Black Gold: How to Dig For Oil

 

 

 

 

 

 

• A geologist decides if the sedimentary rock at the potential drill location possesses good porosity, permeability and possible petroleum accumulation.

• Prior to any drilling, numerous legal matters must be settled, such as getting a drilling permit, surveying of the drill site and obtaining an oil and gas lease.

• Financial arrangements are made with the surface owner for access to his property, and he is usually compensated for the use of his acreage while drilling is in progress.

• If the well does in fact produce oil, the oil company will require access and lease of the land for an extended period of time, possibly several years.

• Once the site has been selected, a contractor will bring in equipment to prepare the location and set up the large drilling rig.

• There is no way to estimate the amount of revenue that a well will produce.

• The costs of the exploration process are high; obtaining the mineral rights and land access, renting drilling rigs, and completing the well through fracture stimulation, among other things, force the companies to spend more than they make during the early drilling process.

• With oil prices at record highs, companies could be poised to make fortunes. A good well can produce several hundred barrels a day, which at current prices could mean millions of dollars every year and several hundred millions over the life of the well. If successful in finding large deposits of oil within a field, small independent oil companies may sell the right to drill the rest of the field to a large oil corporation

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• The oil comes out of the ground as crude. The color and consistency differs depending on the grade. Much of the oil produced from the wells in “Black Gold” is considered light, sweet crude and is the most sought-after, thus commanding a high price.

• Once crude oil is removed from the ground, it is sent to a refinery by pipeline, ship or barge, where different parts of the crude are separated into useable petroleum products.

• Crude oil is measured in barrels. One barrel of crude oil, when refined, produces about twenty gallons of finished motor gasoline and seven gallons of diesel, as well as other petroleum products.

• Most of the petroleum products are used to produce energy. Many people use propane to heat their homes and fuel their cars. Other products made from petroleum include ink, crayons, bubble gum, dishwashing liquids, deodorant, eyeglasses, tires, ammonia and heart valves.

• Every well that contains petroleum also holds natural gas. The natural gas can be an additional source of revenue, but it is more volatile and dangerous to excavate than crude oil.

• Crude oil also contains sulfur, though the reserves in West Texas are known to have less sulfur than crude from other areas.