About the Industry

About the Industry

It is best to have a background understanding of how the oil and gas industry conducts and organizes its business in order to have a better appreciation of the value that Kinetix Exploration Limited represents, the opportunities present and the day to day realities of operating in this exciting and vital industry. The industry as a whole can be typically separated into three main areas, these being upstream, and midstream and downstream with Kinetix Exploration Limited’s focus being that of upstream more commonly referred to as exploration and production, or the E&P sector. The following sections are aimed at giving a brief introduction to the fundamentals of the industry from the formation of our product through to commercial hydrocarbon production.

Fundamental Stages

Both oil and natural gas deposits have come about from decaying organic matter both that of animals and plants which after being lay down has been subject to great compression and heat with the planets sedimentary rock structures including sandstone, lime and shale within the earth’s crust. With both oil and gas being less dense than water, they can be subject to movement within the earth’s crust rising through porous rock structures until typically they become trapped by less porous geology known as a rock cap, forming a reservoir containing large quantities of hydrocarbons and this is where recovery is directed, to obtain our needed supplies of crude oil and gas.

Initial exploration begins with our geoscientists examining areas in which we already possess a relatively detailed geological understanding, to this we apply additional data derived from a variety of sources including seismic, gravity, magnetic and sea floor mapping technologies to build the most accurate representation possible of the makeup of the survey are in regard to both location and size of any potential fields it may contain and a guide as to the type of recovery methods best suited to its particular nature. Following such an evaluation if the area in question has met company criteria we will go about seeking relevant exploratory licenses from either that government or an existing license holder to begin test drilling to realize the fields full worth. This is only done once confidence in the field potential is high as it typically attracts costs through both required signature bonuses as well as financial and development progress milestones that are stated as part of any contract.

The advances that have been made in all fields of geological surveying over recent years have improved what was once more akin to an art rather than a Science, the locating, evaluating and planning the extraction of both oil and natural gas deposits. In particular seismic acquisition, where high energy sound waves are passed through the geological structure of the earth or sea bed and the returning waves analyzed much like an ultrasound in examining a human patient, can present geologist with 2-D and 3-D images of the rock structure showing where and in what manner oil and gas is accumulated. With this information available the success rate of test drilling in the industry has increased dramatically. Further testing is done at the exploratory well on recovered rock samples, electrical, magnetic and radioactive testing on these samples is conducted giving reference to those reading recorded at other fields.

With an oil or gas field being identified and exploratory drilling and testing establishing that recovery is commercial viable, it is now time to plan the development of the field. At this stage many companies seek out partners in order to better manage financial risk with one company usually assuming the management and operational responsibilities at the site. The site is then prepared in accordance with all of the relevant legal environmental and safety regulations associated with the particular location.

With the identified well drilled and cased, it still remains to be completed as recovering oil and gas is not quite the straightforward process of drilling and pumping out the product that many people believe it to be. A long list of factors need to be taken into account regard the peculiarities of each and every well from the viscosity of the deposit to the degree of porosity presented by the accompanying rock structure and how these will ultimately affect commercial recovery efforts.

The final stage, that of production is the most important one with this being where oil and gas products are recovered and eventually sold for the profit of the company. Reaching this stage from initial exploration can take on average five years of work for oil recovery and up to 7 years for that of natural gas as a part of the different processes are required dependant on whether the recovery is being conducted onshore or offshore. At the well head itself, initially recovery is accomplished with a minimum of effort as natural pressure within the reservoir helps to force the oil or gas up the shaft for collection. Over time however this natural pressure routinely drops and as this does so artificial means are required to apply pressure to continue extraction. Even with the most efficient recovery methods in the most accommodating of geological structures, we can expect that only between 20% and 40% and 60% to 80% for oil and gas respectively can be economically recovered from a reservoir.