Category: Oil and Gas business

USGS claims in a new survey that 13% of the undiscovered oil and 47,260 bcm of natural gas or 30% of global gas reserves are present in the Northern Pole, which is as much as Russia, the country with the largest supply of natural has

The space between a well’s casing and the wall of the borehole

A mobile submersible drilling structure used in arctic areas.  The rig is moved onto the drilling site and submerged during periods when the water is free of ice.  All equipment below the waterline is surrounded by a caisson to protect it from damage by moving ice.  The drilling deck has no square corners so that moving ice can better flow around it

AMI refers to the coming together of parties over a defined territory though it does not necessarily mean that any of the members has already possessed a legal right on part or all of the territory. The agreement can entail the stages of the partnership and can be for the purpose of reconnaissance and feasibility studies or even up to production sharing. The concept almost resembles a joint bidding agreement; one difference being the latter’s much shorter contract duration. Traditionally the duration of AMI is long and can go up to 30 years. Nowadays it is generally less than 10 years. An operator is not appointed in most AMIs hence dismissing the notion of it being a JOA. There is a term operator in an AMI but this is more defined as a coordinating role. An AMI supposedly binds parties together i.e. none can directly pursue an interest in the agreed area without consent of the others; however past drafts have been rather loose on this aspect (bear in mind that there is no mandatory standard applied on AMI). It becomes a grey area as well when a party (or its parent or its affiliates) uses an indirect route to grab an opportunity(s) as defined in the AMI e.g. the party buys over company holding a block that the AMI parties are interested in. Is the party obligated to offer/share the block in question to the AMI partners? If so, under what valuation should it be i.e. a pro-rata amount of the purchase value or a valuation based on any cost sharing mechanism within the AMI? The general AMI principle allows for a premature withdrawal of a party but forbids the party concerned to compete in the area of interest (applying provisions similar to a non-competition agreement). Even the defined territory of an AMI may eventually lead to its invalidity in view of changing circumstances e.g. an old AMI covering East Germany (which no longer exist – does it then mean Germany?). Hence, adjudication on a present commercial dispute tied especially to an old AMI can be difficult. The general AMI principle allows for a premature withdrawal of a party but forbids the party concerned to compete in the area of interest (applying provisions similar to a non-competition agreement). The issue here is whether it is permissible to impose anti-competition clauses. Within EU for example, anti-competition is generally not allowed. Even within the English courts the view is similar provided that the matter may result in a restraint on trade.

A surface that separates younger strata from eroded, dipping, older strata and represents a gap in the geologic record

The aim of the appraisal phase is to provide an accurate estimate of hydrocarbon reserves in order to make the right decision about whether and how to develop the discovery and to understand and narrow the range of uncertainty in reserves estimates. The key tools include: geological and geophysical interpretation, well test data evaluation, reservoir modeling, economic and fiscal terms. This is a period of high economic risks as on the one hand a complete appraisal program needs to be conducted so that sufficient information is available to take the right decision as to whether to drill or abandon and on the other hand it is important to know when to bring this phase to an end.

Usually a well is drilled which may last 30-40 days and electric logs are run immediately down the drill hole a process that takes about 3 days. The electric logs provide an 85% certainty as to whether there is potential for oil and gas and potential for the existence of a reservoir. This phase, however, needs to be followed by a fuller examination of the data, including especially of the fluid in the reservoir. Indeed, the electric logs do not suffice on their own as they do not testify as to whether the source rock is permeable enough to enable for the free flow of hydrocarbons. Whether the drilling will be a commercial discovery can only be known after all the production testing has been completed. This is carried out by a drill string test in the open hole to take a mud sampling out from the contents of the reservoir to the surface and examine the sample for the presence of oil and/or gas. This process takes another 7-15 days to complete. The drill stem test would be carried out by a reservoir engineer and the electric logs would be carried out by a petro-physicist