Examination # 1

Review
https://oilandgasuk.co.uk/glossary/

1. The objective of financial reporting and the conceptual framework

2. The Accounting Cycle
3. The discovery and preparation for production of oil and gas reserves is the primary
objective of exploration and development activities.
4. The origin of all energy on earth is the sun.
5. Crude oil is a mixture of comparatively volatile liquid hydrocarbons (compounds
composed mainly of hydrogen and carbon), though it also contains some nitrogen,
sulfur, and oxygen.
6. The majority of hydrocarbons found on earth occurs naturally in crude oil.
7. Sedimentary rocks Petroleum may occur in any porous rock, but it is
usually found in sedimentary rocks such as sandstone or limestone. ... of the
inherent porosity between their grains, often become excellent reservoirs for oil or
natural gas.
8. Crude oil is unrefined liquid petroleum; it contains predominantly carbon and
hydrogen in the form of alkanes (saturated hydrocarbons), alkenes and alkynes
(both unsaturated), and aromatic hydrocarbons.
9. Most oil and gas deposits are found in sandstones and coarse-grained limestones.
10. Hydropower remains the largest renewable source, meeting 16% of global
electricity demand by 2023, followed by wind (6%), solar PV (4%), and bioenergy
(3%).
11. Rock in which oil and gas are found in exploitable quantities is known as a
Payzone.
12. Oil sand projects have a productive life that covers multiple decades.
13. When a well will not flow: liquid carrying sand is sent down the well and is forced
out with such power that it breaks the surrounding rocks, this is called Fracking
14. The three basic forms of fossil fuels are: Oil, Coal and Gas
15. Fossil fuels are a product of dead plants and animals.
16. Types of traps where oil can be found: Fault, Anticline, Salt Dome, Stratigraphic
trap.
17. On August 27, 1859, George Bissell and Edwin L. Drake made the first successful
use of a drilling rig on a well drilled especially to produce oil, at a site
on Oil Creek near Titusville, Pennsylvania.
18. Drake's Pennsylvania oil well idea changed the world in 1859. A replica
of Edwin Drake's well and tower stand over the exact site of the first oil well in
the world, drilled in 1859. TITUSVILLE, Pa. ... Drake's genius was to drive pipe
into the ground so debris wouldn't clog the drill hole.
19. https://lonetreeusa.com/upstream-midstream-downstream-whats-difference/
The oil & gas industry is very large and complex. It’s also essential for todays
economy. No modern society can run smoothly without oil and gas. These products
are in high demand in industry, commerce, retail, and commercial/domestic
purposes.
There is a long supply chain (production and distribution) that starts from ground
exploration and ends with the consumer. This article will briefly address how that
happens. The oil industry can be broken into three chronological sectors;
1. Upstream
2. Midstream
3. Downstream
 Upstream sector
Upstream is commonly known as the exploration & production (E&P) section. It
covers all activities related to searching for, recovering, and producing crude oil
and/or natural gas from underground or underwater fields. This sector covers
drilling of exploratory wells, and subsequent drilling and operating the wells that
recover and bring the crude oil or raw gas to the surface. Lone Tree typically
serves clients that operate in this sector. The oil and gas industry is constantly
looking for hard working, skilled workers, to keep up with technological changes.
This is where Lone Tree adds value. Providing a warm, comfortable, inviting place
to eat and rest is as critical as the work itself. By doing this, the workers in the
industry remain safe, healthy, and well rested for the important and labor intensive
work they perform.
Some of the major activities in this sector include:
Exploration
o Geological & geophysical (G&G) surveys are used to explore possible sites.
o Searches for underground or underwater crude oil & natural gas fields.
o Leases & permissions from the land owners to drill are acquired.
o Drilling exploratory wells (costly).
Production
o Extensive time and labor is required to drill the oil and gas.
o Short term storage of the oil & gas.
o Plug & abandonment finish off the well. This is the last step in the process.
The size of the underground/water field determines the extent of this activity.
The upstream section is risky, complex, and heavily regulated by government.
Outside factors that affect what happens in this sector include
 political instabilities in the US or abroad, international conflicts, & even seasonal
weather patterns.
Midstream sector
The midstream sector connects the upstream sector to the downstream sector.
Often times it is lumped in with the downstream sector. Pipelines and other
transport systems can be used to move crude oil from production sites to refineries
and deliver the various refined products to downstream distributors. Natural gas
pipeline networks aggregate gas from natural gas purification plants and deliver it
to downstream customers, such as local utilities.
Major activities involved in the midstream sector include:
o Transportation (pipeline, rail, barge, oil tanker, and/or truck).
o Marketing of wholesale products.
The midstream operations are often taken to include some elements of the
upstream and downstream sectors. For example upstream may include some
storage functions and downstream may include some transport that overlaps into
the midstream sector.
Downstream sector
The downstream sector of the oil and gas industry involves the refining of the
crude oil and/or raw natural gases obtained in the upstream sector as well as selling
or distributing the products obtained. This includes facilities such as petrochemical
plants, oil refineries, natural gas distribution companies, retail outlets (i.e. gas
stations), etc. Many products are derived from the refining of crude oil and these
may include diesel oil, liquefied petroleum gas (LPG), asphalt, petroleum coke,
gasoline, fertilizers, antifreeze, plastics, rubbers, pesticides, synthetic rubber, jet
fuel and many more.
The major activities in the downstream sector include:
 o Refining
o Transport to retail facilities
o Marketing the finished products

References:
http://globalenergy.pr.co/65678-challenges-and-solutions-in-an-upstream-and-
downstream-oil-and-gas-operation

20. In the 1850s and early 1860s oil was used chiefly as fuel for lamps.
21. Gasoline was originally a waste product.
22. Oil and gas are not usually found where they were formed. Oil and natural
gas were formed from the remains of prehistoric plants and animals—that's why
they're called fossil fuels. Hundreds of millions of years ago, prehistoric plant and
animal remains settled into the seas along with sand, silt and rocks.
23. The determination of proved reserves is based on whether the estimated oil and gas
quantities are reasonably certain to be recoverable under existing economic and
operating conditions.
24. The four elements of upstream costs:
a. acquisition
b. exploration
c. development
d. production
 25.Companies involved in the exploration and development of crude oil and natural
gas have the option of choosing between two accounting approaches: the
"successful efforts" (SE) method and the "direct cost" method. f
26. The accounting method that a company chooses affects how its net income and
cash flow numbers are reported. Therefore, when analyzing companies involved in
the exploration and development of oil and natural gas, the accounting method
used by such companies is an important consideration. t
27. Financial statements of an Oil and gas producing entity do not normally include all
the transactions and accounts commonly found in other types of economic entities.
28. The three basic forms of structural traps are the anticline trap, the fault trap
and the salt dome trap.
29. When exploring for oil, geologists look for Fault rocks and Reservoir rocks, and
Trapping structures. F
30. https://www.rigzone.com/training/insight.asp?insight_id=294&c_id=
31. Oil and gas entities uses a single ownership arrangement for sharing risk.
32. Most oil and gas deposits are found in sandstones and coarse-grained limestones.
33. Wind Energy is one of the fastest growing segments of the energy industry.
34. Fuels from Crude Oil include or can be blended to give gasoline, jet fuel, diesel
fuel, heating oil, and heavier fuel oils. Heavier (less volatile) fractions can also be
used to produce asphalt, tar, paraffin wax, lubricating and other heavy oils.

Oils in order of viscosity – 1 being the least viscous and 5 being the most:

1. North Sea Gas Condensate

2. Middle East Light
3. Todd Crinoidal Crude
4. West Texas Intermediate
5. South American Heavy Crude