The technical side of refining and excavating oil gets pretty deep, but in a nutshell, the crude oil is heated by a furnace and is sent to a distillation tower, where it is separated by boiling point; from there, the material is converted by heating, pressure or a catalyst process into finished products including fuels like gasoline and diesel, and specialty products like asphalt and solvents.
Put succinctly, the action of “refinement” breaks crude oil down into its various components, which are then selectively reconfigured into new products.
Oil is excavated (or extracted) using different methods depending on geology and location, a process that occurs, obviously, before it is sent to refineries to create the aforementioned refined products we rely on every day, such as gasoline. The first efforts to tap the oil sands resource began in the mid-20th century using hot water to separate bitumen from sand; since then, the process has evolved into the cutting-edge methods used to extract oil today.
Let’s briefly go over the ways oil is excavated in this day and age, based on the two primary oil types: conventional and unconventional.
- Conventional Oil – This type of oil is excavated from underground reservoirs using traditional oil rig pumping and drilling methods; as a liquid at atmospheric temperature and pressure, conventional oil flows through a wellbore and a pipeline (unlike bitumen, which is too thick to flow without being heated or diluted), making it easier and less expensive to recover because it requires less processing after excavation.
- Unconventional Oil – This cannot be recovered using conventional pumping and drilling methods, and as such it demands advanced extraction techniques. Oil found in geological formations that make it more difficult to extract, such as light tight oil (LTO) is also referred to as “unconventional” oil because non-traditional techniques are demanded to excavate the oil from the underground reservoir. Additionally, this kind of oil excavation uses horizontal drilling and hydraulic fracturing.
Other ways oil is recovered or otherwise extracted/excavated throughout the world include:
- Surface mining
- Oil sands tailings
- In situ recovery
- Steam-assisted gravity drainage (SAGD)
- Cyclic steam stimulation (CSS)
Where Mineral Rights Come Into Play
Mineral rights often include the rights to any oil and natural gas that exist beneath a property, and the rights to these commodities can be sold or leased to others. In most cases, oil and gas rights are leased; the lessee is normally uncertain if gas or oil will be discovered, so they generally prefer to pay a small amount for a lease rather than pay a larger amount to buy.
The bottom line is that if a lessee finds oil or gas and begins production, a regular stream of royalty payments usually keeps the terms of the lease in place.
From oil drilling and mineral mining to understanding how to sell mineral rights, Ten Cow Holdings can help all landmen and others with any questions or concerns. Call us today at (210) 960-1564.
