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Analysis of the Development Phases of Hydrocarbon Field

Updated on December 1, 2021


Hydrocarbon fields are also referred to as oil fields. They are reservoirs found deep in the earth crust and they contain crude oil. Some fields are found some places in the sea or ocean. Such fields are called offshore fields. An example of such is the Safaniya Oil Field which is located on the Persian gulf. The oil fields cover very large lengths mostly several miles. The crude oil contains products such as petrol, oil, tar, and natural gas. To arrive at these final products a lot of procedures are followed. Other than the procedures, several other factors like cost are also considered. Some of the major oil fields in the world are Ghawar Field in Saudi Arabia, Burgan Field in Kuwait, Ahwaz Field in Iran, Cantarell Field in Mexico, and Ku-Maloob-Zaap field also in Mexico. The Ghawar is the largest hydrocarbon field on earth. In recent times, the discovery of this field has been a major source of conflicts between nations.

A very recent example was a conflict between Sudan and South Sudan. The main steps involved in setting up a fully running production line include exploration, actual development, production and finally site abandoning. Before exploration, one has to consider mostly political and financial factors. After discovering the field then the next question is how economical is the field? This question is well answered by considering the amount of oil in the reservoir. When satisfied with the amounts then the appraisal phase, development, and production follow. Transportation and refining are the final stages of the process. In my discussion, I will consider an offshore field in the Persian Gulf and highlight the developmental phases

Political and Financial Challenges for Exploration

When considering the political challenges, we first have to consider the location of the Persian Gulf. The gulf is along Bahrain, Iran, Iraq, Kuwait, Qatar, Saudi Arabia, and the UAE. These nations are mostly governed by Islamic laws since most part of their populations are Muslims. Secondly, we have to look at the political stability of these countries. Bahrain, Iran, and Iraq do not have the most favorable political stability so there are only three options left. Political instability affects crude oil production in various ways. For example, if the instability leads to the nation being sanctioned by the international community then my company will encounter losses since our products cannot be availed to the international market(Amyx, Bass, & Whiting 1960).

Braithwaite, Rizzi, & Darke (2004) argue that political instability may also cause a shortage of labor as most of the manpower will be in the war. This means that my company will not realize its maximum potential which is another cause of low profits. Political instability may also lead to the destruction of company property. In most cases, instabilities are caused by violence, looting, and many deaths. When property is destroyed a lot of funds will be used to repair which reduces profits. The killing will reduce the labor supply. A few who will not be killed will run in fear of their life. Politics bring with them government policies. The instability might be there but the policies are very unfavorable. Among Qatar, Saudi Arabia, and UAE. I will consider the country with better policies. These policies include low taxes, minimum bureaucracy, and tight security. All these are aimed at reducing the cost while maximizing the profits. Some states readily give exploration rights while others are hesitant.

Financial challenges are also among the considerations. Every step of the process is very expensive and the financial muscle of my company should always be in my considerations. The aim is to explore a highly productive offshore field which will not strain my company. Some fields may be found very far away from the mainland. Such fields require more finances which also entails more advancedtechnology. Casey, & Butler, (2004 argue that the location of the field also determines the method of drilling required. Some methods are more expensive than others. The wells are mostly several kilometers deep. The transportation cost from the field should also be a consideration. Location of some fields requires improvised means of transport to ensure that the crude oil reaches the refining centers. The labor costs should also be considered putting in mind the capability of the company. Most of the offshore mining requires highly skilled labor. Highly skilled labor is usually very expensive.

The company may not be having the personnel at the instance. It has to consider the cost of hiring or contracting. My company should go for the cheaper option so as to maximize profits. At times the personnel may not be available locally at the area the field is located therefore creating the need to import. The financial challenges vary with the various companies. The aim of most companies, however, is to maximize profits, therefore, should opt for cheaper options. Before venturing into any offshore mining a company should ensure that it has adequate capital. The crude oil products have a ready market which is the main advantage. Any running machine in the world requires running a petroleum product. Current statistics have come up with a major problem in the financial sector of the oil industry. Most assets are almost at the end of their economic life. Considering the cost of the assets, this is a major setback to the owners and operators. Finance experts take into account the expected revenue; they then compare it with estimated development costs to come up with an economic assessment. If the criteria are favorable, then the field can be developed and later produced.

Exploring Commercially Feasible Reservoirs

A reservoir is a concentration of hydrocarbons beneath the earth surface. They are classified into two categories, that is, conventional and unconventional reservoirs. Conventional reservoirs are trapped in between rocks of low permeability while the unconventional one are trapped between a porousand a low permeability layer. Commercially feasible reservoirs are those which can easily be developed without many financial strains. The aim of this stage is to determine the viability of oil and locate wells. This stage involves exploration drilling. Exploration drilling is essential in obtaining some essential information (Sanford, Thompson, & McFall, 1985). It retrieves some samples for more chemical and physical analysis. The analysis is used to determine the best locations for drilling. Exploratory drilling is generally cheaper than the actual drilling to set up a factory. The data collected assists in making informed decisions on how to carry on with the actual development. The company is able to consider various options and go by which is easy to them.

Appraisal stage

This stage is further aimed at giving cost-effective data to be used in the development. At this stage, more reservoirs are drilled to collect more samples. Appraisal stage has three main aims. The first one is to come up with an almost actual volume of the reservoir. This helps the company determine the economic value of proceeding with the development. If the volumes are estimated to be very small a company may find it not economical to proceed. The second objective is to know the size of the reservoir. Mazzullo, & Harris, (1992) argue that very small sized are uneconomical to explore further. The last aim is to predict future production life of the reservoir. Some reservoirs usually run dry faster than others. It mostly depends on the bedrock beneath the reservoir. For a company, the best reservoir is that which will take a longer time to dry up. It is at this stage that a company is able to target on a technicality. Technicality here includes the technical labor and technology required in development. With the more detailed data available at this stage a company is also able to evaluate its economic targets.

Information of the volume, it is easy for a company to target on its returns as they can also estimate the cost. Future behaviors of a reservoir during production can also be determined at this stage. Laws of physics are usually used to determine the behavior. It is at this stage that a company able to assess the impact of the development on the environment. If there is a risk of very high environmental damages if the plan is executed, then in most cases the mining licenses are denied to the company. When there is a prediction of minimal damages then the development plan goes through.

Forming of Development Plan Stage

This is where now a company lays out a plan on how to arrive at production. At this stage, there is an evaluation of development options for a field and coming up with the best option. The main factors which a company should consider are costs, economic evaluation, and finally, the time required for full execution. A company has to go for a cheaper plan. By cheap, I mean what the company deems affordable. The plan also has to take into consideration of the returns from the project. The company should also highlight the period of total execution of the plan. The development plan also includes assessments of potential risks, environment, and social impacts. Oil and gas recovery should also be in the plan. Oil recovery is the increase of the amount of crude oil produced in a field by applying various techniques. A plan for an offshore field entails a subsurface development plan. It is good to note that the offshore development plan has a higher magnitude in terms of the capital and personnel requirements. Time schedule for offshore fields is also longer than the onshore ones. Under offshore planning, there is what we call uncertainty and fiscal rules in development planning. It is important to have a model which can account for different decisions.

Production Plan Which Has to be Executed Upstream

A production plan is a sequential alignment of manufacturing modules in a company. Production plan ensures that the production process is efficient, safer, and more cost-effective. It ensures that production is done on time and more safely. Oil production involves various risks like in heath issues to the employees, community members and to the environment. A good company has a plan which outlines how it will make its production safe to all the parties involved. A careful plan ensures the production process is systematic which reduces risks brought by rushing. The plan should outline the methods of disposing of the waste products (Flint, & Bryant, 1993).

A production plan also entails the use of labor, resources, and all the assets. All these uses should be optimized to save on costs which may be incurred on other stages of the development. The cost of exploration and development are usually quite high and optimizing some resources reduces the cost of production. A production plan also outlines the management arrangement. With an organized management then it becomes easy to control the whole process as everyone is responsible for his omissions or commissions. A plan for an offshore field should entail what reservoirs to develop, the drilling methods, the schedule, and platforms. Financial resources require in the drilling and the technique to be used.

Transportation Methodologies of Production

Transportation from an offshore oil field to an onshore refinery or storage might be costly depending on the position of the field. The deeper into the see the oilfield then the higher the transport cost(Knipe, 1997). When choosing the method of transport to use, a company should consider the cost, the ability of the onshore refinery to handle stabilized oil and the cost of selling the crude oil compared to that of selling the separated products. The transportation may be through the use of pipelines from the field to the onshore refinery. It may also be with the use of tanker shuttles which are located adjacent to the oil fields. The crude oil is pumped into the shuttles which then transport the crude oil to the refineries onshore. The pipes used are specialized to deal with changes in pressure and temperature in the deep waters. Another commonly used method of transportation is the use of floating storage tankers. When the vessel is filled with the stabilized crude oil, it is offloaded to the shuttle tankers which then transport it to the onshore refinery or oil storage.

Refining and Distillation of Production

After the stabilized oil is transported to the onshore refinery it is processed to various products. Some of the products are fuels, tar, and asphalt. According to Odling, Gillespie, Bourgine, Castaing, Chiles, Christensen,& Trice, (1999), various chemical and physical processes are involved to come up with these products. When in the refinery the first step is to remove all non-hydrocarbons from the crude oil. Oxygen, nitrogen, salt, and water are some of the non-hydrocarbons removed. The process begins with distillation of the crude oil. The distillates are then passed through the cracking process. After that, there is the reforming, alkylation, polymerization, and isomerization. These processes form fluid mixtures which are separated through solvent extraction and fractionation processes. Impurities are removed through hydrotreating among other methods. Modern refinery processes like breakdown and reshaping of hydrocarbons have been adapted. The main aim of these processes is to increase the production of petrol so as to cater for the rising demands.


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