Structure of the Petroleum Industry

A Special Presentation for:

PESA FSO Training
July 2011
Presentation Outline
Industry at a glance
Upstream versus downstream
Hierarchy and structure
Whos who on a rig
Who brings what to a rig
Industry at a Glance
By far, the largest industry
in the U.S. oil and gas is
the second largest
contributor to the federal
tax base behind income
taxes
Directly employs
2.2 million people
Provides more than
5 percent of the countrys
income
PESAs 190 member
companies account for
$200 billion in market cap
and 400,000 employees
worldwide
Upstream
Includes everything from
signing a lease to placing
produced liquids and gas into a
pipeline, such as:
Geology & Seismic
Drilling & Completions
Workovers & Wireline
Enhanced Recovery
PESA member companies and
their customers are primarily
upstream companies
Midstream
Includes the
processing and
transportation of
produced liquids and
gas from the wellsite
to a downstream
facility such as a
refinery
Downstream
Includes the refining of crude oil, distribution of
processed natural gas, and sales of related
products such as sulfur, asphalt, and plastics
Industry Structure Lease Holder
A typical wellsite is the coordination of dozens of people,
companies, and technologies.
The Lease Holder is the final decision-maker for all facets of the
wellsite, such as which drill bits to use, how much cement, and
which technologies and services are economically viable for the
project. The Lease Holder often subcontracts most wellsite work
to other companies.
Though they are household names, Lease Holders comprise a
relatively small portion of the overall industry.
Drilling Contractor
The Drilling Contractor carries out the Lease Holders plans.
These companies typically own the drilling rig and employ
the rigs base crew of drillers, roustabouts, and rig
repairmen.
Drilling Contractors, working via the Lease Holder,
coordinate onsite subcontracting work such as wireline,
cementing, perforating, et cetera.
Service & Supply Companies
Service and Supply Companies provide the technology,
expertise, and equipment as determined by the Lease
Holder and Drilling Contractor.
Nearly all of the technological and safety innovations of
the past 30 years have come from Service and Supply
Companies.
Whos Who on a Rig
A floating offshore drilling rig is a massive
piece of machinery, employing on average
120 people. They work in two shifts.
Typically, only a handful about 10 are
directly employed by the Lease Holder.
More than half of the crew are employed
by the Drilling Contractor, which operates
and maintains the vessel.
The remaining crew are employed by
Service and Supply Companies, who
provide equipment, run well logs,
complete the well, and supply the
rig with everything from drilling
fluid to televisions.
Who Brings What Lease Holder
The Lease Holder is the expert
on the well site and directs all
functions on a rig. They have
completed seismic work and
provide a plan to maximize the
wells resources.
The Lease Holder typically does
not provide equipment, and
on-site employees are senior
site engineers directing the
operation.
Who Brings What Drilling Contractor
The Drilling Contractor moves the drilling rig into position
for drilling along with a full-time crew. The rig includes
large permanent equipment such as blow-out preventers,
mud pumps, and drilling top drives.
Who Brings What Service & Supply Companies
Service & Supply Companies
bring all equipment,
consumables and tools used to
drill, test, and complete the
well.
Equipment can range from
small rubber grommets to
drilling mud to multi-million-
dollar subsea stacks that are 40
feet tall and more.
Service Companies provide
expert technicians for a variety
of operations including well
logs, completions, equipment
repair, fishing and
remediating broken or
caved-in wells.