Oil, gas and coal: how they form, are found, moved and priced: Finding and producing oil and gas

2.1 Seismic surveys and rotary drilling turned exploration into engineering

Early oil hunters drilled near seeps or where the landscape looked promising. Geology then gave better guides: oil collects in particular kinds of structure, so mapping rock layers and folds narrowed the search. Measurements of tiny variations in gravity and magnetism helped too. The decisive tool, though, is the seismic survey.

In a seismic survey a source of sound, an explosive charge or vibrating truck on land, an air gun towed behind a ship at sea, sends waves into the ground. They bounce back from boundaries between rock layers and are recorded by thousands of sensors. Computers turn the echoes into images of buried structure. Two-dimensional lines gave way to 3D surveys in the 1980s and 1990s, and to repeated 4D surveys that show how fluids move as a field is produced.

The only way to confirm oil is still to drill. Early wells were made by percussion, repeatedly lifting and dropping a heavy bit; the Chinese had used bamboo rigs on this principle to drill brine wells centuries earlier. Rotary drilling, in which a turning bit grinds through rock while mud is pumped down to cool it and carry cuttings up, took over in the 20th century. Howard Hughes Sr's two-cone rock bit of 1909, improved to three cones in 1933, made deep rotary drilling routine.

Today's wells routinely go several kilometres deep, and the drill bit can be steered. Directional drilling lets one platform reach many targets, and horizontal drilling turns a well sideways to run along a thin reservoir for one to three kilometres or more.

• Smil, Oil: A Beginner's Guide (2008) · via Smil Mastery Course, M6 'Finding and producing oil'
• Smil, Natural Gas: Fuel for the 21st Century (2015) · via Smil Mastery Course, M6 'Finding and producing oil'

2.2 Most oil stays in the reservoir, and a few giant fields dominate

Oil does not sit underground in a lake. It fills the tiny pores between grains of rock, held there by capillary forces and pushed by the pressure of surrounding water and gas. When a well opens the reservoir, that natural pressure drives oil to the surface. This primary recovery typically brings up only about 10 to 20% of the oil in place.

To get more, producers inject water or gas to push oil towards the wells and keep the pressure up. This secondary recovery lifts total recovery to perhaps 30 to 40%. Enhanced methods go further: injecting steam to thin heavy oil, injecting carbon dioxide which mixes with oil and helps it flow, or chemicals that loosen it from rock. Even so, a typical field abandons more than half its oil.

Oil wealth is very unevenly spread. A small number of supergiant fields hold a large share of all the oil ever found. The largest is Ghawar in Saudi Arabia, discovered in 1948, about 280 kilometres long, which alone has produced a large part of all Saudi oil. Such fields are cheap to produce because each well yields a great deal, which gives their owners low costs and staying power.

Production has also moved offshore and into deeper water. The first platforms out of sight of land appeared in the Gulf of Mexico in the late 1940s. Today floating production vessels work fields in more than 2 kilometres of water off Brazil, West Africa and the US Gulf, linked to wells on the sea floor by flexible pipes.

• Smil, Oil: A Beginner's Guide (2008) · via Smil Mastery Course, M6 'Finding and producing oil'
• Smil, Energy at the Crossroads: Global Perspectives and Uncertainties (2003) · via Smil Mastery Course, M6 'Finding and producing oil'

2.3 Shale combined two old techniques and remade American supply

Shale is the source rock itself: the fine-grained, organic-rich layer where oil and gas formed but from which they could not easily escape. Its pores are so small and poorly connected that a conventional vertical well drilled into it produces very little. For decades geologists knew the resources were vast but could not get them out at a profit.

The shale revolution came from combining two techniques. Horizontal drilling turned the well to run sideways through the shale layer for kilometres, exposing far more rock than a vertical well. Hydraulic fracturing pumped water, sand and small amounts of chemicals down at very high pressure to crack the rock in many stages along that horizontal section. The sand props the cracks open so that gas and oil can flow to the well.

US shale gas output took off after about 2007, followed by tight oil from the Bakken in North Dakota and the Permian Basin in Texas. US crude production passed its 1970 peak in the late 2010s, and the United States became the world's largest producer of both oil and gas. When it launched Oil 2025, the IEA's head credited the United States with about 90% of the growth in world oil supply over the previous ten years.

Shale wells behave differently from conventional ones. Output falls steeply, often by more than half in the first year, so producers must keep drilling to hold output steady. That makes shale responsive to price: drilling rises when prices are high and falls quickly when they drop. Smil reviewed the concerns, including water use, possible groundwater contamination, small induced earthquakes and methane leaks, and judged them manageable with good regulation, but not trivial.

• Smil, Natural Gas: Fuel for the 21st Century (2015) · via Smil Mastery Course, M6 'Shale gas, coal and the fossil future'
• IEA (2025). Oil 2025: Analysis and forecast to 2030. Paris: International Energy Agency, June 2025. · web

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Check your understanding

What is the main tool for imaging buried rock structures in oil exploration?

Roughly what share of the oil in place do primary and secondary recovery together bring up?

Why must shale producers keep drilling to hold output steady?