Oil and Gas Well Developmental Stages
Obtaining a Lease
The first step in Oil & Gas development is to obtain a lease from the mineral owner(s) to explore and extract minerals from the land. Typically, the mineral owner(s) will receive a percentage of the profit from any natural resources that are discovered and extracted [See Royalty Interest].
Locating Oil & Gas
Seismic technology is used to learn about the rock formations and layers under the ground. Regions with oil and gas tend to have certain geological formations and characteristics that help in identifying and locating oil and gas reservoirs.
Drilling an Exploratory Well
Once prospective sites of oil and gas reservoirs are located based on the rock formations, a site that allows for potentially cheap and easy access to the resources is selected. The land above the site is cleared and leveled, access roads are built, and a drill rig is erected over the potential well.
Completing a Well
The well is completed if commercial quantities (aka economically viable quantities) of oil and gas are found at the selected site; otherwise the well is deemed a ‘dry hole’ and plugged with cement in accordance with environmental restrictions.
Once commercial quantities of economically recoverable oil and gas have been found, the volume of oil and gas present and the number of wells needed to extract oil and gas in as much economically viable quantities from the reservoir is determined.
Production of Oil and Gas
Early in the production stage, oil and gas will flow to the surface on its own. Once the flow reduces, artificial stimulation methods are used to keep producing and recovering oil and gas. Most oil wells produce oil, gas and water, and the three components will be separated at the surface. Oil and gas that have been produced are then either stored in tanks or transported to separation facilities via pipelines.
When a well either produces non-economically viable amounts of oil and gas, or stops producing altogether, it is plugged with cement and abandoned in an environmentally friendly manner. The site is reclaimed and returned to similar conditions as before oil and gas development began.