Oil And Gas Reservoir ? What Kind Of Animal Is That ?

I have made so far, three (3) entries related to oil and gas industry. Eventually, these three (3) including this entry and subsequent entries will eventually help my readers to have an awareness about common words in the oil and gas industry, and subsequently have an understanding how this relates to the accounting entries. Accounting is not all about debit and correspondent credit entry. I relate this to my professional life as an accountant, especially in the oil and gas industry. I have to have a good grip and in-depth understanding about the business, to enable me to execute my work effectively and efficiently, and adding value in the business.

What is oil and gas reservoir ? During my first few weeks in the oil and gas industry, I attended one introductory course of oil and gas and the trainer said ” Imagine a sponge [ not Sponge Bob ! ] and basically, the oil and gas [ hydrocarbon] contains in the sponge “. In Technical Definition ; reservoir is a noun and ” subsurface body of a rock having sufficient porosity and permeability to store and transmit fluid. It is a critical component to complete the petroleum system.

Yes, the success or the failure of an exploration and production activities, will depend how BIG is the reservoir size down there. How much we can recover, how much daily production, and how much long it lasts ? Yes, in this respect, SIZE does matter as it will determine the conceptual design of the extracting the oil and gas from the sub surface and this design, will determine the economic viability and feasibility of the project. How much the total initial investment, and how much is the returns it would be throughout the period of operations.

The SIZE of the reservoir will be the key determinant how the oil and gas companies, will decide to extract the oil and gas down there, and in the future shall it decide to sell the operation areas, the potential investor will look into this information as well.

As per technical definition, it is very important that there is sufficient porosity and permeability to allow the oil and gas to flow. Without these two (2) factors, SIZE alone does not matter. However, with an ever evolving technology in the oil and gas industry, there available technology to improve the flows of the oil and gas resources like fracturing and acidizing. Still, it boild down to the economics of the methods.

The size of the reservoir will determine how much reserve an Exploration and Production Companies [E&P] still have in their portfolio. Remember those days, when SHELL was hit with the reserves scandals and issues ? Yes, it is especially true for public listed companies as potential investors would want to know ” how much left in the reserves [ bank accounts] as it will determine how much longer the company is still here to stay in the business, so to speak.