In order to fully understand the true value that we as accompany offer to our shareholders, clients and partners, it is essential to have at least a bare working knowledge of what is involved in the unique oil & gas industry. This vital industry has its own very unique day to day requirements and business structure that can often at first glance seem somewhat confusing to those from outside of it. To simplify matters it is best to separate the industry into three principle stages, simply called upstream, midstream and lastly downstream. At Bront Oil Co. Ltd. we are for the most part concerned with upstream endeavors, often referred to in industry parlance as the E&P sector. What follows is a brief overview of the oil & gas industry from initial discovery to commercial recovery operations.
Vital reserves of oil and natural gas are the result of millions of years’ worth of organic matter having decayed and being then subject to both compression and heat on an immense scale within our planet’s sedimentary rock strata. Rocks such as Lime, sandstone and shale are where this resource is most commonly encountered as the same actions that laid down this organic matter, later laid down the covering rock structure.
As both oil and its associated natural gas have a lower density than water, they are both easily moved within the crust of the planet until such time as they become in essence trapped by what geologists refer to as “rock cap” a less porous rock structure which backs up these deposits to form a reservoir. It is these reservoirs that are the subject of all exploration and recovery efforts within our industry.
The first stage of all oil & gas work is also arguably the most difficult and long lasting. This is the initial exploration stage in which geologist draw upon their solid understanding of certain areas compositions to best posit likely zones in which oil & gas reservoirs are likely to have formed. Once these have been quantified a full inventory of mapping, imaging and survey techniques and equipment is brought to bear to both narrow down and assess potential field locations and limits. The technologies involved include magnetic field studies, seismic imaging, gravity distortions and highly detailed 3-D sonar modeling. All of these are used to best determine which potential sites are deserving of further exploration.
Once a site has been identified that meets our strict company criteria, we then proceed to seek out permission to conduct test drillings on the site to further assess its viability and best prospective recovery means. We obtain this permission in one of two ways either by seeking a license to do so from the country in which the field is located or if it is an already licensed field from that sites license holder, usually a large multinational concern.
In recent year’s giant steps forward in technology and the benefits that this has brought have greatly improved the industry’s ability to accurately locate and gauge potential fields. Science now has replaced what was for many years almost an uncanny art form, the role of the successful geologist. This has resulted in more economical and time efficient surveying, which has allowed for previously unimaginable results. We at Bront Oil Co. Ltd. strive to keep ourselves at the very forefront of this technological revolution ensuring that we maintain our position as the best possible choice of partner in the field of surveying and exploration.
Once a resource field has been positively identified and we have conducted sufficient exploratory drillings and testing to ensure that it is economically viable to recover. Then we move on to what is known as the development phase of that site. Usually at this stage multiple companies are involved in order to better mitigate financial risk as well as for allowing specialization to take place in areas including operational management, distribution and legal compliance with all safety and environmental conditions applicable within that locale.
The site is drilled and cased, readying it for future recovery operations. This however is no simple task, but rather a complex solution that will be formulated and applied on a case by case basis in order to better expedite recovery at a specific site factoring in conditions such as depth, pressure, composition and porosity of the reservoir structure.
The last phase of this process is known simply as the production stage, with the site now producing raw resources which are transported for distillation and ultimately purchase by end users. To reach this last step can take as many as five years when recovering oil products and as long as seven years to efficiently recover natural gas on a commercially viable level. The employment of different strategies is mandated by many factors with one of the largest being that of the sites location, either onshore or offshore with the latter posing a unique set of challenges. Lastly, the process utilized must allow for flexibility over time due to the fact that recovering the product itself affects the state of the reservoir’s pressure which must be accounted for as it declines over time. At present even the world’s best standards of recovery at the most forgiving of sites are still quite low when viewed from an economic standpoint. As little as 20% up to a maximum of 40% of available oil is commercial viable to recover from most sites and when it comes to natural gas, where initial pressures are much greater this rises to between 60-80%. This is further affected when swings in commodity prices are factored in meaning that it is often times more economical to develop a new field rather than continue drawing from an existing one.