Assignment_2011

Introduction of the oil market Oil is composed hydrocarbon and was formed millions of years ago in the process that began when aquatic plant and animal remains were covered by the layers of sediment such as particle of rock and minerals. Different mixes of plant and animal remains as well as pressure, heat and time have caused hydrocarbons to appear today in a variety of forms for example crude oil, a liquid, natural gas, a gas and coal a solid. Even diamonds are a form of hydrocarbons. The word of petroleum comes from Latin words ‘Petra’ or ‘rock’ and ‘oleum’ oil. Oil is found in reservoirs in sedimentary rock. Tiny pores in the rock allowed the petroleum to seep in. There “reservoir rocks” hold the oil like a sponge, confined by other non porous layers that form a trap.  Reservoir rocks The world consists of many regions with different geological features formed as the Earth’s crust shifted. Some of the regions have more and larger petroleum traps. In some reservoir rocks, the oil is more concentrated in pools, making it easier to extract, while in other reservoirs it is diffused throughout the rock. The Middle East is a region that exhibits both favorable characteristics which the petroleum trap are large and numerous and the reservoir rocks hold the oil substantial pools, the region dominance in world oil supply is the clear results. This are the example below:  World Oil Reserves By Regions 1st January 2005 Other regions also have large oil deposits , even if the oil is difficult to identify and more expensive to produce. The United States, with its rich oil history is such a region. Drilling for oil To identify a prospective site for oil production, companies use a variety of techniques, including core sampling, physically removing and testing a cross section of the rock and seismic testing. When the return vibrations from a man made shockwave and measured and calibrated. Advanced in technology have made huge improvements in seismic testing. After these exploratory tests, companies must then drill to confirm the presence of oil or gas. A dry hole is an unsuccessful, one where the drilling did not find oil or gas or not enough to be economically worth producing. A successful well may contain either oil or gas and often both. Because the gas is dissolved in the gas. When the gas is present in oil, it is extracted from liquid at the surface in a process separate from oil production. Historically drilling a wildcat well searching for the oil in a field where it had not yet been discovered had a low chance of success. Only one out of five wildcat wells found oil or gas. The rest were dry holes especially from seismic technology which has improved the success rate to one out of three according to some on in two. Reducing the money wasted on dry holes is one of the aspects for upstream activity that has allowed the industry to find and produce oil at the prices prevailing over much of the 1990s. After the successful well identified the presence of oils and gas or gas, additionally wells drilled to test the production conditions and determine the boundaries of the reservoir. Finally, productions or development wells are put in place along with the tank, pipelines, and gas processing plants so the oil can be produced, moved to the market and sold. Once extracted, the crude oils must be refined into usable products. *Oil Refining **Simple Distillation The core refining process is simple distillation, illustrated in a stylized fashion at the right because crude oil is made up of a mixture of hydrocarbons the first and basic refining process is aimed at separating the crude oil into its fractions, the board categories of its component hydrocarbons. Crude oil is heated and put into a still a distillation column and different products boil off and can be recovered at different temperatures. The lighter products liquid products boil off and can be recovered at different temperatures. The lighter products liquid petroleum gases(LPG), naphtha and so called straight run gasoline are recovered at the lowest temperatures. Middle distillates jet fuel, kerosene, distillates such as home heating oil and diesel fuel come next. Finally, the heaviest products residuum or residual fuel oil are recovered, sometimes at temperatures over 1000 degrees F. The simplest refineries stop at this point most in the United States however reprocess the heavier fractions into lighter products to maximize the output of the most desirable products as shown schematically in the illustration and as discussed below. **Downstream processing Additional processing follows crude distillation downstream or closer to the refinery gate and the consumer of the distillation process. Downstream processing is grouped together in this discussion but encompasses a variety of highly complex units designed for very different upgrading processes. Some change the molecular structure of the input with the chemical reactions, some in the presence of a catalyst some with thermal reactions. In general, these processes are designed to take heavy low valued feedstock often itself the output from an earlier process and change it into lighter, higher valued output. A catalytic cracker for instance, uses the gasoil output from crude distillation as its feedstock and produces additional finished distillates and gasoline. Sulfur removal is accomplished in a hydrotreater. A reforming unit produces higher octane components for gasoline from lower octane feedstock that was recovered in the distillation process. A coker uses the heaviest output of distillation the residue or residuum to produce a lighter feedstock for further processing as well as petroleum coke. U.S demand is a centered on light products such as gasoline as shown in the graph below, refiners in the United States more closely match the mix of products demand by using downstream processing to move from the natural yield of products from simple distillation, illustrated earlier to the U.S demand slate illustrated here. After simple distillation alone, the output from a crude oil like Arab Light would be about 20 percent of lightest gasoline like product and about 50 percent of the heaviest the residuum. After further processing in the most sophisticated refinery, the finished product output is about 60 percent gasoline and 5 percent residuum.  Crude oil quality The physical characteristics of crude oils differ. Crude oil with a similar mix of physical and chemical characteristics, usually produced from a given reservoir field