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Exploration, Development and Production

Exploration, Development and Production

The oil and gas supply chain consists of three streams: upstream, which covers the exploration, development and production of oil and gas; midstream, which includes the transportation of oil and gas by tanker; and downstream, which includes the refinement and sales processes.
JX Nippon Oil and Gas Exploration (NOEX) is the sole upstream arm of JXTG Group and is involved in the development and production of oil and natural gas. The following shows the basic flow of our development and production business.

Main flow of oil and natural gas development Acquisition of License Blocks Exploration Development

Acquisition of License Blocks

Acquisition of License Blocks

Our primary aim is to acquire license block interests from resource-rich countries. There are various ways we acquire these interests, including open tender for new licensed acreage held by the countries, direct negotiation, or by farming into existing license blocks where other companies already have interests.

Exploration

Exploration

Exploration includes searching underground for oil and gas deposits, and evaluation in the case of discovery. Once a licensed block is acquired, extensive surveys are conducted, including terrestrial geological surveys, aerial photographs, satellite images, gravity and magnetic surveys and seismic surveys, before the decision is taken to drill a well. After evaluating the potential for oil and gas fields in the licensed block, the drilling location for an exploration well is selected based on the survey data. If the presence of oil and/or gas is confirmed by the exploration well, an appraisal well is then drilled to evaluate the extent of the discovery.

Development

Development

If evaluation of the reserves and their volumes indicate a commercially viable location for development, preparations for the production of oil and gas begin. Development includes the design and construction of oil and gas processing systems, pipelines, storage, and offloading facilities, and the drilling of production wells.

When developing a large gas field, the site is also assessed for liquefied natural gas (LNG) development. LNG projects require construction of large-scale liquefied plant and exporting facilities, and therefore require the building and maintenance of long-term customer relationships. In extra-heavy oil developments such as our oilsand project in Canada, we may also build upgrade facilities to convert the yield from low-grade heavy oil to high-grade light oil.

Production and Further New Challenges

Production and Further New Challenges

Following trial operation of the facilities, the production of crude oil and natural gas begins. Volumes of subsurface reserves gradually decrease as production continues. It is therefore necessary to be continuously securing new license block interests for the future discovery of oil and gas deposits.