PETROLEUM SYSTEMS & ECONOMICS (GEOLOGY)

“Oil, it is to the treasures of the earth
what minds are to human life.”
- Anonymous.

PETROLEUM
SYSTEMS & ECONOMICS
Ritisha Singh
Department of Geology
M.Sc 4th
Semester
From Black Gold to Liquid Gold :

Table of Contents
Introduction
What is petroleum?. 01
Elements & Processes
Of Petroleum Systems
Source, generation, migration,
accumulation & preservation.
03
Petroleum System
Concept & Deﬁnition
02
Petroleum Deposits
With respect to India & World.
04
05
Petroleum Economics
In global perspective. 06
References

INTRODUCTION
WHAT IS PETROLEUM?
❏ The word "petroleum" originates from the Latin words "petra" and "oleum," meaning "rock" and "oil"
respectively.
❏ In general, petroleum refers to natural hydrocarbons found in rocks, existing in gaseous, liquid, or solid
states.
❏ Natural liquid oil occurring beneath the Earth's surface is commonly
known as Petroleum Oil/ Crude Oil.

❏ The gas associated with petroleum or found separately
underground is termed as Natural Gas.
❏ The semi-solid or solid part of petroleum is referred to as
Bitumen or Asphalt.
❏ In some regions, petroleum is colloquially called "rock oil" or
"Mitti Ka Tel" due to its association with rocks underground.
❏ Petroleum obtained through drilling is often termed
"mineral oil."

PETROLEUM SYSTEMS
Concept & Definition:
❏ The concept of a petroleum system revolves around the dynamic geological processes responsible for
the formation, migration, accumulation, and preservation of hydrocarbons (such as oil and gas) within
the Earth's crust.
❏ It involves understanding the interplay between source rocks (where hydrocarbons originate), reservoir
rocks (which hold hydrocarbons), seal rocks (which trap hydrocarbons), and various geological processes
like maturation, migration, and trapping.
❏ Petroleum systems analysis helps in identifying potential areas for oil and gas exploration and
production, assessing exploration risks, and estimating the likelihood of discovering commercial
quantities of hydrocarbons.

“Petroleum system is a conceptual framework used in the field of geology and petroleum
exploration to understand the dynamic geological and geochemical processes responsible
for the generation, migration, accumulation, and preservation of hydrocarbons (such as oil
and gas) within the Earth's crust.”

ELEMENTS & PROCESSES OF
PETROLEUM SYSTEMS
The petroleum system is a conceptual model that describes the processes that lead to the formation and
accumulation of oil and gas. It consists of ﬁve essential elements.
Maturation
Generation
Migration
Accumulation
Preservation
Source Rock
Migration Route
Reservoir Rock
Trap
Seal Rock

1. PLACE OF ORIGIN:
❏ Primarily occurs from offshore areas (of past) in
seas and oceans around the world.
❏ Some of the common offshore petroleum
extraction regions include: Continental Shelves,
Subsea Basins, Deepwater Fields.

2. SOURCE ʻMATERIAL’:
❏ Petroleum is primarily derived from the remains of
minute marine organisms such as plankton and
algae.
❏ In marine water with the help of sun rays they
produce hydrocarbons by photosynthesis.
❏ In Precambrian period Green algae, Green/blue
algae and Acritarchs were the main source for the
formation of oil.
❏ in Mesozoic era Coccolithophorids (one celled
plant) and Dinoﬂagellates (this is also one celled
organism, its skeleton is made up of carbonate)
contributed mainly for the origin of petroleum.
❏ During the Tertiary time various other types of
organisms, such as Diatoms, Silicolagelletes,
Discoasters, Ebridians, Eugiendids and others
became constituents for the formation of
petroleum.

3. TRANSFORMATION OF MATERIALS INTO SOURCE ROCK:
❏ Formation of Organic Matter:
❏ Algae, along with other plant and animal
organisms, floated on the sea, similar to how
mosses float on ponds.
❏ Over time, countless organisms died and sank
to the ocean floor, where they accumulated for
hundreds and thousands of years.
❏ Before they could decompose, they were
buried in mud, which sealed them off from air.
❏ Action of Anaerobic Bacteria:
❏ Without air, anaerobic bacteria began to break
down these organic remains.
❏ The presence of water and the weight of the
mud caused it to harden into shale, trapping
the organic material or the source material was
thus finally imprisoned.

4. SOURCE ROCK MATURATION & GENERATION OF
HYDROCARBONS:
❏ Source rock MATURATION refers to the physical
and chemical changes that occur within the
organic-rich sedimentary rock, known as source
rock, over geological time.
❏ During maturation, organic matter within the
source rock undergoes thermal and chemical
transformations due to increasing temperature and
pressure as it is buried deeper within the Earth's
crust.
❏ These changes may include the breakdown of
organic molecules, expulsion of water, and the
GENERATION of hydrocarbons.
BUT HOW DOES IT EXACTLY HAPPEN?
To be continued……

a. Initial stage of petroleum formation.
b. During this stage, various types of living
and dead organic matter, along with
minerals, are mixed and deposited in
shallow water environments.
c. Diagenesis occurs at shallow depths,
typically up to hundreds of meters.
d. Decomposition of organic matter at the
early stage of diagenesis produces carbon
dioxide, ammonia, methane, and water.
e. Chemical reactions and microbial activity
during diagenesis transform organic
matter into KEROGEN, a precursor to
petroleum (blackish gluey compact mass).
SO, LIFE OF OIL GOES THROUGH DIFFERENT STAGES -
1. Diagenesis (Temperature below 50°C):

a. Second stage of petroleum formation.
b. It occurs as deposition continues in a
subsiding basin, leading to increased
temperature and pressure.
c. Temperatures during catagenesis may
range from 150°C to 200°C, with
pressures varying from 300 to 1000 bars
or more.
d. Thermal degradation of kerogen during
catagenesis results in the production of
liquid petroleum, wet gas, and
condensate, with signiﬁcant amounts of
methane.
e. Medium to low molecular weight
hydrocarbons dominate during this stage.
2. Catagenesis (Temperature 50 to 200°C):

a. Final stage of petroleum
transformation.
b. It occurs at greater depths and
temperatures exceeding 200°C.
c. Organic matter at this stage is
predominantly methane, with residual
kerogen components converting to
graphitic carbon.
3. Metagenesis (Temperature greater than 200°C):

As discussed, due to pressure and temperature of
the earth kerogen was transformed into oil and gas
through the centuries. When the pressure or
temperature was high only gas was produced.
In this respect a good correlation has been found
between the occurrence of oil or gas with depth (Fig,
4.3). The maximum amount of oil and gas is
originated at a depth of 3000 and 5000 metres
respectively and the temperature remained between
50°C to 250°0.

Do you know KEROGEN also has its types?
Type I kerogen (High H: C ratio - 1.6 - 1.8) is derived from sapropelic organic matters, principally
constítuted of high-grade algal remains, lacustrine and on maturation yields crude oil. It represents the
most petroleum generating kerogen type.
Type II kerogen (H: C ratio 1.4) consists mostly of amorphous material, both continental and aquatic in
origin and derived from the bacterial and mechanical breakdown of a mixture of marine, one-celled plants
and animals. Algal tissues, spores, pollens also contribute. Oil-prone but yields more natural gas than Type I.
Type III kerogen (H:C ratio 1.0 or less) is derived from humic organic matters of terrestrial, woody origin
from higher land plants and sometimes known as coaly kerogen, equivalent to vitrinite macerals in coal. The
humic material in Type Ill kerogen has a low capacity to form oil and yields mostly natural gas.
Type IV kerogen (H: C ratio 0.4 or less) consists mostly of inert particles that have been highly oxidized,
recycled and altered before burial, like charcoal. It is the rarest kerogen type and has practically no ability to
generate either oil or gas.

5. MIGRATION OF OIL & GAS:
During the origin of petroleum in ﬁne grained kerogen
shale, oil and natural gas remain tightly packed within the
very limited pore spaces.
Petroleum after its origin comes out
of the source rocks and takes shelter in the adjoining
coarse grained porous and permeable RESERVOIR rocks.
This is known as MIGRATION of oil and gas.
Where as MIGRATION
PATHWAY is a porous and permeable conduit from source
to reservoir rock that hydrocarbons (oil and natural gas)
take, commonly a layer of sand or sandstone, or a fault or
fracture system.
The migration of oil and gas is of two types :
(i) Primary migration, and (ii) Secondary migration

(i) Primary Migration:
The movement of oil from the source rock to a
porous rock, which serves as a storehouse of oil
(reservoir rock), is called primary migration/
expulsion.
(ii) Secondary Migration:
In primary migration oil comes out of the source
rock to the reservoir rock. In the secondary
migration oil moves out of this reservoir rock
towards surface. This migration continues until it is
stopped by some obstacle i.e. impervious rock
giving rise to oil pools.

CAUSES OF MIGRATION
:
❏ Expansion in Volume.
❏ Difference in Pressure.
❏ Geological Disturbance.
❏ Capillarity.
❏ Water.
❏ Buoyancy or Speciﬁc Gravity.

5. RESERVOIR ROCK:
❏ Sedimentary rocks that possess the necessary properties
to store and transmit accumulations of ﬂuid hydrocarbons
(oil and natural gas) in economically viable quantities.
❏ Clastic and carbonate rocks contain more than 90% of the
world’s oil and gas reserves, rarely, occurrences are found
in many other rocks like fractured shales, cherts, igneous
and metamorphic rocks.

CHARACTERISTICS OF RESERVOIR ROCKS :
Most essential characteristic properties of reservoir rocks are porosity and
permeability.
POROSITY : Oil-bearing rocks must be porous /or have voids so that
oil and gas may occur and accumulate within these pores and empty
spaces of the rocks.
❏ Porosity is the ratio of the total volume of the pores to the total volume
of the rock irrespective of whether the pores are interconnected or not.
❏ Total Porosity = Volume of the pores present in the rock
Volume of the whole rock
❏ In the study of reservoir rocks, the volume of the interconnected pore
spaces is measured which is ﬁlled by recoverable oil and gas and the
ratio of this volume to the total volume of the rock is known as effective
porosity.
❏ The total porosity of the oil bearing rocks usually ranges from 5% to
40%, generally it is between 10 to 20%. Limestones, in general have less
porosity than the sandstones. The effective porosity commonly varies
between 40% to 75% of the total porosity of the rocks.
Depending on the porosity, oil-bearing potentiality of the
common reservoir rocks is assessed as follows:

PERMEABILITY : The property of a rock which permits the flow of a fluid through its
interconnected pores without any change in the structure of the rock or displacement of its grains is
known as intrinsic/specific permeability or absolute permeability.
❏ The absolute permeability varies considerably in different rock types but it is independent of the nature
of the fluid.
❏ A rock is considered to be well permeable if there is easy and speedy flow of the fluid through it in good
quantity in a short time. If there is no flow or negligible flow of the fluid through a rock, then it is
impermeable.
Relation between Porosity and Permeability:
A permeable rock is always porous but all the porous rocks are not permeable. The space for the
accumulation of oil and gas is provided by the effective porosity whereas the movement of oil and gas
through the rocks is conducted by the
permeability.

TYPES OF RESERVOIR ROCKS :
The reservoir rocks are broadly classiﬁed as :
(i) Clastic (fragmental) rocks;
(ii) Carbonates; and
(iii) Miscellaneous rocks.
Clastic Reservoir Rocks:
❏ Maximum occurrences of oil and natural gas.
❏ E.g. Sandstone, Siltstone, Greywackes, Arkoses,
Conglomerates and Orthoquartzite,
Cherty-Sandstones, limestones or dolomites,
Fractured shale, Clastic limestone & dolomite.
❏ Sand lenses may be full of oil and gas and may be
form several pools extending over large areas
under trap conditions.

Carbonate Reservoir Rocks:
❏ Contains about 1/3rd of the total petroleum reserves of the
world
❏ Fractured limestones and dolomites.
❏ The maximum concentration of oil and gas in carbonate
rocks is found in Middle East Countries mostly like Iran,
Kuwait, Iraq & Saudi Arabia.
Other Reservoir Rocks:
❏ The Igneous and metamorphic rocks rarely have commercial
accumulations.
❏ The oil migrated from the source rocks usually occurs in
fractures of these rocks.
❏ Commercial occurrences have been found in basalt
intrusives and ﬂows, andesites and pyroclastics, granitic and
metamorphic basement complexes and tuffs interbedded
with shales.

ACCUMULATION OF OIL & GAS IN THE TRAP (OF THE RESERVOIR
ROCK) & PRESERVATION DUE TO SEAL ROCK:
❏ ACCUMULATION refers to the process
by which hydrocarbons (oil and natural gas)
migrate from their source rock and become
concentrated within a reservoir rock.
❏ Petroleum migrates underground until it
encounters obstacles that stop its
movement, like impervious rocks. When this
happens, the oil can accumulate in porous
rocks and form a pool. When it is stored on a
commercial scale an oil TRAP is formed.
❏ The impermeable rock that acts as a barrier
to further migration of petroleum is known
as SEAL ROCK or CAP ROCK. Seal rock
helps in PRESERVATION of petroleum
within the trap.

ABOUT THE SEAL ROCKS (CAP ROCKS) :
Seal rocks, also known as cap rocks, play a critical role.These
seemingly ordinary rocks act as silent guardians, ensuring the
success of a potential oil or gas field.
Seal rocks are fine-grained sedimentary rocks with exceptionally
low permeability. This impermeability is the key characteristic that
allows them to trap hydrocarbons within a reservoir rock.
The permeability of a seal capable of retaining fluids through
geologic time is ~ 10-6 to 10-8 darcies.
TYPES OF SEAL ROCKS :
While various rock types can exhibit sealing properties, some are
particularly effective:
Shale: Shale, composed of clay minerals and tiny rock particles, is
a classic seal rock due to its extremely low permeability.
Evaporites: Rock formations like anhydrite (calcium sulfate) or
salt (halite) can be excellent seals due to their dense and tightly
packed nature.
ANHYDRITE
/
SHALE

CLASSIFICATION OF TRAPS :
A trap is a geological formation that acts like a cage. It allows hydrocarbons to enter a permeable reservoir rock
but hinders their further upward movement. This trapping mechanism is essential for the concentration of oil
and gas, leading to potentially recoverable resources.
A broad classiﬁcation covering most of the oil and gas traps of commercial importance is as follows :
1. Structural Traps:
a. Fold Traps.
i. Anticline.
ii. Syncline.
iii. Homocline.
b. Fault Traps.
2. Stratigraphic Traps:
a. Primary Stratigraphic Traps.
i. Traps in Clastic Rocks.
ii. Traps in Chemical Rocks.
b. Secondary Stratigraphic Traps.
3. Combination of Structural & Stratigraphic
Traps:
a. Salt Domes.

1. STRUCTURAL TRAPS :
These traps arise due to tectonic deformation of sedimentary rock layers within the Earth's crust. This deformation
can manifest as folds, faults, or a combination of both, creating geometries that favor hydrocarbon accumulation.
A. Fold Traps :
B. Fault Traps :

2. STRATIGRAPHIC TRAPS :
Formed by variations in the depositional environment or diagenetic processes within the sedimentary sequence.
These variations can lead to changes in rock properties, influencing fluid flow and creating trapping geometries.
A. Primary Stratigraphic Traps :
B. Secondary
Stratigraphic Traps :
Formed during the deposition of the sediments, the
nature of which decides the characteristics, like porosity
and permeability of the reservoir rocks and also the
formation of various structural features. For eg.:
a. Sand Lenses
b. Sand Wedge
c. Bioherm
d. Facies Change
(d)
(a)
(b)
(c)
Formed after sedimentation and diagenesis, certain abnormal stratigraphic changes or
variations take place in the reservoir rocks. They are called Unconformity traps
(B)

3. COMBINATION OF STRUCTURAL AND STRATIGRAPHIC TRAPS :
These traps arise due to tectonic deformation of sedimentary rock layers within the Earth's crust. This deformation
can manifest as folds, faults, or a combination of both, creating geometries that favor hydrocarbon accumulation.
A. Salt Domes :
Salt plugs or salt domes are formed when a huge
body of rock Salt (being plastic) is subjected to great
pressure from above and pushed upwards through
the weaker sections in the overlying strata to form a
steep sided dome. On the edges of these domes oil
is trapped.
The cap rocks occurring above the salt domes
consist of limestones, gypsum, anhydrite and
occasionally sulphur.
The thickness of the cap rock may vary up to
several metres. Salt domes are responsible for
trapping the oil and have no relation with the
origin of petroleum.

PETROLEUM DEPOSITS
INDIA:
OFFSHORE DEPOSITS:
Western Offshore:
1. Mumbai High:
● Location: Arabian Sea, off the coast of Maharashtra.
● Geography: Situated in the Mumbai Offshore Basin.
● Production Year: 1974
● Operator: Oil and Natural Gas Corporation (ONGC).
2. Bassein Gas Field:
● Location: Arabian Sea, northwest of Mumbai,
Maharashtra.
● Geography: Located in the Mumbai Offshore Basin.
● Operator: Reliance Industries Limited (RIL).

3. Heera Oil and Gas Field:
● Location: Arabian Sea, off the coast of Mumbai,
Maharashtra.
● Geography: Part of the Mumbai Offshore Basin.
4. Neelam Oil and Gas Field:
● Location: Arabian Sea, off the coast of Mumbai,
Maharashtra.
● Geography: Situated in the Mumbai Offshore Basin.
5. Daman Oil and Gas Field:
● Location: Arabian Sea, off the coast of Gujarat.
● Geography: Located in the Cambay Basin.

Eastern Offshore:
1. Krishna-Godavari Basin (KG-D6):
● Location: Bay of Bengal, off the east coast of India.
● Geography: Situated in the Krishna-Godavari Basin.
● Operator: Reliance Industries Limited (RIL).
2. Ravva Oil and Gas Field:
● Location: Krishna-Godavari Basin, off the east coast of
India.
● Geography: Situated in the shallow waters of the Bay of
Bengal.
● Operator: Cairn Energy India Pty Limited.

ONSHORE DEPOSITS:
(State wise)
1. Assam:
● Oil Field: Digboi Oil Field
● Location: Digboi, Tinsukia District, Assam
● Geography: Situated in the Upper Assam
Basin.
● Production Year: 1889 (1st well)
● Operator: Oil India Limited (OIL)
2. Arunachal Pradesh:
● Oil Field: Kharsang Oil Field
● Location: Kharsang, Changlang District,
Arunachal Pradesh
● Geography: Situated in the eastern part of
Arunachal Pradesh.
● Operator: Oil India Limited (OIL)

3. Tamil Nadu:
● Oil Field: Neduvasal Oil Field
● Location: Neduvasal, Pudukkottai District, Tamil Nadu
● Geography: Situated in the Cauvery Basin.
● Operator: Oil and Natural Gas Corporation (ONGC)
4. West Bengal:
● Oil Field: Haldia Oil Reﬁnery
● Location: Haldia, Purba Medinipur District, West
Bengal
● Geography: Adjacent to the Haldia Port.
● Operator: Indian Oil Corporation Limited (IOCL)
5. Gujarat:
● Oil Field: Ankleshwar Oil Field
● Location: Ankleshwar, Bharuch District, Gujarat
● Geography: Located in the Cambay Basin.
● Operator: Oil and Natural Gas Corporation (ONGC)

Petroleum Reserves of
India
https:/
/iced.niti.gov.in/energy/fuel-sources/oil/reserve

1. Oil Demand Growth:
● The increase in global demand for oil is slowing down.
● In the ﬁrst quarter of 2024, it grew by 1.6 million barrels per day (mb/d), which is lower than expected
due to weak deliveries in OECD countries and more people using electric vehicles.
● This slower growth is expected to continue in 2024 and 2025.
2. World Supply Growth:
● The United States and other non-OPEC+ countries are increasing their oil production until 2025.
● Global oil production is expected to go up by 770 kb/d to 102.9 mb/d in 2024.
● Non-OPEC+ countries will lead this increase, while OPEC+ may produce less if they continue with
voluntary cuts.
● In 2025, global production could grow by 1.6 mb/d, with Non-OPEC+ leading the way.
PETROLEUM ECONOMICS
According to the IEA Oil Market Report, April 2024,

3. Refinery Throughputs:
● Refineries around the world are expected to process more crude oil.
● In 2024, they're estimated to process 1 million barrels per day (mb/d) more, reaching 83.3 mb/d.
● However, this is a bit less than expected due to issues like lower Russian oil processing and
unexpected shutdowns in Europe and less activity in China.
● In 2025, they're expected to process even more, reaching 84.2 mb/d, mainly because of increased
activity in non-OECD countries.
4. Oil Inventories:
● Oil inventories, which are the amount of oil stored, went up by 43.3 million barrels in February,
reaching a high point.
● But on-land stocks fell to their lowest level since 2016.
● The amount of oil stored in water is also at its highest level in 15 months.
● In OECD countries, industry stocks went down by 7.6 mb in February, staying below the five-year
average. Early data for March suggests a build-up of 22 mb.
5. Oil Prices:
● Prices of oil went up to $90 per barrel in April because of tensions in the Middle East, attacks on
Russian refineries, and OPEC+ countries deciding to continue cutting their oil output.
● Investors also felt good about investing in oil, which helped push prices up.

REFERNCES
1. Elements of Petroleum Geology by Richard C. Selley.
2. IEA Website.
3. Geology In Website
4. Alex Strekeisen Website.
5. Research Gate Website.
6. Railsback Website
7. NITI AAYOG Website

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