Hydrocarbon exploration (or oil and gas exploration) is the search by petroleum geologists and geophysicists for hydrocarbon deposits beneath the Earth's surface, such as oil and natural gas. Oil and gas exploration are grouped under the science of petroleum geology.
Visible surface features such as oil seeps, natural gas seeps, pockmarks (underwater craters caused by escaping gas) provide basic evidence of hydrocarbon generation (be it shallow or deep in the Earth). However, most exploration depends on highly sophisticated technology to detect and determine the extent of these deposits using exploration geophysics. Areas thought to contain hydrocarbons are initially subjected to a gravity survey, magnetic survey, passive seismic or regional seismic reflection surveys to detect large-scale features of the sub-surface geology. Features of interest (known as leads) are subjected to more detailed seismic surveys which work on the principle of the time it takes for reflected sound waves to travel through matter (rock) of varying densities and using the process of depth conversion to create a profile of the substructure. Finally, when a prospect has been identified and evaluated and passes the oil company's selection criteria, an exploration well is drilled in an attempt to conclusively determine the presence or absence of oil or gas.
Oil exploration is an expensive, high-risk operation. Offshore and remote area exploration is generally only undertaken by very large corporations or national governments. Typical shallow shelf oil wells (e.g. North Sea) cost US$10 – 30 million, while deep water wells can cost up to US$100 million plus. Hundreds of smaller companies search for onshore hydrocarbon deposits worldwide, with some wells costing as little as US$100,000.
A prospect is a potential trap which geologists believe may contain hydrocarbons. A significant amount of geological, structural and seismic investigation must first be completed to redefine the potential hydrocarbon drill location from a lead to a prospect. Four geological factors have to be present for a prospect to work and if any of them fail neither oil nor gas will be present.
A source rock - When organic-rich rock such as oil shale or coal is subjected to high pressure and temperature over an extended period of time, hydrocarbons form.
Migration - The hydrocarbons are expelled from source rock by three density-related mechanisms: the newly matured hydrocarbons are less dense than their precursors, which causes over-pressure; the hydrocarbons are lighter, and so migrate upwards due to buoyancy, and the fluids expand as further burial causes increased heating. Most hydrocarbons migrate to the surface as oil seeps, but some will get trapped.
Reservoir - The hydrocarbons are contained in a reservoir rock. This is commonly a porous sandstone or limestone. The oil collects in the pores within the rock although open fractures within non-porous rocks (e.g. fractured granite) may also store hydrocarbons. The reservoir must also be permeable so that the hydrocarbons will flow to surface during production.
Trap - The hydrocarbons are buoyant and have to be trapped within a structural (e.g. Anticline, fault block) or stratigraphic trap. The hydrocarbon trap has to be covered by an impermeable rock known as a seal or cap-rock in order to prevent hydrocarbons escaping to the surface
Hydrocarbon exploration is a high risk investment and risk assessment is paramount for successful project portfolio management. Exploration risk is a difficult concept and is usually defined by assigning confidence to the presence of the imperative geological factors, as discussed above. This confidence is based on data and/or models and is usually mapped on Common Risk Segment Maps (CRS Maps). High confidence in the presence of imperative geological factors is usually coloured green and low confidence coloured red. Therefore, these maps are also called Traffic Light Maps, while the full procedure is often referred to as Play Fairway Analysis. The aim of such procedures is to force the geologist to objectively assess all different geological factors. Furthermore, it results in simple maps that can be understood by non-geologists and managers to base exploration decisions on.
Bright spot - On a seismic section, coda that have high amplitudes due to a formation containing hydrocarbons.
Chance of success - An estimate of the chance of all the elements (see above) within a prospect working, described as a probability.
Dry hole - A boring that does not contain commercial hydrocarbons. See also Dry hole clause
Flat spot - Possibly an oil-water, gas-water or gas-oil contact on a seismic section; flat due to gravity.
Hydrocarbon in place - amount of hydrocarbon likely to be contained in the prospect. This is calculated using the volumetric equation - GRV x N/G x Porosity x Sh / FVF
GRV - Gross rock volume - amount of rock in the trap above the hydrocarbon water contact
Net sand - part of GRV that has the lithological capacity for being a productive zone; i.e. less shale contaminations.
Net reserve - part of net sand that has the minimum reservoir qualities; i.e. minimum porosity and permeability values.
N/G - net/gross ratio - proportion of the GRV formed by the reservoir rock ( range is 0 to 1)
Porosity - percentage of the net reservoir rock occupied by pores (typically 5-35%)
Sh - hydrocarbon saturation - some of the pore space is filled with water - this must be discounted
FVF - formation volume factor - oil shrinks and gas expands when brought to the surface. The FVF converts volumes at reservoir conditions (high pressure and high temperature) to storage and sale conditions
Lead - Potential accumulation is currently poorly defined and requires more data acquisition and/or evaluation in order to be classified as a prospect.
Play - An area in which hydrocarbon accumulations or prospects of a given type occur. For example, the shale gas plays in North America include the Barnett, Eagle Ford, Fayetteville, Haynesville, Marcellus, and Woodford, among many others.
Prospect - a lead which has been more fully evaluated.
Recoverable hydrocarbons - amount of hydrocarbon likely to be recovered during production. This is typically 10-50% in an oil field and 50-80% in a gas field.
Petroleum resources are typically owned by the government of the host country. In the USA most onshore (land) oil and gas rights (OGM) are owned by private individuals, in which case oil companies must negotiate terms for a lease of these rights with the individual who owns the OGM. Sometimes this is not the same person who owns the land surface. In most nations the government issues licences to explore, develop and produce its oil and gas resources, which are typically administered by the oil ministry. There are several different types of licence. Oil companies often operate in joint ventures to spread the risk; one of the companies in the partnership is designated the operator who actually supervises the work.
Tax and Royalty - Companies would pay a royalty on any oil produced, together with a profits tax (which can have expenditure offset against it). In some cases there are also various bonuses and ground rents (license fees) payable to the government - for example a signature bonus payable at the start of the licence. Licences are awarded in competitive bid rounds on the basis of either the size of the work programme (number of wells, seismic etc.) or size of the signature bonus.
Production Sharing contract (PSA) - A PSA is more complex than a Tax/Royalty system - The companies bid on the percentage of the production that the host government receives (this may be variable with the oil price), There is often also participation by the Government owned National Oil Company (NOC). There are also various bonuses to be paid. Development expenditure is offset against production revenue.
Service contract - This is when an oil company acts as a contractor for the host government, being paid to produce the hydrocarbons.
