Crude Oil Futures

Oil wells usually refer to a vertical hole drilled in the earth to find and extract petroleum oil and natural gas from the underground layers. Wells are generally composed of a series of small holes and tubing and smaller holes within, encased in cement, whereby perforations along the casing in the production zone enable the oil to flow though rocks into the production casing. Inherent pressure is then enough to allow the oil and gas to flow to the surface. In case the pressure is not enough, other substances may be injected to stimulate it.

Wells can produce three types of products. Some produce only oil. Others produce both oil and natural gas. Others produce only natural gas. However, wherever there is extraction of oil, there are high chances that there will also be natural gas present, as in the release of hydrocarbons when the oil is extracted. Where demand for gas is present in the area of the drilling, pipes conduct the gas to the supply lines. In places where the gas may not be carried away for use, it used to be burnt. However recent environmental concerns have reduced this occurrence of burning gas on the spot, and the gas is often re-injected in the well to produce pressure.

Oil wells can be drilled onshore or offshore. Onshore wells are found on land, and are easier and less costly to drill and operate. Gas as the byproduct of oil extraction can also be efficiently carried away through pipe lines. Off shore wells target oil which is underground but also found under an ocean, away from land and shores. Shallow waters are easier to drill into and operate wells on, whereas the logistics of the procedure become more complicated and expensive the deeper the water is.

Oil wells can be classified in different categories, according to their purpose. Production wells are drilled for oil production. Appraisal wells are used to assess characteristics of a hydrocarbon accumulation. Wildcat wells refer to wells dug in an area where not much is known of hydrocarbon accumulation, and referred much to a random dig. These are not really used nowadays, since they were used for exploratory and information purposes, which is now available through the efforts placed in exploratory and appraisal wells.