3. Exploratory Drilling : Significant facilities development 

 projects first occur during the exploratory phase. Exploratory drilling 

 activity requires the development of shore support industries, service 

 bases, and marine repair and maintenance facilities. More important, 

 the ground work for other major projects is made during this phase, 

 including obtaining land options and acquiring necessary permits and 

 approvals. Oil and gas companies initiate strategies during this phase 

 that emphasize minimal capital investment. 



Exploratory drilling is an operation that begins with relative 

 uncertainty of success, especially in a new province where geologic data 

 are incomplete. Each additional exploratory well drilled and each rock 

 core examined rapidly increases the information base and allows better 

 placement of the next hole. 



Teams of geologists carefully examine the records of the seismic, 

 gravity, and magnetic surveys to determine a promising location for the 

 first exploratory well. As drilling proceeds, rock cores are removed 

 and periodically the well is "logged". Well logging is a process by 

 which sonic, electric, and radiation characteristics of the sub-surface 

 rocks are measured, in place, for mapping sub-surface structures. 



If the first exploratory well hits what seems to be a commercial 

 find--that is, an encouraging rate of flow of oil or gas--another well 

 will be drilled nearby to confirm the discovery. Success here means a 

 new field has been found and efforts are immediately devoted to estimating 

 the size of the find. A more accurate estimate is developed as appraisal 

 ("step-out") wells are drilled to delineate the horizontal extent of the 

 field and determine the number of wells needed to economically drain the 

 field. 



Using the rock cores, well logs, and drill stem tests taken during 

 the exploratory drilling program, petroleum production engineers evaluate 

 the reservoirs to determine the best areas in which to set up permanent 

 oil or gas recovery wells and establish production platforms. 

 Simultaneously surface site investigations are initiated to determine 

 foundation characteristics and subsurface geology of the potential 

 platform locations. Platform locations, then, are determined by the 

 combined efforts of reservoir engineers and engineers who are responsible 

 for designing, fabricating, and installing the platform. 



4. Field Development : Field development embraces the rapid 

 implementation of strategies developed during exploratory drilling and 

 earlier phases. (Detailed descriptions of field development and production 

 are discussed in Part 2). During field development, company strategies 

 are refined and reoriented as new and detailed information on the resource 

 comes forth. This reorientation may be expressed in changes in location 



of onshore supporting facilities. During this phase, the pattern of 

 development becomes crystalized, and it is unlikely to change significantly 

 throughout the productive life of the field. 



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