US OIL AND GAS INDUSTRY

Nature of the US Oil and Gas Industry

Oil and natural gas furnish about three-fifths of our energy needs, fueling our homes, workplaces, factories, and transportation systems. In addition, they constitute the raw materials for plastics, chemicals, medicines, fertilizers, and synthetic fibers. Petroleum, commonly referred to as oil, is a natural fuel formed from the decay of plants and animals buried beneath the ground, under tremendous heat and pressure, for millions of years. Formed by a similar process, natural gas often is found in separate deposits and is sometimes mixed with oil. Finding, developing, and extracting oil and gas are the primary functions of the oil and gas extraction industry. While some of these functions are done by the large oil companies, most are done by contractors working in the support activities for mining sub-sector, which is included in this industry.

Using a variety of methods, on land and at sea, small crews of specialized workers search for geologic formations that are likely to contain oil and gas. Sophisticated equipment and advances in computer technology have increased the productivity of exploration. Maps of potential deposits now are made using remote-sensing satellites. Seismic prospecting—a technique based on measuring the time it takes sound waves to travel through underground formations and return to the surface—has revolutionized oil and gas exploration. Computers and advanced software analyze seismic data to provide three-dimensional models of subsurface rock formations. This technique lowers the risk involved in exploring by allowing scientists to locate and identify structural oil and gas reservoirs and the best locations to drill. Four-D, or “time-lapsed,” seismic technology tracks the movement of fluids over time and enhances production performance even further. Another method of searching for oil and gas is based on collecting and analyzing core samples of rock, clay, and sand in the earth’s layers.

After scientific studies indicate the possible presence of oil, an oil company selects a well site and installs a derrick—a tower-like steel structure—to support the drilling equipment. A hole is drilled deep into the earth until oil or gas is found, or the company abandons the effort. Similar techniques are employed in offshore drilling, except that the drilling equipment is part of a steel platform that either sits on the ocean floor, or floats on the surface and is anchored to the ocean floor.

In rotary drilling, a rotating bit attached to a length of hollow drill pipe bores a hole in the ground by chipping and cutting rock. As the bit cuts deeper, more pipe is added. A stream of drilling “mud”—a mixture of clay, chemicals, and water—is continuously pumped through the drill pipe and through holes in the drill bit. Its purpose is to cool the drill bit, plaster the walls of the hole to prevent cave-ins, carry crushed rock to the surface, and prevent “blowouts” by equalizing pressure inside the hole. When a drill bit wears out, all drill pipes must be removed from the hole a section at a time, the bit replaced, and the pipe returned to the hole. New materials and better designs have advanced drill bit technology, permitting faster, more cost-effective drilling for longer periods.

Advancements in directional or horizontal drilling techniques, which allow increased access to potential reserves, have had a significant impact on drilling capabilities. Drilling begins vertically, but the drill bit can be turned so that drilling can continue at an angle of up to 90 degrees. This technique extends the drill's reach, enabling it to reach separate pockets of oil or gas. Because constructing new platforms is costly, this technique commonly is employed by offshore drilling operations.

When oil or gas is found, the drill pipe and bit are pulled from the well, and metal pipe (casing) is lowered into the hole and cemented in place. The casing’s upper end is fastened to a system of pipes and valves called a wellhead, or “Christmas Tree,” through which natural pressure forces the oil or gas into separation and storage tanks. If natural pressure is not great enough to force the oil to the surface, pumps may be used. In some cases, water, steam, or gas may be injected into the oil-producing formation to improve recovery.

Crude oil is transported to refineries by pipeline, ship, barge, truck, or railroad. Natural gas usually is transported to processing plants by pipeline. While oil refineries may be many thousands of miles away from the producing fields, gas processing plants typically are near the fields, so that impurities—water, sulfur, and natural gas liquids—can be removed before the gas is piped to customers. The oil refining industry is considered a separate industry, and its activities are not covered here, even though many oil companies both extract and refine oil.

The oil and gas extraction industry has experienced both “booms” and “busts” over the years, illustrating the cyclical relationship between the price of oil and employment. During periods of high oil and gas prices, the industry expands exploration and production and hires more workers. The opposite occurs during periods of low prices.

Working Conditions

Working conditions in the industry vary significantly by occupation. Roustabout jobs and jobs in other construction and extraction occupations may involve rugged outdoor work in remote areas in all kinds of weather. For these jobs, physical strength and stamina are necessary. This work involves standing for long periods, lifting moderately heavy objects, and climbing and stooping to work with tools that often are oily and dirty. Executives generally work in office settings, as do most administrators and clerical workers. Geologists, engineers, and managers may split their time between the office and the jobsites, particularly while involved in exploration work.

Drilling rigs operate continuously. On land, drilling crews usually work 6 days in a row, 8 hours a day, and then have a few days off. In offshore operations, workers can work 14 days in a row, 12 hours a day, and then have 14 days off. If the offshore rig is located far from the coast, drilling crew members live on ships anchored nearby or in facilities on the platform itself. Workers on offshore rigs are always evacuated in the event of a storm. Most workers in oil and gas well operations and maintenance or in natural gas processing work 8 hours a day, 5 days a week.

Many oilfield workers are away from home for weeks or months at a time. Exploration field personnel and drilling workers frequently move from place to place as work at a particular field is completed. In contrast, well operation and maintenance workers and natural gas processing workers usually remain in the same location for extended periods.

Occupations in the Industry

People with many different skills are needed to explore for oil and gas, drill new wells, maintain existing wells, and process natural gas. The largest group, construction and extraction workers, account for about 37 percent of industry employment. Professional and related workers account for about 14 percent of industry employment, and managerial, business, and financial workers account for about 12 percent. Transportation and material moving workers make up about 10 percent, and production workers about 9 percent.

A petroleum geologist or a geophysicist, who is responsible for analyzing and interpreting the information gathered, usually heads exploration operations. Other geological specialists also may be involved in exploration activities, including paleontologists, who study fossil remains to locate oil; mineralogists, who study physical and chemical properties of mineral and rock samples; stratigraphers, who determine the rock layers most likely to contain oil and natural gas; and photogeologists, who examine and interpret aerial photographs of land surfaces. Additionally, exploration parties may include surveyors and drafters, who assist in surveying and mapping activities.

Some geologists and geophysicists work in district offices of oil companies or contract exploration firms, where they prepare and study geological maps and analyze seismic data. These scientists also may analyze samples from test drillings.

Other workers involved in exploration are geophysical prospectors. They lead crews consisting of gravity and seismic prospecting observers, who operate and maintain electronic seismic equipment; scouts, who investigate the exploration, drilling, and leasing activities of other companies to identify promising areas to explore and lease; and lease buyers, who make business arrangements to obtain the use of the land or mineral rights from its owners.

Petroleum engineers are responsible for planning and supervising the actual drilling operation, once a potential drill site has been located. These engineers develop and implement the most efficient recovery method in order to achieve maximum profitable recovery. They also plan and supervise well operation and maintenance. Drilling superintendents serve as supervisors of drilling crews, overseeing one or more drilling rigs.

Rotary drilling crews usually consist of four or five workers. Rotary drillers supervise the crew and operate machinery that controls drilling speed and pressure. Rotary-rig engine operators are in charge of engines that provide the power for drilling and hoisting. Second in charge, derrick operators work on small platforms high on rigs to help run pipe in and out of well holes and operate the pumps that circulate mud through the pipe. Rotary-driller helpers, also known as roughnecks, guide the lower ends of pipe to well openings and connect pipe joints and drill bits.

Though not necessarily part of the drilling crew, roustabouts, or general laborers, do general oilfield maintenance and construction work, such as cleaning tanks and building roads.

Pumpers and their helpers operate and maintain motors, pumps, and other surface equipment that forces oil from wells and regulate the flow, according to a schedule set up by petroleum engineers and production supervisors. In fields where oil flows under natural pressure and does not require pumping, switchers open and close valves to regulate the flow. Gaugers measure and record the flow, taking samples to check quality. Treaters test the oil for water and sediment and remove these impurities by opening a drain or using special equipment. In most fields, pumping, switching, gauging, and treating operations are automatic.

Other skilled oilfield workers include oil well cementers, who mix and pump cement into the space between the casing and well walls to prevent cave-ins; acidizers, who pump acid down the well and into the producing formation to increase oil flow; perforator operators, who use subsurface “guns” to pierce holes in the casing to make openings for oil to flow into the well bore; sample-taker operators, who take samples of soil and rock formations from wells to help geologists determine the presence of oil; and well pullers, who remove pipes, pumps, and other subsurface devices from wells for cleaning, repairing, and salvaging.

Many other skilled workers—such as welders, pipefitters, electricians, and machinists—also are employed in maintenance operations to install and repair pumps, gauges, pipes, and other equipment.

In addition to the types of workers required for onshore drilling, crews at offshore locations also need radio operators, cooks, ships’ officers, sailors, and pilots. These workers make up the support personnel who work on or operate drilling platforms, crewboats, barges, and helicopters.

Most workers involved in gas processing are operators. Gas treaters tend automatically controlled treating units that remove water and other impurities from natural gas. Gas-pumping-station operators tend compressors that raise the pressure of gas for transmission in pipelines. Both types of workers can be assisted by gas-compressor operators.

Many employees in large natural gas processing plants—welders, electricians, instrument repairers, and laborers, for example—perform maintenance activities. In contrast, many small plants are automated and are checked at periodic intervals by maintenance workers or operators, or monitored by instruments that alert operators if trouble develops. In non-automated plants, workers usually combine the skills of both operators and maintenance workers.