Field Notes: hydrocarbons 101
Following the result of the poll, we have prepared this first article that provides basic concepts about the hydrocarbons: what they are, how the form and how they can be commercially exploited.
Disclaimer: this content may not be interesting for all readers, but we aim to collect several aspects that are important to understand some technical results that are published in the operational updates from drilling activities.
Value from the dead
All hydrocarbons are formed from the decomposition of organic material, made from dead animals and plants. It is a misconception to say that oil is made from dead dinosaurs, in reality microscopic animals and algae, like placton, are the origin of all oil and gas even consumed.
After this material accumulates on the surface or seafloor of seas or lakes for millions of years forming large layers of hundreds of feet or tens of meters wide, it has to be buried underground and them move deeper into the Earth’s crust before it can start transforming into hydrocarbons. Once this material is buried at depths of more than 2 kilometers, the process to create hydrocarbons begins. However, the presence of hydrocarbons doesn’t mean that they can be economically exploited.
Many companies discover the presence of hydrocarbons in their exploratory drills, but the actual goal is to find discoveries that are economically viable and profitable. Here is where the hydrocarbon system becomes relevant. Most of you have heard about reservoirs and source rock, but there are other aspects that are equally necessary:
Source Rock is the organic-rich sedimentary rock where hydrocarbons are generated through the thermal breakdown of organic materials (such as dead plants and plankton) under high pressure and temperature conditions over millions of years. This process results in the formation of hydrocarbons like crude oil and natural gas.
Migration Pathway is the subsurface route through which hydrocarbons move from the source rock to a reservoir rock where they can accumulate. This pathway is usually a network of interconnected pores and permeable rock layers that allow the hydrocarbons to flow through. In extreme cases, the migration can reach the surface, it is called an oil seep (the miniature of this post corresponds to one happened in the Kern Country, California).
Reservoir Rock is a porous and permeable rock layer where hydrocarbons accumulate after migrating from the source rock. So, hydrocarbons don’t generate in the reservoirs, it is where they accumulate. Every reservoir has 2 key important features that will make it a good or poor reservoir: porosity (the size of the open spaces) and permeability (the connections between pores to allow the transmission of fluids across the reservoir). Thanks to a good porosity and permeability, a reservoir will hold significant quantities of hydrocarbons.
Trap is a geological configuration that prevents hydrocarbons from further migrating and causes them to accumulate in a specific location. Traps can be structural (formed by deformation of the Earth's crust) or stratigraphic (formed by variations in rock types and layers). Common types of traps include anticlines, fault traps, and stratigraphic pinchouts.
Seal Rock, also known as cap rock, is an impermeable layer of rock that overlays the reservoir rock and prevents the upward migration of hydrocarbons. It acts as a barrier that traps the hydrocarbons within the reservoir, preventing their escape to the surface.
Each element has to be present at a discovery, there is no oil or gas discovery without the presence of the 5 elements of the petroleum system.
How hydrocarbons are created
One aspect that is important to convert the organic material into hydrocarbons is the thermal breakdown, maturation or cracking process. Many believe that oil or gas generation from organic material only depends on the depth where the source rock is located. Therefore, this process occurs under specific conditions of temperature, pressure, and time.
The most critical factor is temperature, which increases with depth in the Earth's crust, thus, the deeper, the hotter. The exact range of temperatures required for this process can vary but typically falls within the range of 60°C to 150°C (140°F to 300°F) for oil generation and higher temperatures, around 150°C to 250°C (300°F to 480°F), for natural gas generation. Also, higher pressures at depth helps in maintaining the stability of the newly formed hydrocarbons, preventing their premature escape from the source rock.
The whole process may occur over millions of years. The longer the organic material remains buried and subjected to elevated temperatures and pressures, the greater the extent of hydrocarbon generation. Time is a critical factor in allowing the chemical reactions to proceed and the hydrocarbons to accumulate, but it could be accelerated due to certain minerals acting as catalysts.
During the migration process, each rock will react differently to each each type of hydrocarbon, particularly due to changes in density, facilitating the separation of the different components. In its path from the source rock to the reservoir, hydrocarbons also react with minerals present in some rocks, which can also act as catalysts and reactivate the cracking process during migration. Once the hydrocarbons accumulate in the reservoir, they continue evolving and changing as they will still react to the pressure and temperature.
In some cases, discovery or appraisal wells find hydrocarbons, but they are deemed uneconomical due to their immaturity, which means that the hydrocarbon deposits encountered are not fully developed. Usually, this is shown by a high organic matter content, which indicates that the thermal breakdown process is not complete. Hence, there is a working petroleum system (there is organic matter, a source rock, a reservoir and a seal) but it is at an early stage.
Different types of hydrocarbons
Once hydrocarbons generate, they usually evolve. The different hydrocarbons of commercial interest range from heavy oil to natural gas. The main difference is the length of the hydrocarbon chain, as all hydrocarbons are a long chain of hydrogen and carbon atoms:
Extra heavy oil or bitumen: very long hydrocarbon chains with a very high molecular weight and more than 60 carbon atoms. It is so dense that is the only one that is solid at room temperature. The only way to extract them is by thermal treatment using hot water or steam. For its transportation, they require upgrade by blending it withlighter oils or performing a thermal process to crack the hydrocarbon chains.
Heavy Oil: long and complex hydrocarbon chains, often containing more than 20 carbon atoms. This heavy molecular weight makes them viscous and dense.
Light Oil: a relatively shorter and less complex hydrocarbon chain with fewer carbon atoms, usually between 6 and 12.
Condensates: their hydrocarbon chains are intermediate in length and complexity between heavy oil and natural gas, with a lower molecular weight than light crude oil. Most condensates are gaseous in the reservoir but condense into liquid form when brought to the surface due to changes in pressure and temperature.
Natural Gas Liquids (NGLs): are hydrocarbons that are typically in liquid form under standard temperature and pressure conditions and are often recovered along with natural gas production. NGLs encompass a range of hydrocarbons, including ethane (C2H6), propane (C3H8), butanes (C4H10, can be isobutane or n-butane with different geometric of the chain and features), and pentanes (C5H10). Contrary to condensates, NGLs can easily volatize at surface temperature and pressure.
Natural Gas: primarily consists of shorter hydrocarbon chains with fewer carbon atoms, as few as 1 in the case of methane (CH4). Most people wrongly think that methane is the only natural gas, but ethane can be also recovered from gas reservoirs in its gaseous form.
So, the main difference between all the types of hydrocarbon consists of the number of carbons, which increases the molecular weight, that dictates the phase of the hydrocarbon at surface pressure and temperature. All hydrocarbons can be gaseous, liquid or solid, depending on the pressure-temperature pair.
Hydrocarbon classification
It is important to remember the origin of hydrocarbons, the cracking of organic materials and the migration through rocks until reaching the traps. Thus, natural gas and oil will have different characteristics depending on the origin of the organic matter and the minerals it came in contact with. As a result, all hydrocarbons will have impurities that will be extracted together with it. Most common impurities in oil and natural gas are oxygen in various forms (e.g. CO2), sulphur and nitrogen compounds, metals, wax/paraphin and salts. This introduces changes in the specific composition that will affect the premium or discount that each oil receives.
The two main types of classification are:
Gravity
Different types of oil can be classified depending on the density of oil compared to that of water, using the formula provided by the American Petroleum Institute
API gravity = (141.5/Specific Gravity) – 131.5
In the case of the API gravity, the most viscous types (higher specic gravity) have lower grades, and the less viscous (lower specific gravity) have higher grades. So, attending to the API gravity oils can be classified as follows:
Light – API > 31.1
Medium – API between 22.3 and 31.1
Heavy – API < 22.3
Extra Heavy – API < 10.0
Sulphur content
In case of sulphur, the oil can be classified as sour or sweet, depending on the content. The main challenge with sulphur is that it requires additional treatment. Also, it is important to reme,ber that both sulfur dioxide (SO2) and hydrogen sulfide (H2S) gases are toxic and represent an environmentl hazard.
In the case of natural gas, the presence of sulphur requires additional processing equipment and specially-designed pipelines, as sulphur attacks the steel and increases the corrosion. This is particularly relevant because the processing of sour natural gas is not usually done next to the wellhead, it has to be transported to dedicated processing plants through pipelines that tend to require additional maintenance capex. The good thing is that processing of sour natural gas produces sulphur (wow, really?!), which can be sold to chemical or fertilizer industries.
In the case of oil, the sulphur content is one of the main aspects that affect the use. Refineries usually demand sweet oils for the production of oil, while sour oils (typically more than 1%) usually receive a discount and are in demand by chemical industries. In the case of oil as a fuel, sour heavy oils are used by vessels that are fitted with scrubbers in their exhaust systems due to the lower cost of this type of oil, while sweet heavy oil (such as the Very or Ultra Low Sulphur Oil) is used by vessels lacking scrubbers, paying a premium for it.
Types of crudes
As we mentioned, the previous two aspects are the main features, but not the only ones. Two of the most important ones are:
CO2 content (natural gas): very high CO2 content will impact the processing of the gas, and offtakers will reflect this in the price. There have been some extreme cases of high CO2 content in Indonesia with 74 to 91% found in several wells in the Rembang Bay.
Wax/parafin (oil): the presence of wax is a problem for all oil production projects; a high wax content can result in additional costs to avoid wax-forming processes that may lead a discovery to become uneconomical. The main issue with wax is that it can accumulate on the surface of the pipes. In some cases the problem worsens if wax combines with hydrate (a special type of ice created from a combination of water, carbon dioxide, and methane due to changes in temperature and pressure) that increases the likelihood of accumulations. These deposition can rapidly reduce the flow in the well bore and, in some extreme cases, even plug the pipes. This requires the use of heat treatments or solvents, as well as periodic interventions in the pipes. Hence, a high wax content will increase the opex
Impact on the value
There are not 2 equal oils as the petrophysical characteristics and impurities will always differ, so the applications and uses will also diverge. As a result, each type of oil receives a different discounts/premium over reference oils like Brent or WTI, which reflect their inherent characteristics.
In the case of refineries, which are one of the largest consumers of oil, they run specific processes so they are designed for a particular type of oil. Usually, refineries will reflect the difference in quality from the ideal oil for its installations in the price they pay for the oil they acquire. However, it is not just a matter of prices, a refinery or combustion engine will not be able to work with any type of oil, independently of the discount.
As a summary, there are to extreme cases that show how different 2 oils can be:
Venezuelan oil has a very low API gravity in the range of 15° - 30° and with a very high sulphur content as high as 6%, which limits the number of potential buyers and, as a result, it receives a lower price and it is used by many US refineries to produce oil.
Many types of oils produced in APAC countries like the Indonesian Tapis usually have high API gravity in the range of 42° - 45° and a sulphur content below 0.04%, making them very sweet. These sweet light oil typically receives a premium and it is widely demanded as a marine fuel.
Conclusions
We hope there basics of hydrocarbons were interesting, we will continue writing about different aspects of the o&g sector, looking at information that may be useful to understand some technical data published by the companies.