Oil and Gas 101: A civil conservation Presented to the S andoval - - PowerPoint PPT Presentation

Oil and Gas 101: A civil conservation

Presented to the S andoval County Commission December 10, 2015 By: Karin V. Foster Executive Director Independent Petroleum Association

• f New M exico

Chronology of a well

• Geological review – is the resource there?
• Leasing - How does an oil company obtain

properties?

• Drilling and Completion: How are resources

extracted?

• Regulations: What government oversight is

there?

• Other FAQs: Is there impact to water?

Fundamentals of Petroleum and Reservoir engineering

• Overview of hydrocarbon properties
• Geology overview
• Reservoir mechanics
• Formation evaluations

Hydrocarbon properties

• Oil and gas are the liquid and gaseous forms of petroleum
• Petroleum is a any naturally-occurring hydrocarbon found beneath

the earth

• Petroleum hydrocarbons occur in a variety of states
• Increase in Carbon and hydrogen Increase in

chemical bonds  Increase in energy content.

GAS Volatile liquid Liquid Semi-solid solid Natural gas Condensate Crude oil Tar/ Bitumen Shale

The Origin of Hydrocarbons

• Source Rock

– Where the hydrocarbon

• riginates
• Reservoir Rock

– Where the hydrocarbon is

stored

• Seal Rock

– Prevents seepage

• Traps

– Anticlines – Faults – Pinchouts

–

Source: WWW. Greatsouthlandminerals. com

Geology and Geophysics

• Where do we look? Sedimentary Basins

– Depressions in the earth’s crust allow for

deposition and accumulation of sediments

San Juan Basin is listed as a top ten producer of Natural Gas in the US

Source: EIA.gov/ oil-gas/ rpd.topfields.pdf Dec 3, 2015

Structural Geology - definition

• Study of geological features produced by:

– Deformation of the Earth’s crust

• Fold or fault

– Feature within a rock

• Fracture
• Bedding surface

– Spatial arrangement of rocks

Structural geology - features

Source: RM M LF Oil and Gas short course, Ehrman from Montello Resources

Identification of drill prospects - seismic

• M ethod to determine the depth and orientation of

rock formations without drilling

Source: Baker Hostetler

Identification of drilling prospects

Leasing – gaining access to the resource

• 1. Increased leasing activity

–

Landmen, usually on contract with companies do title searches at the county court house

–

Talking to land owners about obtaining the rights to sever minerals (subsurface) and using surface to build locations, roads etc.

• 2. Permitting with Oil Conservation Division/ BLM
• 3. Bonding with NM OCD / BLM / SLO

Regulatory requirements to prior to drilling

• Whose mineral are you extracting?

– Private or State Trust – Private Contract, State lease

and NM OCD oversight

– Federal - BLM

• Whose surface are you crossing?

– Private or State Trust – Private contract as required by

SOP A, State Right of way permits, NM OCD oversight

– Federal – BLM with M OU

• Split estate is a common issue in New M exico

Identification of drill prospects – exploratory drilling

• The prospective geologic structure has been identified
• How do we verify the interpretation? Drill a well
• Numerous wellbore orientations

Identification of drill prospects- drilling

Identification of drill prospects - drilling

• Types of wells

– Wildcat Well

• Pure exploratory development / new area
• What is the extent of the resource?

– Development Well

• In a developed field or extension of an existing field

– Dry Holes

• Economic amounts of oil and gas are not present

– Abandoned Well

• Dry hole that has been filed with cement (plug and

abandoned) and the ground has been restored.

Identification of drilling prospects - drilling

Well completion – typical process

• Drill wellbore
• Evaluate formation (well logging etc.)
• Run casing into wellbore
• Cement casing string into place
• Perforate pay zone
• Install tubing string
• Identify stimulation requirements
• Bring well on production

Well completion

• Reservoir stimulation

– M ay be necessary due to low permeability – Common stimulation methods

• Chemical stimulation - acidizing
• Physical stimulation – hydraulic fracturing

– Hydraulic fracturing is the dominant technique in modern

completions, especially in shales and tight gas reservoirs

Well completion

• Hydraulic fracturing

– Fractures are induced by pumping fluids into a

formation at high rates and pressures

• Polymers and cross-linked gels
• Foams

– Once fractures are created, proppants are pumped

down to prop them open and create higher permeability

• Sand
• Ceramic beads

Hydraulic fracturing

Regulatory requirements during drilling/ fracking

• perations
• Depending on whose mineral you are extracting –

NM OCD and/ or BLM for APD – Dictates location and direction of well, surface

impacts, surface facilities, ingress and egress, disposal

• f drill cuttings (closed loop systems), disposal of

water from drilling and hydraulic fracking operations

– NM OCD reporting of constituents used in HF

• perations

– FracFocus

Other regulatory requirements

• M onitoring air quality – NM ED and EP

A and BLM – Environmental Quality Control Act – Clean Air Act

• EP

A and Army Corps of Engineers – Waters of the US

• EP

A and BLM – Hydraulic fracturing regulations

• BLM , SHPO, NM SLO – Cultural resources
• Surface

Fiscal impacts on a county of exploratory drilling

• Unknown until the operator knows the resource (after

that first well is operational)

• The Impacts of Oil and Natural Gas Production in New

M exico on Sandoval County A Summary of Important Economic and Revenue Issues

• In 2013, Sandoval County producers shipped 1,080

thousand barrels of oil worth $86 million and 394.1 million M CF of natural gas worth $1.639 billion.

• Source: New M exico 31, 2014 report, “Oil and Natural

Gas Production in New M exico”

What does production in Sandoval County mean for direct revenues?

Severance Tax and Capital Outlay

Thank you!

• Please use IP

ANM as a resource to you. If I don’t know the answer, I can find someone who will.

• Consider also asking

– New M exico T

ech

– New M exico Oil Conservation Commission Karin V. Foster Executive Director, IP ANM (505) 238-8385