Peak oil is the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline. The concept is based on the observed production rates of individual oil wells, and the combined production rate of a field of related oil wells. The aggregate production rate from an oil field over time appears to grow exponentially until the rate peaks and then declines, sometimes rapidly, until the field is depleted. It has been shown to be applicable to the sum of a nation’s domestic production rate, and is similarly applied to the global rate of petroleum production. It is important to note that peak oil is not about running out of oil, but the peaking and subsequent decline of the production rate of oil.

M. King Hubbert created and first used this theory in 1956 to accurately predict that United States oil production would peak between 1965 and 1970. His logistic model, now called Hubbert peak theory, and its variants have been shown to be descriptive with reasonable accuracy of the peak and decline of production from oil wells, fields, regions, and countries, and has also proved useful in other limited-resource production-domains. According to the Hubbert model, the production rate of a limited resource will follow a roughly symmetrical bell-shaped curve based on the limits of exploitability and market pressures. Various modified versions of his original logistic model are used, using more complex functions to allow for real world factors. While each version is applied to a specific domain, the central features of the Hubbert curve (that production stops rising, flattens and then declines) remain unchanged, albeit with different profiles.

Some observers, such as petroleum industry experts Kenneth S. Deffeyes and Matthew Simmons, believe the high dependence of most modern industrial transport, agricultural and industrial systems on the relative low cost and high availability of oil will cause the post-peak production decline and possible severe increases in the price of oil to have negative implications for the global economy. Predictions vary greatly as to what exactly these negative effects would be.

If political and economic changes only occur in reaction to high prices and shortages rather than in reaction to the threat of a peak, then the degree of economic damage to importing countries will largely depend on how rapidly oil imports decline post-peak. According to the Export Land Model, oil exports drop much more quickly than production drops due to domestic consumption increases in exporting countries. Supply shortfalls would cause extreme price inflation, unless demand is mitigated with planned conservation measures and use of alternatives.

Optimistic estimations of peak production forecast the global decline will begin by 2020 or later, and assume major investments in alternatives will occur before a crisis, without requiring major changes in the lifestyle of heavily oil-consuming nations. These models show the price of oil at first escalating and then retreating as other types of fuel and energy sources are used.

Pessimistic predictions of future oil production operate on the thesis that either the peak has already occurred, we are on the cusp of the peak, or that it will occur shortly[8] and, as proactive mitigation may no longer be an option, predict a global depression, perhaps even initiating a chain reaction of the various feedback mechanisms in the global market which might stimulate a collapse of global industrial civilization, potentially leading to large population declines within a short period. Throughout the first two quarters of 2008, there were signs that a possible US recession was being made worse by a series of record oil prices.

An oil derrick is a drilling rig designed for use in oil and natural gas production. The basic oil derrick has an upright stationary section which is potentially capable of supporting hundreds of tons of weight, combined with a movable boom which is used to raise and lower equipment. Derricks of various designs have been in use for centuries to extract valuable resources from under the Earth, and continue to be widely used today.

The term derrick comes from Thomas Derrick, a hangman who invented a type of gallows using a movable beam and pulley system during the Elizabethan era. During his lifetime, Derrick executed over 3,000 people, many of them with his modified gallows device, and the supporting framework for his gallows came to be known as a derrick. The term was adopted to describe cranes and other lifting devices which used a similar support mechanism.

Early derricks consisted of a framework which was designed to hold a large pole used for percussive drilling, which is accomplished by repeatedly beating the earth to make a hole. A modern oil derrick typically uses a drill bit which is capable of biting through the substrate, and cooled with a constant slurry of mud to prevent it from getting too hot. Typically, as the drill bit sinks in, the hole is lined to prevent a cave in. Once the drill reaches the oil, it is withdrawn so that pumps and pipes can be inserted into the hole to extract it.

In an area rich in oil, an oil derrick is designed to be a permanent structure, and will continue to operate for many years. Portable oil derricks are also used in less resource rich areas, or to make preliminary explorations in areas of potential interest. In general, a portable oil derrick is not capable of handling as much weight as a permanent one, which can be anchored to the ground and built with heavy weight equipment since it does not have to be moved.

The basic oil derrick design is familiar to residents of areas rich in oil, and is also used on offshore oil drilling platforms which extract water from under the ocean. A large oil derrick requires an extensive crew to run properly, and is often located in a field of similar derricks, all of which operate on a constant basis. The oil derrick crew typically includes geologists, engineers, mechanics, and safety inspectors to ensure that the workplace is well maintained.

Offshore oil drilling is an oil extraction technique which allows oil companies to access deposits of oil buried under the ocean floor.

Most typically, offshore oil drilling sites are situated over the continental shelf, although advancements in drilling technology have made platforms even further out to sea economically and physically feasible. Many people are opposed to offshore oil drilling, due to concerns about its impact on the environment, and the unaesthetic appearance of oil rigs off the coastline.

Many sections of the Earth’s oceans have massive deposits of oil buried deep beneath their surface, and these oil deposits are extremely appealing to many oil companies. The first offshore oil drilling operation was established in 1938 in the Gulf of Mexico, and other producers quickly started to follow suit in other regions of the world. By the 1970s, many communities had enacted specific bans against offshore drilling, and the issue became a bone of contention in some areas.

There are several ways in which an offshore oil drilling operation can be run, and the type of oil rig used is usually dependent on the depth at the location, the type of oil, and prevailing conditions. Classically, fixed rigs are built into place on the ocean floor, with multiple well heads and adjustable parts to allow engineers to extract oil from the surrounding area. Floating rigs are also used, in some regions, and in some areas offshore oil drilling is conducted on ships for even more mobility.

Working on an offshore drilling rig can be extremely dangerous. Several accidents have caused rigs to explode, capsize, or become badly damaged, with accompanying loss of life, and many crews today are housed offsite, so that if something happens to the rig, the loss of life will be less severe. Workers on oil rigs still have to contend with severe weather conditions, problems with the rig, and geological conditions which could become dangerous, and they are typically highly paid in recognition of the risks of the industry.

The environmental effects of offshore drilling are primarily caused by pollution related to poorly maintained and operated rigs. Oil spills around rigs are common, especially at the seafloor, where drilling may stimulate seepage, and heavy metal pollution can also occur. Some people also feel that offshore oil drilling disrupts and confuses marine life, although ironically rigs can also provide shelter to seabirds and fish.

Global trade is an ever-present influence on the economies of nations, and there is more trade internationally in crude oil or petroleum than in anything else. The oil trade refers to the extraction, transportation, and refinement of crude oil to be sold in markets all around the globe. Trade in crude oil and its products is a complex web of wells, offshore platforms, pipelines, tankers, and refineries. Oil, more than perhaps any other commodity, can have important worldwide political ramifications because of its very high importance as an energy source.

In the oil trade, as with others, products flow first to the markets that provide the highest value to the supplier. All else being equal, this will mean that the nearest markets receive the product first, because it costs the least for the supplier to get it there. After the nearest market’s needs are met, the product goes to the next nearest, and so on.

This phenomenon is visible in the fact that while the Middle East exports vastly more oil than any other region, oil consuming countries in the Western Hemisphere, such as the United States, tend to rely more heavily on oil produced in other Western Hemisphere countries, such as Canada, Mexico, and Venezuela. It is worth noting, however, that there is real global dependence on Middle Eastern oil, especially in the countries of the Far East.

There are four main types of crude oil resources: conventional oil, heavy oil, extra heavy oil, and bitumen, a semi-solid form of crude oil such as is found in the Canadian oil sands. Conventional oil represents only about 30% of the world’s oil reserves. Whereas conventional oil can be extracted using traditional oil well methods, the heavier oils and bitumen are sometimes so thick and heavy that they need to be heated or diluted before they will flow.

Two main types of transportation, tankers and pipelines, are essential in the oil trade. Tankers make possible the oil trade between continents, and are an efficient, low-cost way to accomplish this. Tankers of various sizes are employed, depending on the distance that the oil needs to be transported. Exports from the Middle East, for example, are typically of high volume and need to travel long distances. The tankers used for these exports can carry over 2 million barrels of oil per voyage.

Brent Blend

Brent Blend, comprising 15 oils from fields in the Brent and Ninian systems in the East Shetland Basin of the North Sea. The brent crude Oil is landed at Sullom Voe in the Shetlands. Oil production from other parts of the world is often compared to the price of this brent oil, which forms a benchmark for the oil price.

Brent Crude Oil is one of the major classifications of oil consisting of Brent Crude, Brent Sweet Light Crude, Oseberg and Forties. Brent Crude oil is produced or sourced from the North Sea.

Brent blend is a fairly light crude oil, though not as light as West Texas Intermediate (WTI). It contains approx 0.37% of sulfur, classifying it as Sweet Crude, yet again not as sweet as WTI. Brent blend is ideal for production of Gasoline. It is most often refined in Northwest Europe, but when the market oil prices are favorable for export, it can also be refined also in the United States or the Mediterranean region.

West Texas Intermediate

West Texas Intermediate (WTI) is a type of crude Oil used as a benchmark in estabishing oil prices and the underlying commodity of NYMEX (New York Mercantil Exchange) Crude Oil futures trading. This is normally the type of oil referenced in Western news and business reports about crude oil prices, alongside North Sea Brent Blend crude oil.

West Texas Intermediate (WTI) is a very light crude, lighter than Brent crude oil which is fairly light. It contains approx 0.24% sulfur, rating it a “sweet” crude, sweeter than Brent oil. Its properties and production site make it ideal for being refined in the USA, mostly in the Midwest and Gulf Coast regions of the country.

OPEC Basket

The “OPEC Basket” consisting of crude Oil from the following countries and names:

“Arab Light”, which is Crude Oil from Saudi Arabia. “Bonny Light”, which is crude oil from Nigeria. “Fateh”, which is crude oil from Dubai, “Isthmus” from Mexico (which is non-OPEC), “Minas” Indonesia. “Saharan Blend” which is crude oil from Algeria. “Tia Juana Light” from Venezuela.

OPEC traditionally try to keep the crude oil price of the Opec Basket between upper and lower price limits, by increasing and decreasing oil production. This makes the measure important for oil market trading analysts. The “OPEC Basket”, which is a a mixture of both light and heavy crudes, is heavier than both Brent and WTI crude oils.

GLOSSARY  IN  OIL & GAS PRODUCTION INDUSTRY

This is a list of words and phrases used in the oil and gas production industry. Some of the words in the list are considered slang -others common – and their usage as applied to the production of oil and gas often differs from normal usage. The definitions may vary from work area to work area. The list is not to be considered all inclusive, nor as covering all the variations in word meaning.

~ A ~

Abandon – To cease efforts to produce oil or gas from a well , and to plug a depleted formation and salvage all material and equipment.

Absorption – To soak up as a sponge takes water.

Acidizing – The treatment of formations with hydrochloric or other type acids in order to increase production or injection.

Adsorption -The attraction exhibited by the surface of a solid for a liquid or a gas when they are in contact.

API – Abbreviation for American Petroleum Institute

API Gravity – The standard adopted by API for measuring the density of a liquid, expressed in degrees.

Associated Gas – Natural gas which is in contact with crude oil in the reservoir.

Aquifer – A water-bearing rock strata. In a water-drive field the aquifer is the water zone of the reservoir underlying the oil zone.

Annular Space – The space around a pipe (casing or tubing) suspended in a wellbore is often termed the ANNULUS, and its outer wall may be either the wall of the borehole or the casing.

Automation -The automatic, self regulating control of equipment, systems, or processes

~ B ~

Back Off – To unscrew one threaded piece (such as a section of pipe) from another.

Back Pressure – The pressure resulting from restriction of full natural flow of oil or gas.

Back Up – To hold one section of an object, such as a pipe or a nut, while another is being screwed into or out of it. A BACK UP WRENCH refers to any wrench being used to hold the pipe or bolt.

Bad Oil – Oil not acceptable for delivery to the pipeline purchaser because of too high BS&W; oil requiring additional treating.

Baffles – Plates or obstructions built into a tank or other vessel to change the direction of fluid flow.

Ball and Seat – Parts of the valves in a plunger type oil well pump.

Basic Sediment and Water (BS&W) -The water and other extraneous material present in crude oil.

Batch – A definite amount of oil, mud, chemicals, cement, or other material in a treatment or operation.

Battery (Tank Battery) – The production handling equipment on the lease.

B/D – The abbreviation for barrels per day. Other related abbreviations are: BPD for barrels per day; BOPD for barrels of oil per day; BWPD for barrels of water per day; BLPD for barrels a of liquid per day

Beam – The walking beam of a pumping unit.

Beam Well – A well whose fluid is being lifted by rods and pump actuated by a beam pump rig unit.

Bean – A type of choke used to regulate the flow of fluid from a well. Different sizes of beans are used for different producing rates.

Bell Hole – A bell-shaped hole dug beneath a pipeline to provide room for use of tools by workers,

Blank liner – A liner without perforations or slots,

Blank Off – To close off by sealing or plugging.

Bleed – To drain off liquid or gas, generally slowly, through a valve called a bleeder. To BLEED DOWN, or BLEED OFF, means to slowly release the pressure of a well or of pressurized equipment.

Bleeder Valve – A small valve on a pipeline, pump, or tank from which samples are drawn or to vent air or oil; sample valve.

Blind – To close a line to prevent flow.

Blind Flange – (Also a BLANK FLANGE) – A solid disc used to dead end a companion flange.

Blowout – An uncontrolled flow of gas, oil or other fluids from a well.

Blowout Preventer (BOP) – The equipment installed at the wellhead for the purpose of controlling rig pressures in the annular space between the casing and drill pipe (or tubing) during drilling, completion and certain workover operations.

Boilerhouse – To make up or fake a report without actually doing the work.

Bonnet – The part of a valve that packs off and encloses the valve stem.

Boot – A tall section of large-size pipe used as a surge column on a vessel.

Bottom-Hole – The lowest or deepest part of a well.

Bottom Water – Water occurring below the oil and gas in a production formation

Bowl – A device that fits in the rotary table or wellhead to hold the wedges or slips that support a string of drill pipe casing or tubing while tripping in or out of the hole

Break Out – To unscrew one section of pipe from another section

Brine – Water that has a large quantity of salt, especially sodium chloride, dissolved in it. Salt water.

Bring In A Well – To complete a well and put it on production.

BTU (British Thermal Unit) – A measure of the heating value of a fuel .

Buck Up – To tighten a threaded connection.

Bump A Well (Bump Down) -To lower a sucker-rod string on a pumping unit so that the pump hits bottom on the downstroke.

Seismogram – a record produced by a seismographic survey

Seismograph – a device that records vibrations from the earth or which records shock waves set off by explosions in shot holes and picked up by geophones.

Seismographic survey – geophysical information on subsurface rock formations gathered by means of a seismograph. The investigation of underground strata by recording and analyzing shock waves artificially produced and reflected from subsurface bodies of rock.

Seismometer – a device for receiving and recording shock waves set off by an explosion and reflected by underground rock formations.

Shot charge – the explosive charge put in a seismic shot hole.

Shot hole – a small diameter hole, usually drilled with a portable truck mounted drill, for planting explosive charges sued in seismic operations.

Shot point – the shot hole – the point at which the detonation is during a seismographic survey

The petroleum industry is involved in the global processes of exploration, extraction, refining, transporting (often with oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category.

Petroleum is vital to many industries, and is of importance to the maintenance of industrialized civilization itself, and thus is critical concern to many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world at large consumes 30 billion barrels (4.8 km³) of oil per year, and the top oil consumers largely consist of developed nations. In fact, 24% of the oil consumed in 2004 went to the United States alone. The production, distribution, refining, and retailing of petroleum taken as a whole represent the single largest industry in terms of dollar value on earth.

In Arizona, California, Hawaii, Nevada, Oregon and Washington, the Western States Petroleum Association (WSPA) is responsible for producing, distributing, refining, transporting and marketing petroleum. This is non-profit trade association that was founded in 1907, and is the oldest petroleum trade association in the United States

The Society of Petroleum Engineers (SPE) is a professional organization whose mission is to collect, disseminate, and exchange technical knowledge concerning the exploration, development and production of oil and gas resources and related technologies for the public benefit and to provide opportunities for professionals to enhance their technical and professional competence.

SPE provides a worldwide forum of oil and natural gas exploration and production (E&P) professionals for the exchange of technical knowledge and a professional home for more than 75,000 engineers, scientists, managers, and educators. SPE’s eLibrary contains more than 42,000 technical papers — products of SPE conferences and periodicals, made available to the entire industry. SPE has offices in Dallas, Houston, London, Dubai, Moscow and Kuala Lumpur.

The history of the Society of Petroleum Engineers (SPE) began well before its actual establishment. During the decade after the 1901 discovery of the Spindletop field, the American Institute of Mining Engineers (AIME) saw a growing need for a forum in the booming new field of petroleum engineering. As a result, AIME formed a standing committee on oil and gas in 1913.

In 1922, the committee was expanded to become one of AIME’s 10 professional divisions. The Petroleum Division of AIME continued to grow throughout the next three decades. By 1950, the Petroleum Division had become one of three separate branches of AIME, and in 1957 the Petroleum Branch of AIME was expanded once again to form a professional society.

The first SPE Board of Directors meeting was held 6 October 1957, making 2007 the 50th anniversary year for SPE as a professional society.

The following chronology lists major events in SPE’s history and shows how membership has grown over time.

1950s
During the 1950s, the petroleum membership of AIME grew significantly, leading to restructuring decisions that would shape the future Society of Petroleum Engineers.

1957
The Petroleum Branch of AIME becomes a full-fledged professional society – the Society of Petroleum Engineers of AIME. On October 6, 1957, the first Board of Directors meeting was held in Dallas, Texas, with President John H. Hammond presiding.

1958
The SPE Reprint Series begins with the publication of Well Logging.

1961
The first issue of the Society of Petroleum Engineers Journal is published.

1979
The first Middle East Oil and Gas Show and Conference is held.

1985
SPE is incorporated separately from AIME. Becomes a separate international Society with offices in United States, United Arab Emirates and London.

The Organization of the Petroleum Exporting Countries(OPEC) was created in 1960 to unify and protect the interests of oil-producing countries. OPEC allows oil-producing countries to guarantee their income by coordinating policies and prices among them. This unified front was created primarily in response to the efforts of Western oil companies to drive oil prices down. The original members of OPEC included Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. OPEC has since expanded to include seven more countries (Algeria, Angola, Indonesia, Libya, Nigeria, Qatar, and United Arab Emerates) making a total membership of 12.

OPEC represents a considerable political and economical force. Two-thirds of the oil reserves in the world belong to OPEC members; likewise, OPEC members are responsible for half of the world’s oil exports. The fact that OPEC controls the availability of a substance so universally sought after by modern society renders the organization a force to be reckoned with.

The first display of the effect OPEC power could have on the world’s politics was in the 1970s. When the Yom Kippur War exploded in the Middle East, the United States assisted Israel in defending itself against the Egyptian and Syrian armies. In what may have been a response to this interference in the war, OPEC instituted an oil embargo that targeted the United States and its European allies. The embargo lasted from October 19, 1973 to March 17, 1974.

The effects of the OPEC oil embargo were widespread. Immediate effects included inflation and economic recession in the United States and other countries targeted by the embargo. Car owners in the United States were restricted to specific days on which they could purchase gasoline: even dates for cars with even-numbered license plates, and odd dates for cars with odd-numbered license plates.

A national law introducing more restrictive speed limits was instituted, as well as a year-round Daylight Savings Time. The OPEC oil embargo also drove auto manufacturers to produce smaller and more fuel-efficient vehicles. Even after the embargo ended, oil prices continued to rise, and the United States economy continued to suffer.

Although OPEC is often seen as a villain in the political arena, the organization serves an important purpose. OPEC prevents its members from being taken advantage of by industrialized countries, by ensuring that oil-exporting countries are paid a fair price for crude oil. Because oil-exporting countries are dependent on industrialized countries for oil products, OPEC standards prevent industrialized countries from buying crude oil at rock-bottom prices, then turning around and selling oil products back at vastly inflated prices.

An oil skimmer is a piece of equipment which is designed to clean up spilled oil. There are a number of applications for oil skimmers, and there are a number of different styles on the market to meet various needs. These devices are used to clean up after tanker spills, to clarify mixtures of oil, water and other substances for commercial use, and to clean up various pumps and tanks in facilities which handle oil and other substances.

Oil skimmers fall into two basic categories. One type of oil skimmer is intended to remove oil in a usable state, while the other removes oil along with assorted other impurities. Oil skimmers pop up in some surprising places; many restaurants, for example, have oil skimmers in their grease traps to prevent oil and grease from clogging their drains. The use of oil skimmers is also an important aspect of environmental cleanup.

There are a number of different ways in which an oil skimmer can work. Some rely on the simple operation of gravity, allowing oil to float to the top of the oil skimmer and then pushing the oil into a storage container. Other oil skimmers use belts, wheels, or rotating drums which are coated in substances which attract oil to pull oil from a contaminated fluid. Some fluids can be run through a centrifuge, which will pull the oil out of the liquid, while others are coalesced by being passed through a substance which will coagulate the oil and pull it out.

When quick containment is needed, some companies set up weir skimmers. These oil skimmers are floated on the water around the spill, and they allow water to flow through, but not oil. In these instances, the weirs serve two functions: they contain the spill, and they get a head start on cleanup. Cleanup personnel can also use hand held oil skimmers which essentially vacuum up the oil, while others deposit sponges or other absorbent materials into the spill to collect the oil so that it can be removed.

Oil skimmers come in various sizes, ranging from industrial oil skimmers which are designed to handle a high volume of contaminated material to smaller skimmers which are used by hand or on small spills. The sooner an oil skimmer is applied to an oil spill, the more successful it will be, as oil tends to spread into a slick, a very thin layer of oil which floats on top of water and other carrier fluids. Slicks are difficult to clean up since they are so thin, but they can deal a lot of damage.