The oil and gas bearing structure is typically porous rock, such as sandstone or washed out limestone. The sand may have been laid down as desert sand dunes or seafloor. Oil and gas deposits form as organic material (tiny plants and animals) deposited in earlier geological periods, typically 100 to 200 million years ago, under, over or with the sand or silt, are transformed by high temperature and pressure into hydrocarbons.

For an oil reservoir to form, porous rock needs to be covered by a nonporous layer such as salt, shale, chalk or mud rock that prevent the hydrocarbons from leaking out of the structure. As rock structures become folded and raised as a result of tectonic movements, the hydrocarbons migrate out of the deposits and upward in porous rock and collect in crests under the non-permeable rock, with gas at the top and oil and fossil water at the bottom. Salt is a thick fluid, and if deposited under the reservoir, it will flow up in heavier rock over millions of years. This process creates salt domes with a similar reservoir-forming effect. These are common e.g. in the Middle East.

This extraordinary process is ongoing. However, an oil reservoir matures in the sense that an immature formation may not yet have allowed the hydrocarbons to form and collect. A young reservoir generally has heavy crude, less than 20 API, and is often Cretaceous in origin (65-145 million years ago). Most light crude reservoirs tend to be Jurassic or Triassic (145- 205/205-250 million years ago), and gas reservoirs where the organic molecules are further broken down are often Permian or Carboniferous in origin (250-290/290-350 million years ago).

In some areas, strong uplift, erosion and cracking of the rock above have allowed hydrocarbons to leak out, leaving heavy oil reservoirs or tar pools. Some of the world’s largest oil deposits are tar sands, where the volatile compounds have evaporated from shallow sandy formations, leaving huge volumes of bitumen-soaked sands. These are often exposed at the surface and can be strip-mined, but must be separated from the sand with hot water, steam and diluents, and further processed with cracking and reforming in a refinery to improve fuel yield.

The oil and gas is pressurized in the pores of the absorbent formation rock. When a well is drilled into the reservoir structure, the hydrostatic formation pressure drives the hydrocarbons out of the rock and up into the well. When the well flows, gas, oil and water are extracted, and the levels shift as the reservoir is depleted. The challenge is to plan drilling so that reservoir utilization can be maximized.

Seismic data and advanced 3D visualization models are used to plan extraction. Even so, the average recovery rate is only 40%, leaving 60% of the hydrocarbons trapped in the reservoir. The best reservoirs with advanced enhanced oil recovery (EOR) allow up to 70% recovery. Reservoirs can be quite complex, with many folds and several layers of hydrocarbon-bearing rock above each other (in some areas more than ten). Modern wells are drilled with large horizontal offsets to reach different parts of the structure and with multiple completions so that one well can produce from several locations.