Introduction to Oil and Gas Industry

Oil and gas are considered among the world's most important resources. The oil and gas industry plays a critical role in driving the global economy.

Oil is not only an essential raw material to over 2,000 end products but is also used for transportation, heating, electricity and lubrication. It supplies about 50% of the world’s total energy requirements.

About 90 countries produce oil, although a few major producers account for the bulk of world output. Oil and gas reserves are heavily concentrated in the Middle East, and gas in the Russian Federation. About 40% of the world’s crude oil are supplied by 12 OPEC countries (Algeria, Angola, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela). They account for about two-thirds of proven reserve.

Major non-OPEC oil producing countries are, the United States, Mexico, Denmark, Norway, the United Kingdom and Russia, China and Vietnam.

The petroleum industry can be largely divided into a) upstream, b) midstream and c) downstream sectors. In addition there are also oil service companies providing support services across all sectors. 


The upstream sector is also commonly known as the exploration and production (E&P) sector. This sector involves the exploration of potential crude oil and natural gas fields using seismic technology in concurrence with drilling of exploratory wells for appraisal purposes, and subsequently developing discovered  reservoirs  by drilling wells and installing production facilities  to exploit the hydrocarbon reserves.


The midstream sector involves the transportation and storage of  crude oil, natural gas and bi-products. In this sector we have companies involved in laying and maintaining pipelines, operating barges and maintaining compression stations, processing plants and refineries.

The downstream sector entails the supply of refined petroleum products from refineries and petrochemical plants to the end users. This chain includes distribution from refineries to terminals, distribution to depots and distribution to retail outlets for marketing.

Exploration
Oil and gas exploration encompasses the processes and methods involved in locating and discovering potential sites for oil and gas drilling and extraction. This is the first-stage of oil and gas production. Many uncertainties exist during   the exploration process. Geological surveys are conducted for onshore exploration and seismic imaging for offshore exploration.  
Drilling & Extraction
Drilling is the final stage in the exploration process. Drilling allows further evaluation of the subsurface and reveals if oil and gas exist at a particular drilling site. Drilling an exploratory well can take 2 to 6 months. Onshore exploration relies on fixed or mobile drillings rigs.

Offshore exploration can require fixed offshore Jackup drill rigs, Semi-Submersible drill rigs and Deep Water Drill Ships.

Onshore Development
In onshore development, the wells are grouped together in clusters forming a gathering system. This gathering system consists of a network of connecting carbon steel pipes which sends the oil and gas to a production and processing facility.

In the production and processing facility the oil and gas is treated through chemical and heating processes. The oil and gas is then separated from water and sediments and placed in storage after which the resources can be pumped through pipelines to loading terminals where the resources are ready to be transported by oil tankers or transport vehicles. The water removed from the oil and gas is also treated and eventually pumped back into the reservoir.

Offshore Development
In offshore development drilling wells can be conducted from platform or underwater. Offshore development utilizes both surface and subsurface production facilities. The production and extraction process can consist of fixed platforms or floating vessels. 

Offshore rigs contain processing equipment and facilities onboard and the resources extracted are transported by pipeline or stored so it can be loaded on tankers. Additional processing requirements are completed at onshore production facilities.

In gas production and development, production and condensation plants are required in which a liquefaction plant provides treatment, refrigeration and liquefaction followed by the storage and loading of liquefied gas. The gas is transferred to liquefied natural gas tankers (LNG's) which transports the gas to a treatment plant where the gas undergoes re-gasification from storage tanks at the plant.