Men working on oil rig

Oil and gas project lifecycle

A new opportunity may be accessed through a new licence award, entering into an existing joint venture or investing in an existing project. Once access to a new opportunity or area has been gained, there are six key lifecycle stages.

Oil and gas project lifecycle


1. Exploration Seismic

Following a licence award, oil and gas companies usually conduct seismic surveys. Seismic surveys use sound waves to create maps of the sub seabed geology. These maps help to identify rock formations under the seabed which may contain oil or gas. Other survey techniques may also be used, including gravity, magnetic and electro-magnetic. If results show structures exist that are potential hydrocarbon reservoirs (prospects), an oil and gas company (operator) may then proceed with site surveys.

2. Site Surveys

Site surveys are carried out to gain more information including seabed data, water column and the environment in a potential drilling location. If the results support the identification of a prospect and a safe and environmentally viable drilling location is identified, the operator may proceed to exploration drilling.

3. Exploration Drilling

One or more exploration wells are drilled in the seabed to determine if a prospect exists and gain further data on the subsurface conditions. If a hydrocarbon reservoir is encountered the well is normally tested to see whether the reservoir is viable for production, in which case the operator may proceed to appraisal drilling. If no viable reservoir is encountered an operator may carry out further drilling if the initial results indicate that hydrocarbons may still exist elsewhere in the license area. Wells unsuitable for further development are sealed below the seabed and tested to ensure they are fully secure before being abandoned.

4. Appraisal Drilling

If promising amounts of oil and gas are confirmed, field appraisal is used to establish the size of the field and the most appropriate production method, in order to assess whether the field is commercial. Appraisal may take several years to complete. Appraisal wells are drilled to confirm the size and structure of the field. Well logging (analysis) provides data on the hydrocarbon-bearing rocks. Well testing provides hydrocarbon samples and information on flow rate, temperatures and pressures. If appraisal confirms a commercial reservoir, the operator may then proceed to development.

5. Development

Once a prospect has been shown to be technically and commercially viable a development plan is submitted to the relevant authorities for approval. Before a field is developed, materials and services are procured and equipment is manufactured and installed, including a system for transporting oil or gas. In some cases production wells may be drilled horizontally to extend many kilometres from the well head. Once development drilling is complete, the facility is tested to achieve a stable production level. Finally the development comes on-stream and starts production.

6. Production

Fields produce hydrocarbons in many different ways depending on the type (oil or gas), location, water depth and environmental conditions. Production may be entirely offshore, with product exported directly from the offshore facility, or it may be connected to a near-shore or onshore facility for processing and export. Once the development is on-line, production is gradually increased until it reaches peak production. This is maintained for a number of years before production starts to decline. It may be feasible to inject water or gas into the reservoir to maintain production levels, or drill new wells in nearby reservoirs and connect these to the facility.