Petroleum Exploration and Production

There is a saying in the petroleum industry that "oil is found in the minds of men." Even with the most sophisticated scientific techniques, finding hidden petroleum deposits involves a large measure of creative interpretation. Until a hole is drilled, the existence of oil or gas is theoretical; "dry" holes are common even in established production areas. Once the resource is found, its value also depends on the "minds of men": exploration and production are expensive endeavours, worthwhile only when society needs the oil or gas badly enough to pay for it.

The existence of buried petroleum had been known for many centuries, but people did not start drilling for oil until the middle of the 19th century. At that time a shortage of whale oil coincided with the invention of techniques for refining "rock oil" into lamp oil (see Abraham GESNER). Since then, demand for oil and gas has periodically surged and slumped, and so have prices and exploration activity.

Geology and Geophysics
The Earth's surface often provides the field geologist with clues to what lies below. The hints may be obvious: seepages of oil and gas, or outcroppings of SEDIMENTARY ROCK or FOSSILS exposed in a tilted layer of rock on a mountain. That layer of rock might once have been the flat bottom of an ancient sea which, through millions of years and constant movements of the Earth's crust, was folded, tilted and exposed (see PLATE TECTONICS).

The clue is important: accumulations of oil and gas are often found in rock strata that are folded or tilted to some degree. However, the rocks that may contain traps for reservoirs of oil and gas are often thousands of metres below the surface, sometimes covered by a fairly horizontal plain. Aerial photographs and topographical maps can be useful in determining the underground landscape, and the science of geophysics can be even more helpful in mapping the depths beneath the surface.

Geophysics studies physical properties of rocks (eg, magnetism, resistivity, radioactivity). The geophysicist's tools include a magnetometer and a gravimeter, which are used to identify rock types. Both instruments were developed in the 1800s and have been improved continually since that time. Deeply buried sedimentary rocks are often very dense and contain high concentrations of IRON and other materials detectable by a magnetometer. Differences in the pull of gravity of various rocks, measured by the gravimeter, can also help identify the locations of certain rock types beneath the surface.

Another geophysical tool, the seismograph, can virtually compose pictures of underground rock formations. The seismograph works on the principle of sound-wave transmission. The sound waves are generated by small charges of dynamite or through vibrating or percussion methods. As they travel downwards through layers of different types of rocks, the sound waves are reflected back to the surface. Differences in wave intensity and travel time provide information about the different types and structures of rocks through which the waves travel. At the surface, the sound waves are recorded by geophones, sensitive recording devices connected to computer equipment. Computers produce the "pictures"; ie, seismographs in which the geophysicist can "see" the structural composition of the rocks far below.

Exploration
The only way to prove what lies in buried rocks is to drill a well. Even with modern GEOLOGY and geophysical techniques, drilling remains risky. An exploratory or "wildcat" well in an area that has not been drilled before faces high odds against success: perhaps one of 7 or even 10 exploratory wells finds commercial accumulations of oil or gas. To be commercially viable, a well must be able to produce enough oil or gas to justify the costs of drilling and placing it on production. In wildcat areas the first exploratory wells are often drilled as tests; they are not expected to yield oil or gas. Such wells, however, produce valuable information about the nature of the rocks and their oil and gas potential through the analysis of core samples, rock cuttings and data gathered from down-hole surveys.

If exploratory wells establish the presence of producible quantities of oil or gas, "development" wells are drilled to define the size and extent of the field. In development drilling the odds for success are higher: perhaps 6 or 7 successful wells for every 10 drilled. But the element of risk is still present: there may not be enough oil or gas to be commercially attractive; or the technology required to produce oil or gas may be too expensive.

The exploration industry in Canada has gone through "booms and busts," ups and downs that have little to do with the amount of oil or gas left to be found and more to do with the balance between supply and demand. For example, the NORMAN WELLS oil field in the NWT was first discovered in 1920, but it was then considered too remote to be of interest to southern Canada. A modest amount of oil was refined there to meet regional demands. It was not until the mid-1970s that decreasing supplies and increasing oil values made large-scale development at Norman Wells worthwhile.

Technology also can have an impact on exploration activity. For example, extensive exploitation of the large volumes of heavy oil in the LLOYDMINSTER area was dependent on the development of enhanced recovery techniques.

Drilling
There is a certain romantic air about drilling, perhaps a result of the risk, or of the movies and TV programs that show burly men wrestling with heavy equipment, gushers blowing in and wells blowing out. In today's drilling industry, however, the emphasis is on sophisticated technology. Skills are more important than brawn. Blowouts have almost been eliminated by improvements in drilling equipment and knowledge.

In the early years of Canada's petroleum industry, wells were not drilled but were punched with cable tools. On a cable tool rig, a heavy bit with a chiselled edge was suspended on a line of rope or wire cable. The hole was made through the constant raising, lowering and pounding of the bit into the earth. By the late 1920s, most operations used rotary drilling equipment, which was more efficient, drilling deeper and faster.

Today, drilling is accomplished by a bit at the end of lengths of steel pipe. Each piece of pipe is about 9 m long and is added, a length at a time, by threading onto the next piece of pipe. The bit, drill collars (which add weight to the bit) and lengths of pipe are called the drilling "string." The whole string is turned by a rotating platform, the rotary table. The revolving bit cuts and grinds through rock formations, lubricated and cooled by drilling fluid commonly called drilling "mud," a mixture of water or oil, clay and chemicals.

A deep-rated drilling rig, which might be used to drill holes 5000 m deep, is composed of much heavier, larger and stronger equipment than one used to drill shallow wells (eg, 1000 m deep). For offshore drilling, rigs generally are permanently mounted on barges or platforms so that they can be towed from well site to well site. Some offshore drilling rigs are mounted on specially designed ships which move under their own power.

Completion
Drilling operators constantly monitor the progress of a well so that decisions about completion or abandonment can be made quickly. Throughout the drilling operation, the rock cuttings are examined for traces of hydrocarbons and other evaluations and analyses are made. If the well is judged a dry hole, it will be plugged with cement and abandoned. However, if the tests show promise, the well will be "completed."

The first step in completion is the installation of production casing, tubular steel pipe that is cemented in place down the length of the well bore. After this process, the drilling rig is usually removed from the well and a truck-mounted service rig is moved into place. The production casing is performed to allow entry of fluids and gases from producing formation into the well bore. The perforations also provide access to the producing formation for other completion activities that may be undertaken.

Formations that years ago might have been considered capable of only minimal production now achieve good production rates through completion practices that, with better prices for oil and gas or improved technology, are worth implementing. Fracturing is a common completion technique. In this process, materials are pumped down the well under high pressure to pop open cracks in the reservoir rock so that the oil or gas can move more freely through the formation.

Production
As crude oil, natural gas, their products and byproducts become more valuable, optimizing recovery becomes very important. Only about 25% of the oil can be recovered from a typical reservoir by natural means or primary recovery techniques. Enhanced-recovery techniques permit production of more oil from many reservoirs. The most common enhanced-recovery method, water injection, involves injecting water into the oil-bearing formation; the water forces the oil toward the producing well bore. Such techniques can result in recovery rates that can exceed 80% of the oil in place.

Natural gas generally flows to the surface through its own pressure; thus, a natural-gas wellhead is usually composed of only a series of chokes and valves to control flow. This wellhead structure is called a "Christmas tree." Crude oil, which typically contains some natural gas or solution gases, is sometimes produced through its natural pressure, but most crude oil wells in Canada require some method of lifting or pumping the oil to the surface. Pumping equipment is known by various names, including "pump jack,""horsehead pump" and walking beam.

Transportation
In a country as large as Canada, the transportation of oil and gas from areas of supply to areas of demand is a very important aspect of the petroleum industry. In western Canada's oil- and gas-producing provinces, long trains of tank cars are a common sight. They carry everything from asphalt (produced from heavier crude oils and used for paving roads) to propane, butane and other liquid and gaseous products of crude oil and natural gas. Many of these tank cars are headed east, to industrial centres where the petroleum products and byproducts are used in a great variety of MANUFACTURING processes (see CHEMICAL AND CHEMICAL PRODUCTS INDUSTRIES).

Before the 1950s, railway and truck transport were the only methods of transporting oil and gas across Canada, but since then PIPELINES have carried most of Canada's oil and gas production to areas of consumption. Just as the construction of railways was essential to the early development of Canada, pipelines became an integral part of Canada's industrial growth midway through the 20th century.

Refining
Gasoline, diesel fuel and jet fuel are the most obvious petroleum products, but the list of manufactured products includes everything from insecticides to shampoo and plastic. The processes that result in these products are often complex, but all are based on separating crude oil's various components into useful byproducts, which can be in solid, liquid or gaseous forms.

Refining begins with "boiling" crude oil past its evaporation point. In a process called distillation, the various components are vapourized and separately condensed according to their boiling points into basic hydrocarbon streams. Gasoline, kerosene, jet fuel and diesel fuel are produced from middle distillates; greases, lubricating oils, waxes and asphalt are produced from residues.

Some products must be blended and improved with chemical additives in secondary refining processes to produce finished products with desired characteristics. Refineries may also produce heating fuels, heavy industrial fuels and feedstocks for the PETROCHEMICAL INDUSTRY.

Regulation
The marketing of crude oil, natural gas, their products and byproducts is complex. Various regulations, both federal and provincial, govern all aspects of production and sales. Although the provinces have jurisdiction over the oil and gas produced within their boundaries, the federal government has the ultimate jurisdiction over oil and gas pricing, transmission and sales, both domestic and export. Governments share the revenues of producing companies through federal and provincial taxes and provincial royalties.

The ownership of oil and gas, particularly in offshore areas, and the right to revenue sharing and regulation often have been topics of dispute among federal and provincial governments (see ENERGY POLICY). The NATIONAL ENERGY BOARD regulates interprovincial movements of oil and gas and export allocations of gas and electricity.

Author ANNE MCNAMARA

Links to Other Sites
Turner Valley
The official website for the Town of Turner Valley, the birthplace of Alberta's oil and gas industry. Check out the history of the "Turner Valley Oilfields."

Alberta's Oil Sands
An extensive information source about recent technological advances in the exploration and development of Alberta's oil sands, the second largest proven concentration of oil in the world. Also covers related environmental issues. A Government of Alberta website.

Sable Offshore Energy Project
This informative website about the Sable Offshore Energy Project is from the ExxonMobil Corporation.

Frontier Resources — Alberta Oil Rig
A multimedia exhibit on the history of oil exploration in Alberta. From the Canadian Museum of Civilization.

OTS Heavy Oil Science Center
A detailed information source about producing, transporting, and refining heavy oil products. From the Lloydminster Oilfield Technical Society.

Canadian Energy Pipeline Association
An informative website about Canada's petroleum industry. Find out how oil and gas flow through pipelines. Also features maps of pipeline systems in Canada and other data.

The Canadian Drilling Rig Museum
A museum dedicated to the history of oil and gas exploration in Southern Ontario.

Pipeline: Inside the Oil Patch
This blog offers the latest news about Canada's petrochemical industry. From the Calgary Herald.

Imperial Oil
Imperial Oil is one of Canada's largest corporations and has been a leading member of the petroleum industry for more than a century. Look in this section for historical background, details on current operations, on-line versions of corporate publications such as the award-winning Imperial Oil Review magazine, and information about the company's long-standing and continuing support for worthwhile causes.

Duke Energy Corporation
The website for US owned Duke Energy Corporation, a diversified energy company with a interests in real estate, natural gas, and electric businesses.

Canadian Petroleum Products Institute
The website for the Canadian Petroleum Products Institute, an association of major Canadian companies involved in the refining, distribution, and marketing of petroleum products. See basic descriptions of petroleum products, the latest industry news, and related statistics.

ConocoPhillips Canada
The website for ConocoPhillips Canada. This company acquired Gulf Canada Resources Limited in 2001. Find out about company history and operations. Features an overview of the technology being used to recover oil from some of Alberta's vast oil sands deposits.

The Canadian Society of Petroleum Geologists
Information of interest to petroleum geologists in Canada. Check out the link to SIFT (Student Industry Field Trip) for post-secondary students in geology and related fields.

Oil Sands Discovery Centre
Dig into the history, science and technology of Alberta's oil sands at the website from the The Oil Sands Discovery Centre in Fort McMurray, Alberta.

History of Oil and Gas in the NWT
Historical overview of petroleum exploration in the Northwest Territories. Focuses on oil activity in the Norman Wells region, the Mackenzie Delta, the Beaufort Sea, and the Liard Plateau. Also mentions the Canol agreement signed by US and Canada during World War II. A Government of the Northwest Territories website.

North Atlantic
This site offers a brief illustrated history of the refinery at Come by Chance. From the website for North Atlantic Refining. From the website for the oil company North Atlantic, a subsidiary of Harvest Energy Trust.

Gas hydrates - Fuel of the future?
This illustrated feature on gas hydrates explains what they are, where they are found, economic uses, and related environmental concerns. From the Geological Association of Canada.

Canada's Evolving Offshore Oil and Gas Industry
This superb site features exceptional illustrations and photographs of the latest technology used in drilling for oil and gas offshore. Also covers the history of offshore drilling, an overview of related environmental issues, and more. From the Canadian Centre for Energy Information.

Maritime jurisdiction and boundaries in the Arctic region
This map depicts possible boundaries of maritime jurisdiction in the Arctic region. From International Boundaries Research Unit, Durham University in the UK.

Arctic Oil and Gas
An illustrated feature on developing Arctic oil and gas resources from Natural Resources Canada.

Glossary: Gas production and pipeline technology
A gloosary of terms related to gas production and pipeline technology. From the website for the Mackenzie Gas Project. A PDF file.

New map of Arctic could point to Canadian gas, minerals
A CBC News article about research related to potential mineral and petroleum resources in the North as well as Arctic sovereignty issues.

Petroleum History Society
Profiles of pioneers in Canada's petroleum industry. From the website for the Petroleum History Society.

Canadian Energy Research Institute
This organization focuses on economic research in energy and environmental issues related to the petroleum industry. See "Publications" to view online copies of detailed research reports.

Edward Burtynsky: Oil
View a collection of superb Edward Burtynsky photographs depiciting the oil industry. From the CBC website.

Canadian Society of Exploration Geophysicists
See the menu on the left to access copies of scientific articles, abstracts, and an online geophysical atlas. For more information about geophysics, click on "Students" and then "Careers in Geophysics."

Canadian Association of Petroleum Producers
The website for the Canadian Association of Petroleum Producers, a great information source about all aspects of Canada's upstream oil, oil sands, and natural gas industry.

Bakken in Saskatchewan: An Update
An illustrated overview of the geology of the Bakken Formation and its future potential as petroleum source. From the Williston Basin Petroleum Conference.

TransAlta boss says economics could make carbon capture unfeasible for years
An article about how the cost of carbon capture processes affect energy extraction projects. From Canadianbusiness.com.

Hibernia
The official website for the Hibernia oil drilling platform offers information about the drilling process, management of ice hazards, and much more.