What The Law School won't teach you about the Oil and Gas Business.

In an amazing twist of fate, not every lawyer eventually provides legal services as part of a law firm. Many take on other interests which they hope to build by being a part of the sector they are interested in, and others may be forced to work elsewhere due to space constraint in top tier law firms and many other factors. Thus, it is no surprise to see lawyers in the technology, energy, banking, agriculture, or telecommunications industry, providing legal, company secretarial services, or even non-legal services. However, to succeed in any of these industries, such lawyer has to be equipped with technical knowledge of the sector.

This write up practically sums up everything you need to know about the technical foundation of exploring and producing (the upstream sector) oil and gas in Nigeria.

Exploration:

The start process of the exploration of Oil and Gas is to locate the particular hydrocarbon (whether oil or gas). Sometimes, there is a visible evidence of the presence of the hydrocarbon, through oil and gas seeps, or pockmarks. However, many times, geologists have to find subsurface structures that may form oil reservoirs through passive seismic or regional seismic reflective surveys, gravity surveys, or magnetic surveys. This process is done in Nigeria with the Oil Exploration License ("OEL"), granted for a one-year period.

Well development:

When a significant amount of investigations has been made, and the hydrocarbon is confirmed to be existent, the lead then becomes a prospect to be drilled to conclusively determine its existence. For this purpose, an exploration or appraisal well is drilled with an oil rig. In the well, a steel pipe is placed to provide structural integrity. Holes are then made in the base of the well to enable the hydrocarbon to pass into the flow station. Further, a collection of valves called a “Christmas Tree” or “Tree” is equipped to regulate pressure and control flow. The right to conduct this process comes with the Oil Prospecting License ("OPL"), granted for a period not less than five years.

Production:

After the hydrocarbon is confirmed to be existent, the next process is the production process. It is important to be aware that a prospect is a potential trap that may contain a combination of hydrocarbons (oil and gas) and water. Basically, the production process separates these elements and proceeds with the hydrocarbon needed. The part of the trap that contains the hydrocarbons is known as the petroleum reservoir. The Oil Mining Lease ("OML")is granted with the prior consent of the Minister of Petroleum to conduct production operations for a 20-year period.

Flow Station Process: The production process is done in a flow station. The elements (oil, gas, and water) enter the flow station through the wells through Inlet Pipes. It then enters into the Inlet Manifold which houses the Christmas tree that controls the direction of the flow into three different headers – Test header, Low Pressure header, and High Pressure header. These headers then direct the flow of the elements into different separators – The High Pressure Separator, The Low Pressure Separator, The High Pressure/Low Pressure Separator, and the Test Separator – which then separates the elements.

If the essential hydrocarbon is Oil, the oil is transferred to an Oil Refinery. The water, by the regulations of the Department Petroleum Resources ("DPR"), is injected into the ground. The DPR also requires that the gas should not be flared but utilized or be injected back to the ground. Thus, the gas may be injected to the ground to be utilized as an artificial lift to pump up oil or water. The gas may also be refined as petrochemicals or liquefied natural gas (amongst others).

Site abandonment:

However, when the well lacks the potential to produce economic quantities of oil or gas, or when a production well is no longer economically viable, the site of production will be abandoned. This is known as Site Abandonment, and this is where the upstream activities end.

I hope you enjoyed the read. Thank you for your time!