What is exploration in the drilling industry?

Fast Facts About
Prospecting for Oil and Natural Gas

Prospecting is the very first stage of the oil and natural gas development process. It consists of Exploration, Permitting and Leasing.

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Exploration encompasses the processes and methods involved in locating potential sites for oil and gas drilling and extraction. Numerous tools are used to identify and characterize &#;prospects&#; for oil and natural gas development. These tools range from basic geological and paleontological understanding of a reservoir to acoustic and magnetic seismography enhanced by 3D imaging. Other factors such as road access, topography, and prior drilling results (if any) are also considered. If available, data from already existing wells in the reservoir is analyzed, such as well logs, cross-section data, and Estimated Ultimate Recovery (EUR), which is an estimate of the expected recovery of oil or gas from a producing well. Finally, the location must be economically and regulatorily available.

Permitting and Leasing are closely intertwined and follow exploration. Prior to drilling in hydrocarbon fields that were identified through the exploration process, permits and leases must be secured from the entity that owns the land and its associated mineral rights. In the United States there are four types of land ownership which influence this process: Private, Federal, State, and Tribal. The Federal Government manages leases on the outer continental shelf of the United States for offshore activity as well. The United States is the only country in the world that allows private ownership of mineral rights. Outside the United States, permitting and leasing of mineral rights are generally a government-managed process.

Taken together, the processes of exploration, permitting and leasing may take years to decades to accomplish, depending on the location and nature of the prospecting activity.

See our Drilling, Completing, and Producing Oil and Natural Gas Wells page for information on the steps that follow prospecting. See our Oil and Natural Gas pages for information on processing, refining, and transporting oil and natural gas after they are produced.

Porosity vs Permeability

Porosity is the volume of pore space in a rock as a percentage of the total volume the rock occupies.

Permeability is the ease with which fluids or gases can move through the interconnected pores of rock.

Both porosity and permeability are important factors for a productive oil or gas well

Types of Oil and Gas

Oil

• Conventional oil (naturally high permeability)
• Unconventional oil (low permeability)
  • Heavy oil
  • Tight oil
  • Oil sands
  • Oil shale

Gas

• Conventional gas (naturally high permeability)
• Unconventional gas (low permeability)
  • Shale gas
  • Tight sands gas
  • Coalbed methane
• Methane hydrates (not commercial)

Prospecting Tools

Paleontology
Fossil correlation and dating of different core samples

Seismography
Measuring of seismic waves to understand and map the subsurface

Well Logs
Logs that show the density, porosity, temperature, resistivity, and pressure at different depths

Mapping
Geologic mapping of potential sites and data analytics of current wells

Drivers

• Continuing high demand for oil and gas
• Can reduce energy dependence on other countries
• Can reduce transportation costs from importing oil and gas
• Potential to find reservoirs that are more economic

Barriers

• Geologic tools can be expensive
• Lack of certainty that new drilling permits will be given
• Strict regulations for oil and gas
• Land use restrictions

Climate Impact: Low

• Emissions from exploratory wells

Environmental Impact: High

• Exploratory wells require the clearing of vegetation and land
• Seismic techniques of exploration disturb ecosystems
• Road construction to prospecting sites cuts through ecosystems
• Improper disposal of saline water pumped from the ground damages soil and groundwater

 

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Updated September

What Is Exploration & Production (E&P)?

Exploration & production (E&P) is a specific sector within the oil and gas industry linked to the early stage of energy production, which generally involves searching for and extracting oil and gas. An E&P company finds and extracts the raw materials used in the energy business. Typically they do not refine or produce energy but merely find and extract raw materials to be shipped to other oil companies within the production process.

Key Takeaways

• Exploration and production (E&P) is the early stage of energy production, which includes searching for and extracting oil and natural gas.
• After identifying potentially viable fields, a well is drilled to test the findings by collecting samples.
• If there are both the quality and quantity needed to produce and sell commercially, the production of oil wells begins.
• The oil and gas deposits are extracted from the wells, stored temporarily, and eventually shipped via a pipeline to a refinery.

Understanding Exploration & Production (E&P)

E&P is known as the upstream segment of the oil and gas industry, which consists of the search, exploration, drilling, and extraction phases. The E&P segment is the earliest portion of the oil and gas production process. Companies within this segment are primarily focused on locating and extracting commodities from the Earth.

The resource owners and operators of E&P work with a variety of contractors, such as engineering procurement and construction (EPC) contractors, joint venture partners, and oil field service companies. In locating and extracting oil and gas, E&P companies also build infrastructure and collect massive amounts of analytical data.

Exploration & Production (E&P) Phases

The process of oil and gas exploration and production typically consists of four stages, which are outlined below:

Search and Exploration

The search and exploration stage involves the search for hydrocarbons, which are the primary components of petroleum and natural gas. Land surveys are performed to help identify the areas that are the most promising. The goal is to locate specific minerals underground, to estimate the amount of oil and gas reserves before drilling. Geologists study rock formations and layers of sediment within the soil to identify if oil or natural gas is present.

The process can involve seismology, which uses substantial vibrations as a result of machinery or explosives to create seismic waves. How the seismic waves interact with a reservoir containing oil and gas helps to pinpoint the reservoir&#;s location. Once it has been determined that there appear to be reserves beneath the ground, the test drilling process can begin.

Well Construction

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Advantages Of The Baler Machine

After identifying potentially viable fields, a well is drilled to test the findings and determine whether there are enough reserves to be commercially viable for sale. The process involves making a hole by drilling or grinding through the rock beneath the surface. A steel pipe is inserted into the hole so that the drill can be inserted into the pipe, allowing for exploration at a deeper level.

Core samples are taken and studied by geologists, engineers, and paleontologists to determine if there is the proper quality of natural gas or petroleum in the underground reserve. If the process shows that there are both the quality and quantity needed to produce and sell commercially, the production of oil wells begins.

Engineers will typically estimate how many wells will be needed and the best method of extraction. The estimated cost of the number of wells is determined. Next, the construction of the platform begins, which could be on land or offshore. The necessary environmental protections are also implemented at this stage.

There have been significant advances in drilling technologies over the years. Companies can drill horizontally, tapping into vertical wells to search for natural gas pockets, which can produce far more natural gas than a typical vertical well.

Extraction

The oil and gas deposits are extracted from the wells. Sometimes, natural gas can be processed at the same site as the well. However, petroleum is usually extracted on-site, stored temporarily, and eventually shipped via a pipeline to a refinery.

Abandonment of Wells

Once a site is no longer productive, meaning all reserves have been extracted and all opportunities have been exhausted, the wells are plugged or sealed. Attempts are made to restore the area in an effort to help the environment. 

The Midstream and Downstream Phases

Once the crude oil and natural gas reserves have been extracted, the midstream oil and gas production process begins. Midstream companies focus on the storage and transportation of oil and natural gas through pipelines. They deliver the reserves to companies involved in the final stage of production, called downstream.

The downstream process involves refineries that process the oil into usable products, such as gasoline. Once finished products are created from the crude oil and natural gas, they are sent to distributors and retail outlets, such as energy providers and gas stations.

What Does E&P Stand for in Oil and Gas?

E&P is short for exploration and production, which is the early stage of energy production that consists of looking for oil and gas and then extracting it.

What Is the Difference Between Exploration and Production?

Exploration is the process of examining places where abundant oil and natural gas resources potentially exist under the Earth&#;s surface. Once these places have been identified, production commences to collect and extract.

What Are the 3 Stages of Oil and Gas?

The oil and gas industry is generally broken down into three segments: upstream, midstream, and downstream. The first phase is upstream, which is when companies initially explore and then start drilling and extracting oil and natural gas. It is then followed by midstream, which refers to the transportation of crude or refined petroleum products, and finally downstream, which is the final stage and consists of processing the oil into usable products and marketing them.

Is Exploration and Production (E&P) Upstream?

Yes, exploration and production (E&P) is considered part of the upstream phase, which is the initial part of the oil and gas process that consists of exploration, drilling, and extraction.

The Bottom Line

Finding and extracting oil and natural gas from the Earth&#;s surface is a deeply controversial and complex process that requires lots of money, patience, and hard work. It&#;s necessary, though&#;without these resources, which are used to power vehicles, heat buildings, produce electricity, and even to make products such as deodorant, MRI machines, and pacemakers, the economy and life as we know it would grind to a standstill.

Are you interested in learning more about Exploration Drill Rigs? Contact us today to secure an expert consultation!