6.0
UPSTREAM OIL & GAS EXPLORATION AND
PRODUCTION INDUSTRY
Geological and Geophysical Analyses
Seismic Acquisition Vessels
Exploration Drilling
Development
Production
General Comments
Actions for Final Report
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6.0
THE UPSTREAM OIL AND GAS EXPLORATION AND PRODUCTION
INDUSTRY
The terms “upstream” or “E&P” in the context of the oil and gas industry refer to that
part of the oil and gas industry that is concerned with the exploration for, and the
production of, hydrocarbons.
The E&P process goes through a number of distinct phases with each phase roughly
equating to an order of magnitude increase in expenditure:




Geological and Geophysical analyses (Millions of US dollars)
Exploration drilling (10’s of millions of US dollars)
Development (100’s of millions to billions of US dollars)
Production
Each phase requires the delivery of services which maybe of a general/generic or
specialized nature. The company initiating, controlling and paying for the activities
associated with E&P is called the “Operator”, and the operator will normally subcontract a lot of the activities to specialized service providers. An understanding of
what each phase of E&P entails will assist with identifying potential opportunities for
South African suppliers and thereby help identify the demands that will be placed on
the NPA to meet the requirements of the potential suppliers.
Geological and Geophysical Analyses
G&G studies involve the analysis of data and tend to be performed in-house by the
operator, although some work can be sub-contracted to specialists. Central to G&G
studies is the interpretation of seismic data.
Seismic Acquisition Vessels
In the offshore E&P industry seismic data is acquired by large highly specialized
seismic acquisition vessels. There are no seismic vessels based out of South Africa
and they only tend to come into the region when hired by an operator for a specific
acquisition project. The vessels spend a minimum amount of time in harbour to bunker
up and take on supplies or to make emergency repairs.
Seismic tow compared to the city of Oslo (Norway)
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Exploration Drilling
Potential drilling locations are identified based on G&G analyses. The type of Mobile
Offshore Drilling Unit (MODU) selected for a specific drilling project will depend on
various criteria such as water depth, current, sea conditions and depth to target. A
drilling operation requires numerous services as well as a considerable amount of
equipment and consumables.
Examples of Mobile Offshore Drilling Units
All equipment and consumables need to be transported to the rig and waste materials
removed from the rig. Depending on the type of MODU selected by the operator work
boats will be used to tow the vessel, keep the rig supplied and to act in a stand-by
capacity at the rig, the work boats are essentially specialised tugs designed to work in
the oil field.
In order to help ensure that no delays occur during drilling operations an onshore
logistics base is established where equipment and supplies for the MODU are
warehoused in preparation to be sent offshore as required. A typical logistics base will
have office space, an open yard, warehousing and workshop facilities. Proximity of a
logistics base to harbour facilities is essential so that equipment can be easily
transferred to and from the base to the work boats.
Helicopters are used to transport personnel to and from the rig; therefore there is a
requirement for helicopter services and associated support services. Similarly, in
some instances chartered fixed wing aircraft are used to transport rig personnel to the
heliport.
A drilling operation relies very heavily on logistics, due to the high cost of drilling it is
imperative that all equipment and personnel are in the right place when you need
them.
Development
During the development phase of the E&P process the focus shifts to engineering and
construction but also includes further drilling of production wells and possible
acquisition of seismic data. The construction of production facilities requires large
fabrication areas with direct access to harbour facilities with all the necessary support
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services, warehousing, workshops etc. In addition, the offshore construction and
installation vessels will also require servicing and supply.
Production
The production phase is characterized by a fairly steady demand for certain
consumables as well as equipment and services focused on maintenance and support
of the production facility.
During its working life a facility sometimes requires
upgrading and/or expansion as well as regular shutdowns for overhaul. Personnel and
supplies will need to be transported to the facility and some waste materials removed.
General Comments

Logistics is the life blood of E&P operations; it is a service common to all the
phases of the process.

The oil and gas E&P business is unforgiving to any company that delivers poor
standards of service and workmanship.

The E&P industry requires both hi-tech specialized services and equipment
such as wireline logging, testing services, cementing services etc. as well as
generic services such as catering, fuel supply, communications, household
consumables etc.

The availability of suitable lay-down areas, warehousing, workshop facilities
and easy access are key to attracting oilfield business to the Western Cape
(Cape Town and Saldanha Bay).

Some regulations pertaining to the movement of MODU’s in and out of the
harbours need to be reviewed by NPA.

Authorities such as customs and excise, immigration legislation and SAMSA
need to be come involved in the consultative process so that they can better
understand the functioning and requirements of the E&P industry.
Actions for Final Report.

Regulations regarding movement of MODU’s in and out of harbours to be
proposed

Workshop to be held to advise Customs, Immigration, SAMSA to advise them
of the requirements of the E&P industry and the hub in the Western Cape
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