306 PETROLEUM GEOLOGY/Exploration In addition to confirming the presence of hydrocarbons, an exploration well provides information from which the size of the accumulation can be assessed, the development of the field planned, and further exploration in the area undertaken Rock cuttings brought to the surface by the drilling mud and specially taken core samples contribute to an understanding of the geological history of the sedimentary basin and, specifically, of the nature and characteristics of the reservoir rocks Wireline logging (Figure 18), using special sondes to measure the electrical, acoustic, and radioactive properties of the rocks, allows key physical properties of the rocks, such as porosity and the fluid content – of oil, gas, or water – within the pore space, to be determined Other logging tools can detect the presence of fractures (which can be important for the flow characteristics of a reservoir), the dip (or inclination) of the rock layers, and sedimentary features (such as cross-stratification) If this information indicates a potentially commercial accumulation, then a flow test can be undertaken, in which the oil or gas is flowed to the surface: from flow and pressure measurements, further insights into the porosity and, particularly, permeability of the reservoir and the likely performance of wells under operational conditions can be gained Further surveys and additional drilling are then undertaken to appraise the size of the accumulation and reduce the geological uncertainties; this information is used to plan the development of the field Exploration Costs Onshore, the exploration costs depend very much of the nature of the terrain: operations in remote mountainous or jungle areas are much more expensive than those in flat desert country Operations in urban and agricultural areas and in areas of environmental sensitivity are expensive, as access can be difficult and strict regulations relating to noise, pollution, and environmental protection must be adhered to Offshore, costs are less variable, though remote and less climatically favourable locations inevitably attract higher costs (Table 1) Petroleum Agreements Figure 18 Wireline log response of a hydrocarbon bearing sandstone reservoir, with a shale seal above and water saturated reservoir below the oil DT, interval transit time; GR, gamma ray Reproduced with permission of Millenium Atlas Company Limited Apart from the onshore USA, where individuals can have title to the mineral rights, in most countries these rights are vested in the state, and exploration for oil and gas can be carried out only under licences or contracts granted by the state Petroleum agreements can be divided into two main types: licences (including leases, permits, and concessions) and production-sharing contracts Under a licence agreement, a company is granted exclusive rights to explore particular areas The company finances the exploration campaign and, if the exploration is successful, the development cost and in return is entitled to dispose of the production, sometimes subject to a deduction of a royalty in kind and an obligation to supply the domestic market The state obtains revenues from the royalty and from taxation, often through special petroleum taxes A variation on this type of agreement is a joint-venture agreement, where the state shares with the company the risk and expenses of the development phase; generally the company will carry the project at its own cost through the exploration phase