Petroleum industry

From Wikipedia, the free encyclopedia

The petroleum industry is involved in the global processes of exploration, extraction, refining, transporting (often with oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum is also the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers, pesticides, and plastics. The industry is usually divided into three major components: upstream, midstream and downstream. Midstream operations are usually included in the downstream category.

Petroleum is vital to many industries, and is of importance to the maintenance of industrialized civilization itself, and thus is critical concern to many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from a low of 32% for Europe and Asia, up to a high of 53% for the Middle East. Other geographic regions’ consumption patterns are as follows: South and Central America (44%), Africa (41%), and North America (40%). The world at large consumes 30 billion barrels (4.8 km³) of oil per year, and the top oil consumers largely consist of developed nations. In fact, 24% of the oil consumed in 2004 went to the United States alone.[1] The production, distribution, refining, and retailing of petroleum taken as a whole represent the single largest industry in terms of dollar value on earth.

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[edit] History

[edit] Natural history

Petroleum is a naturally occurring liquid found in rock formations. It consists of a complex mixture of hydrocarbons of various molecular weights, plus other organic compounds. It is generally accepted that oil, like other fossil fuels, formed from the fossilized remains of dead plants and animals by exposure to heat and pressure in the Earth's crust over hundreds of millions of years. Over time, the decayed residue was covered by layers of mud and silt, sinking further down into the Earth’s crust and preserved there between hot and pressured layers, gradually transforming into oil reservoirs.

[edit] Early history

Oil in general has been used since early human history to keep fires ablaze, and also for warfare.[citation needed] Its importance in the world economy evolved slowly, with Wood and coal used for heating and cooking, and whale oil used for lighting well into the 19th Century.

An early petroleum industry was established in the 8th century, when the streets of Baghdad were paved with tar, derived from petroleum through destructive distillation.[citation needed] In the 9th century, oil fields were exploited in the area around modern Baku, Azerbaijan, to produce naphtha. These fields were described by al-Masudi in the 10th century, and by Marco Polo in the 13th century, who described the output of those oil wells as hundreds of shiploads.[2] Petroleum was distilled by al-Razi in the 9th century, producing chemicals such as kerosene in the alembic, which he used to invent kerosene lamps for use in the oil lamp industry.[3]

The Industrial Revolution generated an increasing need for energy which was fuelled mainly by coal. However, it was discovered that kerosene could be extracted from crude oil and used as a light and heating fuel. Petroleum was in great demand, and by the twentieth century had become the most valuable commodity traded on the world market.[4]

[edit] Modern history

See also: Baku oil boom
Galician oil wells
Galician oil wells

Imperial Russia produced 3,500 tons of oil in 1825 and doubled its output by the mid-century.[5] After the oil drilling began in what is now Azerbaijan in 1848, two large pipelines were built in the Russian Empire: the 833 km long pipeline to transport oil from the Caspian to the Black Sea port of Batumi and the 162 km long pipeline to carry oil from Chechnya to the Caspian.

At the turn of the 20th century, Imperial Russia's output of oil, almost entirely from the Apsheron Peninsula, accounted for half of the world's production and dominated international markets.[6] Nearly 200 small refineries operated in the suburbs of Baku by 1884.[7] As a side effect of these early developments, the Apsheron Peninsula emerged as the world's "oldest legacy of oil pollution and environmental negligence"[8] In 1878 Ludvig Nobel and his Branobel company "revolutionized oil transport" by commissioning the first oil tanker and launching it on the Caspian Sea.[6]

The first modern oil refineries were set up by Ignacy Łukasiewicz near Jasło, Poland in the years 1854-56..[9] They were initially small as there was limited demand for refined fuel. They produced oil for artificial asphalt, machine oil and lubricants, in addition to Łukasiewicz's kerosene lamp. As kerosene lamps gained popularity, the refining industry grew in the area. The first large oil refinery opened at Ploieşti, Romania in 1856. The first oil drilling in the United States began in 1859, when oil was successfully drilled in Titusville, Pennsylvania. In the first quarter of the 20th century the United States overtook Russia as the world's largest oil producer. By the 1920s, oil fields had been established in many countries including Canada, Poland, Sweden, the Ukraine, the United States, and Venezuela.

In 1938, the Superior Oil company constructed the first offshore oil platform off the Gulf Coast of Louisiana.

[edit] Corporations

During the 1960s, multinationals such as Mobil, BP, and Shell had access to more than 80 percent of global oil and natural gas reserves. Western multinationals control just 10 percent of the world's oil, while state-run firms exercise exclusive control over roughly 77 percent, according to a November 2007 paper from Rice University's James Baker Institute.[10]

[edit] Industry Structure

The American Petroleum Institute divides the petroleum industry into five sectors:

Oil companies can also be categorized as "Supermajors" (BP, Chevron, ExxonMobil, ConocoPhillips, Shell and Total S.A.), "majors," and "independents" or "jobbers." Most upstream work in the oil field or on an oil well is contracted out to drilling contractors and oil field service companies.[citation needed]

[edit] Environmental impact and future shortages

Some Petroleum industry operations have been responsible for water pollution, through byproducts of refining, and oil spills.

The combustion of fossil fuels produces greenhouse gases and other air pollutants as byproducts. Pollutants include nitrogen oxides, sulfur dioxide, volatile organic compounds and heavy metals.

As petroleum is a non-renewable natural resource the industry is faced with an inevitable eventual depletion of the world's oil supply. The BP Statistical Review of World Energy 2007 predicted the reserve/production ratio for proven resources worldwide. The study placed the prospective life span of reserves in the Middle East at 79.5 years, Latin America at 41.2 years and North America at only 12 years. The global reserve/production ratio estimates that at current production levels, the world's oil reserves will be depleted in 40.5 years. [12]

The Hubbert peak theory, also known as peak oil, is an influential theory concerning the long-term rate of conventional oil production and depletion.

According to research by IBISWorld, Biofuels (primarily ethanol, but also biodiesel) will continue to supplement petroleum, however output levels are low and these fuels will not displace local oil production. Ethanol is viewed as offering a lower environmental impact, and will play a small role in reducing dependence on imported crude oil. Most of the ethanol used in the US (over 90%) is blended with gasoline to produce fuel containing 10% ethanol in order to lift the oxygen content of the fuel. [13]

[edit] See also

Energy Portal

[edit] References

  1. ^ "International Energy Annual 2004". Energy Information Administration. 14 Jul. 2006. Found at http://www.eia.doe.gov/pub/international/iealf/tablee2.xls
  2. ^ K. Ajram (1992). Miracle of Islamic Science, Appendix B. Knowledge House Publishers. ISBN 0911119434.
  3. ^ Zayn Bilkadi (University of California, Berkeley), "The Oil Weapons", Saudi Aramco World, January-February 1995, p. 20-27.
  4. ^ Halliday, Fred. The Middle East in International Relations: Power, Politics and Ideology. Cambridge University Pres: USA, 270
  5. ^ N.Y. Krylov, A.A. Bokserman, E.R.Stavrovsky. The Oil Industry of the Former Soviet Union. CRC Press, 1998. Page 187.
  6. ^ a b Shirin Akiner, Anne Aldis. The Caspian: Politics, Energy and Security. Routledge, 2004. Page 5.
  7. ^ United States Congress, Joint Economic Committee. The Former Soviet Union in Transition. M.E. Sharpe, 1993. Page 463.
  8. ^ Quoted from: Tatyana Saiko. Environmental Crises. Pearson Education, 2000. Page 223.
  9. ^ Frank, Alison Fleig (2005). Oil Empire: Visions of Prosperity in Austrian Galicia (Harvard Historical Studies). Harvard University Press. ISBN 0-674-01887-7. 
  10. ^ Put a Tyrant in Your Tank
  11. ^ American Petroleum Institute. "Industry Sectors." http://www.api.org/aboutoilgas/sectors/ Retrieved 12 May 2008
  12. ^ BP Global. "Reports and Publications: Oil Reserves." http://www.bp.com/sectiongenericarticle.do?categoryId=9017902&contentId=7033474 Retrieved 26 Feb 2008
  13. ^ IBISWorld. "US Oil Drilling Industry Market Research Report." http://www.ibisworld.com/industry/retail.aspx?indid=103&chid=10 Retrieved 14 May 2008

[edit] External links