Introduction to
Manitoba’s Oil
Industry
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October 2011
Innovation, Energy and Mines,
Petroleum Branch
what is petroleum?
• Crude oil, or petroleum, is an organic substance derived
from the remains of prehistoric plant and animal remains.
– Also known as fossil fuels.
• Hydrocarbons are molecules containing hydrogen and
carbon.
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Plankton
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how was oil formed?
Crude oil was formed from the remains of dead sea
creatures and plants (plankton). The organic
material remains gathered on the seabed and
were gradually covered by layers of sand and
other sediments.
Over time these layers were compressed under the
weight of sediments laid on top. The increased
pressure and temperature changed the organic
material, sand and other sediments into rock. The
sand became sandstones or potential reservoir
rocks. The organic rich layers became oil and
shale or oil source rocks.
(Please see animation at http://www.absorblearning.com/media/item.action?quick=11h)
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where do we find oil in the source rock?
• Because oil and gas are lighter
than water, they float on top of
water. Oil and gas that formed
in the source rock deep within
the earth floated up through tiny
pore spaces in the rock.
• Reservoirs contain porous
rocks, such as sandstones, that
allow fluids to flow through the
pore spaces, that is, that are
permeable.
Does this rock have good porosity?
How about permeability?
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3 phases of petroleum
Exists as a:
• liquid
– crude oil
• vapor
– natural gas
• solid
– coal
– oil sands
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how the oil is found...
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drilling rigs
• Drilling rigs use a drill stem
and a drill bit to grind
down through the
overlaying rock to get to
the oil and gas below.
• Drill rigs run 24 hours a
day, 7 days a week.
• Cost to drill : (2010 average)
– Vertical well ~$450,000 +
– Horizontal well ~$937,607 +
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4 Different drill and completion bits
Poly- Crystalline Diamond Bit
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Horizontal Drilling
A horizontal well is drilled vertically until the kick off point is reached.
At this point the well is angled until it meets the targeted producing
formation. The wellbore is then drilled horizontally through this
reservoir. Horizontal wells provide for a greater drainage area than
a conventional vertical well and therefore are generally more
productive.
In Manitoba over 90% of the wells drilled are horizontal with 1 well
replacing four vertical wells.
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Vertical Drilling
A hole drilled vertically into the earth usually cased with metal pipe
for the production of oil or gas. Prior to 2006 most wells were
drilled vertically but new drilling and completion techniques have
made horizontals wells economic
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Directional Drilling
The technique of drilling at an angle. These wells are drilled for a
number of reasons: to develop an offshore lease from one platform;
to reach a zone beneath land where drilling cannot be done
(beneath a railroad or lake)
Directional
Horizontal
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How is a bottle of soda similar to an
oil well?
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artificial lift
• If the formation does not have enough
pressure to push liquids to the surface
some type of artificial lift system will
have to be put in place.
• Types of artificial lift: pumpjacks with
bottom hole pumps, submersible pumps
and progressive cavity pumps.
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Pumpjack with bottom hole pump
The purpose of a pumpjack is to convert
circular motion into up and down motion to
control and operate the bottom hole pump.
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so now what?
• Okay, the fluid is to surface, now what?
– Is it a saleable product?
– Can you put this fluid directly into your car?
– What actually comes out of the ground?
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emulsion
• Did you know that oil and water really do mix?
Emulsion after being
shaken
Less than 1 minute later
•Emulsion is a mixture of oil, water and gas.
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what is a battery?
• If you’re thinking Duracell™ or Energizer ™ you
are way off!
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battery
• "battery" means a
system or arrangement of
tanks or other surface
equipment that receives
fluid from, or delivers fluid
to, one or more wells, and
includes an injection
plant, a pump station and
equipment or a device
designed to separate the
fluid into oil, gas and
water and to measure the
amount of oil, gas and
water; The Oil and Gas
Act
Tundra Sinclair 3-4-8-29 WPM
Battery
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what is done with the oil?
• When the crude oil is clean it is ready to be
hauled to a pipeline and sold.
Sales shipping line
Enbridge pipeline tank
farm outside Cromer, MB
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what is done with the water?
• The water that is separated out of the emulsion is salt water, also
called brine.
• Extreme care must be given to its disposal.
• Salt water is re-injected into the formation, which helps restore the
reservoir pressures.
The re-injection process is
also called waterflood or
secondary recovery.
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Mineral Rights & Surface Rights
Mineral Rights: It is the right of the owner to exploit, mine, and/or
produce any or all of the minerals lying below the surface of the
property.
Crown Mineral Rights – 100% of the mineral ownership belongs to the Crown
(Provincial Goverment)
Portional Mineral Rights - A Portion of the mineral rights are Crown and a portion
are Freehold (private)
Freehold Mineral Rights - 100% of the mineral ownership belongs to a private
(freehold) owner.
Approximately 80% of the mineral rights are owned by private individuals or
companies, the remaining 20% are owned by the Crown in the right of Manitoba.
• Surface Rights - The landowner owns the surface rights to the land
and may or may not also own the minerals.
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Environment
 The environment consists of everything around
us, from our water to our farmland, to the sky
above. These are valuable resources and it is in
our own best interest to protect our land, water
and air. We have to take care of our planet!
 Companies are required to operate within
certain guidelines that restrict how they do
business. Each country is responsible for its own
regulations on what is allowable.
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Rehabilitation
• This battery site was rehabilitated and has been
brought back to it’s original agricultural state. All
oil field infrastructure is to be brought back to it’s
original state and is regulated and administered
by the Petroleum Branch.
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Safety
 The Petroleum Branch inspectors are also
Workplace Health and Safety officers who are
responsible for enforcing a Safe work
environment for oil field workers.
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GIS
The Petroleum Branch was an early adopter of GIS and a large percentage of employees
work with GIS on a daily basis. We use this information to plot Well locations, Oil Pools,
Crown owned Mineral Rights, Flow lines, Pipelines, Oil Facilities, calculate royalties paid to
Mineral owners, create maps to post Government Lease Sales and much more.
The majority of the Oil Industry as a whole across North America uses GIS and therefore
has become much easier to view up to date information, make decisions based on
location, analyze date and submit information in a digital form.
Sample of Crown Leased Mineral Rights
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Daly Sinclair Oil Field
Daly and Sinclair Field
Consolidation in 2010
For More information on
Manitoba’s Oil Fields
Please visit
www.gov.mb.ca/petroleum
or call:
Winnipeg: 945-6577
Virden: 748-4260
Waskada: 673-2472