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The Story of Oil

Ten billion years later, a huge agglomeration of gas and dust gave birth to a star "the Sun" and nine planets, Earth included.
At that stage, our planet was just a fiery ball. As it cooled, a crust formed on the surface. Then it underwent a series of tremendous upheavals, as mountains rose up only to disappear; lakes, rivers and seas emerged; continents drifted....
The presence on Earth of four simple elements (carbon, hydrogen, nitrogen and oxygen) created the conditions for life. They combined to form amino acids. The first bacteria appeared 3.5 billion years ago.
From the first living cell to ourselves (via algae, ferns, protolepidodendrons, trilobites, ammonites, dinosaurs and, later, mammals), millions upon millions of plant and animal species have sprung up and then vanished; billions upon billions of creatures have lived and died.

Being made up of carbon, hydrogen, nitrogen and oxygen, most organic waste is destroyed and digested by bacteria. But some was deposited on the beds of inland seas, lagoons, lakes, river deltas and other oxygen-poor aquatic milieus, and were thus protected from bacterial action.
At this point, organic matter becomes mingled with sediment (sand, salt, etc.), and then accumulates in layers over many millions of years, the oldest layers being buried beneath more recent ones.
By their sheer mass, these sedimentary layers sink naturally. The continuous action of plate tectonics at work in the Earth's mantle breaks up these layers and precipitates them still more deeply into the Earth's crust.
The further these sedimentary layers sink, the higher the temperatures and pressures rise. Chemical reactions eliminate the nitrogen atoms and the remaining oxygen, leaving behind molecules consisting of just carbon and hydrogen: these are the liquid and gas hydrocarbons found in the rock, known as source or mother rock.
These hydrocarbons then begin to move around in the subsoil. Being lighter than water, they tend to rise toward the Earth's surface. If there's nothing to stop them, they ultimately seep out through the surface, or solidify as bitumen or shale.

But if, in the course of their migration, the hydrocarbons encounter an impermeable later, they become entrapped in the microscopic clefts and fissures of the rock, which is then known as reservoir rock. Inside this reservoir rock, the gaseous hydrocarbons slowly rise above the oil. What are the chances of a geologist ever suspecting the existence of this reservoir, a few million years later?
From the time of high antiquity, in ancient Mesopotamia, oil that had seeped to the surface was collected for medicinal use, as well as lighting fuel and caulking for boats.
Today, now that we have been producing from accessible reservoirs for 150 years, it is increasingly hard to find hydrocarbon-impregnated rock. Explorers now have to look hundreds and even thousands of meters below ground.
The geologist's job is to observe, explore and scrupulously record any clue to the possible presence of hydrocarbons below ground. Geologists are people of action and naturalists. They examine rocks and take samples to ascertain their nature and date the strata from which they were taken. They then seek to reconstitute a scenario that may have been written 4 billion years ago.
Combined with aerial and satellite photographs, the geologist's observations then serve to formulate initial hypotheses: yes, there could be oil down there, below ground, and it could be worthwhile looking further.
Now it's the geophysicist's turn to study the physical properties of the subsoil. A variety of methods are used at this stage, and a comparison of their results serves to enrich the geologist's findings. Gravimetry measures gravity, to give some idea of the nature and depth of strata depending on their density.
Magnetometry (generally performed from the air) measures variations in the magnetic field. This gives an idea of the depth distribution of crystalline terrains which have no chance of containing any oil.
A surface shock generates sound waves which are refracted and reflected underground. The way in which the waves are propagated varies as they pass through the different strata.
Using a highly-sensitive microphone known as a "geophone," the geophysicist at the surface listens to the echo of these waves and records them
The geophysicist's seismic recordings are fed into powerful computers. The terrain is mapped by means of isochronic lines linking points on the ground at which the waves take exactly the same length of time to be reflected back to the surface. This method yields two and three-dimensional images of the underground strata, and the resulting seismic maps serve to determine whether certain strata are likely to contain hydrocarbons.
In the oil man's jargon, exploration and production at sea is known as "offshore." Because it is not practicable to survey the terrain at sea, seismic methods are used systematically. And since ships can travel easily in all directions, seismic measurement is in fact easier at sea than on land.
The geophysicist can thus obtain more data offshore than onshore and a more precise three-dimensional image, once the data have been processed.
All these results are aggregated and studied. Geologists, geophysicists, petroleum architects, together with drilling, production and reservoir engineers all supply data to economists and financial planners. By juggling figures, parameters and probabilities, they seek to work out a possible strategy for developing the reservoir in the event of confirmation of the presence of hydrocarbons..
Each member of the exploration team has contributed to the performance of the mission.
By collating and comparing their experience, know-how and findings, their ultimate conclusions are the result of a team effort. Those conclusions are stated briefly:
No: the chances of a result are too slim; or...
Yes: the "prospect", i.e. this highly promising reservoir, is worth taking a gamble. The team is prepared to "pay to see," making the decision to drill.

Geologists, geophysicists and reservoir engineers have concluded there is a "prospect" or possible producing zone. But to find out whether there really are hydrocarbons trapped in the rock, they are going to have to drill down to that zone..
The best location for the siting of the drill rig is determined based on the existing state of knowledge of underground conditions and the topography of the terrain. This is generally sited vertically above the thickest part of the stratum thought to contain hydrocarbons. The drilling team often operates under difficult conditions.
This narrow-bore hole (with a diameter of 20-50 centimeters) is generally sunk to a depth of between 2,000 and 4,000 meters. In a few cases it may go beyond 6,000 meters, and one has even gone to a depth of 10 kilometers, or 30,000 feet.
The derrick, or "mast" in oil slang, is the visible part of the well. This is a metal tower several tens of meters tall, and its serves to lower the "drill-string" vertically into the ground. This drill string is in fact a set of drill pipes screwed end-to-end. In rotary drilling, this string transmits the rotating movement to the drilling tool (of drill-bit) and channels mud down to the well-bottom as the drilling progresses.
The drill assembly consists of a derrick, drill-string, drive-shaft, and the drill-bit itself. The commonest kind of drill-bit consists of three cones made of extremely tough steel capable of eating into the rock face. When the rock is very hard, a diamond-tipped monobloc drill-bit is used.
Specially-formulated mud, prepared under the supervision of the hoghead (oil man's slang for the mud engineer) is injected through the hollow drill-string in order to cool the drill-bit and consolidate the walls of the hole. The mud also helps prevent the oil, gas or water found in the strata crossed from gushing out at the surface. Finally, the mud cleans the well-bottom and carries the rock cuttings back along the pipes to the surface.
The geologist analyzes these cuttings to understand the nature of the rocks traversed and detected signs of hydrocarbons.
Once a certain depth has been reached, the exploration crew conducts a series of measurements known as well-logging. An electronic probe is lowered into the well to measure the physical properties of the rocks traversed. These actual measurements either confirm or disprove the hypotheses formulated prior to drilling, and generally provide more accurate data.
The sides of the well are then consolidated by means of steel tubes screwed together, and the casing is cemented to the terrain to keep the strata separate from each other.
The cuttings brought up the surface do not supply sufficient information for a thorough understanding of the rocks traversed: that's where core sampling comes in.
The drill-bit is replaced by a hollow bit called a coring tool, which extracts a cylindrical sample of rock several meters long.
A study of the resulting core sample yields information about the nature of the rock, its slope, structure, permeability, porosity, fluid content, fossils present, etc.
Drilling progresses very gradually, at a speed of a few meters per hour, slowing to just one meter an hour by the time one is down to 3,000 meters below the surface. Snags are encountered from time to time, and the entire drill-string has to be pulled out regularly for a change of drill-bit.
An exploratory well takes from three to six months to drill. Four wells out of five, or even six out of seven in pioneer zones, fail to yield commercially viable quantities of oil or gas.
Sometimes, though, the drill-bit strikes a hydrocarbon-impregnated rock, in which case the drilling crew conducts extensive well-logging to find out more.
When hydrocarbons are detected, and if there is sufficient pressure for them to rise naturally, a flow-test is conducted using a choke (a calibrated orifice to check the flow rate).
The oil is allowed to rise through this choke for a few hours or days. The quantity collected is measured, as is the change in pressure at the bottom of the well, enabling the probable productivity of the reservoir to be calculated a little more accurately.
If the reservoir looks promising, the drilling crew closes-in the first discovery well. Then it drills a second one, and in some cases several more wells, a few hundred or a few thousand meters distant. By this means the reservoir's characteristics are gradually understood in greater detail.
The decision to stop drilling is taken only when all of these appraisal wells have yielded sufficient information to decide whether to abandon the reservoir or to start planning for development
The principles involved in offshore drilling are the same, but the structure needed to carry the drilling rig and unload all the equipment ferried out by boat is far bulkier and costlier.
Jack-up platforms are used in up to around 100 meters of water and if seabed conditions permit; "semi-submersible" anchored platforms are used in up to several hundred meters of water. Beyond that, drilling is done from dynamically-positioned ships.
Deflected wells are used:
when the drilling zone is inaccessible, or in densely populated areas,
to circumvent an obstacle such as a salt dome,
after a drilling accident,
and above all at sea, to save having to shift a platform.
The exploratory phase has been successful: a reservoir has been identified, with the prospect of producing profitably.
Based on assumptions as to future oil or gas prices, the next step is to determine whether sales of products extracted from the reservoir will be sufficient to cover the high cost of studies, development, construction and funding, as well as production costs proper.
The decision to bring a reservoir onstream is a major one, as the investment outlay can run into several hundred million, indeed a billion, dollars.
Depending on the site, the nature of the subsoil and production characteristics, the petroleum architect's job is to consider the various types of well, gathering systems, treatment, storage and shipment.
The reservoir engineer calculates the number, characteristics and siting of the wells. Finally, engineers, economists and financial experts conduct a joint search for the optimum solution reconciling environmental concerns with the need for profitability. Once the best project has been shown to stand up on paper, construction work can be put in hand.
Oil is rarely found in industrialized areas - more frequently it lies in uninhabited regions. Bringing an oil or gasfield into production involves setting up a vast construction site, with work spread over several years. Meanwhile, factories the world over are already manufacturing the apparatus and instrumentation needed for production.
The development teams drill and complete the wells from which oil or gas is to be produced over a period of several years. Completing a well involves inserting casing, or production casing, into the well, organizing the well-bottom so that the fluid flows from the oil-bearing rocks toward the casing, and installing a wellhead (or Christmas tree) at the surface. The Christmas tree is a cluster of valves and measurement devices to control the flow of oil or gas.
Horizontal drilling is an extension of the deflected drilling technique, and it is used to reach production zones far distant from the site of the rig itself.
By draining a reservoir over a distance of more than a kilometer, moreover, one can produce from vertically thin reservoirs and increase the flow of oil.
Meanwhile, construction gangs build the oil, gas and water pipelines through which fluids leaving the well (oil, gas, and water) are to flow. Pumping systems pipe the liquids and gas to their destination via these networks, which are controlled from the valves clustered on the manifold.
While all this is going on, construction continues on the production center. Separators are built to treat the effluent, together with storage tanks and units to dispatch the oil to the refinery. The center also houses the "utilities," which supply the electricity, water and heat needed in order to function. These utilities are often powered by gas extracted from the reservoir.
All these installations are controlled from a central control room.
Finally, living quarters are built for the crew who will be operating and maintaining the installations. Everything possible is done to make life comfortable for them, with proper rest and recreation facilities. Life is tough on a production site, and crews often work 12-hour shifts for weeks at a stretch, often in remote or hostile (sometimes both at once) regions. At regular intervals, the crew is relieved by colleagues who have rested for an equivalent length of time.
Now everything is ready, the flare stack can be lit.


The reservoir is brought into production as soon as possible after appraisal. Enough wells have been drilled and completed, and the control, gathering, treatment and storage installations are now in place. It is time to open the Christmas tree valves. Driven by the pressure in the reservoir, the oil rises to the surface and flows toward the installations.
The effluent flows round-the-clock.
What actually comes up is rather a curious mixture of sand, water, carbon dioxide, nitrogen and assorted hydrocarbons, all in varying proportions. The effluent flowing through the pipe network controlled by the onsite manifold is pumped away from the wells to the treatment units.
The liquid is treated in separators. These are declining pressure tanks in which the gas, oil and water are separated. The water is purified before being returned to the environment or used for production purposes.
The natural gas is reinjected into the well or shipped to consumers via a gas transmission line. Part of it is burned to generate heat and electricity. Some gases can also be liquefied and converted into liquefied petroleum gas (LPG). This is carried in special vessels and marketed as butane and propane gas for domestic use. The crude oil is pumped to the tank farm pending shipment via pipeline or tanker to a refinery.
A reservoir consists of water (the aquifer), with oil on top, which is itself topped by a gas cap. Water is sometimes injected into the aquifer, or gas into the gas cap, to maintain sufficient pressure in the producing stratum. In some cases steam is injected to lower the oil's viscosity and thus boost the productivity of the well.
These methods can increase oil recovery rates from the normal 25-30% to up to 50%.
Inside the reservoir, the oil trickles through cracks and clefts in the rock to reach the well. Various techniques are used to stimulate the process if the cracks are too small, or too few and far between. These include: artificial fracturing, which applies high pressure hydraulically in order to stimulate new cracks; pumping, by means of electric or beam ("donkey") pumps; gas-lift, which consists in injecting gas at the base of the casing. By rising with the oil, the gas lightens the column of liquid; acidification, which consists in injecting hydrochloric acid into the well-bottom. This infiltrates the cracks and dissolves part of the reservoir rock.
All installations are monitored continuously from the control room, and rigorous maintenance procedures help prevent risks of accident and pollution. In the presence of toxic gases, crews always have a gasmask ready to hand in case of leakage. The gas is immediately flared off via the flarestack in the event of any divergence from normal operating conditions. Finally, and especially in offshore installations, regular emergency evacuation drills prepare everyone on the platform for any eventuality
While in production, a reservoir generates a constant stream of new information about its characteristics. These data are carefully scrutinized and may lead to the drilling of new wells, or the use of more appropriate recovery techniques. The news from the well can be good, or bad - reserves may prove to be larger than expected, or on the contrary they may be depleted faster than planned.
After about 15 to 30 years, the well reaches the limits of economically viable production. The time has come to pack up and move on. Derricks, tanks, pipes, equipment... everything has to be dismantled. Specialized teams clean up the site to return it to its natural condition. This is known as "site remediation" in oil industry jargon.
Although offshore exploration and production obey much the same principles as for onshore operations, they call for special equipment and/or methods, depending on the conditions. Subsea production is a good example of the type of adjustment required.
The countries that produce the most oil are not necessarily the ones that consume the most. The largest consumers are the most heavily industrialized countries. Moreover, world oil consumption has increased sixfold since 1950. So, since oil consumption and production do not happen in the same places, the international oil trade is a necessity.

Before the oil crises of the seventies, integrated oil companies -"integrated" meaning controlling the flow of oil from well to pump-maintained long-term ties with the oil producing countries. The oil trade was relatively simple. The oil price level was fixed for rather long periods of time.
At the time of the Middle East conflict in the autumn of 1973,the oil exporting countries in this area organized to force a fourfold increase in the price of crude. In turn, each of them nationalized the concessions they had granted to the oil companies, by which they gained control of their production. The ever-rising needs of the consumer countries, combined with control of production by the producing countries, now make oil expensive.
With the increase in the price of crude, the consuming countries decided to be thriftier with their petroleum (developing more economic engines, applying thermal insulation to their buildings, instituting speed limits, building nuclear power plants, and other measures), and began to look for supply sources outside the OPEC region. Exploration campaigns revealed the existence of major reserves in the North Sea, Alaska, off the Gulf of Guinea, and elsewhere.
In about ten years, the petroleum market changed profoundly. As the sources of supply had multiplied, the actors on the oil scene were continually optimizing their sales and purchases. Long-term contracts became fewer and farther between, the prices of crude were varying incessantly, and the market went worldwide. Transactions in this "spot" market are carried out cargo by cargo, everywhere in the world, nonstop.
Fluctuations in the prices of crude, of refinery products (gasoline, naphtha, bitumen, or others), and of the dollar, generate considerable financial risks. The time that elapses between the purchase of the crude and the sale of the finished products can cause very high losses or very high gains. The fluctuations in these markets are due to a wide range of technical, political, economic, social, and even meteorological causes that are very difficult to predict.
Petroleum "traders" hedge against their financial risks by making time settlement operations. These operations, which are traditional and common in the stock market, have developed only recently on the oil markets. They consist of placing orders for the purchase or sale of "paper" oil, very little of which (about 5%) will lead to an actual cargo delivery. The principle is to compensate a real operation with an inverse "paper-barrel" operation under the same conditions: a negotiator buys a cargo of oil and sells the equivalent "paper barrels" on the spot market at the same time. So if the price of crude drops and the negotiator loses money on the resale of the physical oil, he buys back the "paper" oil at a lower price than he sold it for, and thus makes a profit that compensates his loss on the real market.
There exist several petroleum markets: the market for crude, for finished products, and the spot market. Negotiators on the physical market are located everywhere in the world, whereas the spot markets are localized on the major financial marketplaces (New York, London, Singapore, and elsewhere). The crude and finished product markets are independent. So within the same company, producers get the best value for their cargoes on the world crude market, while the buyers are looking for the crude best suited to their refineries and to their finished product market.
Each market needs reference crudes to compare the prices of different quality products, because the characteristics and components of the crudes differ from one oil field to another. In Europe, "Brent" is the reference quality of crude from the North Sea. It is used on both the physical market and the spot market.
Oil is rarely consumed where it is produced, so it has to be transported by some means or other to where it is needed. Each year, some 1,900 million tons of oil are shipped around the world in purpose-built vessels.
Crude oil and refined products are shipped in oil tankers. The size of the tanker used depends on the type of product being shipped and its destination.
A quarter of all tankers are owned by the oil companies, and the other three quarters by shipping companies that charter them for varying lengths of time.
Tankers are classified according to their deadweight:
less than 50,000 tons, mainly used for transportation of products (gasoline, gasoil,…);
"Aframax"-approximately 80,000 tons;
"Suez-max"-up to 160,000 tons, originally the maximum capacity of the Suez Canal;
"VLCC" (Very Large Crude Carrier)-up to around 300,000 tons of crude oil;
"ULCC" (Ultra Large Crude Carrier)-capacity exceeding 300,000 tons. The largest tankers ever built have a deadweight of over 550,000 tons.

A tanker's hull is divided into several compartments, each tank being separated by waterproof bulkheads, enabling the vessel to carry different types of products simultaneously. The capacity of each tank is limited in order to keep the ship stable and for reasons of commercial flexibility, as well as to limit the amount of oil etc. spilled into the sea in case of collision or sinking.
A tanker cannot sail completely empty, notably for the sake of stability. When the vessel has unloaded her cargo of oil, the ballast tanks are filled with seawater for the sea passage to the loading port. In recent vessels, these ballast tanks are located between the oil tanks and the hull, in a double hull, in order to reduce the risk of pollution in case of grounding or collision.
The main engine, electricity generators, freshwater and steam plants, steering gear, electrical pannels, control room and cargo pumps driving machines are all located in the engine room at the after part of the tanker, underneath the accomodation. Between the engine room and the tanks lies the pump room where are located cargo pumps and ballast pumps.
Tankers are generally powered by Diesel engines, which can be up to 12 meters tall (as tall as a four-story building) and deliver 30,000 horsepower or more.
The Bridge Castel stands at the after part of the tanker and include the accomodation as well as the navigational bridge. High up in the Bridge Castel is the navigational bridge from where the ship is commanded, as it offers the best visibility.
The living quarters, located in the accomodation, comprise crew cabins, frozen rooms, galley, canteens, lounges, sports and leisure facilities, as well as the cargo control room. The Bridge Castel contains everything needed to enable 30 or so people to live and work round the clock for several months at a stretch.
Nearly half of oil carried on the world's oceans is loaded in the Middle East and bound for Japan, the United States and Europe.
Tankers bound for Japan usually pass through the Straits of Malacca. Oil heading for America and Europe is loaded mainly in the Mediterranean, the Persian Gulf or the Red Sea. When loaded in either of the latter, the oil travels via the Cape of Good Hope or through the Suez Canal, depending on the place of the loading port or the ship's size.
There are roughly 4,000 tankers available on the market. The cost of hiring a tanker is known as the "charter rate." This varies according to the size and characteristics of the tanker, its voyage and the availability of ships. Generally speaking, the cost of transportation represents only a very small percentage of the cost of gasoline at the pump. For example, the average cost of carrying oil between the Middle East and Europe is 1.30 U.S. dollars a barrel, or approximately five French centimes per liter of gasoline.
To minimize the risk of accident, oil companies pay very close attention to safety. Their inspectors systematically survey the seaworthiness of vessels and the competence of their crews.
Crude oil is in fact a mixture of thousands of different hydrocarbons. These are classified in three categories, according to their molecular weight: light, intermediate, and heavy.
These result from the transformation of organic fossil material at very high temperatures and pressures. The conditions in which they are "cooked" determines the quality of the crude oil, i.e. the proportions of the different hydrocarbons in the mixture.
Consequently, there are as many different grades of crude oil as there are oil reservoirs. Each needs to be processed accordingly, depending on its quality and the nature of the desired finished products.
Refining is the process that turns the viscous brown liquid (and practically unusable) lifted from the ground into motor fuel as used in automobiles.
In fact, refining serves to obtain a huge range of products to meet the demands of the marketplace. Refiners employ four main types of treatment, namely:
separation,
conversion,
enhancement, and
blending.
These treatments vary according to the quality of the crude oil and the particular demands of the market
Crude oil is a complex mixture of hydrocarbons. The first stage in refining entails separating the different hydrocarbons depending on their boiling ranges. These are low for light fractions (the most volatile), and higher for the heavier ones.
The two main separation processes are atmospheric distillation and vacuum distillation.
This stage produces what are known as "bases," i.e. gas, naphtha, kerosene, gas oil, asphalt, and heavy fuel oil.
The proportions of products obtained by distillation does not match consumer demand, since the proportion of heavy products is too great. These large molecules therefore need to be "broken down" into smaller ones. For that, one needs to :
convert the bases obtained from vacuum distillation into white products (gasolines, jet fuel, gas oil and home heating oil),
and modify the characteristics of the heavy residues to make them suitable for the manufacture of heavy fuel oil and asphalt.
The main conversion processes used are catalytic cracking (cat cracking) and viscosity reduction (visbreaking).
The products obtained from atmospheric and vacuum distillation are not yet ready for use:
in the first place, the octane index of the gasoline is too low for modern engines,
second, current regulations set tough environmental standards for motor fuels.
Consequently, refiners need to eliminate unwanted particles and improve the characteristics of the bases obtained through distillation.
Enhancement techniques include reforming, sulfur removal, isomerization, soda washing, alkylation, etc.
The cuts obtained as a result of this sequence of processes are not themselves the finished products. To obtain finished products ready for market, the refiner must carefully blend the various cuts obtained earlier. For example, to produce unleaded gasoline, the refiner blends suitable proportions of butane, gasoline obtained from direct distillation, alkylate or isomerate, gasoline from the catalytic cracker, reformate, and, possibly, ETBE or MTBE