Oil wells come in many varieties. By produced fluid, there can be wells that produce oil, wells that produce oil and natural gas, or wells that only produce natural gas. Natural gas is almost always a byproduct of producing oil, since the small, light gas carbon chains come out of solution as it undergoes pressure reduction from the reservoir to the surface, similar to uncapping a bottle of soda pop where the carbon dioxide effervesces. Unwanted natural gas can be a disposal problem at the well site. If there is not a market for natural gas near the wellhead it is virtually valueless since it must be piped to the end user. Until recently, such unwanted gas was burned off at the wellsite, but due to environmental concerns this practice is becoming less common. Often, unwanted (or 'stranded' gas without a market) gas is pumped back into the reservoir with an 'injection' well for disposal or repressurizing the producing formation. Another solution is to export the natural gas as a liquid.Gas-to-liquid, (GTL) is a developing technology that converts stranded natural gas into synthetic gasoline, diesel or jet fuel through the Fischer-Tropsche process developed in Word War II Germany. Such fuels can be transported through conventional pipelines and tankers to users. Proponents claim GTL fuels burn cleaner than comparable petroleum fuels. Most major international oil companies are in advanced development stages of GTL production, with a world-scale (140,000 bbl/day) GTL plant in Qatar scheduled to come online before 2011. In locations such as the United States with a high natural gas demand, pipelines are constructed to take the gas from the wellsite to the end consumer.

Another obvious way to classify oil wells is by land or offshore wells. There is very little difference in the well itself. An offshore well targets a reservoir that happens to be underneath an ocean. Due to logistics, drilling an offshore well is far more costly than an onshore well. By far the most common type is the onshore well. These wells dot the Southern and Central Great Plains, Southwestern United States, and are the most common well in the Middle East.

Another way to classify oil wells is by their purpose in contributing to the development of a resource. They can be characterized as:

-production wells are drilled primarily for producing oil or gas, once the producing structure and characteristics are determined

-appraisal wells are used to assess characteristics (such as flow rate) of a proven hydrocarbon accumulation

-exploration wells are drilled purely for exploratory (information gathering) purposes in a new area

-wildcat wells are drilled based on a large element of hope, in a frontier area where little is known about the subsurface. In modern times, oil exploration in many areas has reached a very mature phase and the chances of finding oil simply by drilling at random are very low, and much more effort is placed in exploration and appraisal wells.

At a producing well site, active wells may be further categorised as:

-oil producers producing predominantly liquid hydrocarbons, but mostly with some associated gas.

-Gas producers producing almost entirely gaseous hydrocarbons.

-water injectors injecting water into the formation to maintain reservoir pressure or simply to dispose of water produced with the hydrocarbons because even after treatment, it would be too oily and too saline to be considered clean for dumping overboard, let alone into a fresh water source, in the case of onshore wells. Frequently water injection has an element of reservoir management and produced water disposal.

-aquifer producers intentionally producing reservoir water for re-injection to manage pressure. This is in effect moving reservoir water from where it is not as useful to where it is more useful. These wells will generally only be used if produced water from the oil or gas producers is insufficient for reservoir management purposes. Using aquifer produced water rather than sea water is due to the chemistry.

-gas injectors injecting gas into the reservoir often as a means of disposal or sequestering for later production, but also to maintain reservoir pressure.

Lahee classification

-New Field Wildcat (NFW) – far from other producing fields and on a structure that has not previously produced.

-New Pool Wildcat (NPW) – new pools on already producing structure.

-Deeper Pool Test (DPT) – on already producing structure and pool, but on a deeper pay zone.

-Shallower Pool Test (SPT) – on already producing structure and pool, but on a shallower pay zone.

-Outpost (OUT) – usually two or more locations from nearest productive area.

-Development Well (DEV) – can be on the extension of a pay zone, or between existing wells (Infill).

Drilling

The well is created by drilling a hole 5 to 30 inches (13 – 76 cm) diameter into the earth with an oil platform which rotates a drill bit. After the hole is drilled, a steel pipe (casing) slightly smaller than the hole is placed in the hole, and secured with cement. The casing provides structural integrity to the newly drilled wellbore in addition to isolating potentially dangerous high pressure zones from each other and from the surface.

With these zones safely isolated and the formation protected by the casing, the well can be drilled deeper (into potentially more-unstable and violent formations) with a smaller bit, and also cased with a smaller size casing. Modern wells often have 2-5 sets of subsequently smaller hole sizes drilled inside one another, each cemented with casing.

To drill the well,

The drill bit, aided by the weight of drill string and drill collars above it, breaks up the earth.

-Drilling fluid (aka "mud") is pumped down the inside of the drill pipe and exits at the drill bit and aids to break up the rock, keeping pressure on top of the bit, as well as cleaning, cooling and lubricating the bit.

-The generated rock "cuttings" are swept up by the drilling fluid as it circulates back to surface outside the drill pipe. The fluid then goes through "shakers" which strain the cuttings from the good fluid which is returned to the bit. Watching for abnormalities in the returning cuttings and volume of returning fluid are imperative to catch "kicks" (when the pressure below the bit is more than that above, causing gas and mud to come up uncontrollably) early.

-The pipe or drill string to which the bit is attached is gradually lengthened as the well gets deeper by screwing in several 30-foot (10 m) joints of pipe at surface. Usually joints are combined into 3 joints equaling 1 stand. Some smaller rigs only use 2 joints and newer rigs can handle stands of 4 joints.

This process is all facilitated by a drilling rig which contains all necessary equipment to circulate the drilling fluid, hoist and turn the pipe, control downhole pressures, remove cuttings from the drilling fluid, and generate onsite power for these operations.

Completion

After drilling and casing the well, it must be 'completed'. Completion is the process in which the well is enabled to produce oil or gas.

In a cased-hole completion, small holes called perforations are made in the portion of the casing which passed through the production zone, to provide a path for the oil to flow from the surrounding rock into the production tubing. In open hole completion, often 'sand screens' or a 'gravel pack' is installed in the last drilled, uncased reservoir section. These maintain structural integrity of the wellbore in the absence of casing, while still allowing flow from the reservoir into the wellbore. Screens also control the migration of formation sands into production tubulars and surface equipment, which can cause washouts and other problems, particularly from unconsolidated sand formations in offshore fields.

After a flow path is made, acids and fracturing fluids are pumped into the well to fracture, clean, or otherwise prepare and stimulate the reservoir rock to optimally produce hydrocarbons into the wellbore. Finally, the area above the reservoir section of the well is packed off inside the casing, and connected to the surface via a smaller diameter pipe called tubing. This arrangement provides a redundant barrier to leaks of hydrocarbons as well as allowing damaged sections to be replaced. Also, the smaller diameter of the tubing produces hydrocarbons at an increased velocity in order to overcome the hydrostatic effects of heavy fluids such as water.

In many wells, the natural pressure of the subsurface reservoir is high enough for the oil or gas to flow to the surface. However, this is not always the case, especially in depleted fields where the pressures have been lowered by other producing wells, or in low permeability oil reservoirs. Installing a smaller diameter tubing may be enough to help the production, but artificial lift methods may also be needed. Common solutions include downhole pumps, gas lift, or surface pump jacks. The use of artificial lift technology in a field is often termed as "secondary recovery" in the industry. Many new systems in the last ten years have been introduced for well completion. Multiple packer systems with frac ports or port collars in an all in one system have cut completion costs and improved production, especially in the case of horizontal wells. These new systems allow casings to run into the lateral zone with proper packer/frac port placement for optimal hydrocarbon recovery.

Production

The production stage is the most important stage of a well's life, when the oil and gas are produced. By this time, the oil rigs and workover rigs used to drill and complete the well have moved off the wellbore, and the top is usually outfitted with a collection of valves called a wellhead. These valves regulate pressures, control flows, and allow access to the wellbore in case further completion work is needed. From the outlet valve of the wellhead, the flow can be connected to a distribution network of pipelines and tanks to supply the product to refineries, natural gas compressor stations, or oil export terminals.

As long as the pressure in the reservoir remains high enough, the wellhead is all that is required to produce the well. If the pressure depletes and it is considered economically viable, an artificial lift method mentioned in the completions section can be employed.

Workovers are often necessary in older wells, which may need smaller diameter tubing, scale or paraffin removal, acid matrix jobs, or completing new zones of interest in a shallower reservoir. Such remedial work can be performed using workover rigs – also known as pulling units to pull and replace tubing, or by the use of a well intervention technique called coiled tubing.

Enhanced recovery methods such as waterflooding, steam flooding, or CO₂ flooding may be used to increase reservoir pressure and provide a "sweep" effect to push hydrocarbons out of the reservoir. Such methods require the use of injection wells (often chosen from old production wells in a carefully determined pattern), and are used when facing problems with reservoir pressure depletion, high oil viscosity, or can even be employed early in a field's life. In certain cases – depending on the reservoir's geomechanics – reservoir engineers may determine that ultimate recoverable oil may be increased by applying a waterflooding strategy early in the field's development rather than later. Such enhanced recovery techniques are often called "tertiary recovery".

Abandonment

When the well no longer produces or produces so poorly that it is a liability, it is abandoned. In this process, tubing is removed from the well and sections of well bore are filled with cement to isolate the flow path between gas and water zones from each other, as well as the surface. Completely filling the well bore with cement is costly and unnecessary. The surface around the wellhead is then excavated, and the wellhead and casing are cut off, a cap is welded in place and then buried.

The production from an oil well declines in production. The point at which the well no longer makes a profit and is plugged and abandoned is called the “economic limit.”

The equation to determine the economic limit contains four factors, namely: (1) taxes, (2) operating cost, (3) oil price, and (4) royalty. When oil taxes are raised, the economic limit is raised. When oil price is increased, the economic limit is lowered.

When the economic limit is raised, the life of the well is decreased. Proven oil reserves are lost when the life of an oil well is decreased.

Primary recovery

If the underground pressure in the oil reservoir is sufficient, then this pressure will force the oil to the surface. Gaseous fuels, natural gas or water are usually present, which also supply needed underground pressure. In this situation, it is sufficient to place a complex arrangement of valves (the Christmas tree) on the well head to connect the well to a pipeline network for storage and processing.

Usually, about 20% of the oil in a reservoir can be extracted using primary recovery methods.

Secondary recovery

Over the lifetime of the well the pressure will fall, and at some point there will be insufficient underground pressure to force the oil to the surface. If economical, as often is, the remaining oil in the well is extracted using secondary oil recovery methods .

Secondary oil recovery uses various techniques to aid in recovering oil from depleted or low-pressure reservoirs. Sometimes pumps, such as beam pumps and electrical submersible pumps (ESPs), are used to bring the oil to the surface. Other secondary recovery techniques increase the reservoir's pressure by water injection, natural gas reinjection and gas lift, which injects air, carbon dioxide or some other gas into the reservoir.

Together, primary and secondary recovery generally allow 25% to 35% of the reservoir's oil to be recovered.

Tertiary recovery

Tertiary oil recovery reduces the oil's viscosity to increase oil production. Thermally enhanced oil recovery methods (TEOR) are tertiary recovery techniques that heat the oil and make it easier to extract. Steam injection is the most common form of TEOR, and is often done with a cogeneration plant. In this type of cogeneration plant, a gas turbine is used to generate electricity and the waste heat is used to produce steam, which is then injected into the reservoir. This form of recovery is used extensively to increase oil production in the San Joaquin Valley, which has very heavy oil, yet accounts for 10% of the United States' oil production. In-situ burning is another form of TEOR, but instead of steam, some of the oil is burned to heat the surrounding oil. Occasionally, detergents are also used to decrease oil viscosity as a tertiary oil recovery method.

Another method to reduce viscosity is carbon dioxide flooding.

Tertiary recovery allows another 5% to 15% of the reservoir's oil to be recovered.

Tertiary recovery begins when secondary oil recovery isn't enough to continue adequate production, but only when the oil can still be extracted profitably. This depends on the cost of the extraction method and the current price of crude oil. When prices are high, previously unprofitable wells are brought back into production and when they are low, production is curtailed.

Recovery rates: 

The amount of oil that is recoverable is determined by a number of factors including the permeability of the rocks, the strength of natural drives (the gas present, pressure from adjacent water or gravity), and the viscosity of the oil. When the reservoir rocks are "tight" such as shale, oil generally cannot flow through but when they are permeable such as in sandstone, oil flows freely. The flow of oil is often helped by natural pressures surrounding the reservoir rocks including natural gas that may be dissolved in the oil natural gas present above the oil, water below the oil and the strength of gravity. Oils tend to span a large range of viscosity from liquids as light as gasoline to heavy as tar. The lightest forms tend to result in higher production rates.