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. Depositional Cycle Living organisms are deposited in a water environment after they die

7. Depositional Cycle The dead, organic matter is buried by sediment that enters the depositional zone

8. Depositional Cycle As the sediment is buried deeper, the temperature and pressure increase until the organic matter is converted into hydrocarbon form

9. Depositional Cycle In the case of oil and gas, the fluid will migrate upward through cracks and pore spaces until it is caught in a geologic trap. If no trap exists, the fluid might leak all of the way to the surface

10. Trap Types Pennwell Publishing Different subsea movement can create different traps • A - Anticlinal trap • B - Salt dome trap • C - Fault block trap

11. Exploration With very few exceptions, fossil fuels are found in the ground under the surface Some seams of coal intersect the surface, and some oil seeps to from the ocean bottom. These need no additional effort to find them other than looking All other sources of fossil fuel require some method for peering inside of the Earth

12. Seismic The primary method for oil and gas is to shoot sound waves into the Earth and to listen for echoes Summing echoes from many angles allows a clearer picture of the rock layers near the surface

13. Offshore Exploration One or more microphone cable towed behindboat; microphones imbedded throughout cable; length of cable can be up to 4-5 miles Compressed air that is rapidly released from metal tubes provides sound source Sound travels through rock; reflections from layers sent back to surface recorded by microphones; amount of time that it takes to return determines distance to layer

14. Onshore Exploration Onshore exploration is similar tooffshore; sound reflects off of the rock layers and returned to microphonecables on the surface One difference is that sound source is either dynamite in holes, or“thumping” by 30 ton trucks with a large metal plate Another difference is that paths have to be bulldozed for the trucksand cables to pass through In swampy regions, canals are dredged, and boats towing cablesare used.

15. Environmental Damage In marine environment, explosions are harmful to animals that rely on echolocation In swampy locations, canals are dredged to allow boats to float through; canals disrupt ecosystem and allow salt water intrusion in low lying areas ANWR Photo On land, bulldozed paths take a long time to recover, especially in fragile ecosystems

16. Controlled Source Electromagnetic • Place electromagnetic detectors on ocean bottom • Emit low frequency (~.1 Hz) E&M signal from towed buoy. • Measure electrical resistance of rocks • Low resolution DHI, but not subsurface imaging for rock layers • Still in early stages

17. Correlating Stratigraphic Data If wells or outcrops inthe area, try to correlaterock data over the regionto determine whereresources might be

18. Other Methods Other methods of probing the Earth look for salt and other types of rock environments that commonly are associated with hydrocarbon deposits Gravimeters measure the local force of gravity in order to find anomalous rock facies like salt Magnetometers measure the local magnetic field looking for the same thing

19. Oil drilling Offshore Onshore

20. 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

21. 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

22. 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

23. 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

24. 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)

25. 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)

26. Mineral Rights • Cannot go exploring and digging/drilling everywhere. • Disruptive exploration requires landowner’s permission. • Drilling/digging requires mineral rights owner’s permission • Landowner NOT necessarily mineral rights owner • Mineral rights owner might be state/federal government

27. Federal Government • Minerals Management Service (MMS) - Division of Interior Dept. manages the nation's natural gas, oil and other mineral resources on the outer continental shelf (OCS) • Bureau of Land Management (BLM) - Division of InteriorDept.; manages 264 million acres of public lands in the 12 Western States, including Alaska; also an additional 300 million acres of below ground mineral estate located throughout the country. Once lease is given, mineral resources are owned by company;can be sold to anybody or any country.

28. Offshore States own rights out to 3 miles from shore Feds own rights out to 250 miles from shoreWhere legal to drill, area is broken into 3 mileby 3 mile leased blocks Feds get money for leasing and percentage of royalties Map courtesy of MMS Red lines – Oil; Blue lines – Gasl Black dots - Structure

29. 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

30. 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

31. 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

32. 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

33. 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

34. 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

35. 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?

36. 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

37. World Consumption

38. How Much Do We Have? McKelvy Diagram Just because hydrocarbons are found does not mean that they can be produced Reserves - those resources that we are fairly sure exist and that can be produced economically As new discoveries are made and the price of energy changes, the amount of reserves changes

39. How Long Do We Have? Some experts expect a decline in oil and gas production within 10 years; Others think that it will last for hundreds of years Behavioristic Approach - While abundant, cheap prices will cause a huge increase in usage; as resources are harder to find and extract, raising prices will cause a reduction in usage Technological Approach - Improvements in exploration and production will allow prices to remain reasonable and extend the amount of time for using oil

40. Hubbert Curve Named for Shell geophysicist Dr. King Hubbert; bell-shaped curve that describesusage of resource over time Initially, resource is cheap(easiest produced first) and production increases fast As resource reaches midpoint of usage, it becomes harder and moreexpensive to produce, which causes price to increase and production to decrease

41. Some Factors Affecting Predictions • New technologies affect cost of recovery and the rate at whichenergy is used; Ex.: computers increased the amount of electricityused, but also aid in recovery of oil and gas from wells • New discoveries of fossil fuels are always being made • Cost of other energy sources changes position of profitably-recoverable line on diagram; wind energy at $.03/kwhr rivals coaland natural gas • Changes in demand worldwide affect price, which affects profitably-recoverable line • More people in the world means more usage

42. 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?