- What is oil and gas?
- When were oil and gas first discovered in New Zealand?
- How is oil and gas formed?
- How do oil and gas deposits accumulate?
- How is oil and gas found?
- How is oil and gas extracted?
- What happens to the oil and gas once they have been found?
- Do you consider the impact your activities have on the environment?
- What assets does STOS own?
- What products are made from oil and gas?
- What is a seismic survey?
- What is condensate?
- What is naphtha?
What is oil and gas?
Oil and gas are part of the chemical group known as hydrocarbons. Hydrocarbons are made up of hydrogen and carbon. They range from simple molecules to complex compounds.
The simplest hydrocarbon is methane. The next simplest is ethane. Together they make up the components of natural gas.
The next simplest molecules are propane and butane, which are liquid when kept under pressure. They are the components of liquefied petroleum gas or LPG.
More complex hydrocarbons make up petrol - which is a range of molecules with boiling points between 25 and 150 degrees Celsius.
Kerosene and diesel are hydrocarbon liquids with even higher boiling points. All these naturally-occurring hydrocarbons are known as petroleum.
The most complex and largest hydrocarbon molecules are solids at room temperature and include varieties of bitumen and coal.
The names of these hydrocarbons are easily recognisable because they are important sources of energy in modern times.
Natural gas is widely used in the North Island of New Zealand for generative electricity and heating homes, and we use diesel, petrol, and LPG to power our cars and trucks.
Oil & Gas Composition Diagram
When were oil and gas first discovered in New Zealand?
Oil and gas seeps were first observed on Ngamotu Beach in New Plymouth in 1865. A syndicate headed by a local publican attempted to find oil commercially, but failed after producing only three barrels of oil.
In 1905, the Moturoa Petroleum Company was formed and the 'Birthday' well blew out impressive quantities of oil and gas that continued to flow for some time. This initiated a frenzy of speculation in the area.
The first oil refinery in New Zealand was commissioned in 1913. It was a self-contained operation with its own tin-making section and an automatic filling unit in addition to the distillation process. The fluctuating volumes of oil produced in Taranaki meant production ceased in late 1914. The plant was later purchased by Anglo-Persian (new British Petroleum), dismantled and shipped to the Middle East.
In 1930, William Fossey ran a moderately successful refinery for about 20 years, selling his own products to North Island farmers and businesses.
In 1934, the Moturoa Oil Company began production from the Moturoa field that lasted until 1972.
How is oil and gas formed?
Nearly all our world's oil and gas deposits are found in what are called 'sedimentary basins'. The Taranaki Basin (most of which is under the sea) was formed by the movement of the earth's crust when two tectonic plates met.
For millions of years, sediment, including mud, sand, gravel and organic matter such as plant debris and the remains of microscopic sea creatures, have been deposited and buried in the basin.
Geologists, people who study the history and transformation of the materials that make up the earth, call sediments rich in organic matter 'source rocks'.
As the sediment and organic material get buried deeper and deeper and get closer to the earth's hot core, the temperature rises and pressure on the organic matter increases. This heat and compression causes all soluble chemicals to be forced out. The greasy substance left behind is kerogen (short for kerosene generation).
The sediment can reach temperatures over 100 degrees Celsius. This heat breaks down the large kerogen molecules into smaller, simpler hydrocarbons. This process produces water and carbon dioxide. It is at this stage that the source rocks are considered to have reached maturity.
These small hydrocarbons are the building blocks for oil and gas.
How do oil and gas deposits accumulate?
Once the hydrocarbons have been formed, they are often forced out of the source rocks in which they were created.
Oil and gas flow up through permeable rock and can move up to hundreds of kilometres away through tiny interconnecting fractures in the earth. As they travel through the rocks they create a migration path. Water collects in porous reservoir rocks, so when oil and gas, which are less dense than water, enter the rocks, they rise and travel up through the rocks until they hit a roof of impermeable rock which is called a 'seal'.
When oil and gas become trapped in the reservoir rock covered by a seal, the conditions are right for successful oil and gas exploration. Traps can become dome-shaped as the reservoir and seal rocks gently buckle, and act as a focus for the movement of oil and gas, holding large accumulations.
The Maui field offshore from Taranaki, New Zealand, is an example of oil and gas caught in such a structure.
Oil and Gas Accumulation
How is oil and gas found?
In certain places around the world oil and gas have seeped up to the earth's surface naturally.
In the late 19th century it was discovered that these compounds could be used to provide energy for transport, heating, and lighting homes. Methods progressed from looking for oil and gas on the earth's surface to finding it underground.
Oil and gas seeps provide only a small clue as to where larger quantities may be found as they could be seeping from an accumulation several kilometres away.
Our modern process of locating oil and gas fields is to use scientific equipment to identify areas where there is a combination of reservoir and seal rocks in a trap close to mature source rock.
Exploration efforts are focused on sedimentary basins where there is direct evidence that a mature source rock is present.
Sedimentary basins are initially located and defined by satellite and aerial photographs, as well as magnetic and gravity measurements. Rocks exposed at the earth's surface may also be surveyed to identify geological formations that may be found deeper within the basin.
Detail about the layers of sedimentary rock within the basin, or where potential traps might be located, is found through conducting a seismic survey.
Seismic surveys use released charges or vibrating weights to send energy waves beneath the earth's surface. The waves reverberate down into the earth and bounce back to the surface where they are picked up by sensors called geophones and measured by seismographs which are the same instruments used to measure earthquakes.
The data gathered is then used to make up a three-dimensional picture of the earth's structure. Occasionally, the presence of oil and gas can be identified directly from the seismic records.
Seismic surveying can be done on land or on the seabed. When tests are performed from the ocean's surface, a system known as a hydrophone array is trailed behind a specialised vessel.
Oil and gas exploration activity in New Zealand is governed by the Crown Minerals Act. The Ministry of Economic Development operates a permit system, awarding exploration permits to companies that commit to a work programme within a defined area.
The work programmes usually involve accumulating data about the site, carrying out analysis, and when the results are promising drilling an exploration well.
Finding Oil and Gas
How is oil and gas extracted?
When seismic tests indicate that oil and gas may be present, a well is drilled to test the prospect.
Drilling of the exploration 'wildcat' well presents a raft of challenges. On land, it may not be possible to place the drilling site directly abovt the drilling target because of the current land use and the surface terrain.
If it is not possible for the drilling rig to be directly above the target, it is placed nearby and the well is drilled at an angle, rather than vertically.
When the seismic survey data indicates that the oil and gas are offshore, a specialised drilling rig is brought to New Zealand waters from overseas.
A typical oil and gas well in New Zealand is two to three kilometres deep (although some can be as deep as four kilometres). To drill this far, through solid rock, tough and expensive drill 'bits' are used. Some bits even incorporate diamonds that are incredibly strong, to cut through the tough rock formations.
The bits can be rotated at speeds of over 250 revolutions a minute and despite their toughness, wear out quite quickly. Deeper wells will require more bits as the rock gets harder further down.
As the drill goes deeper into the earth, extra sections of hollow steel drill pipe are screwed in at the surface.
To assist the drilling process, a drilling fluid commonly called 'mud' is constantly pumped down the centre of the drill pipes. This cools down and provides lubrication for the drill bit, and carries rock cuttings to the surface.
When the drill hits oil and gas deposits, the heavy weight of the mud counteracts the pressure that may be released. Maintaining the correct pressure is a crucial function for the safe extraction of oil and gas. All drilling rigs have pressure control equipment to shut off the well in case high pressure oil or gas is struck.
If oil and gas are found, scientists examine the quantity flowing from the well, along with the geology of the reservoir rock cuttings. They must determine if it is consistent with what they expected to find, and if there is enough oil and gas present to continue developing the well and perhaps to drill others.
If the company thinks there is enough oil and gas to make an economic return, appraisal wells will be drilled within the same area before a final decision is made as to whether oil and gas can be produced on a commercial basis.
Oil and Gas Well
What happens to the oil and gas once they have been found?
The decision to develop a well or field is only the beginning of the oil extraction process.
Crude oil and natural gas are not often found in a 'pure' state. Each is composed of a variety of hydrocarbons, so once oil and gas are flowing from the wells, the products must be separated into component parts.
Along with oil and gas, water and hydrogen sulphide (H2S) or carbon dioxide may be extracted. If H2S is present the oil or gas is said to be 'sour' if absent, or if it has been removed it is called 'sweet'. Rest assured that all the oil and gas found in New Zealand to date is sweet and has no sulphur compounds.
Early in the life of the well, there is usually enough natural pressure to drive oil and gas up the tubing. Wells that produce naturally only need a system of chokes and valves to control the flow. The well stream fluid must be separated into its various components, including natural gas, which requires a gas processing plant to condition it for use.
As a well gets older, additional measures are used to extract the oil and gas. These include:
- water injection to support the natural water drive
- gas injection
- Miscibile Flood Operations, which inject a solvent to dissolve and carry any remaining oil
- down-hole pumps
The field type will determine how oil and gas are produced. Once individual hydrocarbons are produced the different components are then transported to storage points, where they are refined before going to customers in a stable form with consistent specifications.
Offshore Oil Rig
Do you consider the impact your activities have on the environment?
Yes. STOS has comprehensive environmental policies and processes in place to ensure we minimise our impact on the environment.
Most of our staff and contractors live and work in the areas where we operate, so have a vested interest in ensuring that our environmental performance is continuously improving.
What assets does STOS own?
STOS is owned by the Shell and Todd Petroleum Mining Companies who each hold 50% interest in our company.
STOS is employed by these owners to operate their fields and assets on behalf of various joint venture parties.
We do not own any physical assets as these are owned by the joint venture participants.
What products are made from oil and gas?
Today oil and gas are not only used as fuels - the gases, refined oils and waxes produced from crude oil are used in making plastics, commercial sprays, paints, medicinal oils, cosmetics and even chewing gum.
What is a seismic survey?
A survey conducted to gather and record patterns of induced energy wave reflections from underground rock layers that are used to create detailed models of geological structures.
What is condensate?
A form of light crude oil.
What is naphtha?
A hydrocarbon product used as a refinery feedstock - light condensate.
