SIC 1382 Oil and Gas Field Exploration Services
SIC 1382
This category covers establishments engaged primarily in performing geophysical, geological, and other exploration services for oil and gas on a contract or fee basis.
541360
Geophysical Surveying and Map Services
213112
Support Activities for Oil and Gas Field Exploration
Companies performing oil and gas exploration services are most often divisions or subsidiaries of major oil companies, although the industry also boasts several significant independent contractors. Many of the industry's leaders are known as integrated companies, which covers the entire oil and gas industry, from exploration to refining to distribution. As such, the exploration branch of the industry is affected by trends in the field as a whole.
For example, in 1998 a drop in world oil prices led to a collapse in exploration and drilling activity. During that time the number of natural gas drilling rigs fell 40 percent, but rebounded by 2001 to produce at record levels, and then declined again. When oil and gas prices are suppressed, companies tighten their purse strings, often cutting costs by idling exploratory drilling. During 2003 the U.S. war against Iraq, as well as a workers' strike in Venezuela, pushed oil prices back up. As a result, oil companies had revenues to once again pursue increased exploration activities.
Partly because the United States is considered a mature oil region, the major U.S. companies—Exxon Mobil, Texaco, and Chevron (which, along with European giants British Petroleum/Amoco/Arco and Royal Dutch/Shell, control the U.S. market)—focused their exploration efforts elsewhere. The Energy Information Administration (EIA) reported that the increases in the U.S. majors' exploration and development expenditures were mostly directed toward the North Sea and Southeast Asia.
As of 2004, North Sea oil production stood at 21 percent. However, by 2015 the region's production was predicted to fall to 11 percent. At that time, the focus is expected to turn to the Middle East with large reserves, as well as Africa and Latin America in search of deep waters. The Middle East is anticipated to represent 21 percent of oil exploration and production, Africa, 19 percent, and Latin America 18 percent.
Much of the exploration process is done before wells are actually drilled. Once a company obtains the mineral rights to the land it wishes to drill, three-dimensional (3-D) seismography, aboveground sonic sampling, and other methodologies are utilized to determine where oil is most likely to be found. Once seismographic data about either underground or sea floor rock is collected, it is analyzed for signs of oil or gas deposits, a process that takes several months. A likely area is then selected, and exploratory or "wildcat" wells are drilled to confirm suspicions. If the area is known to have oil, "development" wells are drilled. There are legal regulations on the number of wells that can be drilled in a given area by "infill drilling." Drilling to test the possibilities for expanding an oil field is done with "stepout" wells. Finally, wells that turn up no product, or too little to make continued drilling feasible, are called "dry holes."
While drilling, a rig, which is made up of a derrick and surface equipment, is set up over the target area, and a bit is attached to a drill stem that is lowered into the earth. In the most common setup, called rotary drilling, a rotating bit connected to a hollow pipe breaks up the earth. Fluids called "mud," made up of clay, water, and other ingredients, are injected through the pipe to cool the rotating bit and carry broken rock back to the surface. Often a hollow casing is placed in the well to keep the walls from caving in and to protect the contents of the well from outside influences of water or gas. Oil and gas are removed simultaneously through narrow tubing that bring the substances to the surface.
The crude oil that wells up without pumping is culled using primary recovery methods, during which time most of the available oil is recovered. In secondary recovery, additional effort is expended to remove the oil. Most often, the well is flooded with water to flush out the oil. Finally, in some wells, tertiary recovery methods, such as injecting steam or gases into the well, help flush out the heaviest, most viscous oil. Wells may be "shut in," their valves closed, during the wait for a pipeline connection or even when the oil and gas market is depressed and further drilling becomes financially difficult. Once a well is dry, it is plugged, usually being filled with cement or mud, and abandoned.
Drilling for natural gas is similar to drilling for oil, but gas must be liquefied before it can be shipped. Apart from the natural gas liquids (NGL) that occur naturally at a well, all gas obtained must be cooled and pressurized into liquid natural gas (LNG) for transportation. NGL is mainly ethane, propane, butane, and natural gasoline while the gas from LNG is mainly composed of propane, propylene, butanes, and butylenes.
The amount of oil obtained is measured in barrels (bbls), one of which is equal to 42 U.S. gallons. Natural gas is measured in thousand cubic feet (mcf), one of which equals one million BTUs (British thermal unit) of energy at one atmosphere of pressure. One barrel of oil is equal to six mcf.
Field exploration in the petroleum industry began in earnest in 1859, when Edwin Drake drilled the first successful oil well in Titusville, Pennsylvania. Previously, oil was obtained only where it seeped from the ground. Drake's discovery went to feed the burgeoning need for kerosene for lamps, but before long lamp oil made from oil replaced that made from coal.
Among the rash of speculators who entered the exploration business was John D. Rockefeller, who soon turned away from exploration, which he considered too much of a financial risk, and moved to refining and transporting the fuel already obtained. For the next 50 years, Rockefeller's Standard Oil Company expanded by any means necessary, engaging competitors in price wars or buying them out when they became a threat. Standard Oil remained unchallenged until exploration in Texas, Louisiana, and Oklahoma led to the rise of companies such as Gulf and Texaco. While Standard's oil fields were in the United States, it began exporting its products to the European and Far Eastern markets, competing with both Shell (then the Shell Transport and Trading Company) and the Royal Dutch Petroleum Company. Standard Oil made several unsuccessful attempts to buy or control Shell. Royal Dutch and Shell began cooperating with each other, partly in an attempt to compete with Standard Oil, and eventually united into one company, today the second largest worldwide. In 1909 the Standard Oil Trust was deemed illegal under antitrust charges, and the U.S. Supreme Court ordered it to be dissolved. Broken up into over 30 companies, the offshoots of Standard Oil still retained immense industry influence, eventually spawning Jersey Standard (later...
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