Oil reserves refer to portions of oil in place that are claimed to be recoverable under current economic constraints. Submit your Oil and Gas Project Here!

Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally as the amount of oil remaining is reduced. The recovery factor (RF) is the percentage of oil in place which is expected to be economically recoverable under a given set of conditions.

Oil reserve estimates are ideally a measure of geological and economic risk — of the probability of oil existing and being producible under current economic conditions using current technology. The international authority for reserves definitions is generally the Society of Petroleum Engineers. T he U.S. Securities and Exchange Commission demands that oil companies with exchange listed stock adopt reserves accounting standards that are consistent with common industry practice. However these standards are based on historical production practices and are not alwa ys meaningful in dealing with deep-water and non-conventional oil fields that are becoming the source of more and more of the world's oil production. In addition, many of the world's largest oil-producing countries do not follow normal in dustry standards in estimating their oil reserves and do not publish any data which would allow their estimates to be verified.

Proven, probable and possible reserves are the three most common categories of reserves used in the oil industry. They represent the probability that a reserve exists based on the geologic and engineering data and interpretation for a given location.

Proven Reserves - defined as oil and gas "Reasonably Certain" to be producible using current technology at current prices, with current commercial terms and government consent, also known in the industry as 1P. Some industry specialists refer to this as P90, i.e., ideally having a 90% certainty of being produced. Proven reserves are further subdivided into "Proven Developed" (PD) and "Proven Undeveloped" (PUD). PD reserves are reserves that can be produced with existing wells and perforations, or from additional reservoirs where minimal additional investment (operating expense) is required. PUD reserves require additional capital investment (drilling new wells, installing gas compression, etc.) to bring the oil and gas to the surface.

Probable Reserves - defined as oil and gas "Reasonably Probable" of being produced using current or likely technology at current pri ces, with current commercial terms and government consent. Some Industry specialists refer to this as P50, i.e., ideally having a 50% certainty of being produced. This is also known in the industry as 2P or Proven plus probable.

Possible Reserves - i.e., "having a chance of being developed under favourable circumstances". Some Industry specialists refe r to this as P10, i.e., ideally having a 10% certainty of being produced in the foreseeable future. This is also known in the industry as 3P or Proven plus probable plus possible.

proven oil reserves declined to a little more than 21 gigabarrels by the end of 2004 according to the Energy Information Administration, a 46% decline from the 39 gigabarrels it had in 1970 when the huge Alaska North Slope ('ANS') reserves were booked. No oil fields of similar size have been found in the US since the ANS discoveries. With over 2.3 million wells having been drilled in the US since 1949,[12] there are very few undrilled areas left where another supergiant oil field could remain undiscovered. As a result, it appears that most US oil reserves have already been discovered. As oil fields get closer to the end of production, estimates of what is left become more accurate. Consequently, US oil reserve numbers are very accurate compared to those of other countries.

United States crude oil production peaked in late 1970 at over 4 gigabarrels per year, but declined to 1.8 gigabarrels per year by early 2006 (only 11 years of future production). In fact, production in the fall of 2005 fell to only 1.5 gigabarrels per year as a result of hurricanes in the Gulf of Mexico — a level not seen since shortly after World War II. At the same time, US consumption of petroleum products increased to over 7.3 gigabarrels per year. The difference ( 5.5 gigabarrels ) was mostly made up by imports, with the largest supplier being Canada, which increased its exports of crude oil and refined products to the US to 0.8 gigabarrels per year at the end of 2005. Imports of oil and products now account for nearly half of the US trade deficit. In early 2007, the Energy Information Agency (EIA) of the U.S. Department of Energy projected that in 2007 oil consumption would rise to 20.9 million barrels per day, while oil production would fall to 5.1 million barrels per day, meaning that oil consumption would be nearly four times as high as oil production.

The United States has the largest known concentration of oil shale in the world, according to the Bureau of Land Management and holds an estimated 800 gigabarrels of recoverable oil, enough to meet U.S. demand for oil at current levels for 110 years. Unfortunately, oil shale is much more difficult and expensive to extract and refine than conventional oil and oil sands. Oil shale must be produced by mining rather than drilling, and the shale contains a waxy oil precursor known as kerogen rather than liquid petroleum. Despite that, oil shale could be developed given high enough oil prices, and the technology for converting oil shale to oil has been known since the Middle Ages, although the scale of the mining and processing operations would be vastly greater than anything done in history.

The main constraint on oil shale development is probably going to be that Canadian and Venezuelan oil sands are only about half as expensive to produce, and the US has full access to Canadian oil sands production under the North American Free Trade Agreement (NAFTA). In addition, there are environmental concerns about oil shale development. The oil shale areas are semi-arid, in which mine scars last for centuries, and are at the headwaters of several important rivers, notably the Powder River in a region in which water rights are very important. These rivers are the source of irrigation water for vast areas of farmland and are the source of drinking water for many major cities. As a result, the oil shales are probably not going to be developed until global oil shortages become very severe.

In December, 2006, the Bureau of Land Management of the US Department of the Interior issued research, development, and demonstration (RD&D) leases for five oil shale projects in Colorado's Piceance basin.

Oil wells come in many varieties. By produced fluid, there can be wells that produce oil, wells that produce oil and natural gas, or wells that only produce natural gas. Natural gas is almost always a byproduct of producing oil, since the small, light gas carbon chains come out of solution as it undergoes pressure reduction from the reservoir to the surface (similar to uncapping a bottle of pop where the carbon dioxide effervesces out.) Unwanted natural gas can actually be quite a disposal problem at the well site. If there is not a market for natural gas near the wellhead it is virtually valueless since it must be piped to the end user. Until recently, such unwanted gas was burned off at the wellsite, but due to environmental concerns this practice is becoming less and less common. Often, unwanted (or 'stranded'; gas without a market) gas is pumped back into the reservoir with an 'injection' well for disposal or repressurizing the producing formation. Another solution is to export the natural gas as a liquid. Of course, in locations such as the United States with a high natural gas demand, pipelines are constructed to take the gas from the wellsite to the end consumer.

Another obvious way to classify oil wells is by land or offshore wells. There really is very little difference in the well itself; an offshore well simply targets a reservoir that also happens to be underneath an oce an. Also, due to logistics, drilling an offshore well is far more costly than an onshore well. By far the most common type of well is of the onshore variety. These wells dot the Southern and Central Gre at Plains, Southwestern United States, and are also the most common type of well in the Middle East.

Another way to classify oil wells is by their purpose in contributing to the development of a resource. They can be characterized as:

* production wells when they are drilled primarily for producing oil or gas, once the producing structure and characteristics are established
* appraisal wells when they are used to assess characteristics (such as flowrate) of a proven hydrocarbon accumulation
* exploration wells when they are drilled purely for exploratory (information gathering) purposes in a new area
* wildcat wells when a well is drilled, based on a large element of hope, in a frontier area where very little is known about the subsurface. In the early days of oil exploration in Texas, wildcats were common as productive areas were not yet established. In modern times, oil exploration in many areas has reached a very mature phase and the chances of finding oil simply by drilling at random are very low. Therefore, a lot more effort is placed in exploration and appraisal wells.

At a producing well site, active wells may be further categorised as:

* oil producers producing predominantly liquid hydrocarbons, but mostly with some associated gas.
* gas producers producing virtually entirely gaseous hydrocarbons.
* water injectors injecting water into the formation either to maintain reservoir pressure or simply to dispose of water produced with the hydrocarbons because even after treatment, it would be too oily and too saline to be considered clean for dumping overboard let alone into a fresh water source, in the case of onshore wells. Frequently, water injection has an element of reservoir management and produced water disposal.
* aquifer producers intentionally producing reservoir water for re-injection to manage pressure. This is in effect m oving reservoir water from where it is not as useful, to where it is more useful. These wells will generally only be used if produced water from the oil or gas producers is insufficient for reservoir management purposes. Using aquifer produced water rather than sea water is due to the chemistry.
* gas injectors injecting gas into the reservoir often as a means of disposal or sequestering for later production, but also to maintain reservoir pressure.

Lahee classification

* New Field Wildcat (NFW) – far from other producing fields and on a structure that has not previously produced.
* New Pool Wildcat (NPW) – new pools on already producing structure.
* Deeper Pool Test (DPT) – on already producing structure and pool, but on a deeper pay zone.
* Shallower Pool Test (SPT) – on already producing structure and pool, but on a shallower pay zone.
* Outpost (OUT) – usually two or more locations from nearest productive area.
* Development Well (DEV) – can be on the extension of a pay zone, or between existing wells (Infill).

Hydraulic Fracturing

Hydraulic fracturing is a method used to create fractures that extend from a borehole into rock formations, which are typically maintained by a proppant . The method is informally called fracing. The technique is used to increase or restore the rate which fluids, such as oil, gas or water, can be produced from the formation. By creating or restoring fractures, the surface area of the formation exposed to the borehole is increased, which effectively increases the rate that fluids can be produced from the reservoir formations.

The main industrial use of hydraulic fracturing is in stimulating production from oil and gas wells. Hydraulic fracturing is also applied to stimulating groundwater wells, preconditioning rock for caving or inducing rock to cave in mining, as a means of enhancing waste remediation processes (usually hydrocarbon waste or spills), to dispose of waste by injection into suitable deep rock formations, and as a method to measure the stress in the earth. Volcanic dikes and sills are examples of natural hydraulic fractures. Hydraulic fracturing incorporates results from the disciplines of fracture mechanics, fluid mechanics, solid mechanics, and porous medium flow.

Drilling Rig

is a machine which creates holes (usually called boreholes) and/or shafts in the ground. Drilling rigs can be massive structures housing equipment used to drill water wells, oil wells, or natural gas extraction wells or they can be small enough to be moved manually by one person. They sample sub-surface mineral deposits, test rock, soil and groundwater physical properties, and to install sub-surface fabrications, such as underground utilities, instrumentation, tunnels or wells. Drilling rigs can be mobile equipment mounted on trucks, tracks or trailers, or more permanent land or marine-based structures (such as oil platforms, commonly called 'offshore oil rigs'). The term "rig" therefore generally refers to the complex of equipment that is used to penetrate the surface of the earth's crust.

Drilling rigs can be:

* Small and portable, such as those used in mineral exploration drilling and environmental investigations.
* Huge, capable of drilling through thousands of meters of the Earth's crust. Large "mud pumps" circulate drilling mud (slurry) through the drill bit and the casing, for cooling and removing the "cuttings" while a well is drilled. Hoists in the rig can lift hundreds of tons of pipe. Other equipment can force acid or sand into reservoirs to facilitate extraction of the oil or mineral sample; and permanent living accommodation and catering for crews which may be more than a hundred. Marine rigs may operate many hundreds of miles or kilometres offshore with infrequent crew rotation.

Oil and Natural Gas drilling rigs can be used not only to identify geologic reservoirs but also to create holes that allow the extraction of oil or natural gas from those reservoirs. An oil or gas pumping rig, sometimes called a derrick, is used to retrieve oil / gas from a reservoir.

Oil and Gas Glossary

SCF - Standard Cubic foot
MCF - Thousand Cubic feet
MMCF - Million Cubic feet
BCF - Billion Cubic feet

MCFD - Thousand cubic feet (of gas) per day
MMCFD - Million cubic feet (of gas) per day

BO - Barrel of oil
BC - Barrel of Condensate
MMBO - Million barrels of oil
MMBC - Million barrels of condensate

BCFE - Billion cubic feet of gas equivalent (oil converted to gas by multiply by 6)
BOE - Barrel of oil equivalent (gas converted to oil by dividing by 6)

Common Oil and Gas Terminology

Conventional crude oil
Pe troleum found in liquid form, flowing naturally or capable of being pumped without further processing or dilution.

Development well
A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphi c horizon known to be productive; a well drilled in a proven field for the purpose of completing the desired spacing pattern of production.

Discovery well
An exploratory well that encounters a previously untapped oil or gas deposit.

Dry hole
Any exploratory or development well that does not find commercial quantities of hydrocarbons.

Established reserves
The portion of the discovered resource base that is estimated to be recoverable using known technology under present and anticipated economic conditions. Includes proved plus a portion of probable (usually 50%).

Exploratory well
A well into an area where petroleum has not been previously found or one targeted for formations above or below known reservoirs.

Field
The surface area above one or more underground petroleum pools sharing the same or related infrastructure.

Flow line
Pipe, usually buried, through which oil or gas travels from the well to a processing fac ility.

Flaring/Venting
The controlled burning (flare) or release (vent) of natural gas that can't be processed for sale or use because of technical or economic reasons.

Heavy crude oil
Oil with a gravity below 28 degrees API.

Infill Drilling
Wells drilled between established producing wells on a lease in order to increase production from the reservoir.

Injection well
A well used for injecting fluids (air, steam, water, natural gas, gas liquids, surfactants, alkalines, polymers, etc.) into an underground formation for the purpose of increasing recovery efficiency.

Lease
Legal document giving an operator the right to drill for or produce oil or gas; also, the land on which a lease has been obtained.

Light crude oil
Liquid petroleum which has a low density and flows freely at room temperature.

Medium Crude Oil
Liquid petroleum with a density between that of light and heavy crude oil.

Methane
The principal constituent of natural gas; the simplest hydrocarbon molecule, containing one carbon atom and four hydrogen atoms.

Natural gas liquids
Liquids obtained during natural gas production, including ethane, propane, butanes, and condensate.

Oil Sands
A deposit of sand saturated with bitumen.

Operator
The company or individual responsible for managing an exploration, development or production operation.

Petroleum
A naturally occurring mixture composed predominantly of hydrocarbons in the gaseous, liquid or solid phase.

Pool
A natural underground reservoir containing an accumulation of petroleum.

Porosity
The volume of spaces within rock that might contain oil and gas (like the amount of water a sponge can hold); the open or void space within rock -- usually expressed as a percentage of the total rock volume. Thus porosity measures the capacity of the rock to hold natural gas, crude oil or water.

Primary Recovery
The production of oil and gas from reservoirs using the natural energy available in the reservoirs and pumping techniques.

Royalty
The owner's share of production or revenues retained by government or freehold mineral rights holders. In natural gas operations, the royalty is usually based on a percentage of the total production.

Sandstone
A compacted sedimentary rock co mposed mainly of quartz or feldspar; a common rock in which oil, natural gas and/or water accumulate.

Secondary Recovery
The extraction of additional crude oil, natural gas and related substances from reservoirs through pressure maintenance techniques such as water flooding and gas injection.

Sedimentary basin
A geographical area, such as the Western Canada Sedimentary Basin, in which much of the rock is sedimentary (as opposed to igneous or metamorphic) and therefore likely to contain hydrocarbons.

Seismic studies
Refers to studies done to gather and record patterns of induced shock wave reflections from underground layers of rock which are used to create detailed models of the underlying geological structure.

Shale
Rock formed from clay.

Solution Gas
Natural gas that is found with crude oil in underground reservoirs. When the oil comes to the surface, the gas expands and comes out of the solution.

Sour Gas
Natural gas at the wellhead may contain hy drogen sulphide (H2S), a toxic compound. Natural gas that contains more than 1 per cent of H2S is called sour gas. About 30 per cent of Canada's total natural gas production is sour, most of it found in Alberta and northeast British Columbia.

Stakeholders
Industry activities often affect surrounding areas and populations. People with an interest in these activities are considered stakeholders. They may include nearby landowners, municipalities, Aboriginal communities, recreational land users, other industries, environmental groups, governments and regulators.

Steam Injection
An improved recovery technique in which steam is injected into a reservoir to reduce the viscosity of the crude oil.

Sweet oil and gas
Petroleum containing little or no hydrogen sulphide.

Synthetic Crude Oil
A mixture of hydrocarbons, similar to crude oil, derived by upgrading bitumen from oil sands.

Tertiary Recovery
The third major phase of crude oil recovery which involves using more sophisticated techniques, such as steam flooding or injection of chemicals, to increase recovery.

Tight Gas
Gas with very low flow rates. Found in sedimentary layers of rock that are cemented together so tight that it "greatly hinders" the extraction. Getting tight gas out usually requires enhanced technology like "hydraulic fracturing" where fluid is pumped into the ground to make it more permeable. The National Energy Board estimates Canada could have between 89 and 1500 trillion cubic feet (tcf) of tight gas, compared to total gas estimates (excluding tight gas) of 733 tcf.

Traps
A mass of porous, permeable rock - sealed on top and both sides by non-porous, impermeable rock - that halts the migration of oil and gas, causing them to accumulate.

Ultimate potential
An estimate of recoverable reserves that will have been produced by the time all exploration and development activity is completed; includes production-to-date, remaining reserves, development of existing pools and new discoveries.

Undiscovered recoverable resources
Those resources estimated to be recoverable from accumulations believed to exist based on geological and geophysical evidence but not yet verified by drilling, testing or production.

Upgrading
The process of converting heavy oil or bitumen into synthetic crude oil.

Viscosity
The resistance to flow, or "stickiness" or a fluid.

Wildcat
A well drilled in an area where no oil or gas production exists.

Submit Your Project Here

Fill out our Simple Questionaire and Find out if you Qualify for Oil Investments - Take me there now!