Page 16 - Hydrocarbon Exploration and Production Second Edition

The Field Life Cycle 3

0 1 2 3 4 5 6 Years
Preliminary Investigation
Geological Surveys
Seismic Surveys

Exploration Drilling
Decisions:
drill?
continue?
continue?
Expenditure $m 100
75
50
25
0
Figure 1.2 Phasing and expenditure of a typical exploration programme.

Despite such improvements, exploration remains a high-risk activity. Many
international oil and gas companies have large portfolios of exploration interests,
each with their own geological and fiscal characteristics and with differing
probabilities of finding oil or gas. Managing such exploration assets and associated
operations in many countries represents a major task.
Even if geological conditions for the presence of hydrocarbons are promising,
host country political and fiscal conditions must also be favourable for the
commercial success of exploration ventures. Distance to potential markets, existence
of an infrastructure and availability of a skilled workforce are further parameters
which need to be evaluated before a long-term commitment can be made.
Traditionally, investments in exploration are made many years before there is any
opportunity of producing the oil (Figure 1.2). In such situations companies must
have at least one scenario in which the potential rewards from eventual production
justify investment in exploration.
It is common for a company to work for several years on a prospective area before
an exploration well is ‘spudded’ – an industry term for starting to drill. During this
period the geological history of the area will be studied and the likelihood of hydro-
carbons being present quantified. Prior to spudding the first well a work programme
will have to be carried out. Field work, magnetic surveys, gravity surveys and seismic
surveys are the traditional tools employed. ‘Exploration’ in Chapter 3 will familiarise
you in some more detail with the exploration tools and techniques most frequently
employed.

1.3. Appraisal Phase

Once an exploration well has encountered hydrocarbons, considerable effort
will still be required to accurately assess the potential of the find. The amount of