The life cycle of a typical oil field is defined by the need for oil companies to receive a return on the investment required to develop an oil field. This life cycle follows the five-step process of exploration, appraisal, development, production, and decommissioning. With the production phase being the only one to yield a profitable return, oil companies keep a watchful eye on appraisal and development costs while extending cost-effective production times with a variety of enhanced oil recovery (EOR) methods. An in-depth analysis of all available data is the key to improved returns with cost-prohibitive errors.
The Life Cycle of a Typical Oil Field
Each phase within the life cycle of a typical oil field is a major undertaking that isn’t easily summarized. A more detailed look into what each of these life cycle phases entails is below.
1. Exploration
Once regulatory and financial obstructions are cleared, the physical and technical effort of exploration can begin. These include seismic surveys of the area that will attempt to establish the existence of reservoirs of hydrocarbons at a site and estimate the potential size of any reserves. Importantly, this effort will also survey the costs of accessing these reserves including an assessment of their depth and any potential safety risks that may be at play. The infrastructure available to drill into and then transport hydrocarbons will also be a part of this assessment. Once the company decides that the potential returns may be worth the costs of further effort, the next phase begins.
2. Appraisal
The next phase in the life cycle of a typical oil field aims to confirm the hydrocarbon reserves estimated in the exploration phase. While the major goal of this phase of development is the confirmation of projected hydrocarbon reservoirs, the broader goal is the reduction of subsurface uncertainty. A swift certainty of the absence of any worthwhile reserves of petroleum or natural gas is better than a significant time in investment and capital that proves fruitless. The appraisal process in hard to access areas can cost upwards of hundreds of millions of dollars. If worthwhile reserves of hydrocarbons offer a return above the costs of investment made so far—as well as on the estimated further costs of development, production, and decommissioning—then development of the field proceeds.
3. Development
Development of a typical oil field is a complex and nuanced process. In many ways, there is actually no such thing as a typical oil field during this phase. Oil fields that conform to relatively familiar geological strata and formations may still have unique features that need to be accounted for and may create additional difficulties in planning for production.
The development phase typically lasts five to ten years and can cost millions of dollars. It can cost billions depending on the accessibility, complexity of the facilities and the number of wells that need to be drilled. Development is based on the assessment of costs versus the returns on that investment during the production phase.
4. Production
The production phase is the only part in the life cycle of a typical oil field where oil companies see a true return on their investment. It officially begins when oil company revenues exceed the costs of the exploration, appraisal, and development phases. It can furthermore be divided into three distinct phases of oil production—primary, secondary, and tertiary.
Because the industry is so mature, there are few if any oil fields remaining where easy primary oil recovery with minimal additional recovery options needed are left. In many cases, field development takes place with the expectation that secondary production with proper water injection well design, or even tertiary production with steam or gas, will be the main means of oil recovery. The production phase of the life cycle of a typical oil field can last just a few years or maybe up to 40 years.
5. Decommissioning
Essentially, decommissioning is an effort to return a field to as close to the state it was prior to operations as possible. This includes returning any water or fluids used during EOR to the underground formation to reduce risks of contamination. It involves the capping or sealing of wells and the deconstruction and removal of facilities and equipment.
Proving Expectations and Enhancing Returns
The key takeaway from the phases within the life cycle of a typical oil field is that there is a great deal of time, effort, and money invested in development and there is a limited production life to justify both initial and ongoing costs. The production phase needs to recover the greatest amount of oil possible. This requires careful mapping of subsurface geology to distinguish petroleum reserves that can be recovered cost-effectively from those that require more investment to recover than return on that investment.
To do so, asset teams must conduct a careful analysis of all available data. Ideally, this would take place during the exploration and appraisal phases. Realistically, the data available from the initial seismic surveys of oil fields during appraisal and exploration only offers the most generalized overview of geological formations and petroleum reservoirs within an oil field. A more granular view that allows for reducing subsurface uncertainty is only truly practicable with the data generated with the interactions from recovery operations over time, revealing a more detailed picture of the reservoir dynamics as well as the extent of subsurface formations.
It is the ability to measure how these interactions change over time—and not just a static image of the reservoir at any single point in time—that is most valuable. Improving expectations during production requires thought and analysis in four dimensions, accounting for time as well as the length, depth, and breadth in the life cycle of a typical oil field. This can be a difficult task to accomplish given how many disciplines are involved in hydrocarbon extraction and how many different programs and methods of analysis are used across the life cycle of a typical oil field. It is only when these data are integrated into one viewing environment that team members in all relevant disciplines can conduct proper analysis. Data visualization aids multi-lateral well design/planning and enhances well and reservoir management efforts in both on- and offshore fields. It allows oil companies to make the most of the life cycle of a typical oil field improving expectations, and maximizing returns on the investment.
It is the ability to measure how these interactions change over time—and not just a static image of the reservoir at any single point in time—that is most valuable.
