On January 10, 1901, Captain Anthony F. Lucas was hard at work drilling an oil well at Spindletop, in southern Beaumont, Texas. Oil was thought to exist beneath the surface, but previous attempts to locate and produce these reservoirs had been unsuccessful.At 1,139 feet, the well hit an oil reservoir and began gushing oil at a rate of 100,000 barrels a day, the largest gusher of its time. Nine days later, the well was under control and turned Beaumont into an oil boom-town. Oil and gas giant Texaco was one of the many companies formed to help produce the area.
Today, oil and gas exploration is much more advanced than in the days of Spindletop. Exploration techniques such as 3-D seismic operations have allowed production companies to become much more precise in their decisions of where to drill. Areas of interest can be probed and analyzed without drilling a single well.The days of “wildcatting” seem to be numbered.
Although these technologies have helped to reduce the number of dry holes that exploration companies encounter, the process of drilling an onshore oil and gas well can be very expensive.
Oil and gas exploration companies must take many steps before a drill bit makes a turn into the Earth’s surface. Seismic operations are used to obtain data about the formations deep below the surface. Once a prospect is chosen, landmen negotiate leases between the oil companies and mineral owners. Prices vary depending on the information known about the prospect, competition from other oil companies, price of a barrel of oil, etc.. Leasing bonuses can range from $50 an acre in an unproven prospect, to $20,000 an acre, or more, in proven areas such as the Barnett Shale in the Fort Worth, Texas area.
Once the drilling process begins and wells start having real production, infrastructure must be constructed in order to move the oil or gas from wells to facilities that can treat the resource to make a final product. Such infrastructure can include pipelines, power lines and roads.
The cost of producing oil and gas is extremley high, takes many resources, and is very time consuming. Not all prospects will pay out and every well will not hit it big. However, with the technologies available to todays oil and gas companies, these problems can be more easily overcome and turned into one thing…..profit.