Energy, Environment, and Industrial Development

1. Energy, Environment, and Industrial Development Michael B. McElroy Frederick H. Abernathy Lecture 18 April 18, 2005

2. Petroleum. The word comes from Latin words. Petra-rock and oleum – oil • Crude oil is a thick, brown or greenish flammable liquid • Consists of a complex mix of various hydrocarbons, largely in the alkane series. Can vary greatly in appearance, composition and purity. • Oil also contains sulfur. “Sweet” oil refers to oil with low sulfur content. “Sour” oil is high in sulfur

3. The four lightest alkanes are CH4 (methane), C2H6 (ethane), C3H8 (propane), and C4H10 (butane) • These are gases. Boiling points: CH4 (-161.6oC), C2H6 (-88.6oC), C3H8 (-42oC), and C4H10 (-0.5oC) • Chains in the C5-7 range are light, easily vaporized, clear naphas. • Chains from C6H14 through C12H26 are blended to make gasoline • Kerosene is composed of chains in the C10-15 range • Diesel fuel and heating oils are in the range of C10-20

4. Boiling points for light petrol used as an automobile fuel are in range 60-100oC • Heavy petrol, also used as auto fuel, boils between 100-150oC • Light kerosene boils 120-150oC • Heavy kerosene, used as jet engine fuel, boils 150-300oC • Diesel boils 250-350oC • Engine oil, used for lubrication, boils > 300oC • Heavies compounds used to make tar, asphalt and residual fuel

5. The Oil Producing Countries (2003) • Saudi Arabia (OPEC) • United States • Russia • Iran (OPEC) • Mexico • China • Norway • Canada • United Arab Emirates (OPEC) • Venezuela (OPEC) • UK • Kuwait (OPEC) • Nigeria (OPEC)

6. Major Exporters • Saudi Arabia (OPEC) • Russia • Iran (OPEC) • U.A.E. (OPEC) • Venezuela (OPEC) • Kuwait (OPEC) • Nigeria (OPEC) • Mexico • Algeria (OPEC) • Libya (OPEC)

7. Countries with largest reserves • Saudi Arabia (OPEC) • Iraq • U.A.E. (OPEC) • Iran (OPEC) • Russia

8. Oil is formed from decay of prehistoric marine plants and animals • Buried under thick sedimentary layers • Heat and pressure turns it into a waxy material known as kerogen and then into liquid and gaseous forms • These migrate through rock layers until they are eventually trapped in porous rock reservoir – oil field • Liquid brought to surface by drilling and pumping

9. Economics of Oil Production • In early days, energy equivalent of 1 barrel oil was used to recover 50 barrels • Today 1-5 barrels recovered for every barrel expanded • Costs approximately $1 to pump a barrel of oil out of the ground in Saudi Arabia. Price delivered to the refinery in the U.S. ~$50

10. http://en.wikipedia.org/wiki/Petroleum#Pricing

11. Oil prices from 1860-1999 in 1999 dollars Source: http://www.eia.doe.gov/pub/international/iealf/BPCrudeOilPrices.xls

12. http://en.wikipedia.org/wiki/Petroleum#Pricing

13. Current global oil production is about 25 billion barrels per year • Value  $1.25 trillion • In a recent year, new discoveries amounted to only 8 billion barrels • International Energy Agency (IEA) projected annual demand to grow to more than 30 billion barrels per year • No surplus capacity? Are rising prices inevitable?

14. Expensive alternatives to today’s oil include the Athabasca oil sands in U.W. Canada and the Venezuelan Orinoco tar sands • Estimates suggest these reservoirs may contain as much as two thirds of world’s total oil • Significant energy required to liberate soil from tar sands • Implications for CO2

15. History of Oil Use • Oil seeps were exploited in Mesopotamia as far back as 3000 BC • Bitumen was traded extensively in the ancient Middle East • Greek fire: a mixture of petroleum and lime. Caught fire when moisture introduced. • First oil wells drilled in China in 4th century; bamboo pipelines from oil wells to salt springs in 10th century • Oil interest received in Galicia and Romania in early 1800’s • Kerosene used to light lamps by 1850 • European crude production estimated at 36,000 barrels in 1859, mainly from Galicia and Romania

16. History of Oil Use • George Bissell’s vision: to drill for oil and use it as an illuminant. Professor Silliman’s contribution • The Pennsylvania Rock Oil Company • “Colonel” Drake drills first well at Titusville, 1859

17. Canadian Dr. Abraham Gesner coined the word kerosene (wax oil). Developed a process for extracting oil from asphalt and refining it to make illuminating oil. Applied for US patent 1854 • Built plant in New York City producing 5000 gallons a day by 1859. Many companies in game. Kerosene from coal (coal oil) • Drake strikes oil in Titusville, August 27, 1859 • First flowing well struck April 1861 – 3000 barrels per day • 3 million barrels produced in 1862. Price drops to 10 cents a barrel

18. US exports oil to Europe • Price rises to $13.75 a barrel at end of Civil War • John D. Rockefeller buys out partner Maurice Clark 1865 • Standard Oil Company formed January 10, 1870. Rockefeller retain one quarter of stock • Royal Dutch discovers oil in Sumatra, 1885 • Henry Ford builds first car • Oil in Oklahoma 1905 • First gas station, St. Louis, 1907 • Oil in Persia, 1908 • Standard of California wins concession in Saudi Arabia, 1933

19. Arab oil embargo, 1973. Price rises from $2.90  $11.65. Alaskan pipeline approved • Hostages taken in Iran, 1979 • Price rises $13  $34 • Exxon Valdez accident, 1989