In days gone by, the common sentiment in the oil patch when prices rose was “Drill, baby, drill!” Not only have times changed, but even back when the phrase was made famous by former Republican Vice-Presidential nominee Sarah Palin in 2008 it vastly oversimplified and understated the efforts required to secure new production. It’s easy to overlook how intensive (and time-consuming) the operation at a well site is before even being able to extract any of those precious crude oil, natural gas and NGL molecules found beneath our feet. Prior to hydrocarbon production, well sites must be obtained, tested and developed by exploration and production companies trying to determine their chances of making a reasonable return on their investment. In today’s RBN blog, we take a step-by-step look at the leasing process.
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
We recently started a series of “101”-style blogs designed to provide a better understanding of the journey those all-important hydrocarbon molecules take from their native formations far underground to their respective downstream markets. In Part 1, we started with the basics of the upstream portion of the oil and gas value chain, from what the sector does to the types of companies that operate in that space. Today, we turn our attention to leasing and the critical role it plays in the exploration process.
Before the Shale Era, E&Ps would explore first to determine the areas that might have the potential to be developed. They would utilize seismic surveys (a topic for a future blog) and other technologies to determine what might be down there, and then if things looked good, drill exploratory wells. For most of the industry’s history, producers were drilling vertical wells into capped sandstones, looking for traps (red arrows in Figure 1 below), and it was hit or miss as to whether they would find commercially valuable hydrocarbons or come up with a dry hole — so it was drill first, then lease. Only after mapping the formations and drilling the exploratory wells would leasing start in earnest.
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About the song
“Square One” was written by Tom Petty and first appeared as the 14th song on Elizabethtown: Songs From the Motion Picture, the soundtrack album for Cameron Crowe’s 2005 film of the same name. It featured several artists, including Nancy Wilson, Elton John and Ryan Adams. It was released in September 2005. “Square One” was nominated for a Grammy Award in 2006 for Best Song Written for a Motion Picture. The song would also appear as the second track on Tom Petty’s third and final studio album, Highway Companion. Personnel on the record were: Tom Petty (lead, backing vocals, guitars, bass, drums), Mike Campbell (guitars), and Jeff Lynne (guitars, keyboards, backing vocals).
Highway Companion was recorded in 2005-06 at Bungalow Palace and Shoreline Recorders in Los Angeles, with Jeff Lynne, Tom Petty and Mike Campbell producing. Released in July 2006, it went to #1 on the Billboard Top Rock Albums and #4 on the Billboard 200 Albums charts. It has been certified Gold by the Recording Industry Association of America. Three singles were released from the LP.
Tom Petty was an American rock and roll musician, singer and songwriter. He was the leader of Tom Petty and the Heartbreakers, and a solo artist. Petty released 16 studio albums with the Heartbreakers, three solo albums and 68 singles. He also released albums with the Traveling Wilburys and with Mudcrutch. Tom Petty and the Heartbreakers were inducted into the Rock and Roll Hall of Fame in 2001 and also have a star on the Hollywood Walk of Fame. Petty is also the recipient of a Gershwin Award for Lifetime Musical Achievement, a Billboard Century Award, and an ASCAP Golden Note Award. Tom Petty died in October 2017 at the age of 66.
