The Science of Hydrocarbon Exploration (Spring 2021 Course Notes - GULC Evenings)

Physical Background

Oil and gas law has its basis in property law; originally, public notions about oil and gas were that oil travels all across the underground of earth’s surface, continuously moving around, meaning that oil drilling companies must be able to catch oil when it is at a certain location at a certain time (this was scientifically deemed to be incorrect; modern views dictate that oil is found in traps, having migrated there from various subterranean sources, sometimes spilling into surface pools which are indicators for underground oil for wildcatters). Drake’s Well signified the first discovery of oil which started modern views of oil discovery, exploration, and technology. Natural gas exists in pockets along with oil, being “wet” or “dry” (containing different amounts of natural gas liquids, NGLs, to be extracted) and “sour” or “sweet” (based on the amount of impurities that need to be removed).

Accumulation and Occurrence

A trap stops the upward movement of hydrocarbons, and the rock below or adjacent to the trap(s) (called a reservoir; often sedimentary rock) holds the hydrocarbons. Reservoirs with high porosity (ratio of total pore (hole) volume in the rock to the total rock volume) and high permeability (the connectivity between these pores / holes). Sandstone (30% porosity), dolomite, and limestone all have high porosities. In reservoirs, while oil / gas / saltwater separate by their densities, saltwater often gets into the pores, completely filling smaller pores and encircling the outsides of larger pores filled with oil (oil:saltwater ratios can range from 80:20 to 50:50); thus, reservoir drilling can lead to the exfiltration of saltwater too.

The formation / structure of reservoirs can be split into two main categories, structural and stratigraphic. Structural reservoirs form due to stresses that cause sedimentary rock deformations (affecting the traps and reservoirs, like mountain building). Stratigraphic reservoirs form due to changes in the formation itself, like increased cementation in sedimentary rock grains or changes in grain size affecting porosity / permeability (these are more difficult for geologists to find).

In terms of structural reservoirs and traps, oil and gas can exist in domes (upward folds in subsurface rock formation layers, leaving a larger middle layer open to fill with oil), anticlines (elongated upward folds that are much longer and narrower, sometimes holding some oil so long as there is enough closure (a “four-way” closure) in the layers), faults (a set of layers of different rocks fractures vertically, causing one of the two sides to move upward or downward; this leads to a reservoir being positioned against an impermeable rock layer which seals off the reservoir, allowing for the storage of oil / gas (faults without sealing capacity still act as conduits for flow, which is needed for hydraulic fracturing), and salt and overpressured shale (salt and overpressured shale are subject to “plastic flow” (like butter moving around); salt also has a constant buoyant density which causes it to move upward through rock layers as other rock layers become more dense, causing salt domes to occur (overpressured shale does something similar); oil and gas traps form around these domes).

In terms of stratigraphic reservoirs and traps, oil and gas can exist in channel sandstones / turbidites (sandstone and limestone which are sealed, often interlayered, through changes in permeability by surrounding non-porous low-permeability rocks), unconformities (layers of rock, having a reservoir, at some layer, being at an incline to the erosional surface, where the layers are eroded but a flat (non-inclined) layer of younger, impermeable rock is deposited (sealing the reservoir)), reefs (calcium carbonate deposits, potentially from dead animal remains (ancient reefs, clastic limestone (carbonate from elsewhere collected in one place), and chemical limestone (generated organically)), which are highly porous, permeable, and sometimes in aquatic environments have even bigger holes due to water movement), and hybrid traps (mixtures of all the above reservoir and trap systems, i.e. an initial faulting combined with the introduction of calcium carbonate leading to secondary cementation, which after a second faulting could lead to the trapping of a new reservoir).

Non-Traditional Reservoirs

There exist some forms of trapping, separate from the traditional depositing-generating-migrating-trapping sequence, that exist (which specialized techniques such as horizontal drilling and hydraulic fracturing). These include shale plays (organic rich shale (organic material needs to have reached thermal maturity with a low permeability) or “tight” sandstone (having high porosity and low permeability) which exist across long, continuous spans underground (acting as the source and the reservoir) can be horizontally drilled, with shale zones then being hydraulically fractured to create new fractures and open up existing fractures to collect shale natural gas), coalbed methane (methane is formed either due to microbial processes or typical thermogenic gas processes underground, which is then held due to water pressures in coal seams; pumping this out leads to the pumping out of water and methane, at which the methane desorbs / disconnects from the coal due to the depressurization that occurs), and oil shale (if source rocks for immature oil and gas are close to the surface, they can be mined and then “cooked” to undergo ore distillation through pyrolysis; this requires lots of water and produces large amounts of slag / heavy metals) / tar sands (oil that has migrated to such a shallow depth in limestone (at low temperatures) that it is degraded due to surface conditions, thus requiring surface mining + heat treating or steam injections for well drilling in order to reduce the viscosity of the product and extract it) / gas hydrates (slush-like solids consisting of methane and water which are found at very low temperatures often below the seafloor; this is a costly technique with great potential (one volume of hydrate yields 160 volumes of gas).

Types of Reservoir Drives

Because oil and gas reservoirs are already under high pressures, which mean that when a well is completed, there often exists a natural drive which pushes the oil / gas to the surface. Sometimes, the drive is only enough to push the oil / gas to the wellbore, or even short of it; man-made drives need to be used (in contrast with natural drives) if this occurs. Some drives include gas drives (when gas mixed with oil in reservoirs is below its bubble point (the point at which it the gas is contained in the oil without separating), it is at a low enough pressure to separate and rise to the top above the oil; drilling into the oil layer can reduce the pressure further by production of some of the oil, leading to a bigger gas cap forming, which pushes the oil out; in the case of a solution-gas drive, the gas is spread out in pockets throughout the oil, and the same technique can be applied but with worse results (because the gas pockets eventually stop expanding)), water drives (once oil reservoirs are drilled slightly, decompression of reservoir water below the oil occurs, leading to the expansion of that water, which pushes the oil to the surface; this is the most efficient form of drive, leading to 30-50% recovery of the reservoir’s oil (and sometimes more)), combination drives (drives which have multiple different sub-drives, such as both a gas cap and solution gas drive; identifying the type of drives present is important for developing a maturing field), and retrograde gas reservoirs (reservoirs which are purely gas, occurring deeper at higher temperatures, which condensate as they approach the surface (or when they reach the surface) due to lower temperatures and pressures; if they condensate to early, recovery becomes difficult as the condensation inhibits flow through the reservoir rock).

Types of Oil and Gas

Hydrocarbons include methane (CH¬4) and other alkanes / paraffins (CnH2n+2) (natural gas is usually methane / ethane / propane / butane) (paraffins with carbon numbers above 5 are usually liquids at room temperature) (1 BTU = .252 kcal). Light crudes have high APIs gravities (inverse of density) (often being rich in gasoline), while heavy crudes have lower API gravities. Hydrocarbons can be “sour” or “sweet” depending on their sulfur content (sulfur can exist in its elemental form, or as H2S gas in gas reservoirs (bad for health and equipment).

Gas that is collected together with oil is “associated / dissolved / oil well” gas; “casinghead” gas is gas that separate from oil upon reaching lower pressures / temperatures at the surface. Dry gas is gas produced not incidental to oil production, which does not go through a significant liquid phase at room temperature, while wet gas contains significant amounts of heavy hydrocarbons which separate at surface pressures and temperatures to form liquids to be sold separately (“casinghead / drip” gasoline). Oil producers will prefer condensate fields when oil prices are increasing. Saturated crudes are different from unsaturated crudes because they contain as much gas in solution that can be dissolved at the pressures and temperatures found in a typical natural reservoir, while unsaturated crudes have room to hold more; unsaturated crudes are “low shrinkage oils” because not that much gas can escape them once they reach the surface, so the oil itself won’t decrease that much in volume (as opposed to saturated crudes, which are “high shrinkage oils”).

Land Descriptions

Most of the United States (except for the original 13 colonies, Florida, Texas, and some Southwestern states that were previously settled under Spanish / Mexican rule) follows a federal rectangular system for gridding land (the outliers follow a “metes and bounds” system based on natural and artificial landmarks). There are several Prime Meridians (going north-south) and Base Lines (going east-west) which split up the land. Range lines (also running north-south) and Township lines (also running east-west) exist at 6-mile intervals past these Prime Meridians and Base Lines, creating townships which are 36 square miles. Each township is split into 36 sections of 1 square mile each, called a standard section (equal to 640 acres; 1 mile is also equivalent to 80 chains, or 320 rods, by length). Sections, however, are not always the same acreage due to errors in surveying (because surveying occurred via a method that treated all land as flat, even if it wasn’t) and the fact that the Prime Meridians get closer to each other as they run farther away from the equator (leading to the formation of trapezoids instead of rectangles). The trapezoid Meridian error is most commonly corrected by plotting periodic full-width township lines every fourth township line, creating a jog which pushes the range line east or west a bit to correct for the proper acreage. However, this means that some sections will have more or less than 640 acres. These discrepancies will be accounted for by lots at the North West edges of a section (if that’s where the surveying occurred).

Navigable waters are saved in trust for future states, so they are not surveyed; non-navigable waters, however, were surveyed at he discretion of surveyors (and bodies of water which were not surveyed had parallel “meander” lines drawn along the banks / shores; additional lots were surveyed from meander lines to describe parcels of riparian or littoral lands).

Petroleum Ownership Theories

The rule of capture states that despite the ad coelum doctrine, wells that are drilled on D’s land by D, which end up draining production from neighbor P’s land, are legal and can rightfully drain production that migrates from the P’s subsurface into D’s subsurface. One theory for the two is that once production migrates through capture onto the draining landowner’s land, it is under his land ad coelum, so he owns it as well. The other approach combines the two and treats the rule of capture as a limitation on ad coelum ownership instead.

E. Kuntz, A Treatise on the Law of Oil and Gas Section 2.4: Theories of Ownership of Oil and Gas (1987)

The author outlines that the two theories noted above, the “ownership-in-place” theory and the “exclusive-right-to-take” theory, are pretty much the same thing dressed with different emphases. The ownership theory outlines that the owner owns the oil and gas under his land, but that ownership is qualified by the operation of the law of capture (if the oil and gas depart the owned land, then the ownership is gone too). The non-ownership theory outlines that while a landowner does not own the oil and gas under his land, he has the exclusive right to capture that oil and gas from his land alone.

References:

https://www.fnrel.org/browse-topics/oil-and-gas

https://www.westacademic.com/Lowe-Anderson-Kulander-Ehrman-and-Griggss-Cases-and-Materials-on-Oil-and-Gas-Law-8th-9781636591698