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OIL & GAS
Darrell Heiden Manager, Energy & Environmental
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How to Locate Oil Deposits the OldFashion Way
http://youtu.be/NwzaxUF0k18
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Overview
Exploration and Extraction of Hydrocarbons
Production of Reservoir Fluids
Contracts
Insurance and Indemnification Requirements
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Oil & Gas Industry Segments
Upstream Exploration and Extraction of
Hydrocarbons
Midstream Transportation, Storage andMarketing
Downstream Processing Raw Materials into aFinished Product
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Upstream Segment
Mineral Lease Acquisition
Landman - Checks records for ownership andmineral interests. Once a Mineral Lease issecured the Lessee can obtain Drilling Permitsand Exploration can begin.
Seismic and Geophysical ExplorationApplication of surface methods to measure thephysical properties of the subsurface, looking
for anomalies in these properties, in order todetect the presence and position ofhydrocarbons
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Drilling Operations
Lease Operator - The individual responsible for theexploration, development, and production of an oil or gas well
or lease.The Operator:
1. Plans the Well
2. Obtains Permits3. Hires Drilling Contractor and other Service Contractors
4. Hires Well-Site Drilling and Completion Consultants
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Drilling Operations
Drilling Contractor Owns and Operates the Drilling Rig.
The Contractor maintains a crew to perform the work.
Rig Manager Responsible for the Rigs Operation andPerformance
Driller Operates the Drilling Rig
Roughnecks Handles the Drill Pipe on the Rig Floor
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Drillers on the Rig Floor
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Drilling OperationsSpecialty Service Providers
Mud Logger Creates a detailed record of
a borehole by examining the cuttings of rockbrought to the surface by the circulatingdrilling mud
Electric Log Engineer Monitors electriclog data for fluid parameters prior to casingbeing installed in the borehole
Drilling Fluids Engineer Monitors drilling
fluids (mud) to maintain hydrostatic pressurein the borehole.
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Drilling Operation
Well-Site Drilling Consultant Provides observe and
report services for the Lease Operator
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Drilling OperationsOilfield Contractors
Lease Work Preparation of the lease site for drillingoperations - build roads, grade location and digs mud pits
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Production
Well Completion
The Well is prepared for
Production (Completed) oncedrilling is finished
Casing Multiple concentric strings
of large pipe with production casingas the final string of casing.
Production Casing The casing is
cemented in place and extendsthrough the reservoir.
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Production Perforation The production casing is perforated to allow
formation fluids to enter the well bore
Production Tubing A small diameter casing that extends
into the reservoir to bring fluids to the surface
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Perforation
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ProductionProduction Contractors
Casing Contractor Runs production casing in the holeprior to removal of the drilling rig
Cementing Contractor Mixes specialized concrete
solutions and pumps a slurry down the borehole to seal eachcasing string to each other forming a seal.
Perforation Contractor The completion crew runs a
perforating gun down the borehole and sets off multiplecharges in the Production Casing
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ProductionHydraulic Fracturing The purpose of Fracing is to create multiple pathways in an
underperforming reservoir so that more fluid can beextracted.
Oil, water and other proprietary fluids are pumped into the
reservoir under pressure to create fractures in the reservoirrock.
Proppants in the fracing fluid remain in the fractures once
pressure is released creating a larger opening for reservoirfluids to flow.
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Horizontal Drilling & Hydraulic Fracing
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ProductionFlowback Contractor A flowback is a process in which
fracture fluid is recovered from the well to the surface. Thepurpose of the flow back is to:
1.Test the well for volume and pressure and gauge flow
capacity2.Transition the hydrocarbons of the well stream to a sales
pipe line or storage tank.
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Production
Pumper Gauger
Monitors well production, schedules removal of producedfluids and maintains production metering and flow charts.
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ContractsTypes of Contracts
Drilling Contracts Master Services Agreement
Contracts are how responsibilities are delegated, liability isallocated and indemnities are arranged.
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Contracts The Drilling Contractor works under one of three standard
contracts developed by the International Association of
Drilling Contractors contracts (IADC).
Day work Footage Turn-key
A contract will have a mutual hold-harmless clause asrespects injury to each others employees and
subcontractors.
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ContractsMaster Service Agreement A long term standing
contract between an Operator, Contractors andConsultants
The MSA achieves two important objectives:
1. Respond quickly to operational changes
2. Implementation of a risk allocation program formultiemployer work sites.
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Insurance Master Service Agreements have Minimum Insurance
Requirements for Consultants and Contractors
Commercial General Liability
Umbrella/Excess Liability Workers Compensation and Employers Liability
Automobile Liability
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Insurance General Liability
$1MM/$2MM Limits of Liability
ISO CGL Occurrence form, defense outside the limits
Action Over Coverage
Additional Insured Ongoing and Completed Operations
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Insurance Explosion, Collapse and Underground Property Damage
Blow Out and Cratering
Automatic Primary and Non-Contributory
Waiver of Subrogation
Sudden & Accidental Pollution (7 day discovery/ 30 day
reporting)
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Insurance Contractors Pollution Liability
Coverage on a Gradual Basis
Claims-Made or Occurrence
Third Party BI/PD and Cleanup Costs
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Insurance Professional Liability
Covers economic damages resulting from errors or omissions
Contingent bodily injury/property damage coverage
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RememberSuccess = Master Services Agreement +
Insurance Requirements
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