oil exploration and production - treccani · russia russia is the country that at the start of the...

Historical background of the oil industry

The birth of the oil industryThe photograph par excellence, the symbolic photo

of the oil industry, is that of Edwin Laurentine Drakewith a rudimentary drilling plant in the background(Fig. 1).

It was indeed Drake, a would-be speculator, and a former railway worker, who marked the start of the industrial oil era when, on 27 August 1859, in Titusville (Pennsylvania), he drilled down to a depthof about 25 m with his rig, although the accumulationdiscovered by him was a modest one, able to produceno more than about twenty barrels a day.Hydrocarbons were in actual fact known and hadalready been used for a long time, but it was not untilthat initiative of Drake’s that a modern technical andeconomic approach commenced, enabling us to speakof an oil industry.

The waterproofing properties of asphalt werealready known in antiquity. Remaining traces bearwitness to its fairly widespread use for cisterns andsailing craft. The Chinese, who moreover usedbituminous products rationally 3,000 years ago, werepioneers in the field of drilling and transport, boringwells some hundreds of metres deep applyingadvanced technologies, and transporting gas inbamboo pipes.

A knowledge of hydrocarbons and some form oftheir use by Mediterranean and Near Eastern peoplesare spoken about in Genesis and other books of theBible, in which there are many references to oil and itsderivatives. And in Herodotus’ History we findinformation of a certain interest, for example when hereports some rudimentary methods applied inMesopotamia for separating and transportinghydrocarbons.

An area that has always been famous for itsstriking surface shows of hydrocarbons is the CaspianSea, where in ancient times a cult developed thatworshipped the fires released by the emission of gas.There are more detailed accounts dating from theMiddle Ages, such as that of Marco Polo who in hisTravels speaks of the trade in petroleum products inthe area of nowadays Azerbaijan.

3VOLUME I / EXPLORATION, PRODUCTION AND TRANSPORT

Oil exploration and production

Fig. 1. E.L. Drake’s derrick in Titusville, Pennsylvania, 1859 (Bettmann-Corbis/Contrasto).

In pre-Columbian times in America, various ethnicgroups knew about the waterproofing properties ofpetroleum, also in their case used above all for tarringthe hulls of sailing craft.

Coming now to more recent times, there are farmore testimonies of the knowledge and use ofhydrocarbons, in Eastern Europe (especially in Galicia,where oil had been used since the Sixteenth century formedicinal purposes and for lighting), as well as inSoutheast Asia (in particular in Burma, where already atthe beginning of the Nineteenth century some hundredsof hand-dug wells and trenches enabled nearly 200,000barrels a year to be produced), and above all in NorthAmerica. Here, around the mid Nineteenth century,Samuel Kier, from Pittsburgh, marketed so-called rockoil as a medicine and also tried, but without success, tosell it as lamp oil. Success instead smiled on a methodof extracting oil from coal and from oil shale patentedin Europe. In those same years a Canadian geologistpatented an analogous process for extracting an oil fromcoal, which he called kerosene, granting a licence for itto various North American industries. Its productiongrew rapidly as it could be sold at a price lower thanthat of the vegetable and animal oils then available onthe market. This brings us to the eve of Drake’senterprise and to the recognition of the great energypotentials of hydrocarbons. From then on, each of thecountries, in which significant surface occurrences ofhydrocarbons and geological situations suitable for theirexploitation were present, was to follow its own coursein developing production technologies; but it was theUnited States that achieved and for long retained pre-eminence in the sector.

The United StatesThe United States oil industry, strongly expanding

onwards from 1859, the year of Drake’s exploit,displayed from the outset the cyclical course that wasto be its characteristic in the years to come: the first oilboom was interrupted in 1863 through lack of demand,while in the ensuing two years there was a resumptionof exploration; a second downswing occurred in 1867,to be followed by another resumption in the years1868-70. Within just a few years the States of NewYork, West Virginia and Ohio became oil producers,and somewhat later the process extended to California,Colorado, Tennessee, Wyoming and Kansas. From themid Sixties the number of refineries increased inPittsburgh, Cleveland and the Atlantic coast, to meetthe pressing market demands. To transport the productmore easily the first oil pipelines were designed, butwere violently opposed by carters and railway workerswho regarded them as dangerous instruments ofcompetition to the exercising of their activity(Anderson, 1984).

Right up to the end of the century the petroleumproduct most in demand was kerosene for lighting, andso the main aim of the oil industry was to refine thecrude oil in order to obtain the maximum possiblequantity, while gasoline and the heavy parts (bitumenand asphalt) were not exploited. It was necessary towait another few years for the advent of motorization,the consequence of which was a balancedconsumption of all petroleum products.

Already at the end of the Nineteenth century, whenthe Russian and Austro-Hungarian empires appearedon the market, it was United States oil that clearlydominated the international scene, also because in theUnited States product diversification had started,whereas in European countries consumption waslimited to lighting and lubrication. However, preciselyin the year 1900, the United States whose productionhad in a forty-year span increased from Drake’smemorable 20 barrels a day to 64 million barrels ayear, was exceeded by Russia, whose output that yearreached 76 million barrels. The other producercountries (the Dutch East Indies, Poland, Romania,Burma, Japan and Canada) all occupied marginalpositions with respect to the two predominant States.1900 was also the year of the discovery of theSpindleton field, at Beaumont in Texas, which ensureda considerable boost to United States production. Fromthen on prospecting was stepped up in many States inthe Federation (Montana, New Mexico, Arkansas,Kansas, California and Oklahoma).

Development was particularly strong in the decadefrom 1911 to 1920, when the spread of motorizationshifted oil consumption over to the automobile marketas against that of lighting (in 1911 gasoline passedkerosene in volume of sales) and the strong upturn indomestic demand actually made it necessary to importoil from Mexico, in spite of the extraordinaryproductive increases recorded in a number of Statessuch as Arkansas and Oklahoma (in the decade, thanksabove all to progress in these States, national productionincreased from 209 to 443 million barrels a year).

Meanwhile the industrial groups were organizingthemselves in a precise manner and defining theiroperational roles, anticipating what was to be thecompany structure of the oil corporations in the nextfew decades, their objectives and their competences.Among the first big industrial companies we recall theStandard Oil Company, which controlled a fair part ofthe oil market, but which had to withstand a series ofFederal antitrust measures culminating, in 1911, in theobligation to wind up the group. New companies werethen registered in the individual States, many of whichretained the name Standard for a certain time, such asthe Standard Oil Company of New Jersey, whicheventually became Exxon.

4 ENCYCLOPAEDIA OF HYDROCARBONS

In the years of the great economic slump (1929-30),the production glut that was a consequence of ademand that had dropped clearly below supply levels,together with other troubles, led to a chaotic situationin the oil world. It was thus necessary to emanate aseries of federal regulations containing the principlesof management of oil activity, for a more rationalworking of the fields. These rules concerned above allresource conservation, good development practicesand production control.

The Thirties were prolific years for the UnitedStates oil industry. One of the most significant eventswas the discovery, at the start of the decade, of theEast Texas Field, the biggest one in the country, with6 billion barrels. In that period avant-gardetechnologies were also developed (Anderson, 1984).In the exploration sector operations relating to electriclogging, magnetometry and above all reflectionseismic survey became consolidated. In the drillingsector, drilling guns, Blowout Preventers (BOP), thetricone (three-cone bit), and semi-submersible drillingrigs came into use. And in the transport field, oilpipelines able to transport different fluidssimultaneously appeared. Some of theseimprovements were patented by the oil companiesthemselves, while others were devised by the servicecompanies (contractors) then undergoing rapidgrowth (some of them are still active, such asHalliburton, Hughes, Schlumberger, Baroid andDresser). In the following pages, a general frameworkof the early stages of oil industry will be offered,using information from a work of great interest(Owen, 1975).

RussiaRussia is the country that at the start of the 20th

century, applying different operating modalities, hadpassed the United States in oil production.

Already in 1847, a dozen years before Drake’sinitiative, the Russian government had had a welldrilled in Azerbaijan (for some time then forming partof the Tzarist empire) in the area of what was later tobecome the Bibi Eybat field, close to Baku. But notuntil 1871 was a first oil well completed. This tookplace in a context in which the oil industry wasregarded as a merely extractive mining activity,exercised in a rudimentary fashion with hand-dugtrenches and wells.

The first real impetus to oil activity in the Bakuarea was provided by two Swedes who had immigratedthere in 1875, Robert and Ludwig Nobel, brothers ofthe scientist who invented dynamite and establishedthe prize that bears his name. To them were due thefirst real oil operations: the acquisition in 1877 of theBalakhany field and after that other oil fields, the

construction of the first refinery, the first oil pipelineand the first oil tanker. They were also the first, in1885, to employ a geologist, the Swede HjalmarSjögren, as a permanent consultant.

A second important stage was the entry into thepetroleum sector of the Rothschild family, who in1892 set up the Société Caspienne et de la Mer Noire,the aim being to supply petroleum products to theterritories of the Austro-Hungarian Empire. At firstbarges were used, plying the Volga and other Russianrivers, and later oil pipelines and railways were built,reaching the shores of the Black Sea.

Russian production rose from 34.5 million barrelsin 1891 to 85 million in 1901 (already in the previousyear, as observed, this had surpassed United Statesproduction). About three-quarters of the output wasmarketed within the country.

In the Caspian region the Russian General OilCorporation had already been established. RoyalDutch-Shell entered the Baku area in 1911 and thefollowing year it bought up the Rothschild’s company.

In 1914 production stood at 65 million barrels, butin the next few years it started going down, droppingto a mere 25 million barrels in 1920, for variousreasons, both technical (low productivity, inadequatedrilling methods, distance of the fields from the areasof consumption) and administrative (the type ofconcessions); but above all the country’s participationin the First World War and the events of the Sovietrevolution had a negative influence.

The new nationalized economy was characterizedby the well-known five-year plans. The first of them(1928-32) led to widespread mechanization, theconsequence of which was an appreciable increase inthe demand for hydrocarbons, accentuating theimportance of the oil industry and centralizing itsorganizational structure, goals and investments. Theresumption of drilling activity and the reopening ofold fields enabled production to recover (64 millionbarrels in 1926 and 84.7 in 1928), even though thetechnologies applied in exploration remained quiterudimentary, still being based on geophysical methodsof gravimetric and magnetic type. Refraction seismicsurvey was applied for the first time in 1929 inChechnya, in the Groznyj area, while the intensive useof electrical prospecting was started the previous year.Magnetotelluric methods and natural electric currentswere widely applied to define the basement orformations with a different resistivity. Refractionseismic surveys properly so termed were introduced byGamburtsev in 1939, in the Bashkiria Republic, todefine a number of shallow structures.

In the second five-year plan (1933-37) drilling,mining and refining techniques were improved, butcertain limiting conditions persisted, such as the


OIL EXPLORATION AND PRODUCTION

shortage of steel for infrastructure, and obsoleteequipment which did not allow production tests to berun at deep levels. Furthermore, the exploration ofnew areas had not yet started (in 1932 the annualoutput was 156 million barrels, still coming verylargely from the Azerbaijan fields). In those years thecontribution of hydrocarbons to the Soviet energybalance was barely 15%.

The ensuing five-year plans coincided withindustrial growth and at all events led to a gradualincrease in the oil industry: 690 million barrels of oiland 20 billion m3 of gas were produced in 1958.

The relaunch of exploration in new areas cameabout thanks to the persistent pressure of IvanMikhajlovich Gubkin, one of the great figures inSoviet petroleum history and one of the very fewgeologists who had visited the oil fields in the UnitedStates. It was due to him that exploration wasundertaken in the early Forties in the Volga-Ural basin,which proved to contain fields with huge reserves, tothe point of being called the ‘Second Baku’. The firstdiscoveries made in this basin, in reservoir ofDevonian age, characterized by different productionparameters from those traditionally known, persuadedthe authorities to invest very large sums also outside ofthe Caspian area. Systematic surveys were started (asmany as 350 seismic teams and 700 geophysical teamswere operating in Soviet territory) and explorationstarted in western Siberia, in Kazakhstan (Mangyshlak)and on the island of Sakhalin. Drilling activityincreased considerably, too, but the wells remainedrather shallow: according to Soviet terminology deepwells were ones that went down to around 2,000 m,and thus very different from the wells considered deepin the United States, of around 4,500 metres.

It was only after 1957 that the reorganization of theSoviet system in the petroleum sector delegatedinstitutions and industries to carry out autonomousprogrammes of exploration. However, the result wasnot brilliant as the competition among the variousagencies, ministries and institutes and the uncertaindefinition of competences between preliminary and detailed exploration made the process complicatedand costly.

The work done in this period, among the manypersonages who have remained in the shadows, byP.Y. Antropov, a petroleum geologist and Minister forGeological Exploration of Hydrocarbons, deservesmention. The start-up of exploration in western Siberiawas due to him. The results obtained in the Siberianarea were very successful: with 32 fields discoveredand 8 authentic giants, it was rightly dubbed the‘Third Baku’.

Reflection seismic survey, although applied inregional surveys, was 20 to 25 years behind the times

compared with what had been done in the UnitedStates. Its poor technological content in terms ofrecording and processing seismic data was reflected inthe difficulty of interpreting complex geologicalsituations.

East European countriesIn Romania at the end of the Nineteenth century

hydrocarbons were produced in a rudimentary mannerwith hand-dug trenches and wells. On the basis of theoil produced in 1895 a refinery was built, financed bythe Hungarian Bank, and subsequently reorganized bythe Deutsche Bank within the framework of Germanproduction.

At the turn of the following century a number offoreign investors were already present. Apart fromStandard Oil, particular importance attached to theentry into the country of Royal Dutch-Shell, which in1907 boasted of an output of 250,000 barrels of oil. In1910, the global production of 9.7 million barrels andthe activity of 547 hand-dug wells, 819 drilled wellsand 244 wells being drilled, made the Romanian oilindustry one of the most efficient ones, with themajority of its production coming from the Pliocenesands of the Ploe

�sti area.

Special mention should also be made of Austro-Hungarian Galicia, a region nowadays hared betweenPoland and Ukraine, with its 631,000 barrels alreadyin 1891 and its peak output, in 1909, of as much as 13 million barrels.

Southeast AsiaIn 1891 Burmese oil fields produced 200,000

barrels, which by 1910 had risen to 6 million. TheYenangyaung field, known since Antiquity, wasworked by the native population with extremelyrudimentary methods, digging trenches and wells byhand. In 1887 the Burmah Oil Company, in whichBritish capital accounted for the majority share, starteddrilling wells mechanically: in 1905 a first productiontest was performed, resulting in 12,500 barrels/day.

In the Dutch East Indies, the territory colonized byHolland corresponding to present-day Indonesia,activity started with the Royal Dutch Company in1890. In northern Sumatra the Dutch company carriedout some accurate geological surveys in an area wheresince 1895 a number of shallow wells had been sunkin the vicinity of surface indications. In 1898 the firstwells were drilled for commercial production. In 1911the total production of the Dutch East Indies, morethan one-third of it from the eastern part of Borneo,was 12 million barrels, rising in 1920 to 20 million,placing the country in the fourth position in the world,after the United States, Russia and Mexico. There wasconsiderable development during the Thirties and in


1940 production reached 65 million barrels (stillfourth, after the United States, the Soviet Union andVenezuela).

Latin AmericaIn Mexico surface indications were observed as

early as the Sixteenth century and there was legislationfor the mining industry as from 1884. However, it wasnecessary to wait until the opening decade of theTwentieth century for any systematic exploration to bestarted (by Charles Canfield and Edward Doheny ofthe United States in the Tampico area), which then ledto the discovery of immense reserves concentrated inthe two areas called Northern Fields and Golden Lane.Annual production, standing at 100,000 barrels in theearly part of the century, had risen to 3.6 millionbarrels by 1910 and, in spite of a decade of politicalinstability, to as much as 193 million in 1921.

Still in 1910 (the year in which production was500,000 barrels) Venezuela was not regarded as a bigoil province, although the large asphalt deposits in theOrinoco region, for long known, had formed the targetfor various surveys by geologists stationed on theisland of Trinidad. Only in the mid Twenties, with thefinds made by Shell and the intense activity of theUnited States companies (which controlled more than50% of production, with the companies issued fromthe Standard Oil Company in the forefront) didreserves increase from 400 to 900 million barrels.

The Middle EastIt is curious that the Middle East, which contains

the largest reserves on the planet, did not form theobject of industrial activity with any appreciable resultsuntil very late in the day, well into the Twentiethcentury. The start of the Middle Eastern oil history canbe pinpointed as 1901, when the Briton William Knoxd’Arcy obtained directly from the Shah of Persia aconcession for sixty years to explore an extraordinarilyextensive area. After various ups and downs, in 1908the Masjed-e Soleyman field was discovered.Management of this field was subsequently assigned tothe Anglo-Persian Oil Company, controlled by theBritish government. Following geological studies and aresumption of exploration in 1925 (applyinggeophysical methods, with refraction and reflectionseismic survey playing an important role) the fieldturned out to be a giant. In the ensuing yearsexploration was very intense and annual productiongrew rapidly (at the time of the Second World War ithad reached 172 million barrels/year).

In the Mesopotamian region, coincidingsubstantially with modern Iraq, which was part of theOttoman Empire, the Germans had acquired a numberof mining rights, entering into competition with the

British. A consortium was formed in 1912 among theDeutsche Bank, the Anglo-Persian Oil Company andRoyal Dutch-Shell, to obtain a concession to developthe oil resources. Two years later the TurkishPetroleum Company came into being (eventuallytaking the name of the Iraq Petroleum Company in1929). After the First World War, the Deutsche Bank’sshare was bought up by the French. In 1927 the Kirkukfield was discovered, and from the very outset itconfirmed the noteworthy oil potential of theMesopotamian area. The immediate consequence ofsuch an interesting result was the pressure put on byUnited States companies, wanting to participate inexploiting Iraqi resources. In 1928 a consortiumformed by these companies obtained a 23% share.

In Saudi Arabia, in the other countries of theArabian peninsula and in the islands of the PersianGulf, oil activities proceeded in parallel fashion. In thebeginning of the Twenties, Frank Holmes, a NewZealand mining engineer that believed in the miningpotentials of the region, managed to sign a series ofagreements relating to oil prospecting in Saudi Arabia,Kuwait and Bahrein. With the financial backing ofStandard Oil of California – now Chevron – the firstwells were sunk, and positive results were obtained inthe Bahrein islands in 1931-32. In 1935 the first signsappeared of what turned out to be the discovery of theSaudi field at Ghawar (1948), which was to finallyestablish Saudi Arabia as one of the countries havingthe largest oil resources.

Emerging countries and national companiesIn the years of the Second World War and those

immediately afterwards, a different picture emerged ofthe world oil situation, due in part to a series of actionsby the governments of the producer countries aimed atsecuring higher revenues, in some cases with theactual nationalization of the petroleum industry(Venezuela, 1948; Iran, 1951; Egypt, 1956; Indonesia,1960). This was the period when the productionsituations took on their present form, with traditionalproducers claiming more committed roles and newproducers appearing on the international scene. Inreality, in some countries signs of the demand forgreater control over companies and production hadalready become manifest, the emblematic case beingthat of Mexico, in which indications of this trend werealready included in the 1917 Constitution and wherenationalization was put through in 1938, with graveconsequences for Standard Oil and Shell, and the birthshortly afterwards (in 1940) of Petroleos Mexicanos(Pemex) which took over ownership of the resourcesand management of all oil activities.

In Venezuela, where for some time relationsbetween the government and the companies had grown



worse because of the increase in the royalties asked forthe new concessions, a law was promulgated in 1948imposing a 50/50 sharing of oil profits betweengovernment and companies. Some concessionscontinued to be granted, but in 1958 there was afurther increase in royalties up to 66-67% for thegovernment. In 1976 foreign companies werenationalized and ownership of them was transferred toVenezuelan companies.

The Middle East situation is more complex. Alreadyin 1932 Persia had cancelled its agreement with theAnglo-Persian Oil Company, and in 1951 the PrimeMinister, Mossadeq, nationalized the petroleumindustry, setting up the National Iranian Oil Company.However, it was not until the Sixties and the setting upof OPEC (Organization of Petroleum ExportingCountries) that the negotiating potential of the Arabproducer countries was fully used. OPEC, established toexercise price controls and to increase the oil revenuesof the producer countries, was at first formed by fivecountries, four of them in the Middle East (Iran, Iraq,Kuwait and Saudi Arabia), and the fifth one beingVenezuela. Qatar joined in 1961, Indonesia in 1962,Libya in 1966, the United Arab Emirates in 1967,Algeria in 1969 and Nigeria in 1971. Ecuador, whichjoined in 1973, left it in 1992, and Gabon did likewise,joining in 1975 and leaving it twenty years later.

Africa, which in the preceding decades had playeda marginal role in the oil market, attained considerablelevels of output in the Sixties. Egypt, for long the soleAfrican producer, reached 10 million barrels in 1948,and it was not until the end of the Fifties that itsproduction started to reach industrial levels.Subsequently it was joined by Libya, Algeria andNigeria, and later by Angola, Congo and Gabon.

In Libya it was not until 1954-55 that important oilproduction activity started, with the assignment of thefirst concessions to Shell, Total, Esso, Mobil, BP,Oasis, Continental and Amerada. The first finds tookplace in 1959 and continued in the early Sixties. Withthe second series of assignments of miningconcessions, the areas of interest were confirmed,followed by the big discoveries at Sirte and in theMediterranean. The establishment of the National OilCorporation (NOC) in 1971 and the nationalization in1973 of the holdings of Shell, Texaco and Occidentalreflect the OPEC model of total production control.

In Algeria the first commercial finds date from1956 when oil was struck at Hassi Messaoud and gaswas found at Hassi R’mel. Petroleum activity in thecountry succeeded in keeping going during the War ofIndependence, but found goings difficult whenindependence had been achieved (1962), due touncertainties connected with the new political andsocial situation. In 1963 it was decided to nationalize

all the oil and gas pipelines, and to purchase the localdistribution networks. In the same year the SociétéNationale de Transport et de Commercialisation desHydrocarbures (Sonatrach) was created, which in1971, in accordance with the new petroleum law, tookover full responsibility for all the mining rights in thecountry, with the possibility of accepting foreignpartners up to a maximum share of 49%.

Nigeria gained an important position amongproducers at the beginning of the Seventies. It wasonly in the latter half of the Fifties that an intensecampaign of exploration had been started,implemented by Mobil, Shell, Tenneco and Agip. TheNigerian National Petroleum Corporation (NNPC) wasfounded in 1971, and the exploration started led toexciting results. Port Harcourt became an importantcentre of operations.

The national companies of the OPEC countrieshave played a more and more important role in theworld panorama, at times being associated withintegrated oil companies or obtaining interests in oilrefining and marketing (such is the case of Venezuelaand Kuwait). Alongside the OPEC state companies,mention should be made of the state companies ofother producer countries, such as Petronas (Malaysia),Petrobras (Brazil) and others, which in recent yearshave shown evidence of great vitality on atechnological as well as on a business basis.

Evolution of petroleum geology

IntroductionPetroleum geology is a branch of applied geology

that aims at recognizing, in a basin, the mechanisms offormation, migration, accumulation and conservationof hydrocarbons. To reconstruct this process, thepetroleum geologist uses, apart from the geologicalsciences properly so termed (mineralogy, stratigraphy,petrography, sedimentology, structural geology,geochemistry, palaeontology, geomorphology andsubsurface geology), also correlated disciplines (fluidmechanics, physical chemistry).

Petroleum geology, as an operative discipline, hasthe main aim of identifying accumulations that areimportant from the economic standpoint thereforeusing a series of surveys (gravimetric, seismic,magnetometric) from which to obtain indirectinformation for recognizing hydrocarbons (type ofgeometries, types of lithology, structures), as no directmethod of recognition exists. The reconstruction thatthe geologist makes of the basin on the basis of theparameters available to him is always a workinghypothesis. No model, however elaborate and based onadvanced technologies, can depict reality. In the


specific case of oil activity, proof of the truth comesfrom drilling the well where the samples collected andanalyzed, the lithologies, and the formation fluids,represent the verification of the hypothesesformulated. To arrive at complex models such as thosethat exist today, the road was a long one (Owen, 1975).

The precursorsIn the first half of the Nineteenth century, the

European schools of geology had already produced aseries of ad hoc observations on the distribution ofhydrocarbons in the known oil-bearing areas,accompanied by coring and analysis, at times of asystematic nature. In Romania, in Burma and in theCaspian Sea region, the material supplied was abundantand the opportunities of study frequent. In the Bakuarea, for example, observations on the links betweenmanifestations of hydrocarbons and the formation ofdiapirs, their relations with structure and faults hadprovided certain ideas for reflection and some initialhypotheses on the migration of hydrocarbons. TheGerman geologist Hermann Wilhelm von Abich and theRussian chemist Dimitri Mendeleev deserve to beremembered in this context; in 1839 von Abich observedthe close correlation between mud volcanoes and the firelinked with the release of gaseous hydrocarbons, whileMendeleev was one of the first scientists to study theCaucasus (1877). Both of them were advocates of theinorganic theory of the origin of oil.

In North America, too, the observations of anumber of scientists and technicians mostly workingin national geological surveys, who had the possibilityof using a mass of precious data and observations,enabled the first hypotheses to be made on the originof oil, on migration, on trap mechanisms and on theanticline concept. Among the many who woulddeserve mention, we can name the Americans SamuelPrescott Hildreth, who in his reports on the bituminousdeposits in Ohio (1836) was the first one to give acorrect definition of the anticline concept; HenryDarwin Rogers, of the Pennsylvania GeologicalSurvey, who in his observations (1858) associated theorigin of oil with coal; and Thomas Sterry Hunt, achemical geologist who may be regarded as the firstworld authority in the petroleum field. Considerationsof great interest were also made by Alexander Murray,of the Canadian Geological Survey, who studied(1856) the oil springs of Enniskillen in Ontario,originated by bituminous schists, and at the same timelaid the foundations for an adequate industrialexploitation of the area.

The years of formationGeology as a science, in the years immediately

following Drake’s discovery (latter half of the

Nineteenth century), only made a minor contributionto the oil industry.

The first prospecting was carried out close to theareas where seepages occurred, or actually wheremining had already started. Prospectors andwildcatters with a modest knowledge of the subjectwent out into the adjoining areas, but adopted criterianot exactly rigorous scientifically speaking. Moreover,in academic circles Drake’s initiative was not greetedwith much enthusiasm.

The oil fields and showings of hydrocarbons inEurope were known through the literature and thegeological reports of Henry Darwin Rogers andAlexander Wintchell on source rocks and reservoirs(1860), which started giving an organic picture ofcurrent knowledge. In those same years, Hunt, goinginto the theory of the anticline in the accumulation ofhydrocarbons, anticipated the possibility of lateralmigration (1863). He also developed a hypothesis ofthe in situ origin of the oil contained in carbonaterocks. The American Ebenezer Baldwin Andrews, in1861 formulated the concept, later taken up by hisfellow-countryman Charles Henry Hitchcock, offractures linked with folds, correlating the presence ofoil more with structural discontinuities of the rockmass than with just the anticlinal structure. Animportant step towards the operational use of geologywas taken with the mapping of geological formations.The structure-contour map, drawn up on behalf of theIndian government by Benjamin Smith Lyman in 1870,represents the first attempt at geological mapping.

At the end of the Sixties of the Nineteenth century,the United States knew only a number of basicconcepts of petroleum geology: the animal orvegetable origin of hydrocarbons, the generation ofcarbonate or argillaceous source rocks, transformationby decomposition or distillation, reservoirs as fissuredrocks, cover provided by clays, vertical and at timeslateral migrations, and anticlines accepted more or lessgenerally as the main accumulation mechanism.The anticline theory was taken up again in the years1883-89 by J.C. White: wrongly considered to be thefather of this theory, he was at all events the first oneto apply it successfully in prospecting for gas, whichin that period was in considerable commercial demand.

In the period 1891-1910, European geologists paidmore attention than American geologists to aspectsregarding the origin and migration of oil. French,Polish and Romanian geologists made significantcontributions in a context that was fertile at academiclevel. In the works of Franz Posepny on Poland, onRomania and on the Caspian area (1871), for the firsttime salt domes are explained as extrusions of deepersaline beds. Also Hans Hofer had the merit in 1876 ofbringing United States knowledge to European circles



and of enabling German-speaking scientists toreinterpret the Carpathian area on a more modernpetroliferous basis. While in Germany, the ideal placefor the study of salt domes and diapiric folds,scientific contributions about oil were scanty, for theCaspian area, the oil-bearing region par excellence, thestudies of the Swede Hjalmar Sjögren published in1885 are worthy of note. The first geologist to beemployed by an oil industry, Sjögren was moreinclined to emphasize structural alignment in thedistribution of accumulations of hydrocarbons than theanticlinal mechanism.

Moreover, in the United States a very practicalmethod of prospecting, besides the anticlinal one, wasthat of belt or of potential oil accumulationsdistributed along preferential belts: a rather roughmethod, which however responded to geologicalcriteria of homogeneous trend from a stratigraphic andstructural point of view. Approaches of a morescientific character, particularly useful for prospecting,are due to John Franklin Carll and Edward Orton.

Carll, of the Pennsylvania Geological Survey, wasthe first one (1875-80) who tried to construct a complexsedimentary model taking into account surfaceobservations and subsurface data, and establishingstratigraphic correlations between wells. His was a first attempt to visualize formations with a three-dimensional geometric representation. In hiselaboration, stratigraphy is much more important thanthe structural aspect in the distribution ofhydrocarbons. The systematic description of the datacollected gave rise to a new working method.

Another contribution of great interest is that ofEdward Orton in 1886-87, which contains interestingobservations on the origin, accumulation and beltdistribution of hydrocarbons, accompanied by a mapof the roof of the Trenton Limestone formation, thefirst one of its sort published by a United Statesgeological survey.

Although studies of petroleum geology in Europewere far more rigorous than in the United States, theywere short lived, whereas in the United States, with thediscovery of fields of considerable size, the sectorreceived a great boost. The oil industry startedsystematically asking for detailed surface maps, coresand new systems of classifying the data.

It should be borne in mind that in that period agood part of the deposits were located in Tertiaryterrain of anticlinal structure, close to seepages, as inBurma, in Romania and in some parts of Russia. Therewere few structural situations without suchoccurrences which were recommended for drilling.Exploration suffered from the lack of structural mapsand geological surveys on a regional basis. Thegeologist’s work therefore consisted in mapping

anticlines near oil showings, and when the well wentthrough deeper layers and with a different tectonicstyle from that of the cover terrains, some problemsarose as to interpretation. Where the deposits werelinked with unitary sequences affected by only a singledeformation phase, the surface survey could besatisfactory, but when it was a question of tacklingdeep levels with different structural characteristicsfrom the cover, that method was no longer sufficient.It was therefore necessary to outline a 3D model.Surface geology made enormous progress in Romaniaand California onwards from 1910, and in fact after afew years it became one of Shell’s workingmethodologies.

As far as the employment of geologists in thepetroleum industry is concerned, some, mostlyEuropean, companies (Royal Dutch-Shell in Burma asfrom 1898, then the Anglo-Persian in the MiddleEastern countries, the Nobels in Russia, the DeutscheBank in Romania and Poland, and Aguila in Mexico)had already formed their staffs of geologists. But thefirst consulting companies had also been started(Boverton Redwood, Beeby Thompson) which hadearned some degree of credit with the companies, eventhough their surveys were sporadic and rathersuperficial. Only two United States companies usedfull-time geologists before 1900, and eight of themhad a permanent staff by 1913. In reality, in this phase,the geologist was employed more for following fielddevelopment and extension works than on explorationproperly so termed. However, Shell had a permanentcentral geology department onwards from 1913 andmade systematic use of geology in its operationalactivities.

The Thirties and geophysicsThe real quality leap in exploration came with

geophysical surveys, and seismic surveys in particular.The geophysical survey has proved to be the mostuseful prospecting technique in oil exploration, eventhough at first this did not lead to abandoning theother prospecting techniques and has not completelyreplaced them.

The geophysical survey originally adopted costlymethods and required a certain amount ofprogramming, apart from choice of the specific areasto be surveyed: all elements that small-scale operatorswere not in a position to contemplate in view of thelimited number of areas available and the modest sizeof their concessions.

The first geophysical applications for oil and gasexploration were carried out, in a period prior to theFirst World War, in Romania and Bohemia on saltdomes, and were based essentially on themagneto-gravimeters designed by the Hungarian


Roland Eotvos. In any case geophysical explorationachieved its first great result in 1924, when thanks tothe torsion balance and refraction seismographs, thesalt domes of the Gulf Coast were identified.

The seismic refraction method has its roots in thework of the Canadian Reginald Fessenden for thedefinition of the seabed (1913), but the first attemptsto apply it to oil exploration are due to John C.Karcher who, in the Twenties, demonstrated inOklahoma the possibility of its application in oilprospecting. In 1927 the reflection seismic survey wasalready regarded as a routine method, and then in 1930it became the most used one, and was decisive infinding hydrocarbons. Initially this method was notfully used due both to the economic slump and thecost of operations, and to the trend of the oil marketwhich did not seem to justify the use of thesetechniques. But as from the second half of the Thirtiesthere was a clear-cut prevalence of discoveries madethanks to seismic rather than traditional techniques,which however went on making their contribution (in1938, for example, in the United States 31 finds weremade by the seismic method versus 6 thanks totraditional methods). In the same period (1933)electric logs (spontaneous potential and resistivity)came into common use in 1936.

While in the Thirties the big corporations alreadyexisted and technology was being developed inexploration (e-logs, gravimetry, magnetometry,seismic surveys), drilling and production, in theensuing years seismic campaigns were conducted in asystematic and intensive manner. In 1952 a largenumber of seismic teams (8,000 teams/month) were atwork in the United States.

Bearing out the validity of this method, a good partof the very large fields (giants) in the United Stateswere discovered by 1945, and 89% of them by 1955,when the effects of seismic surveys made themselvesfelt at industrial level. Only in 1953 was tape-recording apparatus introduced on the market,enabling a number of recordings to be summated, andweaker sources to be used; while in 1956 the multi-cover method was invented, whereby the rate ofpropagation of seismic waves could be determined.With the commercial advent of digital recording in1963, great development took place in seismic datacollection and processing, thanks above all to moreand more sophisticated electronic processors able toanalyze a considerable volume of data. The periodfollowing the Second World War (1946-57) marks theextraordinary development of subsoil geology with alarge number of geologists engaged in monitoringdrilled wells, providing a conspicuous mass ofinformation on the areas explored (sedimentological,palynological, stratigraphic and petrophysical data).

With the support of the new information many areasthought to be mature were reconsidered andsometimes their hitherto ignored sedimentarycharacteristics were evidenced, or even new geologicalmodels were drawn up, reassessing deeper objectivesthat had earlier been unknown. Onwards from theSeventies a start was made on exploring thecontinental shelf, witnessing the unquestioned triumphof the seismic.

The present timeIn the last few decades continuous improvements

have taken place in technologies related to exploration,from logs (acoustic, sonic, radioactive) to recordingtechniques during drilling. In-well data processing,together with the development of informationtechnology, has made it possible to supply a greatquantity of data. Above all seismic, with theintroduction of 3D surveying techniques, has led to theacquisition of a remarkable volume of data. Althoughthe first 3D seismic survey was conducted about 40years ago, it is only in the last fifteen years that thistechnique has become an instrument in common use.At the same time there has been an evolution ininformation technology (software and hardware foracquiring, processing and interpreting the data in themost efficient way possible). The information obtainedwith a survey of this type constitutes a volume thatmay be represented both in vertical sections, as intraditional surveys, and in horizontal sections (timeslices) at a selected time, or again in virtual verticalsections, which run through the wells present in thearea. Since the mid Eighties, with Shell the pioneercompany, the practice has been spreading in the oilindustry of acquiring 3D surveys of very extensiveareas, especially in marine surveys, at the beginning ofthe exploration cycle. For deep-water projects,currently all oil companies start on the explorationphase with a 3D survey. The main benefits obtainedfrom this working choice are a greater geometricreconstruction of the subsurface and the possibility ofusing seismic data for predicting the presence ofhydrocarbons in the subsurface. This means a betterevaluation of the potential of the area and, above all, ashortening of the petroleum exploration andproduction cycle, as the seismic survey itself is usedboth for exploration and for development, with theconsequent reduction in times and costs in the event ofa find.

Regarding the probability of mining success, too,the choice of the 3D survey translates into a betterratio between hydrocarbon-bearing wells and the totalnumber of wells drilled.

For an improved use of 3D seismic, innovative 3Dgeological modelling technologies have been



elaborated, making it possible not only to reconstructthe present characteristics of the basin, but also thepetroliferous evolution thereof. By now there is nodifficulty in inserting all the observations relating tofaults and fractures at every scale, from that of theexposure to the well seismic, in deterministic andprobabilistic models (fracture fields) which enablewells to be located rationally.

Lastly, downstream of these elaborations, the use isbeing consolidated of new integrated geological-geophysical interpretation techniques (gravimetry,magnetometry and seismic) of 3D seismic volumesthat enable a quick definition of the sedimentarybodies concerned to be obtained, on which to carry outspecific analyses or even obtain more detailedpetrophysical characteristics, if it turns out to be ahydrocarbon-bearing deposit (field). Thesetechnologies provide the geologist with a quantity ofinformation that has to be inserted in an interpretativemodel in which all the components of the basin can becoherently explained (maturation process, expulsionand migration of hydrocarbons) in order to achieve thedefinition of the traps present and of the possibleloading of the fluids through preferential migrationpaths. In other words, quoting Wallace E. Pratt, «oil isin the human mind» and technology is only one of theways to find it (Pratt, 1937, 1944).

Cycles of exploration and discovery

The typology of an exploration and discovery cycleThe exploration process is framed in a broader

context of exploration, development, production andmarketing of petroleum products, which are followedby abandonment and the environmental restoration ofthe sites or of the offshore areas used for developmentof the field when the latter is exhausted.

The average times of the first period of anexploration permit are around four years, during which

the foreseen seismic and drilling surveys areperformed and, usually, if a positive result is reached,the first hydrocarbons discovery is made.

In the economy of an oil project, the time betweenthe discovery and the start-up of production of a fieldis of great importance. This time span affects theeconomic return on the investment, as the profitabilityof the project is greater if recovery times for themoney are short. First and foremost, as alreadymentioned, to bring a discovery well into production itis necessary to have an authorization, explained in thesigned agreement (called ‘development lease’).

Within a few months of the discovery ofhydrocarbons, the operator must submit a fieldassessment programme to the competent authority and,within an agreed period, define whether it is acommercial oil field or just a discovery of no economicinterest. In the first case a development plan has to beprepared, containing all the technical specificationsnecessary to bring the field into production and thenmanage the whole process (product transport,development infrastructure and environmentalprotection). Prior to starting any type of activity andinvesting in the discovered field, the operator has torequest a development lease in the area containing thefield, which will protect his mining rights.

Before assessing the size of the field by means of adrilling programme, a detailed seismic survey is oftennecessary to determine the location of the offset andproduction wells. To make the passage between theexploration phase and the development phase easier, itis often useful, from the first exploration phases, toseek to integrate all the technical measures pertainingto the study and the subsequent development of thewell, with the objective of reducing costs andshortening the time between discovery and production.

This is particularly important in deep water or in remote locations, i.e. when possible delays in production are very onerous due to the amount of invested capital.


$ 2003$ money of the day

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Fig. 2. Evolution of oilprices (1861-2003) (BP, 2003).

For this, the example of the Angolan deep-waterarea can be taken: here, the Kuito field was put intoproduction 24 months after the first discovery well.This period is far less than the average time necessaryto bring a deep-water discovery into production, i.e.normally five years (forecasts of bringing currentprojects into production range from the two yearsforeseen for Equatorial Guinea to the nine forNorway).

Historical cyclesThe evolution of the oil industry, from the very

outset, has been characterized by its uneven, cyclicaltrend, with peaks of activity followed by sometimestraumatic standstills. In the United States already inthe very earliest years of the petroleum era a series offluctuations occurred, both positive (1861-63, 1864-65,1868-70) and negative (1863, 1866-67), due to anexcess or shortage of supply. The dependence ofactivity on the trend of prices is a constant of the oilmarket, which in its turn conditions the occurrence ofpolitical and economic crises (Fig. 2 shows theevolution of prices from the very birth of the oilindustry). A number of significant facts are recalledin particular: a) 1973: the Arab-Israeli war with theconsequent embargo against pro-Israeli countries andincreases in price from 3 to 12 dollars per barrel; b) 1979: the Iranian revolution followed by the Iran-Iraq war, with a drop in production and asubstantial increase in prices from 14 dollars in 1978to 35 in 1981; c) 1985: price slump due to OPECpolicy and to the increase in production by SaudiArabia, of as much as 10 dollars per barrel; d) 1991: theGulf War, with a price peak linked to the uncertaintiescaused by the invasion of Kuwait; e) 1998: economiccrisis in Southeast Asia, with the price per barreldown to its historical minimum (below 10 dollars).Apart from the prices, other factors exist bearingwitness to the cyclical trend in exploration activity:e.g. the number of wells drilled, the investmentseffected or the discoveries made. It is clear that abrusque price drop is generally accompanied by animmediate squeeze in exploration expenditure andthere is normally a tendency to favour short-terminvestments rather than to bank on long-termprojects. There are however moments when relativelymodest price fluctuations correspond to peaks ofactivity. In the United States one such peak ofactivity occurred in the mid Fifties, with more than8,000 exploration wells drilled during 1955-56(Owen, 1975), followed by a regular decline until theSeventies, when however the number of wells drilledwas more than 3,000. Such an increase is assumedfor the Soviet Union between 1950 and 1958 (whenexploration wells increased from 6,980 to 12,176).

Although the figure for Soviet wells leaves some roomfor doubt, it is borne out by the growth trend which ledto a production of 181 million barrels in 1947 to over1 billion barrels in 1960. It is however sure thatbetween 1950 and 1965 intense international activitydeveloped: a fair number of significant fields (giants)were discovered in the Soviet Union (in Volga-Uralbasin, in the pre-Caspian basin and in the southernCaspian in the Fifties, while the western Siberian andKazakhstan fields date from the early Sixties), in theMiddle East and in North Africa.

The years 1970-1980After the Yom Kippur War and in the immediately

ensuing years the trend delineated in the oilexploration sector was one of intense activity. Themajor United States oil companies relaunched theirinvestments in the upstream sector in both the nationaland the international market. In those years, in fact,with the ending of intense onshore exploration, thetarget became the conventional waters (down to adepth of 200 m) and the hitherto impracticableterritories of Alaska. The policy of the major oilcompanies tended to develop national reserves and topursue internationally highly ambitious objectives inareas of high risk but with great economic returns. Theexploration started of new areas such as the Gulf ofMexico, the Arctic, the Andes, the North Sea, theShetlands, Yemen, Nigeria and the China offshorearea. This type of strategy, dictated by an attitudeinclined to privileging long-term investments ratherthan immediate dividends, depended not just on thelevel of prices, but also on the fact that in the maturebasins discoveries proved to be of modest size and atrelatively high costs. Furthermore in these yearstechnology evolved rapidly.

The cycle came to an abrupt halt in 1986 followingthe change in Saudi strategy and the slump in crudeprices, which dropped from 26 to 10 dollars per barrel.Even though the industrialized countries wereadvantaged by the reduction in prices, the oilcompanies were forced to cut first their investments inexploration and then in development, with theconsequent severe reductions in activity. At the 12th

World Petroleum Congress (held in Houston, Texas, inMay 1987), with increases in oil prices up to 18dollars a barrel, the companies wondered whether thetime had not come to resume explorative activities thathad been so brusquely penalized. In the next two yearsthere was a 26% upswing in investments in explorationprojects by United States companies, and of 18% and19%, respectively, by BP and Shell. At the end of theEighties there was a resumption of activities at thelevel of wells drilled and of acquisition of areas in theinternational sphere.



The Nineties and deep watersIn the Nineties the companies found themselves

benefiting from an unprecedented series ofopportunities (Fig. 3). First came an important openingup of new geographical areas, in particular in the newindependent countries emerging from the break-up ofthe Soviet Union (Azerbaijan, Kazakhstan, etc.),which started attracting numerous foreign investorsincluding the oil companies. The new republics gavethemselves a series of modern legislative andcontractual instruments and made hitherto inaccessibletechnical information available to the market. TheCaspian Sea ‘rush’ involved all the big companies,both in Azerbaijan and in Kazakhstan. It was in theKazakh Caspian area in fact that a consortium formedby Eni, Total, Shell, Exxon-Mobil and BG made themost significant discovery in these years, withrecoverable reserves of as much as 13 billion barrelsof oil. In the Caspian no other important results havebeen achieved, with the exception of the Shakh Denizfield with its huge gas reserves (1999).

Activity in deep waters (more than 200 m deep, asopposed to the continental shelf characterized bydepths of up to 200 m), which is the second newfeature of the period, in reality had had a precedent inthe Gulf of Mexico, where Exxon, Shell and Petrobrashad for some years refined avant-garde technologies.These technologies were transferred to the deep watersof West Africa (Angola, Congo, Nigeria andEquatorial Guinea) and of the Far East (Brunei andIndonesia). The approach to the deep-water problemimposed on the oil companies an organization inwhich the synergy of different professionalexperiences became an element of great importance.

In drawing up a balance of the results obtained inthis period by the oil industry it is important tounderline the concept of reconstituting reserves linkedwith exploration. In the three-year period 1999-2001,according to Deutsche Bank analysts (DB, 2002 a, b),only 32% of the reserves certified by the major UnitedStates companies (some 50 billion boe) came fromexploration. At world scale, however, it is observedthat from 1990 to 1994, new discoveries replaced 62%of the oil mined, while after 1995 this ratio went downto 53%. Also among the non-OPEC producercountries, only Angola and Brazil wholly replaced theoil produced with new discoveries. This pictureevidences how difficult it is to replace reserves bymeans of exploration. The year 2000 proved to be anexception to this, when the extraordinary discoveriesin the Caspian and in Iran equalized the ratio betweenreserves discovered and production. Lastly, the lowreplacement rate of some very important producercountries, such as Mexico, Great Britain, Oman andColombia should be emphasized.

In the deep-water sector exploration in West Africatook off at the beginning of the Nineties andconcentrated in particular in the Lower Congo Basinareas and Nigeria. These basins were considered tohave great production potentials because similarreference areas such as the Campos basin in Brazil andthe Gulf of Mexico had proved the existence of‘play’(or combination of factors) situations linked tothe presence and the development of turbidite systemsin deep environments.

In the course of the years this assumption has beenconfirmed by the discovery of important fields inAngola: Girassol, Dalia, Hungo, Kuito, Kissanje,


deep waters former USSRFig. 3. New explorationareas in the 1990s.

Landana, Plutonio, Mondo, Tomba and Lobito, alllocated in the Lower Congo Basin. The total reservesfound amount to some 7 billion barrels. Discoverieshave also been made in deep Nigerian waters (Bonga,Agbami-Ekoli, Akpo, Bonga SW and Erha), located inthe first deep offshore belt, where oil prospecting hasattained a fair degree of maturity. It still remains toexplore an outer belt whose residual potential ispresumed to be very great. In the rest of West Africa,only sporadic finds have been made. In EquatorialGuinea, for example, the La Ceiba field has beendiscovered, and in the deep and ultradeep waters ofCongo (N’Kossa, Andromede and Moho) the resultsachieved have not come up to expectations and haveredimensioned the initial interest in the area. Not tomention the Gabon deep offshore area, so far withoutany results. A certain number of discoveries have beenmade also in the south-east Asiatic region and in thenorth-west Australian offshore area.

In the Gulf of Mexico interesting discoveries havebeen recorded with new developments, such as MadDog, Trident, Thunder Horse and Great White. In thedeep waters of the Gulf, too, further possibilities canbe glimpsed, but for high investments and using avant-garde technologies.

In South America, Brazil is outstanding in the oilsector, with its deep waters (the Roncador field), whilegas seems to dominate the scene in Bolivia and inTrinidad and Tobago.

Regarding Europe, there was the discovery ofØrmen Lange in Norway and the Buzzard field in theBritish sector of the North Sea.

In the African margin Egypt has providedinteresting gas reserves with the discovery of variousoffshore fields. The Temsah, Sapphire, Scarab, Saffron,Ha’py, Baltim and Darfeel fields should be mentioned,as well as many others evidenced in the last decade.

In the Atlantic margin, to the west of the Shetlandsand the Färøe Islands, the areas considered of greatpotential have instead not yet given significant results.The same can be said of the Azerbaijan deep offshorearea, where various dry wells have been drilled andonly minor discoveries have been made.

In short, it can be said that deep waters have givenan important contribution to restoring hydrocarbonreserves in the last decade. According to a recent study(«Petroleum Economist», 2004), the discoveriesamount in total to 90 billion boe, and the potential stillbe discovered ranges around 180 billion boe (60% oil).

In the exploration of deep waters, too,technological progress in the last few years has made itpossible, initially to invest more efficiently, and then toexplore remote frontier areas. At the turn of theTwenty-first century wells went down to depths of2,000 m and operations as far down as 3,000 m were

being planned. It is clear that such a challenge has tobe justified by adequate discoveries for whichappropriate technological responses will be necessary.

A final problem connected with deep waters is thefinding of gas, which lacking a local market becomesa by-product hard to use. In recent years gas has foundgrowing use, and discoveries of new reserves havebeen far greater than production. To use also thisresource to the full, technological improvements andinvestments in the liquefaction processes are required.

This panorama of the closing years of last centurycannot be concluded without recalling the otherdiscoveries in conventional plays, first and foremost theoil in the Algerian Sahara which has turned out to be arich oil province where resources exist yet to bediscovered; the remaining Algerian sedimentary basins,especially in the western part of the country, are stillunderexplored. Algeria can therefore be considered acountry with a good mineral potential with regard to oil.For gas, exploration efforts have been concentrated inthe South-West of the country, in the Ahnet Timimounbasins, whose potential remains to be defined. At the endof the Nineties the results reached in Iran were good;some significant oil discoveries were made, a good partof the additional reserves deriving from the Azedeganfield. An analysis of the Nineties in any case evidencesthe great concentration of discoveries in few countries,especially in already known basins, mostly in the MiddleEast, as well as in Angolan and Brazilian deep waters.

At the start of the present millennium a progressiveimprovement has been achieved in the success rate,above all for gas, even though the number ofexploration wells is declining. The result of this higherefficiency of exploration was the increase in theadditional reserves for each exploration well drilled.The 2.3 million boe per well of the end of the Eightiesare doubled in the following decade and for somemajor oil companies they are over 10 million.

The oil shock of 1998 and the reduction in costsOne feature of the cycle in the Nineties that must

not be forgotten is the collapse of oil prices in 1998and the consequences of this fact in containing oilcompany costs.

During 1998 the coincidence of various factors(Iraq’s return to the market, the increased output ofSaudi Arabia, the brusque slow-down in Asiandemand) caused oil quotations to tumble below thethreshold of 10 dollars per barrel, values which, in realterms, had not been recorded since 1972. It isunderstandable that such low prices made the oilcompanies rethink many projects drawn up in morefavourable periods and reduce investments inexploration which, by definition, have a deferredeconomic return spread over the years.



Despite the reduced investments and thecontainment of costs, the companies’ reserves andproduction increased considerably. This twofold resultwas obtained by decreasing the percentage of drywells (40% compared with 60% in the Eighties) andincreasing the commercial value, i.e. the reserves, ofeach single successful well, thanks to technology andto a properly targeted strategic approach. Advancedtechnology, in fact, as from the Nineties, enabled coststo be limited and systematic use to be made both of3D seismic, making it possible to reduce timesbetween discovery and production, and allowing fortechnical improvements for drilling exploration wells.

As far as oil prospecting is concerned, already atthe beginning of the Nineties, the oil companies weredeveloping a new tendency to control and cut its costsand succeeding in aligning the finding anddevelopment cost at values of 4-5 dollars per barrel.BP’s example, too, is significant: the British companydecided to pursue only objectives having a higheconomic potential, with the result of bringing thefinding and development cost down from 6 dollars perbarrel in 1987-88 to 4 dollars in 1997-2000.

In conclusion, it can be stated that the oil shock atthe end of the decade had been salutary in terms ofstreamlining organization, achieving greater efficiencyand reducing costs, factors that are today still presentin the performances of the oil world.

Assessing hydrocarbons reserves

IntroductionBefore speaking about reserves of hydrocarbons it is

considered useful to define the concept of reserves, aterm often used improperly. It should refer only to thatfraction of hydrocarbons contained in a field that can beextracted (‘recovered’). The actual amount of thereserves of a field is known only when total productionhas taken place; earlier figures are mere estimates.

On the basis of the available geological, geophysicaland engineering knowledge at a given moment, adistinction is drawn between proved, probable andpossible reserves. The proved reserves are those forwhich there is reasonable certainty of recovery and forwhich development is defined on given economicconditions. Probable reserves are those which, even ifthe development plan has not yet been finalized, arelikely to be developed. Possible reserves are those thatare uncertain in terms of technical knowledge.

Oil reserves up to 2002At the end of 2002, reserves of oil amounted to

1,048 billion barrels (BP, 2003), of which 819 billion(i.e. almost 80%) in OPEC countries.

In particular the geographical distribution ofreserves (Fig. 4) is characterized by a considerableimbalance in favour of the Middle Eastern area.

In the Middle East, Saudi Arabia has the largestreserves (261.8 billion barrels or 25% of globalreserves), followed by Iraq (112.5 billion, 10.7%), theUnited Arab Emirates (97.8 billion, 9.3%), Kuwait(96.5 billion, 9.2%) and Iran (89.7 billion, 8.6%),while the other countries (Qatar, Yemen and Syria)have definitely smaller reserves.

In Africa important reserves are possessed byLibya (29.5 billion barrels), Nigeria (24 billion) and –with clearly lower totals – Algeria (9.2 billion) andAngola (5.4 billion). In Central and South America theleader is Venezuela (77.8 billion barrels, 7.4% ofworld reserves), followed far behind by Brazil (8.3 billion), while in Eurasia Russia is the leader (60 billion barrels, 5.7%), followed by Norway (10 billion), Kazakhstan (9 billion) and Azerbaijan (7 billion).

If one considers the reserves in the ten-year period1992-2002, a modest global increase (+4%) isobserved (from 1,007 to 1,048 billion barrels), butsignificant variations are starting to take shape withinthe single areas:


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• There is a clear-cut drop in North Americanreserves (from 90.9 to 49.9 billion barrels).

• In the former Soviet countries reserves haveincreased both in Azerbaijan (from 1.3 to 7 billionbarrels) and in Kazakhstan where, with thediscovery of the Kashagan field – the mostsignificant find in the last few years –, reserveshave recorded a further increase of more than 9billion barrels.

• In deep offshore areas (depths of more than 200 m)various discoveries have been made, in particularin the Gulf of Mexico, in Brazil (an increase from3 to 8.3 billion barrels), in Angola (from 1.5 to 5.4billion) and in Nigeria (from 17.9 to 24 billion).

• An increase in reserves has also taken place inCentral and South America, especially inVenezuela (from 62.7 to 77.8 billion barrels).The global values in the preceding decade

(1982-92) are of little significance as no certain dataexist on the reserves of the former Soviet area, butcertain important elements should be emphasized,such as the stationary nature of North American valuesand the considerable increase in Middle Easternreserves (�79%).

With regard to the life index of the reserves, in thelast twenty years this has increased from 28 years in1982 to 40 years in 2002. But the situation is not sostable as it might appear at first sight, because, if weexamine the various areas in detail, it is seen that thecountries that significantly sustain a long-term outputare basically those of the Middle East, with more than90 years, and the Eurasian area (Russia in particular),whereas for the countries of North America and ofAsia-Pacific, the indices drop dangerously to below 20years.

Gas reserves in 2002In 2002 world gas reserves amounted to 156,000

billion m3 (BP, 2003), spread mostly over two mainareas: the Middle East with 36% and Russia with 30%.Europe, Africa and Asia share the remainder in moreor less equal proportions (7-8%), while the values forCentral and South America and for North America(Fig. 5 A) are decidedly lower (4.5-4.6%).

Russia is outstanding among the various countries,with 48,000 billion m3, and in the Middle Eastern areaIran tops the list with 23,000 billion m3, followed bySaudi Arabia with 16,000 and Qatar with 14,000billion.

These figures give us a picture of the futuresources of supply.

If we consider the evolution of reserves over thelast twenty years (Fig. 5 B), it is observed that whereasfrom 1992 to 2002 they increased by 12% (138,000billion in 1992 against the current 156,000 billion m3)

concentrated mainly in the Middle East and offset by anegative balance in the North American area (�20%),in the preceding decade the increase was considerable:over 60%, particularly in Nigeria, Qatar, the UnitedArab Emirates and Saudi Arabia. Among thediscoveries of the last decade those of Australian deepwaters, at Trinidad and Tobago and in Norway (ØrmenLange) are worth mentioning.

The reserves of hydrocarbons in prospect – the “world petroleum life cycle”

The main productive areas are in basins locatedin the northern hemisphere. Some three-quarters ofthe 600 existing basins are not at present productiveand one-third of them has never been drilled byexploration wells. One-third of the basins in theworld are virgin basins. The discoveries made so farinclude a certain number of giant fields, i.e. fieldshaving reserves of more than 500 million barrels.The reserves of these fields represent 1% of globaldiscoveries, but constitute 70% of the oil and 50% ofthe gas found. Some authors (Klemme, 1980) at thebeginning of the Eighties estimated the additionalpotential to be discovered as between 60% and140% of the total reserves discovered (remainingand produced), obtaining the more conservative



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Fig. 5. Proved gas reserves (thousand billion m3):A, distribution by macro-areas (2002); B, evolution (1982-2002).

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value of 60% on the hypothesis that only virginbasins could include a potential, while the moreoptimistic hypothesis considered an increase even inthe productive basins. Between 1982 and 2002 theincrease in proved reserves was equal to 371 billionbarrels (BP, 2003), while until 2000, according tothe evaluation of the United States GeologicalSurvey, the resources still to be discovered amountedto 690 billion barrels (USGS, 2000), a figure whichaccording to some is an overestimation but in anycase compatible with Klemme’s preliminaryforecast.

At this point the logical question is whether it isdifficult to find fresh exploration provinces. The latestacquisitions after the international tenders called inEgypt, Brazil, the Gulf of Mexico and Norway haveproduced results inferior to expectations.Furthermore, areas considered to have a highpotential such as the Azeri part of the Caspian Sea orthe Färøe Islands offshore have not given the hoped-for positive signals. Indeed, as exploration proceeds,the amount of discoveries diminishes, which meansthat more wells are being drilled with progressivelyminor results.

Naturally this is true every time a certain play isbeing sought. If this changes during the course ofexploration, an automatic ‘rejuvenation’ takes placewithin the basin. One example of this is that of theGulf of Mexico (Fig. 6) where new plays rejuvenate abasin above all from the standpoint of the revival ofoperative and explorative activity. It should also beborne in mind that there are about 18 basins in deepwaters in various areas (Nigeria, Gulf of Mexico,Equatorial Guinea, Angola, Norway, Congo, EastIndia, Kalimantan, Brazil, Philippines, Egypt,Malaysia, Mauritania, the Färøer, Morocco, Gabonand the Black and Caspian Seas) where so far the

shallow plays of the sedimentary sequences have beentackled. Future trends are represented by deep offshoretargets, e.g. pre-saliferous themes, which are at depthsof more than 3,000 m under the sea bed. Thispossibility of intervention will naturally depend on thedevelopment of technology and on the drilling rigsmarket.

In short, it is observed that in the long term theareas of exploration will preferentially be located inthe Middle East, Arctic regions, Russia. The MiddleEast in particular (especially Iran and Iraq), will be themain area of production from which the majority ofthe resources to be discovered will continue to come.

The hypothesis of the World Petroleum Life Cycle(Duncan and Youngquist, 1998) regards the times ofexhaustion of oil reserves: a few years or a longerperiod, which will permit a ‘soft’ transition to othertypes of energy. The forecast of an exhaustion withina relatively short time was announced as long ago as1919 by the United States Geological Survey andhas, on various occasions, been the subject ofdiscussion and controversy. In particular we recall themodel constructed by Hubbert (1956), envisaging, onthe basis of the geological knowledge then available,the beginning of the decline in production (peak oil)of North American fields (excluding Alaska) alreadyin 1970. This hypothesis, valid for the United States,turned out to be not suitable for a more generalapplication, since the model did not allow for a seriesof technological and environmental variables whichin fact made possible discoveries that were out of thequestion with the old geological concepts, or for adifferent level of consumption. At a later date certainfollowers of this theory, together with other experts,sought to apply the appropriate correctives to theoriginal model, stating in particular that at worldlevel the slump in demand in the Seventies had


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postpone the expected peak, but had not eliminatedthe decline. Mention should be made, among others,of C.J. Campbell (1997; 2000; 2001; 2002a, b; 2003),J.H. Laherrère (1998), R.C. Duncan and W.Youngquist (1998) and L.F. Ivanhoe (1997).Contained in the articles of Campbell, the founder ofthe Association for the Study of Peak Oil (ASPO),regarded as the best known of Hubbert’s followers,there are a number of grounds for discussion: even ifoil continues to dominate the market for long tocome, the boom in discoveries already had itsepilogue in the Sixties; current discoveries barelycover 1/4 of consumption; the production peak, apartfrom the Middle East, already occurred in 1997 andfor those countries the decline in production hasstarted; the peak at world level will take place in2005-06 and the use of non-conventional oil willpostpone by few years this inevitable decline.Campbell is furthermore critical of the way in whichinformation on reserves is transmitted by governmentbodies (Oil & Gas Journal and World Oil or in theBP reports). According to Campbell the values of thereserves should be referred to the year of the field’sdiscovery and not the summation of revisions whichmake additions to something that in reality hasalready been discovered. Moreover, the figures forthe reserves are often not only linked to the technicalaspect, but are conditioned by other factors (type ofagreement, budget, development plans).Furthermore, for resources still to be discovered,seismic, geochemistry and other technologies bringto light increasingly more modest and difficult traps,but do not lead to the discovery of such giants asthose found in the Sixties. In fact, of the remainingresources, the characteristics of their volume, depthand recovery are far more problematic than for thepast discoveries. The cumulative curve of finds in

relation to wells drilled shows that big fields are thefirst ones to be discovered. As time goes by, thecurve tends to flatten out with a series of marginalresults relating to the last discoveries. And also 22-23 billion barrels are produced every year whereasonly 6 are discovered, little more than 1/4 of what isproduced. The production peak follows the peak indiscoveries with a physiological lapse. For instance,discoveries in the United States reached theirhistorical maximum in 1930, while the productionpeak occurred in 1970, after a lapse of forty years.Fig. 7 shows the gap between discoveries andproduction and demonstrates that the possibleincrease in exploration wells would only veryslightly modify the discovery trend. It is alsoobserved that overly high prices could facilitate theprocess of going over to alternative forms of energy.Campbell concludes with a rather critical picturewith absolute dependence on Middle East prices andthe beginning of the decline of hydrocarbons in 2010(2005 for oil, 2020 for gas). According to Laherrèrethe production of liquid hydrocarbons should reach amaximum in 2010.

The forecasts of the Energy InformationAdministration (EIA) based on data supplied by theUnited States Geological Survey are more optimistic,as the recovery factors foreseen for the hydrocarbonscontained in the fields are higher. It is evinced fromthe specific works on the subject that the MiddleEastern area can for a certain period make up for theproductive shortfalls of other countries. The MiddleEast’s present share in production is bound to increaseunless new oil provinces are discovered, as occurred atthe end of the Seventies when the entry into the marketof the North Sea and Alaska (with a considerablecontribution of production) reduced imports from theMiddle East from 38% to 18%.



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Opposed to the Hubbert school, some expertsconsider the presumed shortage of hydrocarbons as amyth to be debunked, and see in technologicalimprovements in exploration and development thepossibility of discoveries of additional reserves,evidencing that the average residual life of worldreserves is 40 years in 2002 against 20 years in 1948.According to these experts the peak in the UnitedStates is explained by the fact that American basinshave been explored very intensely, whilst a good partof the basins in the rest of the world areunderexplored. Moreover technological improvements(deflected wells, horizontal wells, 3D and 4D seismic)will make it possible both to exploit availableresources at modest costs and to address extremeenvironments such as ultra-deep waters. This moreoptimistic scenario is supported by technologicalprogress, which permits higher recovery factors (from22% in the period 1979-81 to 35% in 1997-99) andabove all lower production costs (from 21 dollars perbarrel in 1980 to 6 in 1997-99). According to theseexperts, certain facts have limited discoveries in recentyears, in particular the exclusion of oil companiesfrom promising areas such as the Middle East. Also,when reserves are spoken about they mean quantitiescertified precisely by the accounting departments ofthe oil companies and not the mineral potential withits decidedly higher values; on the basis of this secondparameter, the situation could be one of a glut of cruderather than one of scarcity, with the risk ofoverproduction and the negative consequences thatpossible production cuts aimed at avoiding drops inprices would mean for the producer countries withweak economies. The limit does not depend on thephysical lack of reserves, but on financial and pricepolicies. In short, the advocates of this line, whilerecognizing that it will be increasingly more difficultto find new reserves in accessible countries and simplegeological situations, place their trust in technology.Not only the frontier areas, but also basins that havefor long been productive will go on supplying thepotential necessary, and the oil industry will findsolutions to the problems that arise (Longwell, 2002).

In conclusion, it can be stressed that the twoschools of thought correspond to differentphilosophies at operative level (Lynch, 2003).Believing in the Hubbert model means thinking ofhigh prices in short times and therefore opting for anaggressive strategy with the objective of acquiringadditional reserves, even with high-cost projects. Inthe other case, instead, a less alarmist outlook means amore cautious strategy that favours low-cost projectsand a flexibility such as not to have nasty surprises inthe event of a slump in prices, as has sometimeshappened in the past.

Classification of fields and basindistribution

IntroductionBelow is a classification of fields (based in part on

the American Petroleum Institute) according to their size:

for oil fields

Megagiant: more than 50,000 million barrels (equal to6.8 billion t)Supergiant: 5,000 to 50,000 million barrelsGiant: 500 to 5,000 million barrelsMajor: 100 to 500 million barrelsLarge: 50 to 100 million barrelsMedium: 25 to 50 million barrelsSmall: 10 to 25 million barrels

for gas fields

Supergiant: more than 850 billion m3

Giant: 85 to 850 billion m3

Major: 17 to 85 billion m3

Large: 8.5 to 17 billion m3

Medium: 4.2 to 8.5 billion m3

Small: 1.7 to 4.2 billion m3

Table 1 shows the numbers of fields discovered inthe world in the various categories. The 2 megagiantsare Ghawar in Saudi Arabia, and Greater Burgan inKuwait, while of the top twenty supergiants, 15 arelocated in the Middle East, 2 in Russia, 1 in LatinAmerica and 2 in North America.

The location of these oil fields corresponds toparticular geological situations. There are in fact anumber of sedimentary basins that contain the mostsignificant oil and gas reserves.

Below is an indication of the cumulative reserves(i.e. the entire quantity of oil found includinghydrocarbons already produced) of the main oil basinsand of the main fields therein. The scale of the


Table 1. Distribution of world oil fields by size(Ivanhoe and Leckie, 1993)

Million barrels Size World Total

>50,000 Megagiant 25,000-50,000 Supergiant 40500-5,000 Giant 46100-500 Major 24050-100 Large 32725-50 Medium 35610-25 Small 7611-10 Very small 4,599

Total 6,371

reserves comes from a number of sources (IHSEnergy, United States Geological Survey, Oil & GasJournal, Petroleum Economist), to which we refer forfurther details.

Oil basinsFig. 8 shows schematically the most important oil

basins, in the general domain of sedimentary basins.Such description (see also Table 2) is in accordancewith the following subdivision of the world intomacroareas, as frequently used today:• North America.• Central and South America.• Europe-Former Soviet Asia (countries of West

Europe, countries of East Europe, Turkey andcountries of the former Soviet Union).

• Middle East.• Asia-Pacific (India, Pakistan, Bangladesh, Far

East, Southeast Asia, Australia and the oceanianzone).

• Africa.

Middle EastThe Arabian basin has the most abundant reserves

of all known basins and include two important oilareas: the Central Arabian province of Rub’ al-Khaliand the Zagros province.

The former has overall reserves of more than 500billion barrels of oil and 62 billion barrels ofcondensate. The fields located in this province areamong the biggest in the world, such as Ghawar andGreater Burgan. Moreover, the area contains a seriesof fields with considerable reserves: Safanya,

Abqaiq, Rumailia, Zakum, East Baghdad, Manifa,Zuluf, Bab, Bu Has, Berri, Bibi Hakimeh, Karanji,Ab-e-Teimur.

The Zagros province contains more than 140 billionbarrels and 7 billion of condensate. There are severalfields of considerable size: Ahwaz, Gachsaran, Marun,Kirkuk, Aga Jari, Rag-e Sefid, Parsi, Haft Kel.

Europe-Former Soviet AsiaThe West Siberian basin consists of various oil

provinces with cumulative reserves of more than 140billion barrels of oil. The most significant fields areSamotlor, Fedorovo-Surguskoye, Ust-Baly-Mamontovskoye and Krasnoleninskoye.

Volga-Ural basin has reserves of more than 65billion barrels. In this basin over a thousand fieldshave been discovered, the best known of which areRomashkino, Arlan, Tuymazinskoye andNovoyelkhovskoye.

The Precaspian basin is the most important one inKazakhstan, with 133 fields discovered, with reservesof more than 20 billion barrels of oil. It includes thefollowing fields: Kashagan, Tengiz, Uzen,Korolevskoye, Karachaganak and Zhanazhol.

In the North Sea the total amount of discoveries ismore than 42 billion barrels of oil. The most importantfields are Statfijord, Ekofisk, Forties, Oseberg, Brentand Gullfaks.

The South Caspian basin has 110 hydrocarbonfields for a total amount of original recoverablereserves of over 20 billion barrels of oil. The Azeri,Chirag e Guneshli fields contain the major part of thereserves.



major oil basins(total reserves >15 billion barrels)

other basinsFig. 8. Oil basins.

Table 2. Oil basins

Basin Cumulative Fieldsreserves (only principal fields are indicated in order of magnitude)

type of fields Megagiant Supergiant Giant

billion of barrels >500 100-150 50-100 15-50 �50 5-50 0.5-5

Arabian Basin: • Ghawar SafanyaCentral Arabian and Rub’ al-Khali Provinces Greater Burgan Rumailia(Saudi Arabia, Kuwait, Neutral Zone, Iraq, AbqaiqUnited Arab Emirates, Bahrein, Qatar) Zakum

Manifa

Arabian Basin: • AhwazZagros Province Marun(Iran, Iraq, Turkey, Siria) Aga Jari

GachsaranKirkuk

Western Siberia • Samotlor(Russia) Fedorovo-Surguskoye

Ust-Baly-Mamontovskoye

KrasnoleninskoyePriobskoye

Gulf of Mexico • East Texas Hawkins(USA: Texas, Louisiana) Hastings

Thunder HorseMars

Volga-Ural • Romashkino Arlan(Russia) Tuymazinskoye

NovoyelkhovskoyeUsinskoyeBavilinskoye

Maracaibo • Campo Costanero Boscan(Venezuela) Bolivar Urdaneta Oeste

CeutaCentroLago

Niger delta • Forcados Yokri(Nigeria, Cameroon, Equatorial Guinea) Nembe Creek

UbitZafiro ComplexMeren

Sureste • Akal (Cantarel) Bermudez Complex(Mexico) Ku

AbkatumTecomonoacanMalob

Sirte • Gialo(Libya) Sarir

AmalWahaBu-Attifel

North Sea • Statfijord(United Kingdom, Norway, Netherlands, EkofiskDenmark) Forties

OsebergGullfaks


Table 2 (cont’d)

Basin Cumulative Fieldsreserves (only principal fields are indicated in order of magnitude)

type of fields Megagiant Supergiant Giant

billion of barrels >500 100-150 50-100 15-50 �50 5-50 0.5-5

Eastern Venezuela • Cerito Central(Venezuela) El Furrial

MulataSanta BarbaraJobo

Permian • Yates(USA: New Mexico, Texas, Oklahoma) Wasson

Kelly Snyder

Precaspian Basin • Kashagan Korolevskoye(Kazakhstan, Russia) Tengiz Karachaganak

Zhanazhol

Saharan Basins: • Hassi Messaoud OurthoudGadames, Hassi Messaoud, Illizi Zarzaitine(Libya, Algeria, Tunisia) Rhourde el-Baguel

Tin Fouye TabankortHassi Berkine Sud

San Joaquin • Wilmington(USA: California) Midway Sunset

Kern RiverElk Hills

Southern Caspian • Guneshli(Azerbaigian, Georgia, Turkmenistan, ChiragIran) Azeri

Balahani-Sabunchi-Ramani

Goturdepe

Lower Congo • Takula(Gabon, Congo, Angola) Dalia

GirassolHungoKuito

Alberta • Pembina(Canada) Redwater

Swan HillsRaibowProvost

Campos • Roncador(Brazil) Marlim

Marlim SulBarracudaAlbacora

Arctic Coastal • Prudhoe Bay Kuparuk River(USA: Alaska) Endicott

Point Mcintyre

Sumatra • Minas(Indonesia) Duri

BangkotBekasap



AfricaThe Sirte basin is the richest one in Libya with

more than 40 billion barrels of oil. 143 discoverieshave been made in this basin, including Gialo, Sarir,Amal, Waha and Bu Attifel.

The Saharan basins with the Hassi Messaoud areacontain, besides the supergiant of that name, morethan 20 important oil and gas condensate fields,including Rhourde el-Baguel and Gassi Touil. TheGadames basin located in Algeria, Tunisia and WesternLibya contains about 20 fields in the Algerian partwith total reserves of 7 billion barrels of oil. Importantfields are Ourthoud, Hassi Berkine and el-Borna. TheIllizi basin, with original oil reserves of approximately5 billion barrels, contains the Zarzaitine and Tin FouyeTabankort fields.

The Niger basin which is located in Cameroon andEquatorial Guinea as well as Nigeria, has reserves ofabout 50 billion barrels of oil. The chief fields areNembe Creek and Forcados Yokri, as well as a certainnumber of fields with between 400 and 600 millionbarrels (Okan, Imo River, Meren, Bomu, Delta South,Obagi Parabe-Eko and Edop). In the deep offshore thefollowing main fields have recently been discovered:Bonga, Bolia, Agbami, Akpo, Bonga SW and Erha,for total reserves of about 6 billion barrels. Thediscovery of the La Ceiba field in Equatorial Guineadates from 1999.

The Lower Congo basin (Gabon, Congo andAngola) contains total oil reserves of over 20 billionbarrels. It has a distribution of fields of variable sizeboth in conventional waters and in deep waters. InGabon some ten fields of modest size (between 50and 90 million barrels) have been discovered, whilethe offshore fields of Congo have larger reserves:Loango, Tchibouela, Emeraude and N’Kossa. InAngola there are some 50 or so oil fields in theconventional areas of Takula, Malongo, Numbi andPacassa, added to which there are the deep-waterdiscoveries made in the last few years, the mostimportant of which are Dalia, Girassol, Hungo, Kuito,Kissanje, Landana, Tomba, Plutonio, Mondo andLobito.

North AmericaThe most important basins in the United States are

the Gulf of Mexico, the inland basins (Permian,Anadarko), the San Joaquin basin (California) and theArctic Coastal basin of Alaska.

The Gulf of Mexico basin is both onshore andoffshore and includes the coastal deposits of Texasand Louisiana. In the coastal complex including theTexas and Louisiana salt basins, total reserves exceed50 billion barrels with such significant discoveries asEast Texas, Hawkins, Caillou Island and Bay

Marchand. In the offshore sector the total provedreserves in the Gulf of Mexico are about 15 billionbarrels from a thousand or so fields. Activity has beenparticularly intense in the last few years withdiscoveries such as Thunder Horse, Mars, Mad Dog,Neptune and Great White. Of the 95 discoveries madebetween 1996 and 2000 (at a depth of less than 800m), four have more than 300 million barrels and fourbetween 100 and 300. The deep waters of the Gulf ofMexico have proved to be rich in oil (75 fieldsdiscovered at a depth of more than 400 m, 40 of thembeing oil fields).

The inland basins in the United States (Permianand Anadarko), with reserves of more than 30 billionbarrels, contain the important discoveries ofPanhandle, Wasson, Yates and Kelly Snyder.

The San Joaquin basin in California, with morethan 20 billion barrels, contains the WilmingtonMidway Sunset, Kern River and Elk Hills fields.

The Arctic Coastal basin in Alaska, with morethan 15 billion barrels of oil, is marked by theimportant discoveries at Prudhoe Bay and KuparukRiver.

The Canadian sedimentary basin in Alberta hasmore than 20 billion barrels, with some importantfields and others of medium size. Among the moresignificant ones are Pembina, Redwater, Swan Hills,Raibow and Provost.

The Sureste basin is the most productive one inMexico. More than 45 billion barrels have beendiscovered there, with its fields at Cantarel, BermudezComplex and Abkatun.

Central and South AmericaThe Campos basin has reserves totalling 16 billion

barrels. In this basin, whose depth is between 500 and2,000 m, the Roncador, Marlim, Marlim Sul,Barracuda and Albacora fields are located. TheMaracaibo basin has oil reserves of 55 billion barrels,represented by only few fields. The most importantones are Tia Juana, Lagunilla, Bachaquero, Cabimasand Lama, known collectively under the name ofCampo Costanero Bolivar.

The Eastern Venezuela basin contains some 40 billion barrels of oil concentrated in the El Furrial, Cerito Central, Mulata and Santa Barbarafields. In the southern part is the Orinoco oil belt in which there are extensive accumulations of heavy oil having a density of between 7° and 10°API and a high sulphur content. The total volume of oil is estimated as 700 billion to over 1,000 billionbarrels: recovery factors are very low (5-6%), and this is therefore one of the basic problems, still unresolved, of the economic exploitation of thisoil belt.




Table 3. Gas basins

Basin Cumulative Reserves Fields(only principal fields are indicated in order of magnitude)

type of fields Supergiant Giantbillions of m3 >40,000 10,000- 5,000- 2,500- >850 85-850

20,000 10,000 5,000

Arabian Basin: • North Field ShaybahCentral Arabian and Rub’ al-Khali Province Ghawar Abqaiq(Saudi Arabian, Kuwait, Neutral Zone, Greater Burgan AwaliUnited Arab Emirates, Bahrein, Qatar) Qatif

Asab

Western Siberia • Urengoyskoye Tambeyskoye(Russia) Yamburgskoye Russkoye Yuzhnoye

Bovanenkovskoye KarampurskoyeZapolyarnoye YuboleynoyeMedvezhye Utrennyeye

Gulf of Mexico • Monroe(USA: Texas, Louisiana) Carthage

KatyOld OceanPledger

Arabian Basin: • South Pars AhwazZagros Province North Pars Tabnak(Iran, Iraq, Turkey, Syria) Marun Kangan

Rag-e Sefid Bibi HakimehPazanan Aga JariGachsaran

Southern North Sea • Groningen Leman(Netherlands, Germany, Denmark, HewettUnited Kingdom) Indefatigable

Viking North

Amu Darya • Dovietabad-Donmez Shorton(Turkmenistan, Uzbekistan, Afghanistan) Shatik

GazliKhangiranZewardi

Niger delta • Inoua Marine(Nigeria, Cameroon, Equatorial Guinea) Alba

Nnwa-DoroSokuObiafu-Obrikom

Saharan Basins: • Hassi R’Mel Hassi MessaoudHassi Messaoud, Ghadames, Illizi, Tin Fouye TabankortThiremt Uplift Alrar(Libya, Algeria, Tunisia) Rhourde Nouss

In Amenas Nord

Precaspian • Astrakhan Kashagan(Kazakhstan, Russia) Karachaganak Tengiz

Zhanazhol

Indonesian Basins: • Natuna D-Alpha (Natuna) Tunu (Kutei)Sumatra, Natuna, Kutei Arun (North Sumatra)(Indonesia) Badak (Kutei)

Pecico (Kutei)Nilam (Kutei)

Northern North Sea • Frigg(United Kingdom, Norway) Ekofisk

BrentSleiper WestOseberg

Eastern Venezuela • Santa Barbara(Venezuela) Pirital

Cerito CentralMulataSanta Rosa

Malaysian Basins: • Bangkot (Malay)Luconia - Malay Jerneh (Malay)(Malaysia) K05 (Luconia)

F06 (Luconia)F23 (Luconia)

Volga-Ural (Russia) • Orenburskoye Romashkino

Asia-PacificThe Sumatra basins (Atjeh, Rokan-Kampar and

Jambi-Palembang) contain a total of 15 billion barrelsof oil. The two most important fields are those ofMinas and Duri.

Gas basinsAmong the supergiant gas fields, mention must be

made in particular of North Field in Qatar, South Parsin Iran and Urengoyskoye in Russia. Of the top twentygas fields, twelve are located in the former Sovietcountries, seven in the Middle East and one in Africa.

The geological distribution of the gas reserves isshown in Fig. 9 and in Table 3. The criteria ofrepresentation (cumulative resources are indicated) arethose indicated for oil.

Middle EastThe Arabian basin has gas reserves of around

64,000 billion m3 with the following fields: the abovementioned North Field, Ghawar, and Greater Burgan.

The Zagros province has reserves of 12,000 billionm3 of gas contained in fields of giant size, such asSouth Pars, North Pars Marun, Rag-e Sefid, Gachsaranand Pazanan.

Europe-Former Soviet AsiaThe West Siberian basin, including also the Yamal

peninsula and the Kara Sea, contains of over 40,000billion m3 of gas with some of the largest gas fields inthe world: Urengoyskoye, Yamburgskoye,Bovanenkovskoye, Zapolyarnoye, Medvezhye,Kharasaveyskoye and Tambeyskoye.

Volga-Ural basin has gas reserves of 2,800 billionm3 and includes, as well as the Orenburgskoye gassupergiant, Romashkino and other smaller fields suchas Korobrovskoye, Zhaykinskoye and Uritzkoye.

The Precaspian basin, straddling the area betweenKazakhstan and Russia, has more than 5,000 billionm3. The most famous fields are Astrakhan andKarachaganak.

The Amu Darya basin in Turkmenistan containsgas reserves of 7,000 billion m3 in important fields,the main one being at Dovietabad-Donmez.

The northern part of the North Sea is an importantgas basin where there have been numerous discoveries(214 fields) and more than 4,000 billion m3 of gas.The Central Graben area contains the following fields:Troll, Ekofisk, Ørmen Lange, Frigg, Brent, Sleiper,Sleiper West, Oseberg, Statfijord and Gullfaks. Thesouthern area is subdivided into two basins, the Anglo-Dutch, mainly of gas, and the Northwest Germanbasin. The former has reserves of 2,530 billion m3 ofgas and in it the Leman, Hewett and Indefatigablefields have been discovered. The latter has 4,500billion m3 and contains the Groningen field.

AfricaThe Saharan basins contain conspicuous gas reserves

(around 5,000 billion m3), which were among the first tobe exploited. Of great importance for exports is the giantHassi R’ Mel, with more than 1,000 billion m3 followedby the 500 billion of the Rhourde Nouss complex and byminor fields (Hassi Touareg, Nezla, Rhourde Chouff)each with about 50 billion m3. Also to be noted is theAlrar field, which takes the name of Wafa in Libya.


major gas basins(total reserves >1,000 billion m3) other basins

Fig. 9. Gas basins.

Regarding the Niger basin, Nigerian governmentsources have declared reserves of 4,500 billion m3 ofgas, i.e. 35% of all African gas reserves. A project isbeing drawn up for the creation of the West AfricanGas Pipeline from Lagos in Nigeria to Takoradi inGhana, with the involvement of Chevron, Texaco andShell, while another project is for a natural gasliquefaction and export plant.

In the Nile Delta more than 1,500 billion m3 of gashave been discovered, thanks to the intense explorationactivity in the last few years. The basin contains theAbu Madi-El Qara field, Port Fuad, Wakar, and themore recent ones of Temsah, Sapphire, Scarab,Saffron, Ha’py, Baltim and Darfeel. A gas pipeline isbeing constructed from Egypt to Jordan.

Central and South AmericaThe Est Venezuela-Trinidad basin is the area in

which the major gas reserves are concentrated, withabout 4,000 billion m3, even if only 10% of it is notassociated with oil production. In the Trinidad andTobago gas basin 1,000 billion m3 have recently beendiscovered, in particular in the Red Mango, Mahogany,Kapok and Ibiscus fields.

Asia-PacificIn the Far East two countries are important for their

gas reserves, Indonesia and Malaysia. Malaysia hasmore than 3,000 billion m3, mainly in the Luconia andMalay basins. The gas fields are Bangkot, K05, F06,Jerneh, Seligi and a number of more dated ones.Indonesia has 4,000 billion m3 of reserves in theNatuna, Kutei and Sumatra basins, with the NatunaD-Alfa, Tunu, Arun, Badak, Nilam and Wiriagar Deepfields.

North AmericaThe Gulf of Mexico – considered in its regional

geological acceptation, i.e. including the coastalbasins – has total gas reserves of over 15,000 billionm3 (approximately 4,400 billions are located offshore,in 105 fields). The gas is mainly located in thecontinental shelf (65% of total reserves), where thereare 31 fields each with more than 35 billion m3 of gas;only one field of this size has so far been discovered indeep waters.

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Roberto PratoScientific Consultant


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