Oil and natural gas: The basic production process

From early colonial times, Guyana’s commodity potential has attracted external investments. And this attraction has remained easily the leading indicator of both Guyana’s growth and development performance as well as its prospects. This is still true today, despite 1) the growth of the state both as a commodity producer and regulator of the economic system; 2) the diversification of the economy into non-commodity producing sectors; and 3) the substantial attraction of domestic investors into commodity producing industries.

Because of this longstanding condition a serious appreciation of Guyana’s political economy must embrace, at the very minimum, a basic or rudimentary grasp of those processes, which are involved in discovering commodity resources and later transforming such discoveries into the production and export of valued products.

The conclusion of last week’s column had indicated, that today’s along with next week’s column, will be devoted to the brief examination of 1) the likely features of the oil and gas extraction processes in Guyana’s hydrocarbons industry (oil and gas); and 2) the tricky issue of worrisome lead times between resources discovery and commercial production and export. The first item is the subject of today’s column and the second, next week’s. discoveries in the Stabroek Block by Exxon and its partners, this was the phase that had been taking place here over many years.

Stage 2 or full field (well) development commences only after exploration yields commercially recoverable hydrocarbon deposits. This stage, however, involves great expenditures, particularly those dedicated to 1) the construction of wells; 2) supporting infrastructure for moving/storing/ maintaining inputs and outputs flow; 3) necessary ancillary facilities (storage reservoirs, well head compressors, separators and so on). Of specific note, there has been rapid change in advanced drilling technologies. Today, these allow for horizontal, multilateral and multi-directional drilling along with the consolidation of well pads.

This stage is described in the manuals as one where 1) the process of extracting hydrocarbons takes place; 2) separating the mixture of liquid hydrocarbons (gas, water and solids) occurs; 3) removing the non-saleable constituents are effected; and 4) selling the gas and remaining liquid hydrocarbons take place.

Today, production sites can handle crude oil output from multiple wells. Typically, the oil is processed at a refinery and the natural gas may be processed to remove impurities either in the field or at a natural gas processing plant.

This involves plugging the well(s) and restoring the site to its original condition when economically recoverable resources are no longer available. The activities at this final stage are driven by the aim to contain environmental degradation.