Fin225

Topics: Petroleum, Natural gas, Hydrocarbon Pages: 22 (2237 words) Published: April 11, 2014
6/17/2013

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FIN227 Mining Investment Analysis
Topic 5: The Oil & Gas Industry
John Clayton
Managing Director, Portunus Corporate Advisory

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6/17/2013

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Hydrocarbons (Carbon + Hydrogen)
• Crude Oil – long chain, liquid hydrocarbon
compounds
– Light – kerosene, petroleum, diesel
– Heavy – wax, bitumen
– Sweet and Sour (sulphur contents)

• Gas - short chain, gaseous hydrocarbon
compounds

Octane: C8H18 is refined
into petrol

Methane: CH4 is a
– Natural Gas: methane, ethane, plus others
– Liquefied Petroleum Gas (LPG): propane, butane gas lighter than air

• Condensate – further up the chain
– Normally exists in the reservoir as gas, but
y
g
condenses out as a li id d i production. P t
d
t
liquid during
d ti
Pentane
for cleaners and solvents

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6/17/2013

Formation of hydrocarbon deposits
• 1.1 Occurrence
– Organic matter in sedimentary (source) rocks
– Ancient oceans and lakes
– Floating ocean life (
g
(forms organic sludge)
g
g )
– Increasing pressure and temperature
transforms ancient organisms into oil &
natural gas
– Ooze turns into source rock
Side view of a typical diatom, the
• 1.2 Migration
– From high to low pressures
– Through permeable rocks and fissures
– Water or gas driven

energy-trapping organism generally
thought to be the origin of oil.

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Formation of hydrocarbon deposits
• 1.3 Reservoirs
– Porosity – void space
– Permeability – Degree of
fluid flow through rock
• 1.4 Seals and Traps
– Impermeable seals –
typically shales
– Structural closure –
typically anticlines, faults
or stratigraphical traps

Sandstone is the most
common reservoir
rock as it has plenty of
room (void space) to
suck
oil
‘suck up the oil’ like a
sponge

Shale rock is a typical
trap rock having very
little space between
the particles (yellow).
Oil will not move
g
through the rock

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6/17/2013

Hydrocarbon Accumulation? – 5 Key Questions
Q5

Q2

Shale present: Is
there a structural
closure or trap
bounded by a
recognised seal?

Upwards migration of
oil & gas as pressure
lowers: I there a
l
Is th
migration fairway?

Q3 & Q4

Q1

Sandstone present:
Is reservoir rock present
with sufficient porosity &
permeability

Source rock present:
Has Petroleum been
generated?

An example of rocks which were previously flat but have been bent into an arch with oil trapped at the crest

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2. Oil & Gas Exploration
• 2.1 High Risk

There are high profits in oil exploration
success, but also High Risks

– Are Hydrocarbons present?
– Permeability/viscosity of oil?
– Is Trap full?

• 2.2 Geological




–...
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