OIL

1. OIL “Black gold, Texas tea….”

2. What is it? Crude oil is a blanket term for a mixture of hydrocarbons; some are long chain hydrocarbons, while others are very shortExact proportion of different hydrocarbons determines viscosityand other characteristics; big differences in crude oil from various locationsMayan crude - very thick, almost tarrySaudi crude - very thin, can almost be used directly in diesel motor

3. Oil Usage Data from Dept. of Energy Not all crude oil is used for gasoline. Over half of all crude oilused in the U.S. goes to other purposes, such as jet fuel, home heating oil, and plastics

4. Transportation About 65% of crude oil (almost 13.2 MBPD) is used for transportation; of this, the majority (9.1 MBPD) is for gasoline BTS, 2007

5. Other Uses About 6% of crude oil is used to heat homes and buildingsAnother 2% is used for generating electricityRemaining amount (26%) used by industry 3% for asphalt and road oil9% for LPG4% for coke3% for petrochemical feedstock Even if stopped using oil for transportation, will still need itfor our modern lifestyles

6. Oil drilling Offshore Onshore

7. Primary Method The cheapest method for extracting oil is to pump it out of the ground using a well This removes about 15-20% of the oil that is stored in the rock matrix

8. Secondary Method The second cheapest method for extracting oil is to inject water into the reservoir at a low spot while pumping from a high spot This removes another 15-20% of the oil that is stored in the rock matrix

9. Tertiary Method The most expensive method for extracting oil is inject a surfactant like steam or CO2 while pumping This removes another 10% of the oil that is stored in the rock matrix

10. Moving Petroleum Once the oil/gas gets to the surface, it must be moved to market. Amount of oil produced from a unit might be thousands to tens ofthousands of barrels of oil per day Need reliable system to get oil to refinery or large holding area; boats and trucks not reliable Solution --> Pipeline

11. Onshore Pipeline Onshore, the pipeline is usually buried in the U.S. Exception is the TransAlaskan pipeline, which must be above ground to prevent permafrost melting.In other countries, done routinely. Above ground pipelines are subjectto terrorism, theft, and drunk hunters. Alaska pipeline leak from hunter’s bullet(Source: BBC)

12. Offshore Pipeline Offshore oil rigs use pipelines running along the bottom of the ocean to get it to nearest land. Repairs can be extremely costly. Most failure incidents are caused by corrosion; most large spillsare caused by anchors (about 3,000 bbls oil spilled per incident)

13. Gulf of Mexico Offshore LouisianaRed lines - Oil Blue lines - Gas Black dots - StructureEach green, gold, andblue square is a 3 mileby 3 mile leased blockWhite squares are notleased Map courtesy of MMS

14. Tankers Oil is an international commodity.To cross the ocean or seas, oil tankers are used. Amount of oil in transport by tankeris quite large, as the world consumesover 75 million barrels per day Source: BBC Persian Gulf alone accounts for 15 million barrels per day exportedTanker spills account for 29 million gallons of oil spill per year

15. Oil refining Crude oil is a mixture of different hydrocarbons Different hydrocarbons have different boiling points Separate by heating to various temperatures Can change the percentage of various hydrocarbons by “cracking” (thermally or chemically) them into smaller ones

16. Environmental Damage Oil wells produce radioactive water Oil spills from wells, tankers, and pipelines occur frequently; usually small, but can be quite large Fumes emitted by refineries are toxic; linked to cancer, lung disease, and host of other problems Sometimes, refineries blow up

17. Oil Shale and Tar Sand Oil shale - kerogen trapped within the low permeability shale;may be up to 40% of shaleU.S. has about 130 billion barrels of oil in this form (2/3 of world total; no production facilities, though; requires miningshale, crushing it, and then passing steam through it to captureoil Tar sand - heavy, asphalt-like crude trapped in sandstone; worldreserves possibly 3 times that of conventional oilCan heat the oil in place to low viscosity and remove it; cheaperto mine it like oil shale

18. U.S. Reserves Addition of Alaska U.S. reserves have been in a steady decline for almost40 years. At the sametime, our productionhas also decreased

19. U.S. Production While consumption of oil in the U.S.has been increasing for 30 year, domestic production peaked in 1970. Majority of U.S. oil from the Gulf of Mexico (mostly Texas and Louisiana),Alaska, and California. North Dakota production has increased 300% over thelast decade Data from the Department of Energy

20. U.S. Imports Common perception is that all of our oil comes from Saudi Arabia Both Mexico and Canada provide as much as Saudi Arabia U.S. oil imports by source (DOE) Nigeria and Venezuela also provide large quantities By how much would fuel efficiency of cars have to increase so that could replace Saudi Arabia contribution?

21. World Oil Reserves Data from DOE , 2008 and Oil & Gas Journal, 2007 Current estimates of oil reserves show that Arabia andEurasia have over 75% of the world’s oil

22. World Consumption

23. How Long? The question is not how much long will we have oil, but how longwill we have cheap oil? Source: C.J.Campbell, 2004 Source: DOE How will international politics change if this situation plays out?