce acreage basin analysis, prospect evaluation, exploration techniques, and discovery appraisal. !!Petroleum engineers who will elaborate on the field development planning, drilling, reservoir engineering and production technology; !!Chemical, mechanical and electrical engineers who will introduce manufacturing of petroleum products. Refining, gas processing, and petrochemicals industries are also discussed. !!Safety and environmental engineers will cover aspects of HSE during all operations from exploration to manufacturing.
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Learning Outcome
! At the end of the course, students should be able to:
! Describe the various steps of the petroleum industry life cycle and understand which disciplines are involved at each step. ! Explain how oil and gas are generated, discovered and produced. ! Explain how oil and gas are transported from the site of production to refineries or treatment plants. ! Explain how oil and gas are treated and how products are exported to markets. ! Describe various petrol and petrochemical products
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Todays Lecture
1.! Review some myths and truths about the oil industry. 2.! Introduce fundamentals about petroleum systems. 3.! Present the various steps of the petroleum industry life cycle and the disciplines involved at each step.
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Lesson Outcome
! Be able to explain
! How important are oil & gas as energy sources? ! How much changes have we seen in the use of energy sources over time? ! How much oil and gas are produced daily? ! What are the proven world reserves of oil and gas? ! The various steps of the petroleum industry life cycle and understand which disciplines are involved at each step

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Who am I to Talk to You about the Oil & Gas Industry?

! I am a Petroleum Geoscientist with 30 years of experience in the oil and gas industry. ! I have a B.Sc. In Geology, a M.Sc. In Geochemistry and a Ph.D. in Marine Geology & Geophysics. ! I joined Shell in 1980 and had assignments in 8 different countries. ! I am currently Shell Chair in Petroleum Geosciences at UTP and am director of the South-East Asia Carbonate Research Laboratory (SEACARL) in the Department of Geosciences and Petroleum Engineering.
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Our reliance on oil is an addiction We will run out of oil in 10 years
Myths & Truths
Renewable energies will soon replace oil Jobs in the oil industry will soon disappear The oil industry is a low-tech world Old people, all from western countries It is a dirty and polluting industry Oil companies fix the oil price The oil lobby sabotages renewables
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Oil companies steal natural resources
Our reliance on oil is an addiction
Myths & Truths

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Our Reliance on Oil is an Addiction

! Oil is necessary to ensure the continuation of life on the planet. ! For instance, we use oil to power farm equipment that provide us with food. ! We use oil to make our vehicles work: motorcycles, cars, trucks, buses, trains, airplanes, ships. ! Oil is also used to make many things we use every day, like the chairs in this lecture hall, the paint on the wall, the plastic and nylon for our clothes and shoes, asphalt on the roads, even cosmetics.
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We will run out of oil in 10 years
Myths & Truths

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Will we run out of oil in 10 years?

! The current oil reserves (producible with existing technologies) will last for at least 40 years. ! Oil resources (discovered but not included in reserves yet) will still be produced in 100 years. ! New technologies will allow us to find more oil that will be added to existing reserves and resources. ! Oil is increasingly reserved for mobility ! Natural gas complements oil in fixed plants (power plants and heavy industry).
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Myths & Truths
Renewable energies will soon replace oil

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Fossil Fuels vs. Renewables

100
Hyd
100 BILLION
tric c e l roe
New Technologies
Billion BOE/year
Solar, wind,! Geothermal
80
World Energy Demand

Coal Natural! gas
Nuclear
60
after Edwards, AAPG 1997
40
Decreasing Fossil Fuels
Crude Oil
20
1900
1920
1940
1960
1980
2000
2020
2040
2060
2080
2100

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Myths & Truths
Jobs in the oil industry will soon disappear

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Careers in the Oil & Gas Industry

100
d Careers in Oil & Gas Hy 100 BILLION Remain Important Solar, wind,! Geothermal In coming 50+ years World Energy Demand Nuclear
Coal
tric c e l roe
New Technologies
Billion BOE/year
80
60
Natural! gas
after Edwards, AAPG 1997
40
Decreasing Fossil Fuels
Crude Oil
20
1900
1920
1940
1960
1980
2000
2020
2040
2060
2080
2100

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The Resource Gap: Geoscientists

Petroleum Geoscientists (Thousands)
90 80 70 60 50 40 30
The resource gap: the of geoscientists World Demand for Geologists & case Geophysicists
Demand
Tota l Wor kfo
GAP
rce
M. Keane, 2007
20 10 0 1995 2000
New
Grow % 3 ( s t i Recru
th)
2005
Year
2010
2015
2020

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Technology in the Oil & Gas Industry

! The Upstream Oil & Gas Industry uses more computer power than any other industry except the entertainment industry. ! Exploration and production of oil & gas rely heavily on high technology: 3D and 4D seismic, basin analysis, reservoir modelling, smart wells, well logging, reservoir monitoring, etc. ! A large number of technology and service companies focus on developing new technologies for the oil & gas industry.

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The oil and Gas Industry needs brains

! Oil and gas exploration and production are very costly. The very large investments must be justified by intelligent proposals and decisions. ! The high technology used in the oil industry requires a high level of skills. ! Major oil company graduate workforce is dominated by M.Sc., Ph.D. and engineers

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Myths & Truths
Old people, all from western countries

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Old people from western countries?

! In the 1970s, the majority of graduate staff in major oil companies was from western countries. ! In the 1980s, all major oil companies put in place diversity programmes aimed at increasing the number of nationalities of their staff. ! National oil companies employ mainly staff from their own country. ! 80% of the industrys workforce will age out in the next five to ten years and are gradually replaced by eager, younger workers.
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Myths & Truths
It is a dirty and polluting industry

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A Dirty and Polluting Industry

! True in the early 20th century when the environment was not an issue. ! A behavioural turn-around took place in the 60s, along with an increased awareness about our environment. ! Staff hired in the 1970s and 1980s were very much aware of the need to protect the environment and drove their companies to become more environmentally-conscious. ! Drilling for oil and gas involves many technical risks, especially as drilling moves into deeper waters, where everything must be done remotely. Insufficient safety measures may lead to catastrophic accidents.
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A Dirty and Polluting Industry

Oil field in Russia in 1920
An Oil Gusher
Oil field in Baku in 1930 Introduction to the Oil and Gas Industry & Sustainable Development
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That is Changing its Ways of Working

Oil Field in France
The Groningen field clusters, designed to make as little visual impact on the environment as possible

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Myths & Truths
Oil companies fix the oil price

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Petroleum Consumption and Price

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Historical Oil Price

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Myths & Truths

The oil lobby sabotages renewables
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The Oil Industry and Renewables

! Major Oil Companies have become Energy Companies ! Since 2006, the oil industry produces more than 75% of new energy options for our future (solar, fuel cells, wind, and hydrogen). ! The current trend is a focus on bio or agro-fuels. ! In Abu Dhabi, over the next decade, a city of 50,000 residents will be built from scratch. And unlike any other city in the world, Masdar City will have no carbon footprint. Once it's built, the city will be powered entirely by renewable energy.
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Myths & Truths

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Oil companies steal natural resources
The Ownership of Oil & Gas

! Until the 50s, the oil produced by oil companies belonged for a large part to them. They paid taxes and royalties to the producing countries. ! In the 60s oil-producing countries nationalized their oil and gas resources. Oil companies received a share of the production. ! Currently, in most countries, natural resources belong to the state. Oil companies are contracted to find and extract oil and gas. Their investment and expertise are paid in kind, a share of production called equity oil or gas, or receive a fee per barrel produced.
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What is Petroleum ?
! From Latin, Petro (rock) and oleum (oil) ! Definition of Petroleum:
A naturally-occurring liquid, gas, semi-solid or solid mixture of hydrocarbons and nonhydrocarbons molecules
! Conventional petroleum: oil, condensates, gas ! Unconventional petroleum: heavy oil, tar sand, and shale oil
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What are Hydrocarbons?

! Hydrocarbons are organic compounds containing carbon & hydrogen atoms bonded together, forming chains.

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Crude Oils Come in Various Colours

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Crude Oils Come in Various Colours
! Due to different composition of the crude

Anding Utara-1 Anding Utara
Basement-1 DST-2
Anding Utara
Basement-1 DST-3

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Common Volumetric Units Used in the Industry

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The Origin of Oil: Organic Matter
Lake Plankton Plant Material Ocean Plankton

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Deposition and Burial or Organic Matter

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Source Rock: Introduction to the Oil and Gas Industry & Sustainable Development Organic-rich Black Shale PCB1012
Source Rock
!A source rock is a rock that is capable of producing hydrocarbons. !requirements for source rocks:
!they need to have a high enough concentration of organic matter and !they should have been heated to a high enough temperature to reach thermal maturation.
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Source Rock Maturation & Petroleum Generation

The earths temperature increases with depth in the earths crust. As organic matter is buried, it is heated and transformed into kerogen, oil and gas. Most oil is produced between temperatures of 60 and 120 degrees C, at a depth range known as the oil window.
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Migration
After petroleum has been generated, it must migrate out of the source rock and into the trap where it will accumulate and form an oil or gas field. Some oils form close to the reservoir and can reach it vertically but in many cases oil migrates laterally over several kilometers before coming to rest in a reservoir. Petroleum migrates as a mixture of oil and gas through water-saturated rocks. In the reservoir these phases separate according to density with the most dense water on the bottom, least dense gas on top and oil between the two.
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Oil Migration into Reservoirs

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Where are Oil & Gas Found?

In large holes like caves in the subsurface ? In the middle of the sea, below the seafloor? In dune sands? In the pores of host rocks?

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Oil and Gas are Found in the Pores of Rocks
0.5 mm
SEM Photo of Miocene limestone reservoir
5 cm
Core sample of Cretaceous limestone reservoir

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Reservoir Rock Upper Under the Microscope
Khuff Limestone

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5 mm
Reservoir Rock
Reservoir rocks are rocks capable of storing large quantities of oil and gas. They are characterized by
high porosity and effective permeability. Examples of good reservoir rocks are sandstone and limestone.
Aquifers, which are rocks that contain ground water, have the same properties as reservoir rocks with the exception that they contain water rather than petroleum.
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Petroleum System Elements

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Sealing Rock
A seal is an impermeable rock through which oil and gas cannot move effectively and which blocks the upwards migration of oil and gas. Sealing rocks are made of mudstone, claystone or salt.

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Traps
A trap is a geometric body where oil and gas are kept in place. It usually consists of a porous rock sealed by an impermeable rock Examples of traps include:
Structural Traps
Folds (Anticline) Faults
Stratigraphic Traps
Pinch out Unconformity
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The Classical Anticlinal Trap

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Trap Styles
Anticline
Fault Salt dome
Pinch-out
Unconformity
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Petroleum System Summary

4 essential elements of a Petroleum System:
Source Rock Reservoir Seal Trap
4 essential processes of a Petroleum System:

Maturation Generation Migration Accumulation
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Typical Oil Field Life Cycle

From Acreage Acquisition To Product marketing upstream (exploration and production) to downstream (transport, refinery, manufacture and sales)
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Careers in the Oil Industry

Many different disciplines are involved in the various domains of the oil industry, from upstream (exploration and production) to downstream (transport, refinery, manufacture and sales)
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Careers for Geoscientists

! Explorationist: finds new oil and gas fields ! Reservoir Geologist: studies fields and reservoirs for development and production ! Operations Geologist: analyses the subsurface geology in wells while drilling ! Seismic Acquisition and Processing Geophysicist: designs, executes and processes seismic surveys ! Seismic interpreter: extracts the geology in seismic ! Production seismologist: images the subsurface geology of producing fields.
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Careers for Petroleum Engineers

! Operations PE: Designs wells, leads and supervises drilling operations. ! Drilling Engineer: Executes the drilling operations of new wells. ! Reservoir Engineer: analyses and models the reservoir to ensure optimum recovery of hydrocarbons. ! Completion Engineer: designs and supervises the completion of wells in producing reservoirs. ! Production Engineer: Supervises producing wells to ensure optimum production performance
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Careers for Mechanical Engineers

! Drilling Engineer: Executes the drilling operations of new wells. ! Facilities Engineer: Designs and builds surface facilities in field development ! Operations Engineer: Designs and supervises development and production operations. ! Control Engineer: Coordinates operations in field development and production operations. ! Maintenance Engineer: Ensures that all facilities are in good working order during production operations.
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Careers for Electrical Engineers

! Logging Engineer: Plans and executes the logging operations in new wells. ! Facilities Engineer: Designs and builds surface facilities in field development, especially power plants. ! Instrumentation Engineer: Designs and supervises production monitoring instrumentation in field development. ! Control Engineer: Coordinates operations in field development and production operations. ! Maintenance Engineer: Ensures that all electrical facilities are in good working order during production operations.
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Careers for Civil Engineers

! Construction Engineer: Plans and executes the construction of drilling sites onshore and offshore; designs and builds refineries and other plants. ! Facilities Engineer: Designs and builds surface facilities in field development. ! Pipeline Engineer: Designs and builds pipelines onshore and offshore ! Environmental Engineer: Determines environmental measures for wells and fields; ensures that all operations are environmentally safe.
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Careers for Chemical Engineers

! Mud Engineer: Plans and executes the preparation of drilling mud while drilling wells. ! Reservoir Engineer: analyses and models fluid flow in reservoirs to ensure optimum recovery of hydrocarbons; designs and executes chemically enhanced recovery operations. ! Process Engineer: Designs and builds hydrocarbon treatment plants and refinery components. ! Product Engineer: plans and supervises hydrocarbon product manufacturing operations.
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Careers for Other Disciplines

! Environmental Scientists: Prepares, submits and evaluates Environmental Impact Assessments (EIA); ensures that all operations are environmentally safe. ! IT Engineer: Plans IT and computer hardware and software requirements for petroleum operations. Ensures that all IT equipment is up-to-date and operational; designs software for petroleum operations. ! Safety Engineer: Executes HSE Management plans for all stages of petroleum operations; ensures that all operations are conducted in a safe and healthy way.
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Compensation in the 21st Century

! Salary ranges:
Geoscientists $75,000 Geo-technicians $40,000 Engineers (19 years avg.) $83,000 Engineering technicians $55,000 - $260,000 - $90,000 - $185,000 - $86,000
Average
$140,000 $66,000 $122,000 $64,000

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Next Lecture
Exploring for oil and gas The future of energy

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THANK YOU

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How do International Companies Obtain a License?

!By bidding in a licensing round. !By direct negotiations with National Oil Company or Oil Ministry. !By Farming-in in another companys acreage. !By taking over another company and inheriting their licenses.
Introduction to the Oil and Gas Industry and Sustainable Development
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Announcing a Licensing Round

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On offer in a Licensing Round:

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License Bid
! Bidding Companies offer to carry out a certain amount of work (seismic, drilling), the estimated cost of which is calculated according to a fixed formula. ! Bidding companies may be asked to offer a sum of money (signature bonus). ! The highest bidder wins the license and signs an Exploration Contract.
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Contract Types
! Concession License ! Joint Venture Agreement (JV) ! PSA or Production Sharing Agreement (also called PSC: Production Sharing Contract) ! Risk Contract ! Technical Service Agreement
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How do we Reach an Investment Decision?

! Form an evaluation team ! Obtain access to data ! Analyze data ! Identify a play ! Evaluate the potential of the play ! Evaluate the $ Value ! Present proposal to Management
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Evaluation Team
Seismic stratigrapher Geologist Seismic Interpreter Team Leader
Senior Advisor
Petrophysicist
Basin modeller Introduction to the Oil and Gas Industry and Sustainable Development
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Access to Data
! Geological data: presence of source rock, reservoir rocks, etc.. ! Well data: logs, cores, etc.. ! Geophysical data: Gravity and Magnetics data and maps ! Seismic Data: 2D seismic lines, 3D seismic surveys ! Reports on existing fields
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Interpretations
! Derive new maps and geological models from existing data. ! Extract the geological history (depositional history). ! Identify Petroleum System elements. ! Identify potential Play. ! Generate new Play map. ! Assess risks.
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Well Data: Logs

WELL Zingbat-1

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Identify / Select Potential Prospect

! Rank prospects according to specific criteria: !potential volumes !Probability Of Success (POS) ! Identify most promising prospect(s) ! Estimate the value of these prospects ! Make proposal to Management
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Value of the Prospects

! SE Corner prospect: !Potential Volume of oil in place: 1,000 million barrels. !Potential recoverable volume: 300 million barrels. !POS: 25% !Possible follow-ups in case of success.
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Example of Bid
In its application for Block F6, Fortuna Oil & Gas offers the following work commitments: 1.!The acquisition of a gravity survey over the entire Block F6 in the first contract year. 2.!The acquisition of 300 Km of new 2D seismic in the first contract year. 3.!The reprocessing of 500 Km of existing seismic in the first contract year. 4.!The drilling of one exploration well to a depth of 3,500 m in the second contract year.
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Value of Bid
The bid proposed by Fortuna Oil & Gas is valued as follows (minimum cost): 1.! Gravity survey: 2.! 300 Km of new Seismic (@ US$15,000/Km) 3.! 500 Km of reprocessing 4.! 1 well to 3,500 m (@ US$ 3,000/m) TOTAL:
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US$ 0.2 million US$ 4.5 million US$ 0.4 million US$10.5 million US$15.6 million
Economic Value of the Prospects

! Very simplified formula (undiscounted): !Value of oil @ US$ 70/bbl: !Exploration cost: !Development Cost !Government Take !Royalties !PROFIT: !Risked value @ 25% POS: US$21,000 MM - US$ 15 MM - US$ 300 MM - US$18,000 MM - US$ 1,500 MM US$ 1,185 MM US$ 296 MM

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Business Case Presented to Management

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Exploration Phase
! Now that we have obtained an exploration license, we can start the work, including:
!Gravity/magnetics acquisition !Geological field work !Seismic acquisition and reprocessing !Seismic interpretation !Geological model: prediction & risk assessment !Well proposal !Well drilling
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Exploration Period: Airborne Gravity Survey

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Magnetics and Gravity Maps

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Geological Field Work
Geological field work aims at gathering data for sedimentology, structural, regional, and geochemical analyses
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Seismic Data Acquisition

HYDROPHONES AIRGUN
GAS OIL WATER
The raw data need mathematical & physics wave theory Once an interesting site is processing before anything can located seismic data is be seen on seismic sections recorded to see the subsurface
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Land Seismic Acquisition

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Vibrator Truck

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Drilling a Well Offshore

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Drilling a Well Onshore

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After the Well

!If unsuccessful: plan second well or consider relinquishment !If successful:
!Analyze reservoir !Evaluate volumes (3P reserves) !Evaluate economic value !Plan appraisal and possibly development
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Main Messages
! The processes involved in license management: !Evaluation of geological & geophysical data !Prospect identification !Volumetric, risk and economic assessment !Bid submission / award !Exploration phase: seismic acquisition and drilling of exploration well(s) !Appraisal phase: assess the discovery
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Why do we need Energy?

Facts: ! Almost everything we do requires energy. ! Energy is necessary in todays world: industry, transport, home. ! Energy is key to development. ! Zero development would not free us from relying on energy.

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The Visible Use of Energy in the World

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PENANG IPOH TRONOH? KL SINGAPORE

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Energy Sources
! Non-renewable energy: Oil, gas, coal, nuclear. ! Renewable energy: solar, wind, water, geothermal, biomass. ! Secondary energy sources: electricity, hydrogen.

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Different Uses for Energy

! Mobile energy for transport: liquids, some gas:
!PETROLEUM, BIOFUELS, LPG, HYDROGEN
! Immobile energy for industry and homes: solids, gas, electricity:

!COAL !GAS !NUCLEAR !SOLAR, WIND, HYDRO, WAVE, TIDAL, GEOTHERMAL

PCB1012
Availability of energy sources

! Oil: 40 to 100 years ! Gas: 65 to >100 years ! Coal: 150 to 200 years ! Nuclear: >100 years ! Renewable: Infinite
PCB1012
OIL
Oil
! Currently the dominant source of energy. ! Used for transport but also for industry and homes. ! The main source of liquid energy. ! Still abundant but will become more expensive to produce in coming decades. ! Peak production (Hubbert peak) not far from now. ! Largest reserves found in a few regions of the world.
PCB1012
OIL
Top World Oil Reserves
2006 Introduction to the Oil and Gas Industry and Sustainable Development
PCB1012
OIL
World Oil Supply

PCB1012
OIL
World Oil Consumption

PCB1012
OIL
The Future of Oil
! Demand increases fast but supply stagnates. ! Current reserves will last at least 40 years. ! Hubbert Peak may be reached in the next decade. ! Oil could last us for another 100 years, if we:
!!Increase reserves and resources. !!Increase production capacity. !!Convert non-conventional resources into effective reserves. !!Develop alternative sources of oil (biofuels, etc.).
PCB1012
NonConventional Oil
Total World Oil Reserves

PCB1012
NonConventional Oil
Heavy Oil
! Heavy Oil is any type of crude oil that does not flow easily. ! Called Heavy because its density or specific gravity is higher than that of light crude oil. ! API gravity lower than 20. ! Heavy oil is biodegraded crude oil. ! Large quantities of heavy oil in Venezuela. ! Extraction requires heating (Steam injection) or dilution with solvent. ! Feasible but costly.
PCB1012
NonConventional Oil
Oil Sands
! Athabasca Oil sands, Western Canada. ! Heavy oil mixed with loose sand. ! Very large volumes in place: resources exceed Saudi Arabia reserves. ! Production ongoing, currently at small scale.

PCB1012
NonConventional Oil
Oil Sands
! Mainly surface extraction ! Typically low recovery: 10 to 20%. ! Costly, requires a lot of energy and water. ! Environmentally damaging: water pollution, landscape.

PCB1012
NonConventional Oil
Oil Shale
! A fine-grained rock that contains significant amount of kerogen (a solid mixture of organic chemical compounds). ! Extracted kerogen can be transformed to synthetic oil. ! Potentially recoverable oil is 2.8 to 3.3 trillion barrels. ! Extraction is currently ongoing at small scale but could rapidly increase.
PCB1012
NonConventional Oil
The Future of Unconventional Energy Sources
! Heavy oil is already part of our reserves and will be increasingly produced as oil prices remain high. ! Oil Sands and oil shale will provide large reserves in the 2nd part of the 21st century.

PCB1012
GAS
Gas Facts
! Large reserves of gas still exist and could last more than 100 years. ! Gas consumption is increasing steadily, faster than oil (41% in 15 years from 1990). ! Large gas reserves are far away from markets. ! Gas is transported as liquid (LNG) to distant markets (i.e. from middle East to Japan, Europe, etc.).

PCB1012
GAS
Gas
! LNG or Liquefied Natural Gas allows gas to be transported safely over long distances, mainly by specially-equipped ships.
LNG terminal and transport ship

PCB1012
GAS
Gas
! GTL or Gas-to-liquids will allow high-quality liquid fuels to be produced from gas. Two Shell GTL plants are now in operation: Bintulu, Malaysia and Ras Laffan, Qatar.
GTL plant at Bintulu, Malaysia

PCB1012
GAS
The Future of Gas
! Gas consumption will continue to grow, especially with the increase in LNG plants. ! Gas will be increasingly used in fixed plants (industry, power). ! GTL will see a rapid expansion in the coming decades as it offers an alternative source of liquid fuels. ! Gas (LPG) will continue to be an attractive alternative to gasoline.
PCB1012
COAL
Coal Facts
! Powered the industrial revolution of the 19th century. ! Abundant and relatively cheap to extract. ! Reserves spread more equitably around the world than oil. ! Now, mainly used to produce electricity. ! More polluting, produces more CO2 and other compounds (SO2, NOx).

PCB1012
COAL
The Future of Coal
! Coal reserves for 200 years. ! The technology to clean up gases emitted by burning coal is being developed. ! Use of coal will increase in the next 20 years. ! New technologies will allow gasification of coal in the subsurface (coal bed methane extraction) and at the surface and extraction of liquids from coal.

PCB1012
Nuclear
Nuclear Energy Facts
! About 440 nuclear reactors are currently in operation worldwide. ! Requires a high level of technology. ! Clean energy (no CO2) but produces radiation and nuclear waste. ! Modern reactors are safe and risks of radiation leak are extremely low. ! Disposal of nuclear wastes is, however, still problematic.
PCB1012
Nuclear
The Future of Nuclear Energy
! Nuclear industry remains controversial. ! Controversies are mainly linked to irrational fears but also to the real problem of disposal of nuclear wastes. ! The future of nuclear energy is probably in the hands of politicians rather than scientists and engineers. ! Nuclear fusion may provide new answers but fusion technology is in its infancy.
PCB1012
Alternative Energy
Biofuels
! Biofuel is a solid, liquid or gas fuel derived from recently dead biological material and is distinguished from fossil fuels, which are derived from long dead biological material. ! Theoretically, biofuels can be produced from any (biological) carbon source; although, the most common sources are photosynthetic plants. ! Biofuels produce at least as much CO2 as fossil fuels. ! Biofuel production competes with food production.
PCB1012
Alternative Energy
Biofuels
! There are two common strategies for producing biofuels:

!!One is to grow crops high in sugar (sugar cane, sugar beet, and sweet sorghum) or starch (corn/maize), and then use yeast fermentation to produce ethyl alcohol, ethanol (C2H5OH).
PCB1012
Alternative Energy
Biofuels
!!The second is to grow plants that contain high amounts of vegetable oil, such as oil palm, soybean, algae, etc. When these oils are heated, their viscosity is reduced, and they can be burned directly in a diesel engine, or they can be chemically processed to produce fuels such as biodiesel.

PCB1012
Alternative Energy
Biomass
! Biomass is biologically-derived material such as garbage, unused parts of agricultural products, wood chips, etc.. ! Biomass is used to produce gas, liquids or electricity. ! Economical and practical but limited scope.

PCB1012
Alternative Energy
Geothermal Energy
! Geothermal energy requires drilling expensive wells to capture and produce hot water from the subsurface that will provide heating and operate electric turbines. Limited to areas where the geology is right (high geothermal gradient).
Geothermal energy plant in Iceland

PCB1012
Alternative Energy
Hydro-Power
! Hydro-power: large investments needed to construct dams but energy (electricity) produced is clean and cheap. Dams condemn large areas that are flooded and are environmentally controversial.
Glen Canyon Dam, USA

PCB1012
Alternative Energy
Solar Energy
! Solar power: Clean and abundant. The technology that transforms light into electricity is improving but remains expensive and still cannot compete economically with conventional energy sources.
Solar power plant in Tabernas Desert, Andalusia, Spain

PCB1012
Alternative Energy
Wind Energy
! Wind Energy: Used for centuries, windmills are becoming a common sight in developed countries. Although they provide clean energy, windmills are environmentally controversial as they can be an eyesore. Still expensive.

PCB1012
Alternative Energy
The Future of Renewable Energy Sources
! Most renewable energy sources produce electricity and cannot replace liquid fuels for transport and hydrocarbons for the chemical industry. ! They will, however, help us save hydrocarbons and other fossil fuels for more adequate usage. ! As technology improves, cost will go down and make renewable energy sources economically attractive to produce electricity.
PCB1012
Alternative Energy
The Future of Renewable Energy Sources
! Because they produce little to no CO2, renewables will become an integral part of our landscape in decades to come. ! Renewable energy sources cannot provide quantities of energy as large as those that are currently used worldwide. ! Renewable energy sources will play an important role in the coming decades as they will complement other energy sources.
PCB1012
Secondary Energy
Secondary Energy Sources
! Hydrogen: requires a lot of energy to produce. Potentially dangerous to handle. The technology to produce and use it already exists but uses are limited. Will be an alternative fuel but full development is not yet in sight.

PCB1012
The Future of Energy Sources

! Oil will increasingly be used for transport and chemical industry only. ! Gas will be used to produce electricity, power heavy industry and provide feedstock for chemical industry. ! Coal will be used for electricity production. ! Nuclear will continue to contribute to electricity production.

PCB1012
The Future of Energy Sources

! Renewables will become important contributors to the production of electricity but will not replace oil and gas. In spite of their high cost, renewable energy technologies will be developed to offset the adverse effect of burning fossil fuels. ! Hydrogen probably has a longer-term future but will slowly find its way in our everyday life.

PCB1012
Energy Sources in 2010

Total: 65 billion BOE/year
Modified from AAPG
Approximate Figures for 2010 in %

PCB1012
Energy Sources in 2050

Total: 98 billion BOE/year
Modified from AAPG
Approximate Figures for 2050 in %

PCB1012
Conclusions
! Oil and gas will still be with us for a long time. ! Non-conventional HC will compensate for the decrease in conventional reserves. ! Oil will be reserved for mobility usages and chemicals. ! Renewable energy sources will increasingly complement carbon-based resources.

PCB1012

Oil and Gas - Introduction

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MD YAZID MANSOR

Adv Mgmt Prog#53, 2007

Adv Management Program #53, 2007 Career Positions: 2006 2013

2004 - 2006 2002 - 2004

2000 - 2002 1996 2000 1994 - 1996 1984 - 1994

TEACHING / PROGRAMME EXPERIENCE

PCB1012 Course Coordination

! Lecture topics can be found on e-learning

Introduction to the Oil and Gas Industry & Sustainable Development

Why should you be interested in the Oil & Gas Industry?

Introduction to the Oil and Gas Industry & Sustainable Development

Who am I to Talk to You about the Oil & Gas Industry?

Our reliance on oil is an addiction We will run out of oil in 10 years

Myths & Truths

Oil companies steal natural resources

Our reliance on oil is an addiction

Myths & Truths

Our Reliance on Oil is an Addiction

We will run out of oil in 10 years

Myths & Truths

Will we run out of oil in 10 years?

Myths & Truths

Renewable energies will soon replace oil

Introduction to the Oil and Gas Industry & Sustainable Development

Fossil Fuels vs. Renewables

Solar, wind,! Geothermal

World Energy Demand

after Edwards, AAPG 1997

Introduction to the Oil and Gas Industry & Sustainable Development

Myths & Truths

Jobs in the oil industry will soon disappear

Introduction to the Oil and Gas Industry & Sustainable Development

Careers in the Oil & Gas Industry

after Edwards, AAPG 1997

Introduction to the Oil and Gas Industry & Sustainable Development

The Resource Gap: Geoscientists

Introduction to the Oil and Gas Industry & Sustainable Development

Technology in the Oil & Gas Industry

Introduction to the Oil and Gas Industry & Sustainable Development

The oil and Gas Industry needs brains

Introduction to the Oil and Gas Industry & Sustainable Development

Myths & Truths

Old people, all from western countries

Introduction to the Oil and Gas Industry & Sustainable Development

Old people from western countries?

Myths & Truths

It is a dirty and polluting industry

Introduction to the Oil and Gas Industry & Sustainable Development

A Dirty and Polluting Industry

A Dirty and Polluting Industry

That is Changing its Ways of Working

Introduction to the Oil and Gas Industry & Sustainable Development

Myths & Truths

Oil companies fix the oil price

Introduction to the Oil and Gas Industry & Sustainable Development

Petroleum Consumption and Price

Introduction to the Oil and Gas Industry & Sustainable Development

Historical Oil Price

Introduction to the Oil and Gas Industry & Sustainable Development

Myths & Truths

The Oil Industry and Renewables

Myths & Truths

Oil companies steal natural resources