OIL

This information, with very informative graphics, is available in your google doc IB Geo folder - please use it.


 * How is oil formed?**

http://www.berkshiremoody.com/img/oil-drilling-geologya.jpg

Oil is created from the remains of tiny plants and animals like plankton that died in ancient seas between 10 mil. and 600 mil. years ago. After the organisms died, they sank into the sand and mud at the bottom of the sea. Over time, the organisms decayed in the sedimentary layers. As there was little to no oxygen present, microorganisms broke the remains into carbon rich compounds that formed organic layers. The organic material mixed with the sediment forming fine grained shale. When the new sedimentary layers were deposited they exerted a lot of pressure and heat on the fine grained shale. The heat and the pressure distilled into crude oil and natural gas in the reservoir rocks between layers of impermeable rock such as marble or granite.

How is oil found? http://www.squidoo.com/how-oil-is-found Oil has been in use since ancient times. It has been found flowing from the ground and was used first for medical purposes. It was later used for building then found to be useful as a fuel source. Modern method of finding oil

Oil accumulates between layers of the subsurface or in between porous rocks and many different places. The most important thing though is to find the correct union in order to form an oil pool. Geologists who are able to study aerial photographs and satellite images to find out the data of possible locations for oil collection The newer methods of locating oil are by using new technology such as Vibrator or Thumper trucks. This will enable vibrations in the earth to be located by listening through geophones. After being heard by the geophones the data is then transferred to computers, this data is then displayed and studied by Geologists to determine the locations of were oil could be found If a possible location is found, minor drilling will take place, after the well has been drilled, then a measuring device is lowered into the hole, and from that they can find useful information about the types of rock present, what fluids the rocks contain and much more. If the hole looks promising and meets all the criteria then drilling will continue, if it does not then the whole is filled up again and drilling will stop and the research will continue in order to find more possible oil locations The methods to locate oil underwater is used, but instead of Vibrator or Thumper trucks, boats are used, and this measures the depth at which it is located and if there is the possibility of oil the same procedures follows. Watch video about drilling in Texas at the end of the site.

http://www.articlesofadvice.com/articles/15/1/How-Is-Oil-Extracted-From-The-Ground-Triple-Diamond-Energy/Page1.html
 * How is oil extracted?**

When possible oil areas have been discovered, the process of extracting oil is very difficult, takes a lot of planning and is costly. This means that there are many procedures to do before extracting. Firstly: Preparing the Landfill: Landfills should be prepared for drillings Vehicles must be able to cross in order to reach the hole and be able to leave the area Once the land is cleared and easily accessible, a source of water must be found because water is used in the process of extraction

Setting up the Oil rig: Dig a large pit called a cellar around the hole to make sure that the crew, the machines and everything else fits and has enough space for easy access and sooth functioning. Before bringing in the full rig, a drill truck will be brought into the cellar to begin minor drilling of a wider and shallower area in which a conductor pipe will be fitted. This pipe will provide stability when the rig is brought in. Along the way, its spinning blades and its water supply that create large amounts of mud that is removed with a pump-based circulation system. When the desired depth is reached, a long casing pipe is fitted into the hole to keep it from collapsing.

Striking oil: Testing of oil after its been extracted Transporting of oil to the factories to be refined Using oil pump to extract all the oil After being refined it is shipped and sold internationally either by shipping, flight or trucks.


 * Who is oil produced by?**

Oil companies like Saudi ARAMCO, British Petroleum(UK), Perenco(UK), Anadarko Oil Corporation(U.S.), Apache Corporation(U.S.), ENI (Italy), PetroChina, Oil India, British Gas Group, Petróleos de Venezuela. http://en.wikipedia.org/wiki/List_of_petroleum_companies


 * What is the global distribution of oil deposits?**

http://www.independent.co.uk/multimedia/archive/00031/World-Oil_31948a.jpg The highest concentration of oil is found in the Middle East (especially Saudi Arabia: 264.3 billion barrels) approximately 3 weeks ago a larger reserve of oil was found in Venezuela it is estimated now that there is more oil present in Venezuela (total reserves of 297 billion barrels) than in Saudi Arabia (total reserves of 266 billion barrels) http://tripolipost.com/articledetail.asp?c=2&i=5354 BBC article: Venezuela oil “may double Saudi Arabia” (http://news.bbc.co.uk/2/hi/8476395.stm) High concentrations also in: Canada, northern South America, Russia, North Africa, Nigeria Areas with little to no oil reserves: southern South America, southern and eastern Africa, Europe (minus Scandinavian countries), Oceania (eg: Australia) Distribution of reserves: less observable pattern Naturally occurring oil reserves (more random distribution)

http://southdakotapolitics.blogs.com/south_dakota_politics/images/2008/03/28/worldwide_oil_reserves.gif a CNN report on oil reserves: http://www.youtube.com/watch?v=VXYOOvGLzfI 2:13 see above graph entitled “Oil Reserves” the graph shows a spatial representation of how much oil is present in billion of barrels - per country (bbl) the largest oil reserves are in Saudi Arabia, Canada, and Iran however, these are not necessarily the countries with the largest export and harvest of oil - Canada does not exploit a large percentage of its oil in order to preserve the wilderness
 * What are the estimated oil reserves globally?**

Top country producers of oil: Saudi Arabia (10.7 millions of barrels/day) Russia (9.7 millions of barrels/day) United States (8.5 millions of barrels/day) Iran (4.2 millions of barrels/day) Followed by: China, Canada, Mexico, UAE Determined by: Availability of natural oil reserves Availability of technology and infrastructure required to produce oil (eg: pipes, drills, trained personnel, etc) Top company producers of oil: Saudi Arabian Oil Company, aka Saudi Aramco (303,000 million barrels [size of reserves]) National Iranian Oil Company (300,000 million barrels) Qatar General Petroleum Corporation (170,000 million barrels) Iraq National Oil Company (134,000 million barrels) Followed by: Petroleos de Venezuela, Abu Dhabi National Oil Company, Kuwait Petroleum Corporation, Nigerian National Petroleum Corporation http://www.oiecgroup.com/en/partandcln.aspx http://www.petrostrategies.org/Links/Worlds_Largest_Oil_and_Gas_Companies_Sites.htm
 * Who are the major producers – countries/companies?**

http://www.eia.doe.gov/country/index.cfm


 * What is OPEC?**

http://hismap.wz.cz/svet/opec_map.gif OPEC: Organization of Petroleum-Exporting Countries It was founded as an organization of countries formed in 1961 to agree on a common policy for the production and sale of petroleum the following countries are members of OPEC: Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Angola, and Venezuela

http://geography.about.com/library/faq/blqzopec.htm

http://www.globalization101.org/uploads/Image/Energy/opec-reserves-2008.JPG The distribution above illustrates how OPEC countries divide their oil reserves 79% oil reserves are within OPEC countries - which produce a significant amount more barrels than non-OPEC countries


 * Who are the main consumers?**

The main consumers of oil are 1. US – 20,680,000 bbl/day 2. China – 7,578,00 bbl/day 3. Japan – 5,007,000 bbl/day 4. Russia – 2,858,000 bbl/day 5. India – 2,722,000 bbl/day

http://www.nationmaster.com/red/pie/ene_oil_con-energy-oil-consumption

The website below is very useful - read the article! Very complicated... http://www.telegraph.co.uk/finance/newsbysector/energy/2790647/Oil-price-QandA-What-are-oil-futures-and-how-are-they-traded.html http://news.bbc.co.uk/2/hi/904748.stm
 * How is oil traded?**

http://www.youtube.com/watch?v=oplAy-EYKIw&playnext=1&list=PL8E0E51C6CF688646&index=27 - watch for help! What are oil futures?

Futures contracts are financial instruments and carry with them legally binding obligations. Buyer and seller have the obligation to take or make delivery of an underlying instrument at a specified settlement date in the future. Oil futures are part of the derivatives family of financial products as their value 'derives' from the underlying instrument. These contracts are standardised in terms of quality, quantity and settlement dates. In the case of crude oil, the main futures exchanges are the New York Mercantile Exchange (NYMEX) and the Intercontinental Exchange (ICE) where West Texas Intermediate (WTI) and North Sea Brent crude oil are traded respectively These exchanges trade what is referred to as 'light- sweet' crude oil and a single contract, or 'lot', calls for the purchase or sale of 1,000 barrels of oil. Traders can buy and sell oil for delivery several months or years ahead. The bulk of activity in commodity futures markets is typically concentrated on oil for delivery in the next three months. However, in the past five years, activity has increased substantially for deliveries much further into the future as more investors put money into commodity indices.

This would commonly be in a futures contract for delivery in the following month. In this type of transaction, the buyer agrees to take delivery and the seller agrees to provide a fixed amount of oil at a pre-arranged price at a specified location. Futures contracts are only traded on regulated exchanges and are settled (paid) daily, based on their current value in the marketplace. The minimum purchase is 1,000 barrels.


 * How are oil futures traded?**

Futures contracts are traded on regulated futures exchanges. Trading can take place through electronic dealing systems, open outcry around a pit or a combination of both. To trade on an exchange, you need to be a member of that exchange. Exchange members can trade on their own account or they can execute orders for hedgers or speculators. In the latter case, exchange members are acting as brokers and will collect a fee for their service. Each futures exchange has a clearing house which ensures that trades are settled in accordance with market rules and that guarantees the performance of the contracts traded.

There are world benchmarks, US benchmakrs and OPEC benchmarks to determine the cost

In international markets oil is measured and traded in barrels (dollars per barrel ($/bbl)). There re different kinds and oil qualities around the world, therefore the price will depend accordingly. The price references are taken by organization such as the WTI (West Texas Intermediate). Today oil is marketed at 90$/bbl (what you pay for every barrel of oil produced). Moreover, there are different prices according how much it costs to extract the oil from the fields. These include energy consumption, materials, work force, etc. (Belen’s dad :) )
 * How has the cost changed over time?**

The demand for oil is highly dependent on global macroeconomic conditions. According to the International Energy Agency, high oil prices generally have a large negative impact on the global economic growth. Over the last few years, oil price has undergone a significant decrease since the record peak of US$145 it reached in July 2008. On December 23, 2008, WTI crude oil spot price fell to US$30.28 a barrel, the lowest since the financial crisis of 2007–2010 began, and traded at between US$35 a barrel and US$82 a barrel in 2009. The Organization of the Petroleum Exporting Countries (OPEC) was formed to control the price of oil.

http://www.oilnergy.com/1opost.htm

Crude oil must be moved from the production site to refineries and from refineries to consumers. These movements are made using a number of different modes of transportation. Crude oil and refined products are transported across the water in barges and tankers. On land crude oil and products are moved using pipelines, trucks, and trains. Oil its transported in pipes that pump up the oil from the fields to the tanks were they are stored. Then, they are taken to refineries or distilleries to be processed. The barrel is the standard unit of measure for oil production and transportation. A standard barrel size measures 42 US gallons (158.98 liters). As of 2005, about 2.4 billion tons of petroleum were shipped by maritime transportation, which is roughly 62% of all the petroleum produced. There are transported in tankers, and there are roughly 3,500 of them available on the international oil transportation market. Transportation costs account for about 5 to 10% of the added value of oil, and it depends on the amounts of oil carried, the place it is extracted from and where it is being transported. Tanker ships can also be used as semi-permanent storage tanks. The remaining 38% is either using pipelines (dominantly), trains or trucks.
 * How is oil transported?**

Pipeline Marine Rail Truck Volumes Large Very large Small Large Materials Crude / Products Crude / Products Products Products Scale 2 ML+ 10 ML+ 100 kL 5-60 kL Unit costs Very low Low High Very high Capital costs High Medium Low Very low Access Very limited Very limited Limited High Responsiveness 1-4 weeks 7 days 2-4 days 4-12 hours Flexibility Limited Limited Good High Usage Long haul Long haul Medium haul Short haul

Source: adapted from Ken Dymock (2007) General Manager, Distribution, Petro Canada, Chartered Institute of Logistics and Transport, Transportation Situation & Outlook Conference.

Oil Transportation and Major Chokepoints The bulk of the oil transported (62%) is using maritime transportation.

Tanker Size There are different tanker sizes used for the international transportation of oil, from a modest coastal tanker to a VLCC or ULCC Supertanker. The common rule is that the volume that can be carried in a tanker increases as a function of the cube of its length.

http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/table_oiltransportation.html http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ch5a1en.html http://www.petrostrategies.org/Learning_Center/oil_transportation.htm

As shown above, the Middle East is the largest producer of oil and exports it to countries all the around the world especially those in Asia. China and Japan seem to be using the most as they are the world’s largest manufacturers of goods and would therefore require large amounts of oil to run their factories. The United States seems to be getting most of its supplies from Europe and parts of Central America. http://www.black-tides.com/uk/oil/transport-oil/main-oil-transport-routes.php
 * What are the routes?**

Our population depends on oil for transport, the manufacturing of a variety of different products and as a source of energy. Below are examples of petroleum based products: Plastic Bottles (use petrochemicals which are derived from fossil fuels) Soap less Detergent Pharmaceutical Drugs: Vitamins:ASA, is an ingredient in pain relievers, is manufactured from petrochemicals Aspirin Canned goods (use petrochemicals) Candle wax, as a candle is made from wax, and wax is a raw petroleum product Camera Film (Ethylene, which is a byproduct of distilling oil) Pens: Most of the colored inks come from dyes, which are petrochemicals. Sneakers: Most of the rubber soles are made from petroleum Plant Fertilizers: Most of the chemicals in fertilizers come from petroleum products Bandages: The plastic is made from oil Cooking oil ( palm oil, olive oil) Oil paint Basketballs Gasoline Diesel Cd's
 * How is oil used – what products are oil based?**

http://www.saveandconserve.com/2007/05/petroleum_based_products_a_long_list.html All the colored objects above use oil to be manufactured http://www.priweb.org/ed/pgws/uses/uses_home.html

http://www.endoil.org/site/c.ddJGKNNnFmG/b.4090055/k.9C17/Uses_of_Oil.htm

Carbon emissions due to industry, refining and transport of oil. (example: burning excess gas in flares) Perhaps the biggest environmental impact, as increased carbon emissions are directly linked to the combustion of oil and natural gas, both in production and consumption of the resource. Significant impact on aquatic environments from spills, sewage, treatment chemicals and dumping of cooling water (used in industrial processes to cool machinery) The construction of areas for extracting and processing oil present their own environmental impacts from the physical disturbance of the land and the potential leaking of oil and industrial chemicals into soil and groundwater, disrupting local ecosystems and potentially damaging agricultural practises. Terrestrial oil spills may also occur. (example: the trans-Alaskan pipeline spill in May 2010) There are also more indirect impacts as the infrastructure of an area begins to change through the presence of the oil industry, pressures on the ecosystem will increase as the disturbances caused by oil exploitation have a knock-on-effect. (example: decline of the fishing industry in Nigeria due to disruption caused by drilling and transport of oil) http://ngm.nationalgeographic.com/ngm/0702/feature3/text2.html
 * What are environmental impacts of oil exploitation?**

http://www.ogp.org.uk/pubs/254.pdf


 * What are predictions regarding reserves?**

The term “Peak Oil” refers to a point in time when our consumption of this resource will be at its absolute summit, and from there on out our sources will be continually depleting. People have been saying we have reached this point for decades now, but we have yet to see the full impact of this massive depletion. However there is no denying that we are using up our resources much too quickly for our own good, and alternative sources must be developed. Most predictions and forecasts claim that we will have depleted our sources within 40 years. While there are still huge natural reserves in the States and Canada, we have simply grown much too dependant on this resource and need to come up with alternatives.

The Hubbert or ‘Peak Oil’ Curve Showing Predictions Regarding Oil Reserves: http://en.wikipedia.org/wiki/File:Hubbert_peak_oil_plot.svg An Example of The Hubbert Oil Curve Broken Down By Country the graph above is somewhat out of date but still interesting: http://upload.wikimedia.org/wikipedia/commons/4/41/Hubbert_world_2004.png http://people.hofstra.edu/geotrans/eng/ch5en/appl5en/ch5a1en.html sara :D