2 exploration after acquiring the rights the oil

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2. Exploration: After acquiring the rights, the oil company carries out geological and geophysical surveys such as seismic surveys and core borings. The data so acquired are processed and interpreted and, if a play appears promising, exploratory drilling is carried out. Depending on the location of the well a drilling rig, drill ship, semi- submersible, jack-up, or floating vessel will be used. 3. Appraisal: If hydrocarbons are discovered, further delineation wells are drilled to establish the amount of recoverable oil, production mechanism, and structure type. Development planning and feasibility studies are performed, and the preliminary development plan is used to estimate the development costs. 4. Development: If the appraisal wells are favorable and the decision is made to pro- ceed, then the next stage of development planning commences using site-specific geotechnical and environmental data. Once the design plan has been selected and approved, contractors are invited to bid for tender. Normally, after approval of the environmental impact assessment by the relevant government entity, devel- opment drilling is carried out and the necessary production and transportation facilities are built. 3
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5. Production: Once the wells are completed and the facilities are commissioned, pro- duction starts. Workovers 3 must be carried out periodically to ensure the contin- ued productivity of the wells, and secondary and/or tertiary recovery 4 may be used to enhance productivity at a later time. 6. Abandonment: At the end of the useful life of the field, which for most structures occurs when the production cost of the facility is equal to the production revenue (the so-called “economic limit”), a decision is made to abandon. For a successful removal, operators generally begin planning one or two years prior to the planned date of decommissioning (or earlier depending on the complexity of the operation). Figure 1 provides a graphic representation of the project cycle. The risk profile of the project changes during its life cycle. Risks can be grouped under three main categories: geological, financial, and political. In general terms, while geologi- cal risk begins to diminish after a discovery, the political and financial risks intensify. One of the reasons for this is that the bargaining power and relative strength of the investors’ and the host government’s positions shift during the cycle of petroleum exploration and development. By the time production commences, capital investment is a sunk cost, and facilities installed in foreign countries represent a source of vulnerability to the investor. 4 World Bank Working Paper 3. Any operation performed on a well subsequent to its completion. 4. In the first stage of hydrocarbon production natural reservoir energy, such as gasdrive, waterdrive or gravity drainage, displaces hydrocarbons from the reservoir into the wellbore and up to surface. Ini- tially, the reservoir pressure is considerably higher than the bottomhole pressure inside the wellbore. This high natural differential pressure drives hydrocarbons toward the well and up to surface. However, as the
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