Striking Oil

Posted February 26th, 2009 at 12:36 pm.

The rise of the modern oil and gas industry has been traced to January 10, 1901, when a 150-foot gusher of greenish-black oil rocketed into the air from a 1,020-foot hole drilled into “Spindletop,” a salt dome in Beaumont, Tex., by a Pennsylvania oil man, John Galey. The well flowed at an initial rate of 100,000 barrels a day, more than all other producing wells in the United States combined, according to a history compiled by the Paleontological Research Institution. Before the end of the year, more than 200 wells had been drilled cheek by jowl into Spindletop, launching the Texas oil boom and some of the major companies in the industry.

In little more than a century, the United States was producing 7.6 million barrels of oil a day out of a worldwide total of some 85.5 million barrels a day (World Oil, November 2008). The gushers are history (too dangerous and too dirty) and so are oilmen wielding crude cable-tool drills and guided by land surveys and luck. They have been replaced by multidisciplinary teams of scientists and engineers—both women and men—using advanced geophysical mapping, drilling, and production technologies. Five geoscientists who are alumni of Bryn Mawr and Haverford Colleges provide a glimpse of the science, technology, and economics of today’s oil and gas industry.

Risk Spectrum

Andrew Quarles
Andrew Quarles,
Haverford ’89

The oil and gas industry is a very capital-intensive business, to say the least. “In order to maintain enough oil and gas production to meet the world’s needs, the oil and gas industry collectively spends between 200 billion to 300 billion dollars every year,” says Andrew Quarles, Haverford ’89, geoscience manager of the Permian Asset Team of Pioneer Natural Resources. The industry invests that money over a wide spectrum of activities and associated risks. Quarles, who also has an M.B.A., offers an analogy to the financial industry: “The investment ranges from bonds to high-risk stock. High-risk stock is analogous to frontier exploration, for example, deep-water exploration. It is extremely risky, with perhaps a 20- to 30-percent chance of finding something economic. Drilling a single well easily can cost 100 million dollars or more. On the lower-risk, or bond end, of the continuum, are efforts to recover more oil from existing reservoirs.

“When we tap an oilfield, in general, producing under natural pressure only recovers 20 percent of the oil,” Quarles explains. “We are increasing our efforts to recover more of the 80 percent that is left behind.”

For example, Quarles says, his team is experimenting with “down-spacing” in Pioneer’s West Texas Spraberry field, a Permian field that was discovered in 1948. “The first wells were drilled at one per square mile, or one every 640 acres. We are now drilling a well every 20 acres, or 933 feet apart.” Covering eight West Texas counties, the Spraberry field produces crude oil and gas from formations between 6,700 and 10,000 feet deep. Spraberry is the fifth largest oilfield in the United States—the only large oilfield in the country that is growing in terms of recoverable reserves and production—and the 15th largest gas field in the country.

Multidisciplinary Teams

Hydrocarbon exploration and production require multidisciplinary teams of scientists and engineers. Take the composition of the teams involved in extracting oil and gas from an existing field, such as the Spraberry. Geoscientists determine the location and distribution of the hydrocarbon in the pores of the rock. Reservoir engineers analyze the fluid properties of the hydrocarbon, that is, how it flows out of the rock, as well as the economics of the well: if it costs a million dollars to drill the well, how much oil and gas must be recovered, and how fast, for the well to turn a profit? Drilling engineers plan and supervise drilling operations. Completions engineers determine how to perforate or blow holes into the borehole, and how to “crack” or stimulate the rock with the appropriate fracturing fluid to get the hydrocarbon to flow out.

A geoscientist working in a production oilfield typically analyzes geophysical data from existing well boreholes. Data are gathered by lowering instruments into a borehole that measure properties of the rock, including its natural radioactivity, density, electrical properties, neutron density, and sonic velocity.

Stacey Tyburski Quarles
Stacey Tyburski
Quarles ’88

In contrast, a geophysicist working on an exploration team relies on 3-D seismic data, which uses sound waves, to locate oil and gas deposits. A breakthrough technology when it was introduced in the 1960s, 3-D seismic is now standard throughout the oil and gas industry. “In the Gulf of Mexico and international deep-water projects, first you filter data on a 2-D grid to identify prospective areas, and then you use 3-D data to bring up your knowledge another notch,” explains Stacey Tyburski Quarles ’88, principal geophysicist of QvU Consulting, her consulting business. “Based on the 3-D data, we decide if it is a go or no-go, or whether we need further analysis of the raw data. The exploration team typically comprises a geologist, who provides borehole ties, a geophysicist who interprets 2-D and 3-D data, and a seismic specialist.

“A seismic specialist,” Stacey Quarles explains, “performs further processing of the raw data, either to refine the analysis or tie the geophysical attribute to a geological signature—to confirm that a specific seismic reflection package is indeed a sand of reservoir potential.”

Seismic Technology Advances

Recently, ExxonMobil introduced an advance over 3-D seismic: remote reservoir resistivity mapping (R3M). Based on the fact that oil and gas are poor conductors of electricity, R3M uses extremely low-frequency electromagnetic waves to discern these resistive deposits. The technology enables geophysicists to remotely map undersea oil and gas reservoirs more than 10,000 feet below the ocean’s surface. It has been used by exploration teams to search for hydrocarbon reservoirs off the coasts of West Africa, Brazil, Colombia, and Canada, as well as in the Gulf of Mexico.

Pinar O. Yilmaz
Pinar O. Yilmaz, M.A. ’78

“Technology is the lifeblood of our industry,” observes Pinar O. Yilmaz, M.A. ’78, manager of external collaborative projects at ExxonMobil Exploration Company, Houston. “Because oil and gas resources are found in such complex geologic formations, remote locations, and extremely harsh conditions, technology is needed to overcome any of these challenges so that we can bring these resources online. Technologies such as R3M reduce the cost of drilling, accessing, and producing these reservoirs, with as small an imprint on the environment as possible.”

Nevertheless, Yilmaz points out, “Until you actually drill, you don’t know what’s there. Unless there is a nearby well that has already been drilled, you are still out in the wildcat exploration area. That is, pure exploration.”

In fact, Yilmaz says, “In most realms, if a new well is more than a mile from an existing well, that usually is considered ‘exploration.'”

And deep-sea exploration and production are expensive—very expensive—according to figures compiled by the American Petroleum Institute (API). For a project on the Outer Continental Shelf of the United States, for example, marine seismic surveys can cost upwards of $200,000 per day. Exploratory wells can range from $25 million to more than $100 million for some deep-water prospects, which may turn up a “dry hole.” If a company finds commercial quantities of oil or natural gas, subsequent design and installation of the deep-water production facilities may cost in excess of $2 billion. Moreover, oil and gas companies invest hundreds of millions of dollars to acquire and maintain their lease inventories, according to API.

Breaking the Salt Barrier

In the Gulf of Mexico and elsewhere, Schlumberger, one of the world’s largest oilfield service companies—which provide products and services that make it possible for operating companies to find, develop, and produce oil and gas—has worked on development of processing technology for seismic data to deal with the problem of imaging structures and sediments below salt layers.

Gretchen Gillis
Gretchen Gillis ’86

“Salt wreaks havoc on seismic waves,” explains Gretchen Gillis ’86, the editorial manager in the marketing communications department of Schlumberger, and a former development and exploration geologist. “Once new processing technology was developed, it was possible for our customers using seismic data to develop prospects at significantly lower risk because they were confident that they could accurately map depths and the thicknesses of the features in the subsurface below salt. That had been a huge technical obstacle.

“When I worked in exploration in the early 1990s, there was no consideration given to drilling below salt because nobody could see anything there,” Gillis continues. “Now we have the technology to see it, and it has opened a whole new arena for exploration.”

The next obstacle to overcome was how to drill under these conditions. “This required special deep-water drill rigs and drilling equipment, including new types of drill-bit lubricating fluids and measurement tools that are able to withstand much higher temperatures and pressures,” Gillis says. “Both from operating and oil service companies, this has required a tremendous research and development commitment. It requires all kinds of expertise, from chemical engineering to nuclear physics, to develop this new technology.

“The reliability of this new technology is high enough that operating companies are willing to go out into this new frontier,” Gillis continues.

Moreover, oilfield service companies can provide expertise to operating companies at every stage of exploration and production, and a service company like Schlumberger does this at arm’s length, having no equity stake in the prospect or field. “Schlumberger’s seismic business acquires seismic data on shore and in the water,” Gillis explains. “The company provides well-construction services ranging from well planning to specialty drilling tools, to measurement of the properties of rocks being drilled, to interpretation of the results. Once a discovery of oil or gas is deemed to be economic, an oilfield services company can provide consulting services to analyze the data from exploration and early drilling to help identify the type of field and potential reserves and determine the most efficient way to produce the oil and gas and get it to market. As fields develop and become mature, we are involved in enhanced oil recovery efforts. And at the end of a field’s life, we are there to help plug the wells with cement and prevent the leakage of fluids as the wells are abandoned.”

Joint Ventures

Kira Diaz Tushman
Kira Diaz Tushman ’04

Partnerships often make good strategic and financial sense. For example, Shell and BP America are partners in the Na Kika project, which involves the production of oil and gas from five small- to medium-sized discoveries in the Mississippi Canyon area of the Gulf of Mexico, approximately 144 miles southeast of New Orleans. “A lot of offshore platforms are placed over a single huge oil or gas field,” explains Kira Diaz Tushman ’04, a production geologist with BP America, who works on the project. “In this case, a host platform has been placed strategically in the middle of several smaller discoveries that were non-economic to create their own platforms; the oil and gas from each of these smaller fields is piped back to the host facility.”

The semi-submersible host platform is permanently moored in 6,350 feet of water. A network of sub-sea installations connects all five fields to the offshore platform and to one another. The project aims to recover up to 300 million barrels of oil at an investment of $1.4 billion excluding lease costs, according to

“Because the fields where I work have been in production, we have ground truth data, we have wells, we have rock sample data, and we have dynamic data from the producing well—the thickness, pressure, and temperature of the reservoir, and so forth—and we can put these data into the dynamic computer models,” Tushman says. “We take these data to determine if it is worth it to drill another well in this area to get the reserves out faster.”

Unconventional Reservoirs

As oil and gas become ever more expensive to find and recover from conventional reservoirs on land and offshore, operating companies are looking elsewhere. “Unconventional reservoirs of hydrocarbon, such as the Marcellus Shale in western Pennsylvania and upstate New York, represent the biggest sea change domestically,” Andrew Quarles observes. “If you’d said 20 years ago, ‘I can get hydrocarbon out of shale,’ the industry would have replied, ‘You’re crazy.’ But now, we know that shale can be a reservoir. The challenge is that the natural gas is captured in extremely small pore spaces—the width of 50 to 60 methane molecules.”

Technology makes it possible. “They stimulate the rock,” says Stacey Quarles. “Every 100 feet they focus fluid in a horizontal part of the well, shattering the rock, and the gas flows into that induced fracture and then into the wellbore. Horizontal drilling commonly is used in rock that is not a conventional reservoir, such as shale. The ability of the driller to steer the drill bit in the horizontal direction is incredible technology because it lets you enter the body of rock and pursue it in a horizontal dimension, and hit successive fractures where the gas or oil resides.”

Technology also helps to access and transport oil and gas from remote areas to markets around the world. For example, Qatar’s North Field is the largest non-associated gas field in the world, with recoverable resources of more than 900 trillion cubic feet. The problem, Yilmaz explains, was to find a way to transport the natural gas to market. Recently, Qatar Petroleum and ExxonMobil completed development of the world’s largest liquefied natural gas (LNG) carrier, a ship that can carry up to 80 percent more cargo using 40 percent less energy per unit of cargo than conventional LNG carriers due to economies of scale and efficiency of the engines. According to ExxonMobil, the “Q-Max” carrier has a total capacity of up to 266,000 cubic meters, enabling the ship to carry enough natural gas to meet the energy needs of 70,000 U.S. homes for one year.

The rewards associated with today’s oil and gas industry potentially are enormous, but so are the risks—perhaps that is the one of the few aspects of the industry that hasn’t changed since the turn of the 20th century. As Daniel Plainview, a character in the film There Will Be Blood, tells the people of a small California town, “Ladies and gentlemen, I’ve traveled over half our state to be here tonight. I couldn’t get away sooner because my new well was coming in at Coyote Hills and I had to see about it. That well is now flowing at two thousand barrels and it’s paying me an income of five thousand dollars a week. I have two others drilling and I have 16 producing at Antelope. So, ladies and gentlemen, if I say I’m an oilman you will agree. You have a great chance here, but bear in mind you can lose it all if you’re not careful.”

About Our Sources

Gretchen Gillis ’86 is the editorial manager in the marketing communications department of Schlumberger, an oilfield services company, in Sugar Land, Tex. Formerly Gillis was a development geologist at Oryx Energy Company and an exploration geologist at Maxus Exploration Company, both in Dallas. As the elected editor of the American Association of Petroleum Geologists (AAPG), Gillis directs the peer-reviewed journal, AAPG Bulletin. Her professional memberships include the Association of Earth Science Editors, the American Geophysical Union, and the American Institute of Professional Geologists. She earned a master’s degree in Geological Sciences at the University of Texas-Austin.

Andrew Quarles, Haverford ’89, is the geosciences manager of the Permian Asset Team at Pioneer Natural Resources Company, Irving, Tex. Quarles formerly was an exploration geologist at Arco International Oil and Gas Company. A member of AAPG, Quarles also serves on the advisory council of the Jackson School of Geosciences at the University of Texas-Austin. He earned a doctorate in Geological Sciences at the University of Texas-Austin, and an M.B.A. at Northwestern University.

Stacey Tyburski Quarles ’88 is principal geophysicist of QvU Consulting, her own consulting business. Formerly she was a senior geophysicist at Nexen Petroleum; she also has worked as a senior geophysicist at Vastar Resources and Arco International. She earned a master’s degree in Geological Sciences at the University of Texas-Austin.

Kira Diaz Tushman ’04 is an operations geologist at BP America, Houston, where she is currently assigned to a team working on the Na Kiki project, a joint venture of BP and Shell in the Gulf of Mexico. Formerly she worked in the Anadarko Basin on the Mountain Front Region. She also serves as a member of BP Amoco’s Challenge team, which recruits and trains new geologists. Tushman earned a master’s degree in Geological Sciences at the University of Texas-Austin.

Pinar Yilmaz, M.A. ’78, is manager of external collaborative projects at ExxonMobil Exploration Company, Houston. With ExxonMobil since 1980, Yilmaz has also worked in ExxonMobil Exploration, Production, and Upstream Research Company on basin analysis, fault seal, and global studies projects. Yilmaz is a member of numerous professional organizations, including AAPG, which she serves as chair of the Technical Advisory Committee and a member of the Publication Pipeline. She is also serving as technical program co-chair of AAPG’s Rio de Janeiro 2009 International Conference, co-chair of the Management Forum of AAPG’s Denver 2009 Annual Conference, and co-chair of the Management Forum of AAPG’s Moscow 2009 Polar Petroleum Potential Conference. She earned a bachelor’s degree at Hamilton College and a doctorate in Geological Sciences at the University of Texas-Austin.

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