How do you find oil and gas anyway?

You may notice every now and then in the media a story about a “major oil find”, in some exotic location, and how many billions of dollars it might be worth, and can just imagine the sheer brainpower it took to find it. Since the discovery is worth so much and is newsworthy, you’d assume there is some major brilliance and money involved. You are also probably familiar with the image of some rugged oil patch wildcatter, or Texas billionaire, or Saudi prince who buys cars for his dogs, and imagine that their cleverness and business acumen must be just off the charts. Or maybe you think it’s easy, everyone who does it is rich!

The reality is of course somewhat different. The bright and not bright alike spend a lot of money looking for big prizes, and the winnings don’t necessarily go to the rocket scientists. The whole process is like a lottery but with better odds. And usually someone else pays for the lottery tickets (thank you, aggressive investors everywhere!). The miserable truth you don’t read about in the news is that a lot of people, including the clever, spend a lot of time and money looking for oil or gas and find absolutely nothing. Most exploratory wells are dry holes, of which little celebration is generally made, obviously; the media seldom runs stories about how a $10 million well found absolutely nothing, and the guys that drilled it aren’t all that keen to talk about it either. (And that’s life in general I guess; do you really want to see an interview with the world’s 800th ranked tennis player? All 5 foot 3 and 275 pounds of him?)

Though oil and gas can be found almost anywhere if you care to drill a well, it remains difficult to find large enough quantities to produce economically. There may be traces everywhere but traces don’t do you much good (until oil hits $2000 a barrel, then people will rip up their gardens looking for it). In some ways it’s like going to the Yukon or wherever to pan for gold. You might only find an ounce a week, but if that ounce is worth thousands of dollars, it might be worth battling the black flies and grizzlies, which you never would if gold was $20/oz. Oil is the same; the higher the price, the more determined people will be to find it.

The trick is to find the locations underground where large quantities of these products may exist. (You can also look for damp black areas near pipelines but that’s cheating, ha ha.) Petroleum geologists spend their lives trying to sort that out. No one knows exactly what it looks like underground; obviously no one’s ever been there (in a live state) (except in mines, which have no petroleum in them unless something went seriously wrong), which adds to the challenge. So geologists piece together all the clues they can find as to where petroleum deposits might exist.

They start with theories of how the petroleum got there in the first place. Petroleum exists below the earth’s surface (sometimes not very far down) in layers of certain types of rock. People tend to think there are big pools of oil that a well drills into, like underground caverns, and that it’s under pressure and shoots out like a shaken up jug of Coke when it’s tapped into. That’s not the case. (Petroleum can shoot out due to huge pressures underground, which is called a blowout, but in general that’s not the plan and blowouts tend to be very bad news. BP played with one in the Gulf of Mexico recently, you may recall, and executives were so unimpressed with the whole event that they have apparently instructed staff not to proceed with any others.) Petroleum is trapped in certain types of underground rock that are porous, like water in a sponge, and with a lot of pressure on it, because, well, the whole world is sitting on it. Generally, hydrocarbons (the generic term for any raw petroleum product – oil, natural gas, propane, etc.) rise over time (a really long time, like millions of years apparently) from layers deeper in the earth where the petroleum formed, rising until hitting some sort of barrier that won’t allow hydrocarbons to flow through (certain types of rock can absorb and hold petroleum, like sandstone which is very porous, and others don’t; these act as barriers and the rising oil accumulates beneath those layers).

Geologists study the properties of various layers of rock formations. They find clues all over the place, including just looking at the landscape. The real prize data for them though is the bits of rock that come up when a well is drilled. Using those rock fragments, geologists can then map what the underground layers might look like and try to predict what sort of rock layers might be encountered when drilling a well, and at what depth They look for “traps”, or porous rock located below a layer of rock that acts as a barrier where hydrocarbons might have accumulated, sort of like the way water flows to low lying areas (except upside down, and underground). This then is the holy grail of geologists; pictures of well-formed hydrocarbon traps are ogled like porn.

Pretty much the whole petroleum business is based on what was learned by wells drilled earlier, though initially guesses were just based on the landscape. People began drilling wells on hilltops, on the assumption that there might be some sort of corresponding dome-shaped rock formation far below that could hold hydrocarbons, and that worked in some instances. The first guy to drill a well (and it had to be a guy, utilizing the ancient male thought process of “hey I wonder what would happen if…” that usually ends in disaster or great Youtube video, but sometimes actually works out…) likely had no idea about geology, but the second guy learned from the first. And so on. A lot of wells were drilled that were just wild guesses and dry holes, but each well provided information that helped the next. With each well drilled, geologists (who otherwise often have nothing else to do, except drive cabs, or look for gold – but that’s for some other website) studied the rock chips that came up as a well was drilled, and began to catalogue the underground layers. There have been countless wells drilled since petroleum production began (well maybe not countless, I’m sure someone somewhere has counted them, people are weird that way…but anyway there’s a lot), and each has added to the picture of what’s going on underground. For many areas of the world, there are now huge databases that can paint a reasonable three-dimensional picture of what the earth looks like below your feet. This is a great aid to oil and gas explorers, who then have many clues as to what they’ll encounter when they next drill a well.

And yet they still f*ck it up. OK maybe that’s a bit harsh, but many wells drilled to this day are unsuccessful despite all we now know about geology. It is a complex world down there, and it’s hard to know exactly what you’re going to encounter unless the well you are drilling is really close to another well that’s given you some idea (and that’s not guaranteed; I worked at a little company where a geologist (a very good and experienced one) thought a well was messed up during the drilling process and was capable of producing oil if re-drilled; a new well was drilled 10 metres away and came up with nothing). Another excellent geologist I know describes a successful well as being one that encounters exactly what was expected, even if the well is dry. That may sound illogical, but often a geologist will suggest a drilling location with the caveat that there is only a certain chance of success, say 30%, because there is a better than average possibility that the target zone could be, for example, full of water, or not porous enough to hold much oil, etc. If the well then turns out to be a dud, it may have been a technical success because the geologist pegged the probability of failure at 70%, and he was therefore right. (This odd analytical attitude can land a smug geologist out on the street unemployed, but hey you have to admire his/her rationality.) The best people in the industry understand this logic, and don’t let hopes get in the way. (You might wonder why they would risk drilling a well that had less than a 50% chance of success, and the answer is the same as buying a lottery ticket – the payoff could be huge.) But anyway, the best way to find petroleum is to drill near where you know it is already. It takes a brave and wealthy gambler to go out in the middle of nowhere and drill a well with no reference points around. That does happen now and then, often when companies go hunting for a huge find in some uncharted territory, where no wells have been drilled before. This is called exploratory work. The risks are high but the reward can be huge, and without other wells in the area to provide information, other clues are necessary to look for hydrocarbons.

This need for further clues brings up the improbable-yet-there-they-are branch of scientists known as petroleum geophysicists. Intelligent, visionary, and oddly mystifying individuals, geophysicists look at “seismic data”, which is, to the untrained simpleton, nothing but a hard drive full of recordings of sound waves that have bounced through the earth. To gather seismic data, geophysicists (or rather their hired minions) set off a series of charges, like little explosions, buried a foot or two into the earth, either in a straight line (two dimensional or 2D seismic) or in a grid covering a wider surface area (three dimensional or you guessed it 3D seismic), setting off the little explosions in sequence, and then recording the sound waves (or whatever kind of waves they are) as they travel through and then bounce back from various “structures” underground. (“Structures” is roughly their word for the shape of various rock formations; many productive rock formations way down below were ancient sea beds, or shorelines, or river channels, or layers of sedimentary rock like you’d find on a lake bottom that have since been covered over by thick layers of other types of rock – these types of formations tend to be quite porous and large and create excellent hydrocarbon reservoirs) Then, using sophisticated software that integrates all the waves (where they originated from, where they wind up, how fast they travelled through rock, etc.) to paint a picture of the various “structures” or “anomalies” they “see” (I bet you’re tired of seeing the quotation marks, but I mean come on, it’s like seeing Jesus on your toast…anyway since you can’t see my raised eyebrows this subtle and mildly snarky display of skepticism will have to do). The pictures are created by integrating the changes the waves undergo when they enter a different type of rock, or rock that is water saturated vs oil saturated, etc., similar in concept to the effect a regular citizen notices when sunlight enters water; if viewed from an angle you notice that your hand isn’t exactly where you think it would be because the light is refracted. The same thing happens when the sound waves go through various types of rock. Seismic software can then compile all the data from these shifting sound waves and create really pretty images in all the colours of the rainbow, whereupon geophysicists gather around and say things like “that’s interesting” or “that’s a juicy structure” or, in cruder offices, “that stands out like dogs balls.” You (generically, meaning anyone but the 50 petroleum geophysicists in the world) would never know if there is any truth to what they’re saying because it’s like seeing a giraffe in the clouds that no one else can see but they can, and they have fancy degrees and indecipherable terminology so you take their word for it. They sometimes see things so “clearly” that they can convince geologists to go along with their hair-brained schemes to drill a well and evaluate one of these “targets”.

All right, I’m way out of line; geophysics adds a lot to the understanding of what’s happening underground, particularly when you combine what they see with known results from wells that have been drilled in the area (though in bad times you’ll find geophysicists driving cabs too). You can then get a quite-detailed look at what’s going on down below, which greatly aids in selecting drilling targets. I’m being facetious because they live in their own world that no one else understands even remotely. They spend so much time looking at seismic data and matching it to what geologists tell them that they really do have the ability to paint a vivid picture of what underground structures might look like, and which ones are likely to hold hydrocarbon reserves. So geophysicists do a lot to increase the understanding of what underground characteristics might look like.

And yet they still f*ck it up. Lots of wells are drilled based on exciting 3D images, visible in the data to the seismically-trained mind, that yield absolutely nothing (I’ve seem them firsthand; when the well comes up dry you’ll get a shrug and an aloof “well at least nobody died” as they head off to the coffee shop). To their credit, both geophysicists and geophysicists generally just talk in terms of probabilities; you will be hard pressed to find one that will speak in certainties because they understand the difficulty in accurately knowing what is underground; there are all sorts of nuances in the rock formations down below that can throw things off, and there’s no other way to really know other than to drill and find out.

I should wrap up this part of the discussion with the observation that, in my experience, both geologists and geophysicists tend to smoke a lot of dope. A LOT. No hidden commentary there, just a general observation…

Anyway, where was I… the original question so many words ago asked how do you find oil and gas. It’s not easy, and its certainly not nearly as easy as it appears be based on the obscene displays of wealth that energy barons happily wave around. You just don’t see or hear about all the abject failures, some of whom are very capable indeed but unlucky. Fifty or sixty years ago, it was more trial-and-error based, and while a lot of dry holes were drilled, a lot of giant fields were found also, such as the Ghawar field in Saudi Arabia (“Ghawar” in Saudi means, I think, “endless pink Bentleys”). That is the biggest oil field in the world, and has been producing millions of barrels per day for 50 years. It was found largely through luck, but once it was found developing it became much easier.

Now with so much of the world mapped out, the game has changed from finding new bodies of hydrocarbons way underground to figuring out ways to extract the stuff that we know is there. Shale resources are the best example; we’ve known the shale deposits held huge amounts of petroleum for decades, and the areas of the shale deposits are fairly well mapped, but only recently have producers been figuring out how to get it out at a reasonable cost. High prices definitely help; if oil was still at $20 a barrel there wouldn’t be much interest in shale. So higher prices help provide the funding to figure out how to get these resources out of the ground (as well as funding ski hills in the Arabian desert). If oil goes to $300 a barrel, there will be plagues of drilling rigs everywhere, so much so that even anti-environmentalists be begging to have windmills installed if for no other reason than to swat them away.

Anyway, it’s a huge topic, I might have to do a follow up to fill in some gaps if demand is overwhelming…☺