World oil reserves, 2009.

The petroleum industry includes the global processes of exploration, extraction, refining, transporting (often by oil tankers and pipelines), and marketing petroleum products. The largest volume products of the industry are fuel oil and gasoline (petrol). Petroleum (oil) 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 industrial civilization in its current configuration, and thus is a critical concern for many nations. Oil accounts for a large percentage of the world’s energy consumption, ranging from as 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 consumes 30 billion barrels (4.8 km³) of oil per year, with developed nations being the largest consumers. The United States consumed 25% of the oil produced in 2007.^[1] The production, distribution, refining, and retailing of petroleum taken as a whole represents the world's largest industry in terms of dollar value.

Governments such as the United States government provide a heavy public subsidy to petroleum companies, with major tax breaks at virtually every stage of oil exploration and extraction, including for the costs of oil field leases and drilling equipment.^[2]

History[link]

Natural history[link]

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 is formed mostly from the carbon rich remains of ancient plankton after 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.^{[citation needed]}

Early history[link]

Petroleum in an unrefined state has been utilized by humans for over 5000 years. Oil in general has been used since early human history to keep fires ablaze, and also for warfare.

Its importance in the world economy evolved slowly, with whale oil used for lighting into the 19th century, and wood and coal used for heating and cooking well into the 20th Century. The Industrial Revolution generated an increasing need for energy which was fueled mainly by coal, with other sources including whale oil. 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.^[3]

Modern history[link]

Galician oil wells

Imperial Russia produced 3,500 tons of oil in 1825 and doubled its output by mid-century.^[4] After 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 (Baku-Batumi pipeline), completed in 1906, 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.^[5] Nearly 200 small refineries operated in the suburbs of Baku by 1884.^[6] As a side effect of these early developments, the Apsheron Peninsula emerged as the world's "oldest legacy of oil pollution and environmental negligence."^[7] In 1878, Ludvig Nobel and his Branobel company "revolutionized oil transport" by commissioning the first oil tanker and launching it on the Caspian Sea.^[5]

The first modern oil refineries were built by Ignacy Łukasiewicz near Jasło (then in the dependent Kingdom of Galicia and Lodomeria in Central European Galicia), Poland from 1854–56.^[8] These were initially small as demand for refined fuel was limited. The refined products were used in 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.

In Canada, oil extraction began in 1858 in Oil Springs, Ontario.^[9] The first modern oil drilling in the United States began in West Virginia and Pennsylvania in the 1850s. Edwin Drake's 1859 well near Titusville, Pennsylvania, is typically considered the first true modern oil well, and touched off a major boom. ^{[10] [11]}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, Peru and Venezuela. ^[12]

The first successful oil tanker, the Zoroaster, was built in 1878 in Sweden, designed by Ludvig Nobel. It operated from Baku to Astrakhan.^[13] A number of new tanker designs were developed in the 1880s.

In the early 1930s the Texas Company developed the first mobile steel barges for drilling in the brackish coastal areas of the Persian Gulf. In 1937 Pure Oil Company (now part of Chevron Corporation) and its partner Superior Oil Company (now part of ExxonMobil Corporation) used a fixed platform to develop a field in 14 feet (4.3 m) of water, one mile (1.6 km) offshore of Calcasieu Parish, Louisiana. In early 1947 Superior Oil erected a drilling/production oil platform in 20 ft (6.1 m) of water some 18 miles^[vague] off Vermilion Parish, Louisiana. But it was Kerr-McGee Oil Industries (now Anadarko Petroleum Corporation), as operator for partners Phillips Petroleum (ConocoPhillips) and Stanolind Oil & Gas (BP), that completed its historic Ship Shoal Block 32 well in October 1947, months before Superior actually drilled a discovery from their Vermilion platform farther offshore. In any case, that made Kerr-McGee's well the first oil discovery drilled out of sight of land.^[14][15]

After World War II ended, the countries of the Middle East took the lead in oil production from the United States. Important developments since World War II include deep-water drilling, the introduction of the Drillship, and the growth of a global shipping network for petroleum relying upon oil tankers and pipelines. In the 1960s and 1970s, multi-governmental organizations of oil–producing nations OPEC and OAPEC played a major role in setting petroleum prices and policy. Oil Spills and their cleanup have become an issue of increasing political, environmental, and economic importance.

Industry structure[link]

The American Petroleum Institute divides the petroleum industry into five sectors:^[16]

• upstream (exploration, development and production of crude oil or natural gas)
• downstream (oil tankers, refiners, retailers and consumers)
• pipeline
• marine
• service and supply

Oil companies used to be classified by sales as "supermajors" (BP, Chevron, ExxonMobil, ConocoPhillips, Shell, Eni and Total S.A.), "majors", and "independents" or "jobbers". In recent years however, National Oil Companies (NOC, as opposed to IOC, International Oil Companies) have come to control the rights over the largest oil reserves; by this measure the top ten companies all are NOC. The following table shows the ten largest oil companies ranked by reserves^[17] and by production.^[18]

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]}

Environmental impact and future shortages[link]

Some petroleum industry operations have been responsible for water pollution through by-products of refining and oil spills.

The combustion of fossil fuels produces greenhouse gases and other air pollutants as by-products. Pollutants include nitrogen oxides, sulphur 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 listed the reserve/production ratio for proven resources worldwide. The study placed the prospective life span of proven reserves in the Middle East at 79.5 years, Latin America at 41.2 years and North America at only 12 years.

The Hubbert peak theory, which introduced the concept of peak oil, questions the sustainability of oil production. It suggests that after a peak in oil production rates, a period of oil depletion will ensue. Since virtually all economic sectors rely heavily on petroleum, peak oil could lead to a partial or complete failure of markets.^[19]

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. More than 90% of the ethanol used in the US is blended with gasoline to produce a 10% ethanol mix, lifting the oxygen content of the fuel.^[20]

Petroleum industry in popular culture[link]

The petroleum industry's influence on modern society has made it a favorite subject in contemporary literature.

See also[link]

Energy portal

• Instrumentation in petrochemical industries
• List of crude oil products
• List of petroleum companies
• Oil depot
• Oil refinery
• Oil supplies
• Oil well
• Integrated operations
• Standardisation in oil industry

Environmental issues

• Greenhouse gases
• Petroleum disasters
• Renewable energy

Financial and political

• Chronology of world oil market events (1970-2005)
• Energy crisis: 1973 energy crisis, 1979 energy crisis
• Energy development
• Petroleum politics
• Oil imperialism
• Oil price increases since 2003
• Oil-storage trade
• OPEC
• Peak oil
• Oil and gas law in the United States

Oil geology

• Abiogenic petroleum origin
• Fossil fuel
• Oil sands
• Petroleum geology
• Thermal depolymerization

Oil-producing areas

• History of the petroleum industry in Canada
• History of the petroleum industry in the United States
• List of oil fields
• Oil Megaprojects
• List of oil-producing states
• Oil industry in Azerbaijan

Industry Research Projects

• TaskForceMajella

References[link]

Further reading[link]

• Ordons Oil & Gas Information & News http://www.ordons.com
• Robert Sobel The Money Manias: The Eras of Great Speculation in America, 1770-1970 (1973) reprinted (2000).
• Daniel Yergin, The Prize: The Epic Quest for Oil, Money, and Power, (Simon and Schuster 1991; paperback, 1993), ISBN 0-671-79932-0.
• Matthew R. Simmons, Twilight in the Desert The Coming Saudi Oil Shock and the World Economy, John Wiley & Sons, 2005, ISBN 0-471-73876-X.
• Matthew Yeomans, Oil: Anatomy of an Industry (New Press, 2004), ISBN 1-56584-885-3.
• Smith, GO (1920): Where the World Gets Its Oil: National Geographic, February 1920, pp 181–202
• Vassiliou, M.S. Historical Dictionary of the Petroleum Industry. Lanham, MD: Scarecrow Press (Rowman & Littlefield), 700pp. ISBN 0-8108-5993-9.

External links[link]

Wikimedia Commons has media related to: Petroleum industry

• OPEC - Organization of the Petroleum Exporting Countries

v t e Petroleum industry Petroleum · Primary energy Benchmarks Argus Sour · Bonny Light · Brent · Dubai · Indonesian · Isthmus-34 Light · Japan Cocktail · OPEC Reference Basket · Tapis · Urals · West Texas Intermediate Companies and organisations Major petroleum companies Supermajors BP · Chevron · ConocoPhillips · ExxonMobil · Royal Dutch Shell · Total National oil companies ADNOC · CNOOC · CNPC · Iraq National Oil Company · Indian Oil Corporation · Kuwait Petroleum Corporation · Nigerian National Petroleum Corporation · NIOC · ONGC · Orlen · PDVSA · Pemex · Pertamina · Petrobras · Petronas · Qatar Petroleum · Rosneft · Saudi Aramco · Sonangol · Sonatrach Other Anadarko · Apache · BG Group · Cenovus Energy · Devon · Eni · Galp Energia · Gazprom · Hess · Husky Energy · Imperial Oil · Lukoil · Marathon Oil · Nippon Oil · Occidental · OMV · PetroChina · Reliance Industries · Repsol YPF · Sinopec · Statoil · Suncor Energy · Surgutneftegas · TNK-BP Major services companies AMEC · Baker Hughes · CGGVeritas · CH2M HILL · China Oilfield Services · Enbridge · Ensco · GE Oil & Gas · Halliburton · National Oilwell Varco · Petrofac · Saipem · Schlumberger · Snam · Technip · TransCanada · Transocean · Weatherford · Wood Group Other International Association of Oil & Gas Producers · International Energy Agency · International Petroleum Exchange · OPEC · Society of Petroleum Engineers · World Petroleum Council Data Natural gas Consumption · Production · Reserves · Imports · Exports · Price Petroleum Consumption · Production · Reserves · Imports · Exports · Price (Price of gasoline and diesel) Exploration and production Exploration Core sampling · Geophysics · Integrated asset modelling · Petroleum engineering (Reservoir simulation · Seismic to simulation) · Petroleum geology · Petrophysics · Reflection seismology (Seismic inversion) · Seismic source Drilling Blowouts · Completion (Squeeze job) · Differential sticking · Directional drilling (Geosteering) · Drilling engineering · Drilling fluid · Drilling fluid invasion · Drill stem test · Lost circulation · Measurement · Tracers · Underbalanced drilling · Well logging Production Agreements (Concessions · Production sharing agreements) · Artificial lift (Pumpjack · Submersible pump (ESP) · Gas lift) · Downstream · Enhanced oil recovery (EOR) (Steam injection · Gas reinjection) · Midstream · Petroleum product · Pipeline transport · Refining · Upstream · Water injection · Well intervention · XT History 1967 Oil Embargo · 1973 oil crisis · 1979 energy crisis · 1980s oil glut · 2000s energy crisis · Founders · History of petroleum · Nationalization · Seven Sisters · Standard Oil · Oil market timelines Provinces and fields List of natural gas fields · List of oil fields · East Texas · Gulf of Mexico · Niger Delta · North Sea · Persian Gulf · Prudhoe Bay Oil Field · Russia · Venezuela · Western Canadian Sedimentary Basin Other Acronymns · Peak oil (Mitigation · Timing) · People · Petrocurrency · Petrodollar · Petroeuro · Shale gas · Swing producer · Unconventional oil (Heavy crude oil · Oil sands · Oil shale) Category ·  Commons