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Module 2 · Upstream: finding it and lifting it

Getting it out of a conventional field

Level 2 · Working knowledge 10 min read 4 questions

Primary, secondary and tertiary recovery, what a well actually produces alongside oil, and why a field's cost per barrel rises for its whole life.

A pumpjack at an onshore oil well
Once reservoir pressure stops lifting the oil by itself, something has to maintain the difference.Gulustan · CC BY-SA 3.0 · Wikimedia Commons

A conventional reservoir holds oil in connected pore space under pressure. Drill into it and that pressure does the work of lifting the oil, at least at first. Everything that happens afterwards is an effort to keep a pressure difference between the reservoir and the wellbore once nature has stopped providing one.

Three stages of recovery

Primary
The reservoir's own energy drives oil to the surface: compressed gas expanding, water moving in from an underlying aquifer, or simply the oil expanding as pressure drops. Cheapest per barrel, and it recovers the smallest share.
Secondary
Pressure is maintained artificially, almost always by injecting water, sometimes gas, through dedicated injection wells. The injected fluid also sweeps oil towards the producers. Most of the world's conventional production has been through waterflood for decades.
Tertiary, or enhanced oil recovery
Changing the physics rather than just the pressure: steam to reduce viscosity, carbon dioxide or other gases to dissolve into the oil and make it flow, or surfactants and polymers to change how oil and water interact with the rock. Expensive, and applied where the remaining barrels justify it.
NoteRecovery factors for conventional fields vary widely with reservoir type, fluid properties and the methods applied. A great deal of the world's reservoir engineering effort goes into moving that fraction a few points, because a few points on a large field is a large number of barrels for no new exploration.

What actually comes up the well

Not oil. A well produces a stream of oil, gas and water together, and the proportions change through the life of the field - typically towards more water and more gas. Surface facilities separate the three before anything can be sold.

SeparationThe stream enters vessels where gas comes off the top, water drops out of the bottom and oil is drawn from the middle.Three streams
Produced water handlingUsually saline, often containing hydrocarbons and naturally occurring radioactive material. It is treated and re-injected, either for disposal or as part of the waterflood. Volumes routinely exceed oil volumes in mature fields.Injected or disposed
Associated gasGathered and sold where infrastructure exists, used on site for power, re-injected to maintain pressure, or - where none of those is available - flared.Gas sales, or a flare
Stabilisation and custody transferThe oil is brought to a vapour pressure safe for storage and transport, metered, and legally handed over.A sellable barrel

Custody transfer is worth pausing on. It is the metered, contractually defined moment at which ownership of a specific quantity of oil passes from one party to another. Every handover in this course is one of these, and the custody journeys on this site are built around exactly that idea: who held it, where, and what was left behind.

Water cut, decline, and why costs only go one way

Water cut is the share of the produced liquid that is water. It rises through a field's life, and every percentage point means more fluid lifted, separated, treated and injected for the same oil. Decline is the fall in production rate as pressure and remaining oil fall. Together they mean the cost of producing a barrel from a given field rises for its entire life, which is why fields end not when the oil runs out but when the next barrel costs more than it fetches.

Read the numbers correctlyLifting cost - the cash cost of getting a barrel out of an existing well - is not the cost of supply. It excludes the capital already sunk and the capital needed for the next field. A producer can be profitably lifting barrels at a price far below the level at which anyone would sanction a new development. Both statements are true at once, and confusing them is behind a lot of bad commentary. See cost curves for the general case.
What to carry forward
  • Primary, secondary and tertiary recovery are three ways of maintaining a pressure difference, at rising cost.
  • A well produces oil, gas and water together; produced water is usually the largest stream in a mature field.
  • Lifting cost and the price needed to sanction new supply are different numbers and answer different questions.
Terms introduced here
Water cut
The share of produced liquid that is water.
Custody transfer
The metered, contractual moment when ownership of a defined quantity passes between parties.
Lifting cost
The cash cost of producing a barrel from an existing well, excluding capital already spent.
Go deeper

Check yourself

1. Waterflooding a reservoir is an example of:

2. In a mature conventional field, the largest fluid stream arriving at the surface facilities is usually:

3. A producer says its lifting cost is well below the current oil price, yet will not sanction a new project at that price. This is:

4. Associated gas is flared when:

Lesson 5 of 16 in Crude Oil, End to End. Educational content only — not investment, trading, tax or legal advice, not a recommendation to buy or sell any commodity, contract or security, and not a valuation of any asset. Figures carry their reference period and source and are indicative of scale rather than live market quotations. Compiled 2026-09-30; drafted with AI assistance and editorially reviewed, per the editorial policy.

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