What is upstream oil and gas production?

Upstream oil and gas production refers to all operations and processes involved in the production of hydrocarbons (oil or gas), from the underground reservoirs in which they accumulated over time, to the storage tank of a surface facility.

During the exploration phase, the Oil and Gas (O&G) company or Exploration and Production (E&P) company will look for a potential hydrocarbon accumulation using techniques like seismic surveys. An exploration well is then drilled to confirm if the potential accumulation indeed contains hydrocarbon. In that case, we call the accumulation a reservoir.

The exploration phase is then followed by a development phase. During that phase surface facilities are built to handle the production of hydrocarbons and further wells will be drilled to bring the hydrocarbons from the reservoir to the surface.

As part of the development phase, the E&P company will try to maximize the amount of hydrocarbon recovered at surface compare to the total amount of hydrocarbons in place. This ratio is called the recovery factor (eg oil recovery factor = total quantity of oil produced from a reservoir / total amount of oil initially in place in that reservoir).

Many scientific disciplines are involved in maximizing that recovery factor. A very important one is Well Performance.

What is Well Performance and Nodal Analysis?

Well performance is the discipline that aims at maximizing the production of a well. It involves the understanding of the well production mechanisms known as the well inflow and the well outflow.

The well inflow describes the laws that drive the flow of hydrocarbons from the reservoir to the bottom of the well.

The well outflow describes the laws that drive the flow of hydrocarbons from the bottom of the well to the surface.

Both mechanisms are part of what is called the nodal analysis. Nodal analysis studies the evolution of the pressure between two nodes of a system. Applied to well production the system usually starts with a node in the reservoir and finishes with a node in the surface tank or production separator. Fluid movement from one node to the other will trigger an evolution of the hydrostatic pressure and of the frictions (or pressure losses). The change of these 2 pressures (hydrostatic & frictions) will be equal to the difference of pressure between both nodes of the system. By measuring the pressure at a specific node (for instance using a pressure gauge installed in the production separator) and using nodal analysis, the pressure in another node of the system can then be calculated and used to decide of specific action aiming at increasing the well production.

  • Oil and Gas Exploration & Production (E&P) companies face the continuous challenge to maintain their production and replenish their reserves to meet the oil demand. Between 2015 to 2021, exploration and production companies had to adapt in order to deliver new projects in a low oil price environment. Even if the oil price is picking up, the growing scarcity of resources leads to a higher capital cost per barrel of reserve developed.
  • The use of artificial lift is a cost-effective solution to develop reserves. While the amount of reserves developed is not as high as drilling wells in proved accumulations, the risks of failure are much easier to manage and the associated reward contains much fewer uncertainties. For instance, installing an Electric Submersible Pump (ESP) in a well, to increase the drawdown applied on the reservoir and produce a higher rate, contains much fewer risks of failure than drilling a new one. The risk-reward is very interesting and E&P companies should focus on such projects that require lower capital expenses, especially during crisis times like we are currently going through.
  • Moreover, with reservoir pressure depletion and water-cut increase, the need for artificial lift is almost inevitable. This statement is proved by the fact that, according to World Oil Magazine, 94% of all oil-producing wells in the world use some form of artificial lift. So that is more than 900 000 oil-producing wells that use artificial lift (figure 1).
  • As per figures from Lufkin Industry established in 2012 (figure 2), most wells use rod pumping (80%). ESP comes in 2nd position with 11%, followed by Progressive Cavity Pump (PCP) with 4% then Gas Lift (3%), and other methods (2%).