That’s what we’re all about, right? So here’s our primer on that great invention—actually a family of inventions—the American-made and American-perfected (and Texas and New Mexico mastered) oil well. This month, we cover everything short of raising the derrick.
[Editor’s Note: This article, as well as our HR IQ column in this same issue, are part of a special initiative we’re undertaking in our April, May, and June issues. This initiative is our effort to “break down” the workings of the oil and gas industry for the benefit of our growing numbers of readers who—though they may be employed in oil and gas—are not field employees and may not have as much acquaintance with the mechanical, in-the-field side of the business as do hands-on employees. For these employees—mostly office workers—and for anyone else wanting a bit of a refresher, we walk through the “making of a well” in three issues. This installment covers the preliminary stages—the idea-formation stage, the prospecting stage (largely geological and seismic work), the land-research-and-leasing stage, and the site preparation stage.]
It’s a fascinating and truly a phenomenal thing, when examined in detail—this business of drilling into the earth’s crust and extracting oil and natural gas.
It is many things. It is the culmination of decades of genius and equally a product of wrenching trial-and-error. It is intricate and yet it is simple. It represents the cutting edge of some of the free world’s most penetrating scientific endeavor, and it is hard-working, blue-collar industry. It is hopes and dreams. On it ride the fortunes of nations.
The oil and gas “process” is fairly universal, having tracked a straight-line evolution from its earliest days and being recognizable, by its steps and its execution, anywhere it is found around the globe.
So—being so uniform and replicable—it is interesting that here, at our starting point, we find it most difficult to say what the starting point of the oil and gas process really is. Most endeavors have a clearcut starting point. But do we say that oil and gas begins with an idea? A hypothesis? Surely it involves ideas. But the more one examines it, the more it appears that “oil is where you find it,” and the individual who seeks oil begins as often with established seismology or geology, or with knowledge of proven production, as he does with an “idea.”
That’s what we heard from two knowledgeable sources whom we consulted. PBOG spoke with two industry professionals, both of them in Abilene, Texas, for insights into some of the ins and outs of these early phases of the business. Phil Kendrick is the founder and president of Kendrick Oil and Gas, and Tommy J. Blair is an independent geologist.
And then there’s the question of geology and seismology. Both are clearly steps in the prospecting process. But which comes first? Obviously, sometimes the geology leads to seismology (and/or GIS mapping), and sometimes the seismology leads to geology, or at least to more geology. So here, too, the order is not clearly defined.
So our accompanying graphics might not chart an order that is always the order. But still, we have to start somewhere. And so we start with this elusive “idea.”
We asked Blair, the geologist. Does the making of a well begin with geology or with an idea?
“Both,” he said. “For instance, for me, it is an idea. You have an idea. Maybe you’ve worked an area for some time. I’ve done a lot of work in Nolan, Scurry, Fisher, and Coke counties, for instance. And when you’re doing this, you do a lot of mapping. You might map the whole county on certain horizons, just to get an idea of where the structures might be, or where the production is. You use all these things to help you at finding oil and gas. Nearby shows and production are, of course, probably the key. But it’s also about what you map, when you map something. If it is a reef, you look for structure. And if it is a sand, a lot of times you’ll just look for a strat trap. But basically, you’ve got to have some shows nearby, and you’ve got to have production. You try to get on trend with different fields or with production trends, but it basically starts with an idea. And if you can come up with enough evidence that you have a prospective area, then you proceed to the next step.”
That step might be seismographic mapping or surveying.
“Yes, you might use seismic,” Blair said. “I don’t use much seismic in what I do, though I have in the past, especially on the Ellenberger and these structural things. But yes, you’ll come up with your prospects and you’ll map them, you’ll map their different horizons, whatever you think is prospective. You’ll do structure maps and Isopach maps [a thickness map]—especially with sands—sand thicknesses and porosity thicknesses.”
The answer, then, from Blair is that you employ the geological sciences because you’ve got an idea. You’ve got something in mind that you’re looking for.
“Sure you do,” Blair said. “And that idea comes from the nearby production and shows. You’re looking to expand those into your prospect, to find commercial production.”
We asked Kendrick as well. Here is Kendrick’s reply to the question of “idea”—does one begin the process with an idea?
“If you’re in an area where there hasn’t been any drilling at all—and, surprisingly, there are a lot of areas in the United States where they have never had a well put down—if you’re really wildcatting on the idea that there may be the possibility of oil, well, that’s where you start out with something like magnetics or maybe something like an aerial survey, where you fly over the area and end up with some kind of information about what the ‘basement’ looks like, or what the surface geology looks like. And then you determine whether it [still] looks interesting to you. But most people aren’t doing that. Most people are trying to stay close to where proven production is. They don’t want to go out and do rank wildcatting. It’s too expensive. That’s for the big boys, really.”
Kendrick turned from the subject of wildcatting—where “idea” would seem to hold pre-eminence—to the idea (hard not to employ the word this way) of leaving wildcatting behind to focus on areas where oil prospects were better established. In other words, “idea” gets subordinated to geology. But how could it not be like that? And how could the best ideas not have their starting point in the already-known?
“And so,” Kendrick continued, “you find an area that has some good production, and you say, ‘I’ll bet there’s some more production here, and I’ll see if maybe I can come up with something that would [capitalize on] some passed-up areas.’ So that is when you get all the [electric] logs in the area and do some subsurface geology. Even plot your production—plotting what the wells have done. If they have done really well, then that’s what makes it get interesting, to trend with those or close to those, or to try to find a feature somewhere in the area that would resemble the feature that the local oil was produced from. I think that nearly everybody in the Abilene area is trying to stay where there is good oil production.”
So, obviously, as both men’s answers show, there must be an idea and there must be geological indicators and maybe seismographic indicators, but both elements—idea and evidence—must exist. It’s just so very hard to extricate one from the other.
From here it gets more straightforward. Kendrick, who is rather “old school” in his approach, even goes so far as to cite surface geology as a prospecting method. All the major oil fields in West Texas were found using surface geology, of course, because all were found so many decades ago when surface geology was practiced universally. But with the 21st century advances in 3D seismic, few people express ongoing faith in that technique. But Kendrick does—possibly because he actually understands surface geology, which is likely a vanishing art and science. Kendrick, who was interviewed by this magazine in 2012, is something of a jack of all trades in the oil business, someone who still does his own geology, his own land work, etc. Like most of the mid-sized and smaller oil companies, Kendrick Oil and Gas has had to stay with more traditional conventional prospects, ceding the unconventional plays—the massive shale plays—to the majors and the major independents. And so, dealing with conventional prospects, he has retained some of the techniques that have never stopped succeeding in those prospects.
But at any rate, we asked him which comes first—geology or seismic—and again it turned out to be a case of “both”:
“It depends,” he said. “These major companies, they’ll go out and seismograph hundreds of square miles. Now, they wouldn’t go out and seismograph hundreds of square miles if they hadn’t done some kind of geology that indicated there was some potential there. So the seismograph helps fortify what the potential is. [And what the geology found.] But I would say it [the process] would start with surface geology if there is surface exposure. Surface exposure of the limestone or sandstone or something, that they could [key on to] map surface structure. If you don’t have that, then you’d proceed with whatever well control you’ve got—the logs of wells around the areas you’re interested in. Do any of them reflect that there’s some structure there? And then the seismic would probably be run over the area that looked potentially good based on either your surface geology or your subsurface geology. Then there are other things that people use. They use satellite data to pick up indicators. There are some people who think that they can tell where hydrocarbons are present just by the discoloration of the ground or the discoloration of the vegetation, or what have you. And they can see faults on satellite maps. Of course, that’s very meaningful. And so sometimes that’ll be the first thing that they do.”
Kendrick said that some oilmen will look at a drainage map and will base some of their decisions on what they see there.
“There are other ways,” he added. “There are a lot of things that make a geologist or an oil operator interested in an area. It doesn’t necessarily start out with the geology itself. There’s magnetics—you can run magnetics. You can run gravity. There was one company that came out here in the 1950s—American Trading, out of Baltimore, Maryland—and they knew nothing about this country. They just knew it was a good area and put an office in Abilene and they bought magnetic maps, or they had magnetic maps made of the whole area. And where they saw a magnetic ‘high,’ or a feature, they would lease. And that’s what they used to lease on.”
As for leasing itself, as a step, it comes after the prospecting is deemed satisfactory, and like these other steps it is both an art and a science.
Asked when he starts leasing, Kendrick replied, “When you’ve got everything you think you need to identify that this is a good place to drill a well and expect to find oil, then you start your leasing—it’s after you obtain all your information. You’ve got your permit by then, too. You’ve got to have it before you can do anything on the lease, in the way of drilling. You have to have the permit number before you can even start things, in case they [Railroad Commission] come out and, if the driller doesn’t have a permit number, they’ll stop everything until he gets it.”
Said Blair: “Permitting is a big deal any more. Because it’s kind of complicated, because you’ve got to have so many permits and different things from the government. They’re more involved in it. But the Railroad Commission is pretty good about doing what’s right for the oil business. But still there are permits and there is a lot that goes on in the leasing process. It’s also pretty complicated. It can be. I know a lot of these deals get started as brother-in-law deals, or kinfolk deals. Somebody will say, ‘Well, you’re a geologist. Will you look at my place and say if there’s any oil on it?’ And I’ve done that. I’ve found prospects doing that. Just looking at one little specific area and then expanding it into a big prospect.”
And so Blair came full circle, and so do we, when he adds that “Most of my prospects have just been my idea of where oil was.”
Finally, as far as the pre-drilling processes are concerned, there is the dirt work and site set-up.
For Kendrick, that starts with striking yet more agreements. “First you go out and contact the surface owner or the guy who has the grass lease or who leases the surface, or what-have-you, and you tell him what you’re going to do and where you’re going to drill a well, and then you make a deal with him on what the surface damages might be, for whatever activity you anticipate doing. You come to some kind of agreement. Now you have permission to go on the land, and then you get the surveyor out there, and survey it out and stake it in the right spot.
“Then you’ve gotta build your road and clear the location—clear the mesquite and cactus and all that—and make it flat. Then you dig your circulating pit and your reserve pit. Unless you’re going to use steel pits, which used to be seldomly used in this country, but more and more are coming into use.”
That brings us to drilling the well, which we have set aside for next issue. See item at right for more on that.