PETROLEUM (CRUDE OIL)

The important characteristics of petroleum are summarized below.

For a recent illustration of the importance of petroleum in international economics and politics, click here.

For a brief history of petroleum, click here.

Petroleum is a complex liquid mixture that contains hundreds of compounds. Compounds containing carbon and hydrogen only are the predominant ones (for example, octane); compounds that contain also some oxygen, sulfur and nitrogen are less abundant. Typical elemental analyses of crude oils are thus in the following range: 83-87% carbon, 11-16% hydrogen, 0-7% oxygen plus nitrogen, 0-4% sulfur.

Compounds containing only carbon and hydrogen in their molecular structure are desirable because they are responsible for the high heating value of petroleum. (Remember that the primary use of petroleum involves the conversion of its chemical energy to heat, with carbon and hydrogen in the various compounds being converted during combustion to carbon dioxide and water.) At the other extreme, compounds containing sulfur and nitrogen are bad news because during combustion they are converted to sulfur dioxide and nitrogen oxides, which are the precursors to acid rain.

Let's follow the itinerary of petroleum from its reservoir in the Earth's crust to its final destination. The vast majority of petroleum is refined into various fuel products (gasoline, kerosene, diesel fuel, fuel oils). A very small remaining fraction is used to produce chemicals, which are the basis for the so called petrochemical industry; they include products that are synonymous with modern society (pharmaceuticals, cosmetics, plastics, detergents and textiles, to name just a few).

Petroleum is not distributed democratically around the globe. Millions of years ago, as it was formed from decaying plant and animal material, particularly rich deposits were accumulated in the Persian Gulf area. (A typical oil well in Saudi Arabia produces 10,000 barrels per day; the average production of oil wells in the U.S. is about 15 barrels per day.)

For hot-of-the-press updates on oil reserves in the U.S., click here and connect with the U.S. Department of Energy.

For the most recent press reports on world oil reserves, by countries, click here.

For the most recent press reports on world oil reserves, by regions, click here.

In primary recovery of oil, which relies on the natural reservoir pressure to squeeze out the oil from the porous rock, approximately 30% of the oil known to be in the reservoir is brought to the surface. Enhanced recovery methods must be used to recover more than that. Water or gas injection (secondary recovery) is used to increase the reservoir pressure. Steam injection (tertiary recovery) is typically used to reduce the viscosity of the remaining oil and thus further increase the amount that can be pumped out of the reservoir. These methods are not used routinely because they are expensive. When the price of oil increases, there is greater incentive to use them and thus increase, to some degree, the proven reserves of oil.

In the United States, most of the oil production is concentrated today in only five states. The oil fields of northwestern Pennsylvania, where it all started in 1859, have long been depleted. Roughly 70% of the oil produced in the U.S. in 1989 (approximately 3 billion barrels) came from Alaska, Texas, California, Louisiana and Oklahoma.

Because consumption of oil has been so large in the last couple of decades, primarily due to the explosion of the transportation sector, domestic production has not been able to keep up with the consumption.

Today, drilling activiies of the oil companies are primarily concentrated overseas. Increasingly important is also off-shore drilling (Gulf of Mexico, California).

As a consequence of the fact that, by and large, oil is not consumed where it is produced, international transport of oil is big business; it is also a potentially increasing environmental problem, as exemplified by the serious and much publicized Exxon Valdez spill, on Good Friday in 1989 (map of Alaska).

The tanker collided with a coral reef in the Prince William Sound and spilled a quarter of a million barrels of oil, which was to be transported to refineries from the port of Valdez (where the oil is brought by pipeline from the Prudhoe Bay fields).

Once the oil reaches a refinery (safely), it is processed into a multitude of products. Today, the principal products of an oil refinery are:

This was not the case in the early days of oil refining (when J. D. Rockefeller made his fortunes). Kerosene was then the principal product, but it was used for lighting. When Thomas Edison invented the electric light bulb, for a while it appeared that the oil business was in big trouble. But soon thereafter the automobile was invented in Germany and popularized by Henry Ford in the United States (with the venerable model T). In no time production and refining of oil became big international business. Big and small wars were fought over oil in this century. It remains to be seen whether future wars over oil will be avoided.

It is thus hardly surprising that among the top twenty companies in the world (based on market value), oil companies like Exxon and Shell rub shoulders with the big banking, computing and telecommunication conglomerates. Recent merger of Exxon and Mobil to create the world's largest corporation has aptly been called "history unmaking" (see The Age of 12/3/98, www.theage.com.au).

lrr3@psu.edu (last revised 2/17/99)