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Drilling, Completing, and Producing from Oil and Natural Gas Wells

Fast Facts About
Drilling, Completing, and Producing From Oil and Natural Gas Wells

Once a suitable well location has been identified, permitted, and leased, the next steps for oil and natural gas development are drilling, completion, and production:

  1. Drilling typically takes about 50-60 days. It starts with preparing the site (clearing and leveling) and setting up a drilling rig to drill a borehole and feed steel pipe into the well. Drilling mud is used to manage downhole pressures, provide information about the rock layers being drilled through, and keep the drill bit cool. Safety equipment, such as a blowout preventer, is installed to prevent oil and natural gas from being released in rare unexpected overpressure situations.
  2. Completion is a 1-5 week process where the steel pipe in the well is perforated to connect the well bore to the oil or gas reservoir. As needed, additional recovery techniques such as hydraulic fracturing (for low permeability reservoirs) or steam flooding (for thick oil) are applied. A Christmas Tree (series of valves) is installed at the top of the well. As reservoir pressure declines, a pumpjack is installed.
  3. Production from a completed well can last 50+ years. During the production step, the well is monitored, maintained, and managed. In the U.S. the mineral rights owners (individuals) typically receive royalty interest payments on the oil and natural gas produced. In most other countries, the federal government owns the mineral rights.

See our Prospecting for Oil and Natural Gas page for information on exploration, permitting, and leasing. See our Oil and Natural Gas pages for information on processing, refining, and transporting oil and natural gas after they are produced.

Drilling

Vertical Drilling

oil well with pipe going straight down into the reservoir
  • Exposes only the vertical dimension of the reservoir
  • Requires many wells per square mile to extract the oil or natural gas

Directional Drilling

oil well with pipe curving at a 45 degree angle before entering the reservoir
  • Increases the length of pipe exposed to the reservoir by drilling at an angle
  • Enables drilling where vertical access is difficult, such as offshore, under an urban area, under a lake, or under a difficult-to-drill formation
  • Allows grouped wellheads on one surface location

Horizontal Drilling

oil well with pipe turning 90 degrees once it is in the reservoir
  • An extension of the directional drilling technique applied to unconventional reservoirs
  • Each horizontal borehole does the work of several vertical wells with even more exposure of pipe to the reservoir
  • The radius of the turn from vertical to horizontal is ~1/4 mile

Number of Drilling Rigs by Region

(May 2023)

North America
818

Middle East
339

Asia Pacific
233

Latin America
190

Europe
109

Africa
94

Completion

Hydraulic Fracturing

  • Used for unconventional reservoirs to create permeability, typically done in shales
  • A completion technique that pumps a combination of high-pressure water and proppant (typically sand and other additives) down the wellbore to fracture the rock
  • Proppant holds open the fractures, allowing the oil/natural gas to flow
  • The pairing of horizontal drilling (which significantly increases the amount of contact the well has with the reservoir) with hydraulic fracturing has made recovery of resources from shale gas and tight oil reservoirs economic in the US.

Horizontal drilling and hydraulic fracturing are only done at scale in the US.

Production

Types of Oil Recovery*

Primary
  • Pumping or natural flow
  • 12-15% recovery rate of oil
Secondary
  • Waterflooding or pressure maintenance from gas injection
  • 15-20% additional recovery rate of oil
Tertiary
  • Thermal or chemical recovery
  • 5-15% additional recovery rate of oil

*Natural gas is only recovered through natural flow or associated with oil

Conventional vs Unconventional*

*Conventional - naturally high permeability; unconventional - low permeability

US

The US Has More Producing Oil Wells Than the Rest of the World Combined

Country Oil Producing Wells
U.S. 1,029,700
Russia 124,581
Canada 82,556
China 72,691
Venezuela 14,651
Saudi Arabia 2,895

 

The US Also Has the Lowest Average Oil Production Rate Per Well*

Country Barrels of Oil per Well per Day
Saudi Arabia 3,402
Venezuela 168
Russia 84
China 57
Canada 43
U.S. 12

*Production per well is much lower in the US than in other countries due to subsidies for stripper wells that produce very little oil. Those subsidies are intended to encourage domestic oil production. The US is also the only country in the world that has private mineral rights.

Onshore vs Offshore

Drivers

  • High demand for oil and gas
  • Can reduce energy dependence on other countries
  • Can reduce transportation costs from importing oil and gas
  • Well established method of producing high density energy
  • Productivity of wells declines significantly after the first few years so drilling new wells is necessary
  • Technology advances - multiple frac stages, multiple well laterals

Barriers

  • Strict regulations on drilling permits
  • Geologic formations with high permeability that are close to the surface are becoming more scarce
  • Significant environmental and climate impacts
  • Often cheaper to import oil from elsewhere

Climate Impact: High

High gradient
  • Methane leakage from drilling sites

Environmental Impact: High

High gradient
  • Disturbances to land and marine ecosystems
  • Irresponsible oil production can lead to seismicity
  • Potential for oil and gas to leak into groundwater if wells not properly maintained
  • Oil spills
  • Site disturbance
Sources
Printable PDF

Updated September 2023

Before You Watch Our Lecture on
Drilling, Completing, and Producing from Oil and Natural Gas Wells

We assign videos and readings to our Stanford students as pre-work for each lecture to help contextualize the lecture content. We strongly encourage you to review the Essential videos and readings below before watching our lecture on Drilling, Completing, and Producing from Oil and Natural Gas Wells. Include selections from the Optional and Useful list based on your interests and available time.

Essential

  • Overview of the Petroleum Industry - Part 3. GulfPublishingCo. August 18, 2009. (9 min)
    A demonstration of site preparation and the process of drilling a well, with an explanation of the machinery systems involved.
  • VIP Rig Tour. Chesapeake Energy. January 3, 2012. (12 min)
    An overview of the workings of a natural gas rig site.
  • Life of an Onshore Well: Finding and Producing Tight or Shale Oil and Gas | Natural Gas. Shell. February 10, 2013. (6 min)
    An overview of the process of exploration, drilling, and production from a well. Includes demonstration of horizontal wells and hydraulic fracturing.
  • Deep Oil: Aboard the Perdido Platform. Switch Energy Alliance. August 16, 2017. (5 min)
    An overview of the process to build one of the deepest offshore oil rigs in the world.
  • Drilling Rig Count Info and App. Baker Hughes. Updates continuously.
    Download the Baker Hughes drilling rig count app (or visit the website). Interact with the rig count map (only available on the app). Consider how this information is useful to various stakeholders (operators, investors, policymakers). What types of factors do you think affect the number and location of rigs?

Optional and Useful

  • Horizontal Drilling Method. Chesapeake Energy. May 24, 2012. (6 min)
    A walkthrough of the process for horizontal drilling in natural gas operations.
  • Hydraulic Fracturing Method. Chesapeake Energy. May 24, 2012. (3 min)
    An overview of the hydraulic fracturing process in natural gas operations.

Our Lecture on
Drilling, Completing, and Producing from Oil and Natural Gas Wells

This is our Stanford University Understand Energy course lecture on drilling, completing, and producing from oil and natural gas wells. We strongly encourage you to watch the full lecture to understand this complex topic within the context of the oil and natural gas energy systems. For a complete learning experience, we also encourage you to watch / read the Essential videos and readings we assign to our students before watching the lecture.

Jane Woodward

Presented by: Jane Woodward, Adjunct Professor, Civil and Environmental Engineering, Stanford University; Founder and Managing Partner, WovenEarth Ventures; Founding Partner, MAP Energy
Recorded on: October 4, 2023   Duration: 76 minutes

Table of Contents

(Clicking on a timestamp will take you to YouTube.)
00:00 Introduction 
00:59 Oil and Gas Industry Activity 
05:09 Onshore Process & Equipment (Drilling) 
19:53 Onshore Process & Equipment (Completing) 
24:26 Onshore Process & Equipment (Producing) 
37:36 Onshore Rig Count & Efficiency Gains 
45:05 Onshore Environmental Impacts 
1:03:21 Offshore Characteristics & Significance 
1:07:36 Offshore Equipment 
1:09:00 Offshore Environmental Impacts 
1:14:16 Wrap Up Summary

Lecture slides available upon request.

Additional Resources About
Drilling, Completing, and Producing from Oil and Natural Gas Wells

Government and International Organizations

Other Resources

Next Topic: Oil Other Energy Topics to Explore

Fast Facts Sources
Drilling Rigs by Region: World May 2023 (Baker Hughes Worldwide Rig Count)
Vertical vs Horizontal and Directional Wells: U.S. 2010-2022 (EIA, Monthly Energy Review Table 5.2 Crude Oil and Natural Gas Exploratory and Development Wells)
Conventional vs Unconventional Oil Production: World 2017 (University of Michigan, Unconventional Fossil Fuel Factsheet), U.S. 2022 (EIA FAQs)
Conventional vs Unconventional Natural Gas Production: World 2019 (Statista, Shale Gas and Tight Sands Production Worldwide in 2019,With a Forecast Until 2050 and Statista, Natural Gas Production Worldwide from 1998 to 2022), U.S. 2021 (University of Michigan, Unconventional Fossil Fuel Factsheet)
Producing Oil Wells & Production Rates: 2014 (Oil & Gas Journal “Worldwide Look at Reserves and Production.” December 1, 2014)
Onshore vs Offshore Oil Production: World 2017 (IEA. Offshore Energy Outlook 2018, p 15) and (BP Statistical Review of World Energy 2022, p 15), U.S. 2021 (EIA Oil and Petroleum Products Explained October 2022)
More details available on request.
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