Operational Process


Oil and gas explorers begin by examining the local geology. They assess if it is likely to have the kinds of rocks that can produce oil and gas and can form reservoirs that can hold oil and gas.

They then use technology, such as seismic surveys, to detect whether the rocks are likely to contain oil and gas deposits and how large these deposits are likely to be.

Explorers generate seismic (sound) waves and measure the time taken for the waves to travel from the source, reflect off subsurface features and be detected by receivers at the surface. This can help build an image of the subsurface. Information in the seismic signal can also be used to indicate features such as rock density and the likely presence of fluids or gases.

If interpretation of survey results shows it is likely that oil and gas deposits exist in a particular area, an exploration well can be drilled. But even positive survey results do not guarantee success and generally only one in ten exploration wells discovers oil or gas.

What happens during drilling?

  • Drilling stops at regular intervals so that purpose-built steel pipes – or casing – can be installed, often in two or three layers. The gap between the casing and borehole wall is filled with cement.
  • The casing and the cement form a non-porous barrier that prevents cross-contamination between the petroleum-bearing rock formation and any overlying aquifers.
  • The casing and cement are pressure-tested to ensure that they can tolerate higher pressures than those expected over the life of the well.

In the event of success (oil or gas is discovered) a wellhead – which contains barriers, valves, seals and a gas/water separator – is placed on the surface to maintain control of the well and the drilling rig is moved from the site. In the event of failure to find oil or gas, the well is totally filled with cement of such a consistency to tolerate higher pressures than those expected over the life of the well and the surface area is rehabilitated back to its original condition.

Exploration drilling

During and after the drilling of an exploration well information is acquired in various ways, including:

  • Acquiring core (rock) samples;
  • Examining rock cuttings brought to the surface in the circulating drilling fluid; and
  • Lowering specialised logging tools into the wellbore.

These tests give a clearer picture of whether oil or gas is present and if it can be commercially recovered.

Producing oil and gas

In a producing oil or gas well, a wellhead is placed on the surface to maintain control of the well and the well is pressure-tested to ensure that it is safe.

The wellhead contains barriers, valves, seals and a gas/water separator. It allows the pressure of the well and the flow of fluids to be controlled at the surface.

In onshore drilling, an area is fenced off around the well. The size of this area varies. In CSG operations, it is usually about 23m by 23m.

If sufficient volumes of oil or gas are found, the well can be connected to a pipeline so that petroleum can be transported to markets and refineries. This may require building a new pipeline or connecting the well to an existing pipeline. Australia is leading the world in the development of innovative offshore floating production facilities to produce oil and gas where the reservoir is found, thus dispensing with the need for a pipeline.

Oil is generally piped to a refinery for processing into more useful products such as petrol, diesel fuel, liquefied petroleum gas (LPG), heating oil, kerosene and asphalt base. But it can also be piped to a shipping terminal for shipment to an Australian or overseas refinery.

If the natural gas is bound for the export market, it must be first cooled in an LNG plant to turn it into a much denser liquid and then loaded on to ships to be transported to customers overseas.

Gas can be used within Australia for electricity generation, household gas and industrial uses.

The drilling site is rehabilitated once production ceases.