Oil and Gas Law Outline
Petroleum: generic name for certain combustible hydrocarbon compounds found in the earth
A commercial oil deposit requires the presence of a porous, permeable rock formation containing oil of a marketable A.P.I. gravity and of producible viscosity.
Three fundamental properties of petroleum (for oil and gas production):
1. state (gaseous, liquid or solid)
2. specific gravity or density = the ratio between the weights of equal volumes of water and another substance measured at a standard temperature
The specific gravity of oil is expressed as A.P.I degrees, oil with the least specific gravity has the highest A.P.I. gravity (inverse relationship)
3. Viscosity = inverse measure of the ability of a liquid to flow (the less viscous the fluid the greater its mobility)
Nearly all commercial oil and gas production is from some form of sedimentary rock due to the porosity and permeability of such rocks.
There is no way of finding oil and gas short of drilling wells. Geologists look for reservoir traps = underground formations favorable to the accumulation of oil and gas.
Oil and gas exploration is the search for reservoir traps. There are two types of reservoir traps: Structural and stratigraphic
Geophysical survey: an exploration method whereby devices, such as a seismograph is used to develop a contour map of an area in order to determine which land to lease and where to locate an exploratory well
There are two main methods of oil well drilling:
Cable tool drilling: an older method that operates on a hammer principle to pulverize the rock
Rotary drilling rig: the more widely used method, operates on the principle of boring a hole by the continuous turning of a bit
Three fluids may be found singly or in combination in a reservoir trap: oil, gas and water (usually salt water)
• water will be on bottom, oil next , then gas
• the lines separating these fluids are called oil-water and gas-oil contact lines
Both natural and artificial means are used to produce oil; pressure (or reservoir energy) is needed to bring the oil to the surface. Oil wells create areas of low pressure
There are three natural sources of reservoir energy: (one is always present and often all three are)
1. gas expansion: most common
2. water encroachment
Primary factors affecting recovery: rate of production, gas-oil and water-oil ratio and to some extent well spacing.
Artificial reservoir repressuring operations:
1. pressure maintenance: involves the injection of a fluid into a reservoir just beginning to show production and pressure decline
2. secondary recovery: used on worn out fields, water flooding is a common method used
3. tertiary/enhanced recovery: includes a number of processes such as chemical flooding, steam injection, and steam flooding
Fundamental elements of petroleum exploration:
• leasing the land
• careful geological study of it
• making a location for a test well
• clearing the legal title to the land
• drilling the well
The basic legal instrument in this area is the oil and gas lease
There are two types of interests: mineral interest and royalty interest
The unit of measurement for natural gas in the BTU (British thermal unit) which is its capacity to heat
MMBtu: the abbreviation for one million BTU’s, one of the standard units of measurement for natural gas
Distillate and crude oil are measured in barrels
Distillate: the wet element of natural gas that may be removed as a liquid, used...
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