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BRIEF HISTORY OF PETROLEUM
All of the oil world is divided into: 1) The "upstream" comprises exploration
and production; 2) The "midstream" is the tankers and pipelines that carry crude oil to
refineries; 3) The "downstream" which includes refining, marketing, and distribution,
right down to the corner gasoline station or convenience store. A company including
together significant upstream and downstream activities is said to be "integrated".
By generally accepted theory, crude oil is formed from organic waste –
primarily microscopic plankton floating in seas, and also land plants – that
accumulated at the bottom of oceans, lakes, and coastal areas. Over millions of years,
this organic matter, rich in carbon and hydrogen atoms, was collected beneath layers
of sediments. Pressure and underground heat "cooked" the plant matter, converting it
into hydrocarbons – oil and natural gas. The tiny droplets of oil liquid migrated
through small pores and fractures in the rocks until they were trapped.
Typically, in such a reservoir, the lightest gas fills the pores of the reservoir
rock as a "gas cap" above the oil. When the reservoir is drilled the oil fluid flows into
the well and then to the surface. "Gushers" – "oil fountains" as they were called in
Russia – resulted from failure (or, at the time, inability) to manage the pressure of the
rising oil.
As production continues over time, the underground pressure runs down, and
the wells need help to keep going, either from surface pumps or from gas reinjected
back into the well, known as "gas lift". What comes to the surface is hot crude oil,
sometimes accompanied by natural gas.
But as it flows from a well, crude oil itself is a commodity with very few direct
uses. Virtually all crude is processed in a refinery to turn it into useful products like
gasoline, jet fuel, diesel fuel and fuel oil.
In the early years of the industry, a refinery was little more than a still where
the crude was boiled and then the different products were condensed out at various
temperatures. Today, a refinery is often a large, complex, sophisticated, and
expensive manufacturing facility.
Crude oil is a mixture of petroleum liquids and gases in various combinations.
Each of these compounds has some value, but only as they are isolated in the refining
process. So, the first step in refining is to separate the crude into constituent parts.
This is accomplished by thermal distillation – heating. The various components
vaporize at different temperatures and then can be condensed back into pure
"streams". Some streams can be sold as they are. Others are put through further
processes to obtain higher-value products.
Crude oil and refined products alike are today moved by tankers, pipelines,
barges, and trucks. In Europe, oil is often officially measured in metric tons; in Japan,
in kiloliters. But in the United States and Canada, and colloquially throughout the
world, the basic unit remains in "barrel", the 42-gallon barrel, though there is hardly
an oil man today who has seen an old-fashioned crude oil barrel, except in a museum.