Conventional and Unconventional Oil and Gas Reservoirs

Hydrocarbon reservoirs can be divided into two categories: conventional and unconventional. By outlining the characteristics of these two types of reservoirs, we aim to explain their distinctions in simpler terms for legal professionals.
It should be noted that contracts for the development of unconventional oil and gas reservoirs are considered an untapped area in Iran’s oil and gas law.
Developing conventional reservoirs generally involves lower initial costs and less environmental impact compared to unconventional reservoirs. However, unconventional oil and gas development becomes economically viable when oil prices are high (usually above $40 per barrel, though this threshold is changing). In Iran, due to the very low production costs of existing reservoirs, the National Iranian Oil Company has never adopted a policy or strategy to develop unconventional reservoirs, limiting activities in this area to research.

Characteristics of conventional reservoirs:

1. Porosity and permeability: Rock formations such as sandstone or limestone have interconnected pores (porosity) and permeability that allow oil and gas to flow easily through the reservoir rock.
2. Trap mechanism: Conventional reservoirs typically form in geological traps created by folds (anticlines and synclines), faults, or stratigraphic traps.
3. Depth: They are usually found at shallower depths compared to unconventional reservoirs.
4. Extraction methods: Produced through vertical or deviated drilling, sometimes enhanced by secondary recovery methods such as water or gas injection to maintain pressure and improve recovery.

Characteristics of unconventional reservoirs:
1. Porosity and permeability: Very low porosity and permeability. Rock formations such as shale, coal seams, or tight sandstones have limited natural flow of oil and gas, requiring advanced extraction methods.
2. Trap mechanism and cap rock: Unconventional reservoirs lack traditional trap and cap rock structures; hydrocarbons are dispersed throughout the reservoir rock.
3. Depth: Often found at greater depths than conventional reservoirs.
4. Extraction methods: Require advanced technologies such as hydraulic fracturing (fracking) and horizontal drilling to create artificial pathways for oil and gas flow.

Note:* For a reservoir to be classified as conventional, both characteristics (1) and (2) above must exist simultaneously. For unconventional reservoirs, the presence of either characteristic (1) or (2) is sufficient for classification.