fusion point research Marketing Research Reports

Marketing to Exploration and Access Leaders

Understanding Their Role

Oil exists in underground deposits of varying size and composition. Although there are a variety of techniques to identify these accumulations, ultimately petroleum companies must drill exploratory wells to verify the existence and quality of the oil reserves. Exploratory drilling is expensive, dangerous and potentially damaging to the environment, so before the drilling stage companies first:

 

  • Conduct a geological analysis of the potential deposit1
  • Perform surveys using advanced sensing technology (examples include gravity, magnetic and seismic surveys)2
  • Review nearby wells’ drilling histories and production levels
  • Assess the local country involved including available infrastructure (roads, ports, railways, pipelines, etc.,) and political stability3
  • Measure possible impact on the environment4
  • Estimate the potential size and value of the deposit

 

The cost of the exploration process often runs into the millions of dollars, and the expenses and challenges are magnified when the deposit is under a sea.

 

Before making massive investments in exploration, a company must first get some level of rights to the oil at stake. Outside of the US, oil is usually owned by a national government while inside the US private ownership might also exist. The structure of these licensing contracts varies based on the risk involved, and how much risk the petroleum company or the government assumes but the general concept, of course, if for both the private company and the host nation to earn profits.5 Licensing for large potential deposits are highly competitive, and is typically done through a bidding process.6

 

Risk management is a critical part of the exploration and access processes. In addition to risk mitigation strategies, often risk is spread across multiple companies and an entire portfolio of different oil reserves.

 

The steps between identifying a potential oil deposit and beginning large-scale extraction should be oddly familiar to a sales rep. First, an area with a potential accumulation of oil is identified as a Lead. Upon further positive assessment, the area is upgraded to a Prospect or Play. After the studies mentioned above are completed, the chance of success is estimated, along with an appraisal of recoverable hydrocarbons , or the find’s size. The deposit itself has more than oil, so the term typically used in the exploration phase is hydrocarbons (which includes oil, plus natural gas, methane, coal, etc.). Deposits can also be called Fields, Traps, Reservoirs, Pools, and Accumulations. Once the deposit is clearly identified, and assuming it is economically viable to move forward, the oil company moves from Exploration into full-scale Extraction.7

1 Hilyard, Joseph. The Oil and Gas Industry: A Nontechnical Guide. Edited by Hill, Stephen. 1421 South Sheridan Road, Tulsa, Oklahoma 74112-6600: PennWell Corporation, 2012.

2 REUST, DENNIS K. “Hydraulics Delivers GOOD VIBRATIONS.” Hydraulics & Pneumatics 66, no. 10 (2013): 35 – 37. EBSChost(91676848).

3 “COLOMBIA 2012 - Oil & Gas.” Canadian Business 85, no. 3 (2012): 26 – 30. EBSChost(72323597).

4 Mortleman, Jim. “Oil Prospector Exploits Data Analysis for Environmental Drilling Operation.” Computer Weekly, 2014, 10 – 11. EBSChost(96017298).

5 Hilyard. The Oil and Gas Industry .

6 Vianna Pereira, Luciana. “Reviewing the Legal Consequences of Oil Spills and Accidents Offshore Brazil.” Offshore 72, no. 9 (2012): 112. EBSChost(80016930).

7 See Schlumberger’s excellent Oilfield Glossary  at: www.glossary.oilfield.slb.com

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Copyright © 2016 Fusion Point Research, Inc.

Companies searching for oil must first secure rights to anything they find, and then they employ a broad range of technologies to survey and drill for deposits. Exploration is risky, and efforts to understand and reduce risk are vital to success.

fusion point research Marketing Research Reports
Companies searching for oil must first secure rights to anything they find, and then they employ a broad range of technologies to survey and drill for deposits. Exploration is risky, and efforts to understand and reduce risk are vital to success.
  • Conduct a geological analysis of the potential deposit
  • Perform surveys using advanced sensing technology (examples include gravity, magnetic and seismic surveys)
  • Review nearby wells’ drilling histories and production levels
  • Assess the local country involved including available infrastructure (roads, ports, railways, pipelines, etc.,) and political stability
  • Measure possible impact on the environment
  • Estimate the potential size and value of the deposit