Prospecting for Oil and Natural Gas

Fast Facts About
Prospecting for Oil and Natural Gas

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Prospecting is the very first stage of the oil and natural gas development process. It consists of two main steps: exploration and the acquisition of permits and leases.  

Exploration encompasses the processes and methods involved in locating potential sites for oil and gas drilling and extraction. Geoscientists use many tools to identify and characterize “prospects” for oil and natural gas development. These tools range from basic geological and paleontological understanding of a reservoir to acoustic and magnetic seismography enhanced by 3D imaging. Other factors such as road access, topography, and prior drilling results (if any) are also considered. If available, data from existing wells in the reservoir help refine these assessments. This data can include well logs, cross-sections, and Estimated Ultimate Recovery (EUR), which is an estimate of the expected recovery of oil or gas from a producing well. Finally, the location must be economically and regulatorily available.

Permitting and Leasing are closely intertwined and follow exploration. Prior to drilling for oil or natural gas that was identified through the exploration process, permits and leases must be secured for the land and mineral rights. In the United States, four types of land ownership influence this process: private, federal, state, and tribal. The federal government also manages leases for offshore activity on the outer continental shelf of the U.S. The U.S. is one of only a few countries in the world that allows private ownership of mineral rights. In the U.S., mineral rights can be owned independently of the land rights, potentially requiring multiple leases. Outside the U.S., the permitting and leasing of mineral rights are generally a government-managed process.

The landman plays a key role in securing permits and leases, as well as securing the social license to operate by building trust with landowners and communities. Key tasks of a landman are described below.  

Ownership documents and negotiation:

• Negotiate with landowners regarding land ownership, leases, and mineral rights
• Research information about the rights, interests, and ownership of land before negotiations begin
• Write contracts, clear titles, obtain leases, conduct surface inspections of land, and ensure compliance with governmental regulations and industry standards

Building landowner, community, and regulator trust (i.e., social license to operate); arranging logistical, supply chain needs:

• Offer private landowners something in exchange (e.g., signing bonus and royalties, water wells, leveling the land)
• Build investment in the community (e.g., rebuild roads, support schools, create local jobs) and other public benefits into the deal
• Include specifics about the reclamation of the site in the lease
• Secure access to water and access to or ability to build roads for the project

Taken together, the processes of exploration, permitting and leasing may take years to decades to accomplish, depending on the location and nature of the prospecting activity.

See our Drilling, Completing, and Producing Oil and Natural Gas Wells page for information on the steps that follow prospecting. See our Oil and Natural Gas pages for information on processing, refining, and transporting oil and natural gas after they are produced.

Porosity vs Permeability

Both porosity and permeability are important factors for a productive oil or gas well.

Types of Oil and Gas

Prospecting Tools

Climate Impact: Low

• Carbon dioxide emissions from flaring and other prospecting activities
• Methane leakage, venting, and flaring from exploratory wells

Environmental Impact: High

• Site disturbance (e.g., clearing of vegetation and land, road construction, disruption of land-based or marine ecosystems)
• Oil spills contaminate surface water (e.g., rivers, oceans) and soil

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