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Oil and Gas
South Texas College of Law Houston
Strausser, Jeffrey

OIL & GAS
Prof. Strausser
(Spring 2004)- I got an ‘A’ in this class!!
 
 
ORIGIN of
 
I. Organic Theory
            a. Process = anaerobic bacteria à organic matter à hydrogen & carbon        (Kerogen – ooze) à increased pressure, increased temperature à natural gas +           crude oil
 
–         Crude Oil à Forms at 150°
–         Natural Gas à Forms at 300°
 
            b. Porosity – void spaces in sand grains where kerogen breaks down into gas &
                 oil.
 
            c. 3 types of Rock:
                        1. Igneous – volcanic; granite
                        2. Metamorphic – slate, marble
                        3. Sedimentary – sandstone, limestone (Needed for oil/gas accumulation)
 
            d. Hydrocarbons – molecules of hydrogen & carbon (may be gas or fluid)
 
            e. Density: lighter hydrocarbons migrate higher.
 
Gas will be found above oil, oil found above water.
                        Gas             
                        Oil
                        Water
 
            f. Accumulation
                        1. Bend
                        2. Fault
 
            g. Summary: Requirements for formation:
                        1. Source of hydrocarbons – dead critters
                        2. decomposition
                        3. porous rock – for hydrocarbons to accumulate
                        4. temperature & pressure
                        NOTE: if have these, likelihood that reservoir may contain oil/gas
 
II. Exploration & Production of Hydrocarbons
 
            a. Exploring subsurface
 
                        1. Seismic technology (sound waves to investigate)
                                    a. Use geophones (records soundwaves)
                                    b. Soundwaves travel at different velocities through materials of
                                        different density à travel slower through more dense material;
                                        faster thru less dense material (slower thru water than oil)
                                    c. Geophones used to determine density and shape
                       
                        2. Location = place where you decide to drill
 
            b. Drilling a Well
 
                        1. Fluids move from high to low pressure – so by piercing reservoir, the
                            oil will rise.
 
                        2. Process: drilling rig taken to location à connect drilling bit to series of
                            connecting pipe à chews thru the strata à circulating “drilling mud” to
                            keep the drill bit cool & it creates “hydrostatic pressure” to prevent oil
                            from just shooting upward “blow out”. à run piping called “casing”
                            down hole to release the oil (pipe is perforated by using a gun which
                            opens up the pipe allowing oil to escape).
 
                        3. Determining what’s down there:
                                    a. take core sample
                                    b. Run an electric log – measures conductivity of rock (resistivity
                                        of rock) – less dense has greater resistivity???
 
                        4. Measurement of Oil & Gas
                                    a. Oil à measured in barrels
       

                      trespassing.
 
                        a. Unless landowner conveys mineral estate away, the ownership in title
                             has absolute ownership in severalty…oil/gas and coal are considered a
                             part of the realty (real property)… “He owns all the minerals under his
                             land”.
 
                        b. Fugacious – Oil/gas are fugacious…they migrate…therefore, if
                            adjacent landowner drills well on his own property and oil/gas migrates,
                            OIP doctrine does not apply.
                                    (i) Migration is only a problem if have a common reservoir.
                                    (ii) Drainage = when extracting, some of the oil/gas comes from
                                          beneath another’s land.
 
                        c. OIP doctrine would apply if somebody came onto landowners property
                            directly and drilled a well.
 
                        d. Del Monte v. Last Chance Mining Co. (1898) – Δ followed a vein of
                            silver and lead-bearing ore it was mining…beyond the western
                            boundary of its mining claim and under Π’s mining claim.
                                    (i) RULE: OIP = the owner of th