new to the oil industry, page-5

Eccoi,

This is a really good post. You might pad it out by more examples from actual wells ...

Commentary.

You probably want to say something about seismic.

"Offshore, seismic is cheap but drilling is expensive. Onshore, it's the other way around. Old-fashion 2D seismic is usually used onshore, but offshore many lines are run close together to build up a 3D seismic map of the target area".

Ballpark drilling costs ...

Onshore : A$1.5m. Add A$500k for a 2km+ well. Add $500k if you are drilling in the middle of nowehere.

Offshore : A$3m for shallow water, A$30m for deep water.

NB The USA is cheaper

Exploration wells

1. I dont know where you get your A$800k number for completion from ... I've been quoted about A$400k.

2. I'd say "Usually not DST'd, but may be"

DSTs

It's not accurate top say "shale is bad". You need seal rocks to stop the oil evaporating up.

This is something I wrote on Sharescene to explain Nulla Nulla ... feel free to use it.

For normal oil regions, there are 3 important sorts of rocks - stuff you'd put in your garden, stuff you'd put in your bathroom, and stuff that has organic matter that can be "cooked" to form oil or gas.

Garden rocks - sandstone, limestone, coral and sometimes dolorite - can hold oil inside them. They are porous and permiable, and are your reservoir rocks.

Bathroom rocks - slate, shale, claystones or mudstones - are important, because the oil cannot evaporate through them, and they therefore form a seal. Salt is a special case of bathroom rock - it is the ultimate seal, and it naturally forms bubbles or domes. Oilers react to rumours of salt domes the same way junkies react to rumours of China White, and for the same reasons.

Source rocks are important, because if there is no organic matter to cook and form oil, then you can't find it. Marine environments tend to form oil, land environments tend to form gas. Note that evaporating shallow seas are your main targets, as shallow seas are organic rich (= source), sand rich (= reservoir) and salt-heavy (= seal).

If you only have garden rocks, then slowly but surely the oil will evaporate up through them, and you'll drill and find a long string of residual oil, but no viable reservoir. This can happen if, say, glaciers came through your oil province and removed the top half kilometer of seal rocks, leaving only the sandstone reservoir.

If you only have bathroom rocks, then you'll never find a pool that you can pump out, because there is no rock that will hold oil inside it.

Therefore, you need all of them, with the garden rocks underneath the bathroom rocks, and the source rocks somewhere nearby to create the oil, and have it evaporate into the reservoir formed by the garden rocks. Note that oil can migrate a long way, but that isnt the way to bet, as you'll only get a small percentage of the created oil migrating a long distance.

In this case, we've found the bathroom rocks - the not-permiable claystones and siltstones.

In the case of Nulla Nulla, the Hutton Sandstones are the garden rocks, and they havent got to them yet.

For a commercial reservoir, you also usually need a "upside down bowl" (the technical term is "anticline") of garden rocks, as this holds more oil. If you have a sheet of upward-sloping garden rocks that is blocked by something else that is not permiable, that is even better, as that will form one big "stratigraphic" trap that the oil can't escape from.


Ian