Petroleum Industry

THE MODERN PETROLEUM INDUSTRY

THE ERA OF THE SEVEN SISTER COMPANIES, 1911–1980

NATIONALIZATION, 1970–2000

CONCENTRATION AND CENTRALIZATION

THE POLITICAL ECONOMY OF THE PETROLEUM INDUSTRY

BIBLIOGRAPHY

The documentary evidence for the human use of petroleum begins with the Old Testament books of Genesis and Exodus and the works of the ancient Greek historian Herodotus (c. 484–430/420 BCE). In addition archaeologists found pitch in the tombs of the Egyptian kings Tutankhamen (c. 1370–1352 BCE) and Seti II (c. 1200 BCE). The Toltecs of Mexico used bitumen to set tiles as early as 1200 CE, and Native Americans dug oil wells in what are now Pennsylvania, Kentucky, and Ohio.

Still, until the 1850s there was no petroleum mining or production. In that decade oil wells were drilled specifically seeking petroleum in Poland, Canada, and the United States. By 1900 petroleum had been discovered in Baku (in present-day Azerbaijan), Poland, France, Scotland, Italy, Romania, Egypt, Canada, the United States, Mexico, Sumatra, Trinidad, and Peru. In the twentieth century discoveries were made on every continent and in most countries.

THE MODERN PETROLEUM INDUSTRY

The first modern use of petroleum was for kerosene, discovered in 1852. A kerosene lamp was invented in 1857, and the first kerosene factory was built near Baku in 1859. Gasoline was a by-product of kerosene production. After 1901 most petroleum was used for fuel oil to heat and light buildings and for gasoline to power automobiles with internal combustion engines.

From a macroeconomic perspective, petroleum is important because the industrial systems of Western nations and Japan all are based upon its use as a major source of cheap energy and of chemicals for other uses. About 30 percent of the top fifty industrial firms in the United States are petroleum or chemical firms. A similar proportion of the top fifty non-American industrial firms also produce petroleum or chemical products. Petroleum has become essential for fueling production facilities in all industries and for powering, heating, cooling, and lighting buildings and illuminating streets. It thereby makes possible the high-density urban agglomerations so characteristic of western Europe and North America. Without it Western societies would have had to develop either a more efficient energy source or an extensive form of land use rather than the intensive form now practiced. Such a use of land for living space, given a growing population, would threaten food production by depleting the acreage of farmable land. Moreover, because petroleum fuels the vast bulk of industry, virtually all employment in the West depends in the final analysis on its use. Petroleum fuel shortages mean unemployment, and large-scale unemployment can have catastrophic political consequences. Paradoxically, another use of petroleum since the mid-twentieth century has been to encourage decentralization of massive urban agglomerations into the suburbs, requiring the use of petroleum to fuel vehicles. A sustained shortage of petroleum thus would halt this trend toward decentralized land use.

From a macroeconomic perspective, petroleum is an intermediate good, consumed only to produce final consumption items. Despite the emphasis in the mass media on gasoline consumption and prices, the most extensive use of petroleum products since 1949 according to the U.S. Energy Information Administration has been for combined heat and power for homes and industry. Petroleum products thus enter the production functions of every home and industry in the economy. The amount value of petroleum products consumed in the United States in 2005 was 1,836,392 thousand barrels per day.

Industry Structure The modern petroleum industry is structured into four types of organizations: (1) state enterprises, (2) multinational corporations, (3) the Organization of Petroleum Exporting Countries (OPEC), and (4) legally organized commodity exchanges. In most petroleum-producing countries in the early twenty-first century, the state owns a petroleum company with a legal monopoly on the production and distribution of crude petroleum. The largest of these after 1918 was the Soviet state petroleum enterprise.

Most crude petroleum is produced by Western companies. In 1870 the Standard Oil Company was created by the Rockefeller brothers and two other partners. In 1893 the Standard Oil Trust was formed in New Jersey to evade an antitrust suit brought by the state of Ohio. Gulf Oil Corporation was formed in 1901 by the Richard K. Mellon family. Texaco was founded as the Texas Company in 1901 by Joseph S. Cullinan, Walter B. Sharp, and Arnols Shaect. The U.S. Supreme Court in 1911 ordered Standard Oil Trust dissolved. The component companies, still with the plurality of shares owned by the former Rockefeller shareholders, continued to operate as ostensibly separate companies. These companies were Standard Oil of Ohio, Standard Oil of Indiana, Standard Oil of New York, Standard Oil of New Jersey, Standard Oil of California, Standard Oil of Kentucky, Atlantic, and the Ohio Oil Company (later Marathon).

The Royal Dutch Company for the Exploration of Petroleum Sources in the Netherlands Indies was established in 1890. It merged in 1907 with Shell Transport and Trading Company, a British company, to form Royal Dutch Shell. The British government formed the Anglo-Iranian Oil Company in 1914. This company ultimately became British Petroleum. In 1924 the Compagnie Française des Pétroles was established by the French government. ELF began before World War II (1939–1945) with the establishment of three small companies to explore for gas near oil seepages in Aquitaine. Italy in 1926 formed Agencia Generale Italiani Petroli (AGIP). In 1953 ENI was founded as a conglomerate of thirty-six subsidiaries, including AGIP.

These companies all were multinational, multidivisional, and vertically and horizontally integrated firms. Within each company, five major functions were performed—exploration, drilling and production, transportation, refining, and distribution to final consumers. Subsidiaries were responsible for each function. Transfers of product among these subsidiaries and other divisions of the companies were accomplished using shadow pricing or some other form of transfer pricing. Actual payments were made only for transactions with outside firms.

OPEC was established in Baghdad in September 1960 as an intergovernmental organization of five original member states—Iraq, Iran, Kuwait, Saudi Arabia, and Venezuela. Its charter required that each member acquire an increasing level of control of production. By 1970 each member state was required to own a minimum of 55 percent of foreign petroleum companies operating within its jurisdiction. Iraqi production has not been part of OPEC quota agreements since March 1998 due to U.S. and United Nations controls. Other OPEC members have included Qatar (joined 1961), Indonesia and Libya (1962), Ecuador (1963–1993), Trucial States of Oman (now United Arab Emirates, 1967), Algeria (1969), Nigeria (1971), Gabon (1975–1995), and Angola (2007). The OPEC cartel was formed to control the world oil supply so as to increase revenue to member states. It operates by assigning members an annual supply quota for crude oil production and export. In 2005 it controlled about 41.7 percent of world production. OPEC also sets prices.

THE ERA OF THE SEVEN SISTER COMPANIES, 1911–1980

The name seven sisters was coined in a 1961 Time magazine article to refer to the dominant firms in the world oil industry: Royal Dutch Shell, Anglo Persian Oil (Anglo-Iranian Oil/British Petroleum/BP), Gulf Oil, Texaco, and three of the Standard Oil companies from the 1911 trust dissolution—Standard Oil of New Jersey (Humble Oil [Esso]/Exxon), Standard Oil of New York (Socony/Socony-Vacuum/Socony-Mobil/Mobil), and Standard Oil of California (Socal/Chevron). With the exception of Royal Dutch Shell, which is British and Dutch, these are all U.S. or British companies. Only the U.S. companies had their own significant domestic supply sources in the founding period of the industry from 1850 to 1950. The British and Dutch thus undertook a worldwide search for sources, beginning with their colonies and extending after World War I (1914–1918) to the League of Nations territories mandated to their administration. The seven sisters and Atlantic Richfield (ARCO), called majors, were vertically integrated, and all had similar structures. They had separate subsidiaries for exploration, production, refining, and distribution and geographic subsidiaries for operations in different areas.

The most important “independent” or nonintegrated companies, which did not operate in at least one of the areas defining the integrated companies, in this period included Getty, Phillips, Signal, Union, Continental, Sun, Amerada Hess, Cities Service, Marathon, Compagnie Française des Pétroles, Occidental, ENI, Tenneco, and Skelly Oil. In 1983 Occidental acquired Cities Service. Texaco acquired Getty in 1984.

Soviet Petroleum Industry The petroleum industry in Russia prior to the Bolshevik Revolution of 1917 was operated largely by U.S., British, and Swedish companies. During the seven sisters period, the Soviet state owned and operated the industry. The industry returned to private hands after 1991. ConocoPhillips acquired 16.8 percent of Lukoil, the largest Russian oil company. BP-Amoco invested in both Lukoil and Sidanko.

NATIONALIZATION, 1970–2000

Around 1912 producing countries began nationalizing or expropriating the ownership of foreign companies. The theoretical basis for expropriation was provided by Marxism-Leninism. The acceleration of this policy after 1970 was due more to nationalism, although the regimes that instituted it were almost always leftist. Majority or full expropriation took place in Argentina (1912), the Soviet Union (Baku, 1918), Mexico (1938), Iran (1951), Indonesia (1950s-1960s), Egypt (1961–1964), Peru (1968), Libya (1971), Nigeria (1971), Iraq (1972), Algeria (1972), and Saudi Arabia (1973).

CONCENTRATION AND CENTRALIZATION

Since the 1980s there has been an acceleration in the rate of concentration and centralization in the world oil industry with the development of what are referred to as supermajors, majors, and independents or jobbers. Supermajors consist of BP-Amoco, Chevron-Texaco, Exxon-Mobil, ConocoPhillips, and Shell. This category of companies is defined as having a capitalization of $100 billion or more. Majors are defined as companies having a capitalization of $30 to $100 billion. Independents and jobbers include those with a capitalization of less than $30 billion. Supermajors have largely abandoned their traditional function of exploration, 80 percent of which now is conducted by independents. They receive most of their profits from the refining and petrochemical industries and also have diversified into alternative sources of energy, including atomic energy.

Simultaneously with this centralization and consolidation, many countries opened up their petroleum industries again to private international companies. Conflicts between source countries and companies extracting crude petroleum have been endemic from the beginning of the modern era, and examples such as the conflict in southeastern Nigeria and the war in Iraq are manifestations of this phenomenon.

Environmental issues in the extraction and transportation phases of the industry’s operation are less visible and perhaps less important than in the consumption phase. For this reason this issue has been the most recent to emerge. However, the environmental impact of the international industry is difficult to measure systematically, for no international statistics on this issue are collected. The number and volume of oil spills are available, but these represent only extraordinary occurrences, not the everyday degradation of the environment due to operations.

THE POLITICAL ECONOMY OF THE PETROLEUM INDUSTRY

During World War I and continuing into the early twenty-first century, Western countries transformed their economies and their military forces to use petroleum as the primary fuel source. As they did so diplomatic and military conflicts arose over control of the known sources of petroleum. Because this transformation was not far advanced until after World War I, that war cannot be characterized as a war over oil.

Most of the known sources at the beginning of this period were in the United States. Elsewhere oil production began in Baku in the 1870s, in the Dutch East Indies in 1883, in Iran in 1908, in Egypt in 1910, in Venezuela in 1914, in Kurdistan (now part of Iraq) around 1915, in Iraq in 1927, in Saudi Arabia in 1935, in Libya in 1959, in Egypt in 1966, in Sudan in 1974, and in Kazakhstan in 2000. These sources were discovered by Western oil companies, which have involved their governments in protecting their exploitation of these resources.

Local and Regional Conflicts Many of the conflicts that arose were local or regional, involving antagonistic political and military forces internal to countries with petroleum reserves, or between neighboring countries with at least one having reserves. These conflicts took the form of rebellions, revolutions, coups d’état, civil wars, and border wars. For example, in the failed 1905 revolution in Russia, the Baku fields were set afire. The Kurds, representing Turkey, massacred millions of Armenians during World War I. In 1929 and 1989 civil wars occurred in Afghanistan. In 1945 a coup in Venezuela gave control of the oil fields to a different power group in the country. Petroleum has been associated with two civil wars (1955–1972 and 1983–2005) and an armed rebellion in Sudan. The Nigeria-Biafra civil war (1967–1970) involved petroleum fields in the Niger Delta. The Angolan civil war (1976–2002) involved petroleum reserves in the Cabinda enclave. And a rebellion that began in Darfur in 2003 involved the South Darfur fields. Local and regional conflicts increased significantly after Britain withdrew its naval forces from the Indian Ocean and the Persian Gulf in 1971.

Multinational and Global Conflicts Other conflicts involved the major European political powers of the day— the large petroleum-consuming countries—in conflicts that were considered to be major set-piece “wars.” Britain and Afghanistan fought three wars (1838–1842, 1878–1881, and 1919), the British attempting to thwart perceived Russian designs on British India, then including Pakistan. At that time petroleum had not been discovered in or near Afghanistan and so played little role in these wars.

After World War I, Turkey captured a part of the territory of the ethnic Kurds. Another part was given to Britain by the League of Nations as part of the Iraq mandate. A section of this territory was given to the French in the Syrian mandate. The Soviet Union captured the Azerbaijan part in 1920. Kurdistan was made a semiautonomous region of Iraq, the only Kurdish political entity internationally recognized. Turkey and the Soviet Union captured parts of the territory of the ethnic Armenians, other parts of which lie in northern Syria, Iraq, and Iran.

During the 1890s the British attempted to expand the border of their colony British Guiana (now Guyana) westward to include parts of Venezuela, where indications of oil had been discovered. This was probably unnecessary, because Guyana is a geologic sink, a lower-than-sea-level basin into which petroleum flows by gravity from Venezuela on the west and Dutch Guiana (now Surinam) on the east, so wells drilled in Guyana would draw from pools shared with Venezuela and Surinam. Nevertheless, British and German warships blockaded the ports of Venezuela until the United States, citing the Monroe Doctrine, forced them to cease. Oil was discovered in 1914, and by 1928 Venezuela was the world’s largest exporter of oil. Thus one sees the hand of Britain in the Afghanistan, Kurdistan, and Venezuela conflicts between the two world wars.

The most important of these major conflicts was World War II, the first war that might be characterized as an “oil war,” with the petroleum resources of the Caspian Sea, the Persian Gulf, the Gulf of Mexico, the Caribbean Sea, Lake Maracaibo, and the Dutch East Indies being strategic targets of all combatants. As part of its strategy to defend the Caribbean Sea and the Gulf of Mexico from German attack, the United States concluded a deal with Britain in 1940 by which the United States gave Britain used destroyers in exchange for the right to use or build bases in the British Caribbean colonies.

North Africa was the location of battles between Italy and Germany on one side and Britain and the United States on the other to secure Persian Gulf oil, even though no oil had yet been discovered in Libya or the Western Desert of Egypt, where most of the battles were fought. On August 1, 1941, before its entrance into the war, the United States imposed an oil embargo on the Axis powers—Germany, Italy, and Japan. The Netherlands and Britain followed suit. The 1941 embargo reduced Germany’s supply from Mexico and Venezuela and reduced Japan’s supply from the Caspian Sea, the Persian Gulf fields, and the Dutch East Indies. The U.S. entrance into the war was largely due to its embargo of petroleum supplies to Japan. After negotiations with the United States, Britain and Holland failed to reverse this decision, and Pearl Harbor was attacked in December 1941 to reduce the U.S. capacity to enforce the embargo. Japan then invaded and occupied the Dutch East Indies (Sumatra, Java, and Borneo) from 1942 to 1946 to secure petroleum to fuel its war effort.

A few months after the war ended in 1945, a military coup took place in Venezuela, with control of revenues from oil production a major motivation for the conflict. The Dutch also fought wars in Indonesia to regain control of its colony but was forced to grant it independence in 1948. The cold war between the United States and the Soviet bloc from 1945 to 1991 involved the same strategic oil issues as World War II but did not rise to the level of open warfare. The Korean War (1950–1953) and the Vietnam War (1954–1975) were proxy wars for the United States and the Soviet Union but were less conspicuously concerned with control of petroleum reserves and their transportation to world markets. Importantly, however, with the exception of World War II, all conflicts over oil, both regional and global, took place in the countries in which the reserves lay, and not in the consuming countries. This changed dramatically with the onset of “terrorism.”

Terrorism The rise of terrorism since the airplane hijackings in 1968—including especially the attacks on New York City in 1993 and 2001 and on the Pentagon in 2001, the bombings of U.S. embassies and ships in 1998 and 2001, and the bombings on Spanish and British trains and buses and other facilities in 2004 and 2005— changed the location of conflicts. Terrorism may be considered a form of guerrilla warfare, in contrast to a set-piece war. In response to this shift in theaters and tactics, Western governments alleged that certain Arab Muslim states were “sponsors” of these acts of terror or gave safe haven to terrorists. Western states directed military and economic sanctions against these states, which included Iran, Libya, Sudan, Somalia, Afghanistan, and Iraq. It is not without significance that all these states either have petroleum reserves or stand athwart transportation routes to world petroleum markets. Somalia, for example, controls the approach to the Red Sea and the Suez Canal.

Since 1980 five major wars have been fought in the region: the Soviet-Afghanistan War (1979–1989), the Iraq-Iran War (1980–1988), the Persian Gulf War (1990–1991), the U.S.-Afghanistan War that began in 2001, and the U.S.-Iraq War that began in 2003. In addition since 1980 U.S. naval ships and aircraft have blockaded and threatened to attack Libya, accusing it of being a state sponsor of terrorism.

In 1991 the former republics of the Soviet Union became independent. Several of them gave concessions to Western companies to explore for petroleum. With these discoveries, proposals were made for pipelines to carry the petroleum to shipping points for export to world markets. Three feasible routes exist for exporting Caspian Sea petroleum to world markets: west through Azerbaijan, Armenia, and Georgia to the Black Sea; south through Iraq and Iran to the Persian Gulf; or southeast through Afghanistan and Pakistan to the Arabian Sea. Overland markets are north into Russia and east into China.

All wars have as an objective the conquest of territory and its resources and assets, a major part since 1900 being petroleum reserves. Thus all wars since 1900 may be considered, to some extent, wars to control oil. This objective has attained the highest priority since World War II, leading to increased military and diplomatic conflict. Petroleum wars may be expected to continue to arise until a different energy source is discovered and widely employed or until an effective international nonviolent conflict resolution method is found and employed.

SEE ALSO Energy Industry; Industry; Iran-Iraq War; Iraq-U.S. War; Nationalization; Organization of Petroleum Exporting Countries (OPEC); Resource Economics; State Enterprise

BIBLIOGRAPHY

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Engler, Robert. 1961. The Politics of Oil: A Study of Private Power and Democratic Directions. New York: Macmillan.

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Razavi, Hossein, and Fereidun Fesharaki. 1991. Fundamentals of Petroleum Trading. New York: Praeger.

Sampson, Anthony. 1975. The Seven Sisters: The Great Oil Companies and the World They Shaped. New York: Viking.

Snow, Keith Harman. 2007. The New Old “Humanitarian” Warfare in Africa, Part II. Somali Times, February 7.

U.S. Department of Commerce, Census Bureau. 1975. Historical Statistics of the United States: Colonial Times to 1970. Bicentennial ed., pt. 1. Washington, DC: U.S. Government Printing Office.

Wirth, John D. 1985. Latin American Oil Companies and the Politics of Energy. Lincoln: University of Nebraska Press.

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Julian Ellison

Petroleum

Petroleum is a naturally occurring liquid oil normally found in deposits beneath the surface of the earth. It is a type of oil composed of rock minerals, making it different from other kinds of oils that come from plants and animals (such as vegetable oil, animal fat, or essential oils). The word petroleum comes from the Latin words petra (rock) and oleum (oil), and so literally means rock oil. Despite this, petroleum is an organic compound, formed from the remains of microorganisms living millions of years ago. It is one of the three main fossil fuels, along with coal and natural gas.

Petroleum Economy

Petroleum, like all fossil fuels, primarily consists of a complex mixture of molecules called hydrocarbons (molecules containing both hydrogen and carbon). When it comes out of the ground, it is known as crude oil, and it may have various gases, solids, and trace minerals mixed in with it. Through refinement processes, a variety of consumer products can be made from petroleum. Most of these are fuels: gasoline, jet fuel, diesel fuel, kerosene, and propane are common examples. It is also used to make asphalt and lubricant grease, and it is a raw material for synthetic chemicals. Chemicals and materials derived from petroleum products include plastics, pesticides, fertilizers, paints, solvents, refrigerants, cleaning fluids, detergents, antifreeze, and synthetic fibers.

The modern petroleum industry began in 1859 in Pennsylvania, when a man named Edwin L. Drake constructed the first oil well, a facility for extracting petroleum from natural deposits. Since then, petroleum has become a valuable commodity in industrialized parts of the world, and oil companies actively search for petroleum deposits and build large oilextraction facilities. Several deposits exist in the United States. However, around 1960 oil production in the country began to decline as oil in the deposits was being used up and fewer new deposits were being discovered. Demand for petroleum products continued to increase, and as a result the United States came to rely more and more on oil imported from other countries. In 2001 the amount of petroleum extracted from deposits in the United States was estimated to be only one-third of the amount demanded by U.S. consumers. A similar pattern exists in other industrialized countries, and some, like Japan and Germany, import almost all of the oil they use.

However, on a per capita basis, the consumption in these countries is nowhere near the consumption in the United States.

The United States and Canada are unique in that, on average, an individual in these countries consumes about twice as much petroleum product as do individuals in most other industrialized nations. People in the United States and Canada rely more on personal vehicles for their transportation and tend to drive greater distances, making petroleum their major source of energy. In the United States, about two-thirds of the petroleum consumed is transportation fuel, and two-thirds of that (45% of the total) is gasoline for cars and trucks. About 40 percent of the energy used in the United States every year comes from petroleum.

Foreign Oil Dependence

Political leaders in the United States have long been gravely concerned about the country's growing dependence on foreign oil, which in many ways puts the country at the mercy of foreign governments, some of them hostile to the United States. The greatest production of crude oil in the world is in the Persian Gulf region of the Middle East, where about 65 percent of the world's known petroleum deposits are located. About half of U.S. imports come from members of the Organization of the Petroleum Exporting Countries (OPEC), a group of countries encompassing the Persian Gulf and certain parts of Africa and South America. Events in these often volatile regions can have a huge impact on oil prices in the United States and worldwide, and because of the crucial role oil plays in U.S. society any change in the price can precipitate uncontrollable shifts in the country's economy (see chart "World Oil Price 1970-2000"). The most famous example of this is the Arab Oil Embargo of 1973 to 1974, when U.S. support for Israel in a conflict in the Middle East led to a decision by OPEC to impose steep price increases on the sale of oil to the United States. One response by the U.S. government has been the establishment of the Strategic Petroleum Reserve, an emergency stockpile designed to sustain the country's oil needs for approximately three months in the event of a complete cutoff of imports. There is little doubt, however, that dependence on foreign oil is both a political liability for the United States as well as a risk to national security.

Environmental Pollution

Petroleum-derived contaminants constitute one of the most prevalent sources of environmental degradation in the industrialized world. In large concentrations, the hydrocarbon molecules that make up crude oil and petroleum products are highly toxic to many organisms, including humans. Petroleum also contains trace amounts of sulfur and nitrogen compounds, which are dangerous by themselves and can react with the environment to produce secondary poisonous chemicals. The dominance of petroleum products in the United States and the world economy creates the conditions for distributing large amounts of these toxins into populated areas and ecosystems around the globe.

Oil Spills

Perhaps the most visible source of petroleum pollution are the catastrophic oil-tanker spills—like the 1989 Exxon Valdez spill in Prince William Sound, Alaska—that make news headlines and provide disheartening pictures of oilcoated shorelines and dead or oiled birds and sea animals. These spills occur during the transportation of crude oil from exporting to importing nations. Crude oil travels for long distances by either ocean tanker or land pipeline, and both methods are prone to accidents. Oil may also spill at the site where it is extracted, as in the case of a blowout like the Ixtoc I exploratory well in 1979 (see table "Ten Largest Oil Spills in History"). A blowout is one of the major risks of drilling for oil. It occurs when gas trapped inside the deposit is at such a high pressure that oil suddenly erupts out of the drill shaft in a geyser.

Accidents with tankers, pipelines, and oil wells release massive quantities of petroleum into land and marine ecosystems in a concentrated form. The ecological impacts of large spills like these have only been studied for a very few cases, and it is not possible to say which have been the most environmentally damaging accidents in history. A large oil spill in the open ocean may do less harm to marine organisms than a small spill near the shore. The Exxon Valdez disaster created a huge ecological disaster not because of the volume of oil spilled (eleven million gallons) but because of the amount of shoreline affected, the sensitivity and abundance of organisms in the area, and the physical characteristics of the Prince William Sound, which helped to amplify the damage. The Exxon Valdez spill sparked the most comprehensive and costly cleanup effort ever attempted, and called more public attention to oil accidents than ever before. Scientific studies of the effects of oil in Prince William Sound are ongoing, and the number of tanker accidents worldwide has decreased significantly since the time of the Valdez spill, due to stricter regulations and such required improvements in vessel design as double-hull construction.

Nonpoint Sources

Spills from tankers, pipelines, and oil wells are examples of point sources of pollution, where the origin of the contaminants is a single identifiable point. They also represent catastrophic releases of a large volume of pollutants in a short period of time. But the majority of pollution from oil is from nonpoint sources, where small amounts coming from many different places over a long period of time add up to large-scale effects. Seventy percent of the oil released by human activity into oceans worldwide is a result of small spills during petroleum consumption. These minor unreported spills can include routine discharges of fuel from commercial vessels or leakage from recreational boats. However, in North America, the majority of the release originates on land. Oil tends to collect in hazardous concentrations in the stream of wastewater coming out of cities and other populated areas. Runoff from asphalt-covered roads and parking lots enters storm drains, streams, and lakes and eventually travels to the ocean, affecting all of the ecosystems through which it passes. As cities grow, more and more people use petroleum products—lubricants, solvents, oil-based paint, and, above all, gasoline—and these are often improperly disposed of down drains and sewage pipes. Industrial plants also produce small, chronic spills that aren't noticed individually, but add up over time and enter waterways.

Taken together, land-based river and urban runoff sources constitute over half of the petroleum pollution introduced to North American coastal waters due to human activity, and 20 percent of the petroleum pollution introduced to ocean waters worldwide. When wastewater from these sources enters the marine environment it is usually by means of an estuary, an area where freshwater from land mixes with seawater. Estuaries are especially critical habitats for a variety of plants and animals, and are among the ecosystems most sensitive to pollutants.

Petroleum-Contaminated Soil

Not all oil released from land sources is quickly washed away to sea, however. Pipeline and oil-well accidents, unregulated industrial waste, and leaking underground storage tanks can all permanently contaminate large areas of soil, making them economically useless as well as dangerous to the health of organisms living in and around them. Removing or treating soil contaminated by petroleum is especially urgent because the hydrocarbons can leach into the underlying groundwater and move into human residential areas. The engineering field of bioremediation has emerged in recent decades as a response to this threat. In bioremediation, bacteria that feed on hydrocarbons and transform them into carbon dioxide can be applied to an affected area. Bioremediation has in many cases made cleaning up petroleum-contaminated sites a profitable real-estate investment for land developers.

Air Pollution

The U.S. Environmental Protection Agency (EPA) designates six criteria pollutants for determining air quality. These are: carbon monoxide (CO), nitrogen oxides (NO and/or NO2, usually referred to as NOx), sulfur dioxide (SO2), ground-level ozone (O3), particulate matter (including things like soot, dust, asbestos fibers, pesticides, and metals), and lead (Pb). Petroleum-fueled vehicles, engines, and industrial processes directly produce the vast majority of CO and NOx in the atmosphere. They are also the principal source of gaseous hydrocarbons (also called volatile organic compounds, or VOCs), which combine with NOx in sunlight to create O3. Ozone, while important for blocking ultraviolet rays in the upper atmosphere, is also a key component of urban smog and creates human health problems when present in the lower atmosphere. Sulfur dioxide is a trace component of crude oil, and can cause acid rain when released into the air at oil refineries or petroleum power plants. Particulate matter is directly emitted in vehicle exhaust and can also form from the reaction of exhaust gases with water vapor and sunlight. Finally, leaded gasoline is a huge contributor of lead to the atmosphere, and the use of unleaded gasoline has decreased lead concentrations dramatically. The EPA and the World Bank are working to encourage the phaseout of leaded gasoline worldwide.

Petroleum-fueled transportation and coal-burning power plants are considered the chief causes of global warming. Excess amounts of carbon dioxide, methane, and NOx, among other gases, trap heat in the atmosphere and create the greenhouse effect. Carbon dioxide (CO2) is a main constituent of petroleum fuel exhaust, even though it is not toxic and therefore not classified as a pollutant. About one-third of the CO2 emitted into the atmosphere every year comes from vehicle exhaust. Methane (NH3), although usually associated with natural gas, is also emitted whenever crude oil is extracted, transported, refined, or stored.

The Future of Petroleum

The world's reliance on petroleum is expected to grow, despite widespread environmental, economic, and political consequences. The U.S. oil extraction industry continues to aggressively search for new oil deposits and lobby the federal government to open up restricted areas to drilling. The Arctic National Wildlife Refuge in Alaska has been on the oil industry agenda for several decades, creating a long-standing environmental controversy. Advances in oil well technology have allowed extraction in the deep ocean beyond the continental shelf, but these have not been enough to reverse the trend of declining production in the United States.

There are many compelling reasons to decrease society's dependence on petroleum for energy, and the most obvious place to begin is in the transportation sector. Energy-efficient engines and hybrid gas/electric cars can help to reduce some of the need for oil, providing higher gas mileage and less demand. A variety of alternative fuels have also been developed, such as ethanol, biodiesel (made from vegetable oil), and hydrogen. Each of these would produce little or no exhaust pollutants or greenhouse gases, and each derives from plentiful renewable resources. The United States is now in fact actively researching hydrogen as a viable alternative to gasoline, and the hydrogen fuel cell as a substitute for the internal combustion engine.

Petroleum is a useful chemical substance for many important purposes. But it is also a nonrenewable resource with a highly toxic composition, and it poses significant problems when used in huge volumes throughout the industrialized world.

see also Air Pollution; Arctic National Wildlife Refuge; Coal; Disasters: Oil Spills; Economics; Electric Power; Energy; Fossil Fuels; Global Warming; Ozone; NO_x; Renewable Energy; Sulfur Dioxide; Underground Storage Tanks; Vehicular Pollution.

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U.S. Department of Energy. "Energy Efficiency and Renewable Energy." Available from http://www.eere.energy.gov.

U.S. Department of Energy. "Fossil.energy.gov: A U.S. Department of Energy Web Site." Available from http://www.fossil.energy.gov.

U.S. Department of Energy. "Fossil Fuels: An Energy Education Website." Available from http://www.fossil.energy.gov/education.

U.S. Environmental Protection Agency. (1995). Profile of the Petroleum Refining Industry. Washington, D.C.: U.S. Government Printing Office. Available from http://www.epa.gov.

U.S. Environmental Protection Agency. (1999). Profile of the Oil and Gas Extraction Industry. Washington, D.C.: U.S. Government Printing Office. Available from http://www.epa.gov.

U.S. Environmental Protection Agency. "Air Quality Where You Live." Available from http://www.epa.gov/air/urbanair/index.html.

U.S. Geological Survey. Available from http://www.usgs.gov.

U.S. Geological Survey. (1997). "Bioremediation: Nature's Way to a Cleaner Environment." Available from http://water.usgs.gov/wid/html/bioremed.html.

Adrian MacDonald

OIL SEEPS

Almost half (45%) of the petroleum entering the marine environment is from natural seeps rather than anthropogenic sources. At seeps, oil and gas bubble out of cracks in the seabed creating special environments in which new organisms grow. These organisms survive through chemosynthesis rather than photosynthesis. They live in total darkness, more than four hundred meters below sea level, but survive by feeding directly off the hydrocarbons present in seeps or by eating carbon compounds resulting from chemosynthetic bacterial degradation of seep oil. Since 1984 oceanographers have discovered chemosynthetic communities of clams, mussels, tubeworms, bacterial mats, and other organisms on the seafloor of the Gulf of Mexico. United States Department of the Interior regulations protect these chemosynthetic communities from damage due to oil and gas drilling activities.

PETROLEUM INDUSTRY

PETROLEUM INDUSTRY. Petroleum, Latin for "rock oil, " fuels 60 percent of all energy humans use. It also provides the raw material for synthetic cloth, plastics, paint, ink, tires, drugs and medicines, and many other products.

Crude oil can be separated into many different parts called fractions, each of which boils at a different temperature. As crude oil is boiled, the different fractions vaporize and rise to various levels of the distillation tower, also called a still. Thinner oils boil at lower temperatures and consequently reach the top of the tower before they condense. The heavier oils, which boil at higher temperatures, do not reach as high before condensing. The lightest vapors, from the thinnest oils, produce liquefied gases, propane and butane, and petrochemicals. Petrochemicals can be changed into a variety of products: plastics, clothes fabrics, paints, laundry detergent, food additives, lawn chemicals, and more than 6,000 other everyday products. The middle vapors result in gasoline, kerosene, and diesel fuel, as well as jet fuel (a form of kerosene). Next come the fractions that make home heating oil and fuel for ships and factories. The heaviest oil produces lubricating oil and grease, which can also be turned into items such as candle wax. At the very bottom of the distillation tower is the leftover sludge, also called bitumen, which is used in the asphalt that makes roads and roofing.

At the beginning of the twenty-first century, 1.5 million people in the United States were employed in the petroleum industry, which fueled 97 percent of American transportation. Oil provided 38 percent of the country's energy, while natural gas, which is either mixed with the crude oil or lying as a separate layer on top of it, accounted for 24 percent.

Petroleum's Commercial Beginnings

Although people knew of oil prior to 1850 and even had some uses for it, primarily as lamp fuel, it was not a sought-after commodity. Oil bubbled to the surface in "seeps, " and several of these could be found along Oil Creek near Titusville, Pennsylvania. No one was able to collect enough oil to make it an economically sound venture. Titusville resident Joel Angier transacted the first

petroleum lease in 1853 when he leased a portion of an Oil Creek seep from a local saw mill. Although Angier's collection, like those before him, was not economically viable, enough of his oil made it to commercial centers to pique interest in its use and begin theories regarding its extraction. Downstream, farmer Hamilton McClintock gathered enough oil from another seep to produce twenty or thirty forty-two-gallon barrels in a season. His was the largest oil operation of its day, and it set the standard for measurement of oil. Although forty-two-gallon barrels are no longer used, this is still the measurement used for oil production. McClintock fielded some interest from an investment group from New York and Connecticut, but his $7,000 asking price was deemed too exorbitant.

Another group, the Pennsylvania Rock Oil Company of New York, later renamed the Seneca Oil Company, purchased Angier's seep for $5,000. Company principals George H. Bissell and Jonathan G. Eveleth hired Benjamin Silliman Jr., a professor of chemistry at Yale, to analyze the crude oil from their seep. Silliman produced an 1855 report that determined crude oil could be separated into fractions, each with a use. His report emphasized that one of the fractions could be useful as a high-quality illuminant. This report enabled Bissell to get additional financing for his oil venture. The Seneca Oil Company hired Edwin Drake to extract the oil. His first attempt produced ten gallons of crude a day, which was not enough to provide a return on the investment. Drake attempted to increase production by opening more springs and trying to mine the oil, but neither met with success. He eventually settled on drilling. He hired salt well driller Billy Smith, who drilled to a depth of 69.5 feet on 27 August 1859. The next day Smith looked into the well and saw crude oil rising up in it. Reports claim this well's productivity ranged anywhere from ten to forty barrels per day, a minimum of a 400-fold increase in production. This discovery of a method for extracting larger quantities of oil generated the first oil boom. People inundated Pennsylvania, leasing the flats around Oil Creek. By 1861, the commonwealth's wells were producing more than 2 million barrels annually, accounting for half the world's oil production.

Birth of the Modern Oil Industry

In 1900, worldwide crude oil production stood at nearly 150 million barrels. Illuminants served as the primary product of the oil industry, but new inventions such as the automobile and the airplane used petroleum as fuel. Gasoline was also used as an industrial solvent. Initially a barrel of oil yielded eleven gallons of gasoline. Refining began in 1850, when James Young of England patented the first oil refining process. Samuel Kier founded the first commercial refining process in the United States in the 1860s. In 1913, refineries achieved their first major technological breakthrough, adding heat to the oil molecules, thereby "cracking" heavier molecules of hydrocarbons into lighter molecules. By the 1960s, a barrel of oil yielded more than 21 gallons of gasoline, nearly double the production

of the first two decades of the twentieth century. Catalytic cracking in 1936 produced a higher octane fuel as well as the lighter gases that provided the first step in producing five major products: synthetic rubber, plastics, textiles, detergents, and agricultural chemicals.

While Pennsylvania was initially the biggest oil producing state, that didn't stop people from hunting elsewhere. Independent oil prospectors, known as wildcatters, as well as oil companies, discovered oil in Ohio, Indiana, Illinois, Oklahoma, Kansas, California, and Texas. Often oil was discovered by people drilling for water, as happened with the Corsicana field in Texas. Pennsylvania oilman John Galey and his partner, James Guffy, came to Texas at the behest of Anthony Lucas, an engineer and salt miner working for Patillo Higgins, who believed oil could be found under salt domes. In particular, Higgins was eyeing Spindletop, a hill whose elevation had increased over the centuries as the salt continued to rise under the surface. Galey had drilled to 1,020 feet by 10 January 1901. When the drill was pulled out to change equipment, mud began to bubble up the hole, and the drill pipe was shoved out of the hole with tremendous force. Mud followed by natural gas followed by oil shot

out of the ground to a height of more than 150 feet, the first "gusher" experienced by the oil industry. The Lucas gusher produced at an initial rate of 100,000 barrels per day, more than all the other producing wells in the United States combined. In a matter of months the population of nearby Beaumont, Texas, swelled five times, to 50,000 residents, and more than 100 different oil companies put wells on Spindletop. The find was instrumental in creating several large oil companies such as Gulf, Amoco, and Humble, which became part of Standard Oil. It also gave rise to a new drilling technique, since drilling through several hundred feet of sand had proved problematical. Driller Curt Hamill pumped mud rather than water down the drill hole to keep the rotary drill bit cool and to flush out the cuttings. The mud stuck to the sides of the hole and prevented the sand from caving. Since then, mud has been used in almost every drill hole around the world.

While companies retrieved $50 million in oil from the salt dome, they had invested $80 million. Consequently, the site was familiarly known as "Swindletop." It served to usher in the modern age of oil, causing the industry to realize that tremendous potential existed for the vast amounts of this natural resource that had barely been tapped. It became the fuel of choice for transportation, everything from ships and trains to cars and planes. Worldwide oil production in 1925 stood at 1 billion barrels and doubled fifteen years later.

Transportation of Oil

Horses served as the primary means of transporting machinery to the oil field, as well as carrying the product to refineries, in the early Pennsylvania oil fields. By 1865 horses had been supplanted by the newly completed rail line, and tank cars, originally two open tubs, were developed for rail transport. The first pipeline was developed in 1863, when Samuel Van Syckle pumped crude through five miles of a two-inch pipe from the Pithole field in western Pennsylvania to a railroad terminal. In the 1870s a six-inch pipeline ran from oil fields to Williamsport, Pennsylvania, 130 miles away. Ten years later pipelines ran from Pennsylvania to Cleveland, Buffalo, and New York City. At the end of the twentieth century, the United States had over 1 million miles of oil pipeline in use. Most pipelines were buried, with the exception to the 800-mile trans-Alaska pipeline, built partially above ground in the 1970s to prevent damaging the fragile permafrost.

The California oil boom in the 1920s gave rise to yet another industry, that of the oil tanker. Removed from the industrial centers in the East, California looked over-seas for its market. The first tanker, the George Loomis, took its maiden voyage in 1896. From that beginning, petroleum and petroleum products now account for nearly half the world's seaborne trade. The materials are hauled on supertankers, the largest ships ever built, a quarter mile long and half a million tons in weight, shipping 1 million barrels of oil.

The Politics of Oil

Attempts to control the oil industry began as early as the 1870s, when the newly-formed Standard Oil Company, established by brothers John D. and William Rockefeller, sought to gain a monopoly in the industry. They made generous profit offers to companies that merged with them and threatened those that didn't. Early success was recognized in the rapid rise of Standard Oil's market share, from 10 percent in 1872 to 95 percent by 1880, but Standard Oil couldn't control the rapid pace of discovery and development of new fields over the next two decades. By the time the U.S. Supreme Court dissolved the Standard Oil Company into 34 separate companies for violating the Sherman Antitrust Act of 1911, Standard's market share had dropped to 65 percent.

By 1925 the United States was supplying 71 percent of the world's oil. Increased production in Oklahoma and East Texas in the wake of the Great Depression, between 1929 and 1932, caused an oil glut, dropping the price of oil to a low of 10 cents per barrel. This resulted in the Interstate Oil Compact of 1935, followed by the Connally "Hot Oil" Act, which prohibited interstate shipment of oil produced in violation of state conservation laws. The intent was to coordinate the conservation of crude oil production in the United States, and was the first attempt by the federal government to control the supply and demand of the industry. The government stepped in again in 1942, rationing civilian petroleum supplies during World War II. In 1945, the last year of the war, one-third of domestically produced petroleum was going to the war effort.

Continual expansion of offshore drilling gave rise to the 1953 U.S. Submerged Lands Act, which determined that the federal government's ownership of land extends three miles from the coastline. That same year Congress passed the Outer Continental Shelf Lands Act, which provided federal jurisdiction over the shelf and authorized the secretary of the interior to lease those lands for mineral development.

Domestic production of crude oil doubled after the war, but demand tripled. The United States accounted for over half the world's oil production in 1950, but Americans were also using all they produced and more, for the first time becoming a net importer of oil. Thirty years previously the United States had imported only 2 percent of its total petroleum. Now imports accounted for 17 percent of the total. Thirty years after that, in 1980, the United States was importing 45 percent of its petroleum. By 2002 the United States was importing 56 percent of its petroleum, and that figure was projected to grow to 65 percent by the year 2020.

Government regulation of the oil industry reached a pinnacle of invasiveness in the 1970s, as the government sought to reduce import dependency, encourage domestic production, and stabilize prices. These actions were largely a result of an embargo of oil exports by the Persian Gulf nations of the Middle East. Reacting to the United States' support for Israel in the 1973 Arab-Israeli war, the

Organization of Petroleum Exporting Countries (OPEC) nations withheld their oil exports, driving the cost of petroleumfrom$5 per barrel in the late 1960s to $35 per barrel in 1981.

At the same time, domestic oil production declined from 9.6 million barrels a day in 1970 to 8.6 million barrels in 1980. To address the demand and supply issue, President Richard Nixon created what amounted to a paradoxical energy policy: to restrict imports and reduce reliance on foreign oil, while at the same time encouraging imports to protect domestic reserves and encourage lower prices for domestic use. He first imposed price controls on oil in 1971 and then, two years later, abolished the import quotas established twenty years earlier by the Eisenhower administration. Nixon's 1973 "Project Independence" was a plan to make the United States self-sufficient in oil by 1985 by increasing domestic supplies, developing alternative energy sources, and conserving resources. His successor, Gerald Ford, continued a program to reduce reliance on foreign oil through reduction of demand and increased domestic production. Ford focused on transporting oil from Alaska and leasing the outer continental shelf for drilling. He also established the Strategic Petroleum Reserve, a federal storage of oil. By 2002 the reserve stood at 578 million barrels of crude, equal to a fifty-three-day supply of imports. President Jimmy Carter created a National Energy Plan in 1977. He wanted to increase taxes to reduce demand, impose price controls, and shift consumption from imported to domestic sources. He also wanted to direct the nation toward nuclear energy. Despite the attempts of three administrations to reduce national dependence on foreign oil, all of these policies had little impact on oil imports. American imports from OPEC continued to increase throughout the 1970s. By the beginning of the twenty-first century OPEC provided 42 percent of the United States' imported oil and 24 percent of the total oil used in the United States. The 1979 revolution in Iran curtailed U.S. supply from that country and drove prices to unprecedented levels for three years. The Iranian political situation eventually stabilized by 1982, and the oil crisis abated for the first time in over a decade.

The American political policy toward oil under presidents Ronald Reagan and George H. W. Bush adhered to a free-market philosophy. Reagan abandoned conservation and alternative energy initiatives and deregulated oil prices, policies continued by Bush. One result of these policies was an increase in imports from the Middle East, and by 1990 the Persian Gulf states were supplying 600 million of America's 2.2 billion imported barrels annually. President Reagan also signed Proclamation 5030 in 1983, establishing the "U.S. exclusive economic zone, " claiming U.S. rights 200 nautical miles off national coastlines, in an effort to expand the search for oil.

A rift in OPEC in the mid-1980s over market share helped cause a collapse of oil prices. Prices plummeted to as low as $10 per barrel, down from a high of $31. While a boon for consumers, this caused a severe recession in regions of the United States where much of the industry revolved around petroleum. In 1983 Texas, Alaska, Louisiana, and California accounted for three quarters of domestic oil production. Along with Oklahoma, these states are still the top oil producers in the nation.

The George H. W. Bush administration developed a comprehensive national energy policy when the Gulf War of 1991 caused concern over the security of the long-term oil supply. However, the legislation passed by Congress in 1992 did not really address oil and gas, focusing instead on electric utility reform, nuclear power, and increased funding for research and development of alternative fuels. During the 1990s the Clinton administration generally adopted a "status quo" approach to energy, with some exceptions. Clinton suggested the use of tax incentives to spur conservation and alternative fuels, while also encouraging modest tax breaks to increase domestic production. Clinton tightened pollution-reducing regulations on the petroleum industry. Additionally, he closed off several areas of the United States to oil production, supported the ban on drilling in the Arctic National Wildlife Refuge (ANWR), and signed the Kyoto Protocol, a worldwide attempt to limit the production of greenhouse gases. In contrast to the Clinton administration, Congress sought to end restrictions on Alaska North Slope exports and the lift the ban on drilling in the ANWR. Toward the same end, Congress also implemented royalty relief for projects in the Gulf of Mexico. Royalty relief was intended to provide incentives for development, production increases, and the encouragement of marginal production. Deep-water Gulf drilling leases more than tripled between 1995 and 1997.

In 2000 the George W. Bush administration indicated a shift in U.S. energy policy. Like those before him, Bush intended to increase domestic production and decrease consumption. His conservation program proposed to study options for greater fuel efficiency from automobiles and create tax incentives for purchasing hybrid cars that run on gas and electricity. More significantly, to increase production, Bush wanted to review, with the objective of easing, pollution control regulations that may adversely impact the distribution of gasoline. He was seeking to open the ANWR to drilling, despite the Senate's rejection of such drilling in April 2002. Incidents such as the 1989 spill by the Exxon Valdez, which ran aground on Bligh Reef off the Alaskan shore, and the intent to drill in the ANWR brought opposition to the continued search for oil. The Exxon Valdez spilled 10.8 million gallons of oil into Prince William Sound in Alaska, contaminating 1,500 miles of coastline—the largest oil spill in North America.

Demand and Supply

Despite the conservation efforts of repeated administrations, national demand for petroleum products continued to increase. As the twenty-first century began, the United

States was using 19.5 million barrels of petroleum per day—an average of three gallons per person. This usage rate meant America's entire production of oil comprised only half its total consumption. The other 50 percent came from all over the globe, half of it from other nations in the Western hemisphere, 21 percent of it from the Middle East, 18 percent from Africa, and the rest from elsewhere. Canada is the United States' largest supplier, followed in order by Saudi Arabia, Venezuela, and Mexico. The United States uses more than one-quarter of the world's oil production each year. Initially, when oil was extracted and refined for widespread commercial use in the United States in the 1860s, national oil reserves increased as new fields were discovered and better techniques for extracting and refining the oil were implemented. However, the amount of available reserves plateaued in the 1960s and a decline began in 1968. The discoveries in Alaska temporarily alleviated the decline, but the daily output continued to drop from 9.6 million barrels daily in 1970 to nearly 6 million barrels per day in 2002.

The hunt for oil continues. While Drake's original well came in at 69.5 feet, current U.S. holes are on average one mile deep, and at least one is seven miles in depth. Once natural pressure quits forcing the flow of oil up the well, an assembly of pipes and valves called a Christmas tree is used to pump additional oil out. Carbon dioxide and other gases, water or chemicals are injected into the well to maintain pressure and increase production. U.S. fields are among the world's oldest continually producing fields. By 2002, the Earth had yielded 160 billion barrels of oil, with an estimated 330 billion barrels left in the ground. Some estimates suggest that at current production rates the world's proven oil reserves will last until 2050.

BIBLIOGRAPHY

Ball, Max W. This Fascinating Oil Business. Indianapolis: Bobbs Merrill, 1965.

Conoway, Charles F. The Petroleum Industry: A Non-Technical Guide. Tulsa, Okla.: PennWell, 1999.

Deffeyes, Kenneth S. Hubbert's Peak: The Impending World Oil Shortage. Princeton: Princeton University Press, 2001.

Doran, Charles F. Myth, Oil, and Politics: Introduction to the Political Economy of Petroleum. New York: Free Press, 1977.

Economides, Michael, and Oligney, Ronald. The Color of Oil: The History, the Money, and the Politics of the World's Biggest Business. Katy, Texas: Round Oak Publishing Company, 2000.

Levy, Walter J. Oil Strategy and Politics, 1941–1981. Boulder, Colorado: Westview Press, 1982.

Yergin, Daniel. The Prize: The Epic Quest for Oil, Money, and Power. New York: Simon and Schuster, 1991.

TerriLivermore

T. L.Livermore

MichaelValdez

See alsoEnergy Industry ; Energy, Renewable ; Kerosine Oil ; Petrochemical Industry ; Petroleum Prospecting and Technology ; Standard Oil Company .

Petroleum

Types of petroleum

Sources of petroleum

Petroleum exploration and production

Petroleum reserves

Current research

Resources

Petroleum is a term describing a variety of liquid hydrocarbons generally found in sedimentary rocks. Some scientists also include natural gas in their definition of petroleum. The most familiar types of petroleum are tar, oil, and natural gas. Petroleum forms through the accumulation, burial, and transformation of organic material, such as the remains of plants and animals, by chemical reactions over long periods of time. After petroleum has been generated, it migrates upward (by virtue of its buoyancy relative to ground-water) until it is either trapped underground by impermeable rocks or seeps out onto Earth’s surface. Petroleum accumulates when it migrates into a porous rock called a reservoir that has an impermeable seal or cap rock that prevents the oil from migrating further.

Petroleum reserves have been discovered in many areas. In the United States, the states of Alaska, California, Louisiana, Michigan, Oklahoma, Texas, New Mexico, and Wyoming are among the most important sources of petroleum. Other countries that produce great amounts of petroleum include Saudi Arabia, Iran, Iraq, Kuwait, Algeria, Libya, Nigeria, Indonesia, the former Soviet Union, Mexico, and Venezuela.

Humans might have used torches made from pieces of wood dipped in oil for lighting as early as 20,000 BC. At around 5000 BC, the Chinese apparently found oil when they were digging underground. Widespread use of petroleum probably began in the Middle East by the Mesopotamians, perhaps by 3000 BC, and probably in other areas where oil seeps were visible at the surface of Earth. Exploration for petroleum in the United States began in 1853, when George Bissell (1821-1884), a lawyer, recognized the potential

use of kerosene, which is derived from petroleum, as lamp fuel. Bissell also recognized that boring or drilling into Earth, as was done to recover salt, might provide access to greater supplies of petroleum than surface seeps. In 1857, Bissell hired Edwin Drake (1819-1880), often referred to as Colonel Drake despite having worked as a railroad conductor, to begin drilling the first successful oil well, in Titusville, Pennsylvania. The well was drilled in 1859. Once the usefulness of oil as a fuel was widely recognized, exploration for oil increased. By 1885, oil was discovered in Sumatra, Indonesia. The famous gusher in the Spindletop field in eastern Texas was drilled in 1901. The discoveries of giant oil fields in the Middle East began in 1908 when the company now known as British Petroleum drilled a well in Persia (now Iran). During World Wars I and II, oil became a critical factor in the ability to successfully wage war.

Petroleum is among the most important natural resources. Modern society uses gasoline, jet fuel, and diesel fuel to run cars, trucks, aircraft, ships, and other vehicles. Home heat sources include oil, natural gas, and electricity, which in many areas is generated by burning natural gas. Petroleum and petroleum-based chemicals are important in manufacturing plastic, wax, fertilizers, lubricants, and many other goods. Thus, petroleum is an important part of many human activities.

Types of petroleum

Petroleum, including liquid oil and natural gas, consists hydrocarbons, which comprise hydrogen and carbon, with small amounts of impurities such as nitrogen, oxygen, and sulfur. The molecules of hydrocarbons can be as simple as that of methane, which consists of a carbon atom surrounded by four hydrogen atoms, abbreviated as CH₄. More complex hydrocarbons, such as naphthenes, include rings of hydrogen and carbon atoms linked together. Differences in the number of hydrogen and carbon atoms in molecules as well as their molecular structure (carbon atoms arranged in a ring structure, chain, or tetrahedron, for example) produce numerous types of petroleum.

Different types of petroleum can be used in different ways. Jet fuel differs from the gasoline that automobiles consume, for example. Refineries separate different petroleum products by heating petroleum to the point that heavy hydrocarbon molecules separate from lighter hydrocarbons so that each product can be used for a specific purpose. Refining reduces the waste associated with using limited supplies of more expensive petroleum products in cases in which a cheaper, more plentiful type of petroleum would suffice. Thus, tar or asphalt, the dense, nearly solid hydrocarbons, can be used for road surfaces and roofing materials, waxy substances called paraffin can be used to make candles and other products, and less dense, liquid hydrocarbons can be used for engine fuels and lubricating oils.

Sources of petroleum

Petroleum is typically found beneath the surface of Earth in accumulations known as fields. Fields can contain oil, gas, tar, water, and other substances, but oil, gas, and water are the most common. In order for a field to form, there must exist both a reservoir of porous rock (generally sedimentary rock) and a seal consisting of an impervious geologic structure (such as a fault) or impervious strata to trap the petroleum. To find these features together in an area in which petroleum has been generated by chemical reactions affecting organic remains requires many coincidences of timing of natural processes.

Petroleum generation occurs over millions of years. In order for petroleum generation to form, organic matter such as dead plants or animals must accumulate in large quantities. The organic matter can be deposited along with sediments and then buried as more sediments accumulate. The organic-rich sediments are compressed to form a source rock via a process known as diagenesis. After burial, chemical activity in the absence of oxygen allows the organic material in the source rock to change into petroleum. A good petroleum source rock is a sedimentary rock such as shale or limestone that contains between 1% and 5% organic carbon. Rich source rocks occur in many environments, including lakes, deep areas of the seas and oceans, and swamps. The source rocks must be buried deep enough below the surface of Earth to heat up the organic material, but not so deep that the rocks metamorphose or that the organic material changes to graphite or materials other than hydro-carbons. Temperatures less than 302^°F (150^°C) are typical for petroleum generation, and the range of temperatures in which petroleum can be generated is known as the petroleum window.

Once a source rock generates and expels petroleum, the petroleum migrates from to a porous reservoir rock that can store the petroleum. Sandstone, limestone, and highly fractured rocks can all serve as petroleum reservoirs. A good reservoir rock might have pore space that exceeds 30% of the rock volume. Poor quality reservoir rocks have less than 10% void space capable of storing petroleum. Rocks that lack pore space also tend to lack permeability, the property of rock that allows fluid to pass through the pore spaces of the rock. With very few pores, it is not likely that the pores are connected and less likely that fluid will flow through the rock than in a rock with larger or more abundant pore spaces. Highly porous rocks tend to have better permeability because the greater number of pores and larger pore sizes tend to allow fluids to move through the reservoir more easily. The property of permeability is critical to producing petroleum: If fluids can not migrate through a reservoir rock to a petroleum production well, the well will not produce much petroleum and the money spent to drill the well has been wasted. In some cases, fluids are pumped under great pressure into poor quality reservoir rocks in order to fracture the rock and increase permeability. This procedure is known as hydrofracturing.

Petroleum reservoirs are generally sealed by a less porous and permeable rock known as a seal or cap rock, which prevents the petroleum from migrating further. Rocks like shale and salt provide excellent seals for reservoir rocks because they do not allow fluids to pass easily. Seal-forming rocks tend to be made of small particles of sediment that fit closely together so that pore spaces are small and poorly connected. The permeability of a seal must be virtually zero in order to retain petroleum in a reservoir rock for millions to hundreds of millions of years, the time span between formation of petroleum to the discovery and production of many petroleum fields. Likewise, the seal must not be subject to forces within Earth that might cause fractures or other breaks in the seal to form.

Reservoir rocks and seals work together to form a trap for petroleum. Typical traps for petroleum include buried hills shaped like upside-down bowls below the surface of Earth, known as anticlines, or traps formed by faults along which rock has been pulverized to form a seal. Abrupt changes in rock type can form good traps, such as sandstone deposits next to shale deposits, especially if a sand deposit is encased in a rock that is sufficiently rich in organic matter to act as a petroleum source and endowed with the properties of a good seal.

An important aspect of the formation of petroleum accumulations is timing. The reservoir must have been deposited prior to petroleum migrating from the source rock to the reservoir rock. The seal and trap must have been developed prior to petroleum accumulating in the reservoir, or else the petroleum would have migrated farther. The source rock must have been exposed to the appropriate temperature and pressure conditions over long periods of time to change the organic matter to petroleum. The necessary coincidence of several conditions is difficult to achieve in nature.

Petroleum exploration and production

Petroleum exploration and production activities are performed primarily by geologists, geophysicists, and petroleum engineers. Geologists look for areas likely to have the necessary combination of source rocks, reservoir rocks, and geologic history to accumulate large amounts of petroleum. They examine the rocks at the surface of Earth and information from wells drilled in the area. Geologists also examine satellite images of large or remote areas to evaluate the rocks more quickly.

Geophysicists examine seismic data, which are derived from recording waves of energy introduced into the rock layers of Earth through explosions or other means, to determine the shape of the rock layers beneath the surface and whether or not traps such as faults or anticlines exist.

Once the geologist or geophysicist has gathered evidence of potential for a petroleum accumulation, called a prospect, an engineer assists in determining how to drill a well or wells to assess the prospect. Drilling a well to explore for petroleum can cost as little as $100,000 and as much as $30,000,000 or more, depending on how deep the well must be drilled, what types of rocks are present, and how remote the well location is. Thus, the scientists must evaluate how much the well might cost, how big the prospect might be, and how likely the scientific predictions are to be correct. In general, approximately 15% of exploration wells are successful.

Once a successful exploration well has been drilled, the oil or gas, or both, are pumped to the surface through the well. At the surface, the petroleum either moves through a pipeline or is stored in a tank or on a ship until it can be sold.

Petroleum reserves

Estimates of the amount of recoverable oil and natural gas in the United States are 113 billion barrels of oil and 1,074 trillion cubic feet of natural gas. Worldwide estimates of recoverable oil and natural gas are 1 trillion barrels of oil and 5 quadrillion cubic feet of natural gas. These worldwide reserves are expected to supply 45 years of fuel at current production rates with expected increases in demand. However, such estimates do not take into account reserves added through new discoveries or through the development of new technology that would allow more oil and natural gas to be recovered from existing oil and natural gas fields.

Daily consumption of oil in the United States exceeds 17 million barrels of oil per day, of which approximately 7 million barrels are in the form of gasoline for vehicles. Over half the petroleum consumed in the United States is imported from other countries. While the United States has large reserves of petroleum, the undiscovered fields that remain tend to be smaller than the fields currently producing petroleum outside of the United States. Thus, less expensive foreign reserves are imported to the United States. When foreign petroleum increases in price, more exploration occurs in the U.S. as it becomes more profitable to drill wells in order to exploit smaller reservoirs.

Current research

Current research in petroleum includes many different activities. Within companies that explore for and produce petroleum, scientists and engineers try to determine where they should explore for petroleum, how they might recover more petroleum from a given field, and what types of tools can be lowered into wells in order to enhance our understanding of whether or not that individual well might have penetrated an oil or gas field. They also study fundamental processes such as the deposition and diagenesis of sedimentary rocks form, the response of rocks to tectonic stress, and the evolution of life on Earth. The United States Geological Survey (USGS) evaluates petroleum reserves and new technology to produce oil and gas. The federal government operates several facilities called Strategic Petroleum Reserves that store large

KEY TERMS

Barrel— A unit of volume typically used for oil. A barrel contains 42 gal (160 L).

Field— An accumulation of oil or natural gas (or both) that can be produced, usually for a profit.

Hydrocarbon— Compound made from atoms of hydrogen and carbon. Methane (CH₄) and propane (C₃H₈) are simple, gaseous hydrocarbons. Oil can vary from tar to very light liquid hydrocarbon to natural gas.

Natural gas— Gaseous hydrocarbon.

Oil— Liquid hydrocarbon.

Petroleum— Substances made of hydrogen and carbon compounds (hydrocarbons), typically also containing impurities such as nitrogen, sulfur, and oxygen.

Reservoir rock— A rock that has sufficient pore space and connection between pores to allow oil or gas to be stored in the rock and to flow out of the rock. Sandstones and limestones can be excellent reservoir rocks.

Seal— Rock made of fine particles and having little pore space or connection between pores that prevents fluids from leaking out of a reservoir rock. Shale and salt provide some of the best seals for petroleum reservoirs.

Sedimentary rock— Rock formed by deposition, compaction, and cementation of weathered rock or organic material, or by chemical precipitation. Salt and gypsum form from evaporation and precipitation processes.

Source rock— Sedimentary rock containing sufficient organic matter (0.5-5% organic carbon from organic matter in a source rock is typical) to generate petroleum.

Trap— A structure in which petroleum can accumulate and be stored. Anticlines (dome shaped structures below the surface of Earth) can form good traps. Traps can also form along faults and in areas where rock types change rapidly.

quantities of petroleum for use in times of supply crisis.

Petroleum exploration specialists are using a type of geophysical data known as three-dimensional seismic data to study the structures and rock types below the surface of Earth in order to determine where exploration wells might successfully produce petroleum. Geochemists are assessing the results of studies of the chemistry of the surface of Earth and whether or not these results can improve the predictions of scientists prior to drilling expensive exploratory wells.

Significant recent discoveries of petroleum have been made in many areas of the world: Algeria, Brazil, China, Egypt, Indonesia, the Ivory Coast, Malaysia, Papua New Guinea, Thailand, the United Kingdom, and Vietnam, among others. In the United States, the Gulf of Mexico, Gulf Coast states, California, and Alaska continue to attract the interest of explorationists.

See also Air pollution; Fossil and fossilization; Internal combustion engine; Oil spills; Plastics.

Resources

BOOKS

Blatt, H., R. Tracy, and B. Owens. Petrology: Igneous, Sedimentary, and Metamorphic. New York: Freeman, 2005.

Gow, S. Roughnecks, Rock Bits and Rigs: The Evolution of Oil Well Drilling Technology in Alberta, 1883-1970. Calgary, Alberta: University of Calgary Press, 2006.

Lyons, W.C. and G.J. Plisga. Standard Handbook of Petroleum & Natural Gas Engineering. Woburn, Mass.: Butterworth-Heinemann, 2004.

Tarbuck, E.J., F.K. Lutgens, and D. Tasa. Earth: An Introduction to Physical Geology. Upper Saddle River, New Jersey: Prentice Hall, 2004.

Gretchen M. Gillis

Petroleum

Petroleum is a term that includes a wide variety of liquid hydrocarbons . Many scientists also include natural gas in their definition of petroleum. The most familiar types of petroleum are tar, oil, and natural gas. Petroleum forms through the accumulation, burial, and transformation of organic material—such as the remains of plants and animals—by chemical reactions over long periods of time. After petroleum has been generated, it migrates upward through the earth, seeping out at the surface of the earth if it is not trapped below the surface. Petroleum accumulates when it migrates into a porous rock called a reservoir that has a non-porous seal or cap rock that prevents the oil from migrating farther. To fully understand how petroleum forms and accumulates requires considerable knowledge of geology , including sedimentary rocks , geological structures (faults and domes, for example), and forms of life that have been fossilized or transformed into petroleum throughout the earth's long history.

Tremendous petroleum reserves have been produced from areas all over the world. In the United States, the states of Alaska, California, Louisiana, Michigan, Oklahoma, Texas, and Wyoming are among the most important sources of petroleum. Other countries that produce great amounts of petroleum include Saudi Arabia, Iran, Iraq, Kuwait, Algeria, Libya, Nigeria, Indonesia, the former Soviet Union, Mexico, and Venezuela.

Petroleum products have been in use for many years. Primitive man might have used torches made from pieces of wood dipped in oil for lighting as early as 20,000 b.c. At around 5,000 b.c., the Chinese apparently found oil when they were digging underground. Widespread use of petroleum probably began in the Middle East by the Mesopotamians, perhaps by 3,000 b.c., and probably in other areas where oil seeps were visible at the surface of the earth. Exploration for petroleum in the United States began in 1853, when George Bissell, a lawyer, recognized the potential use of oil as a source of lamp fuel. Bissell also recognized that boring or drilling into the earth, as was done to recover salt, might provide access to greater supplies of petroleum than surface seeps. In 1857, Bissell hired Edwin Drake—often called "Colonel" Drake despite having worked as a railroad conductor—to begin drilling the first successful oil well. The well was drilled in 1859 in Titusville, Pennsylvania. Once the usefulness of oil as a fuel was widely recognized, exploration for oil increased. By 1885, oil was discovered in Sumatra, Indonesia. The famous "gusher" in the Spindletop field in eastern Texas was drilled in 1901. The discoveries of giant oil fields in the Middle East began in 1908 when the company now known as British Petroleum drilled a well in Persia (now Iran). During World Wars I and II, oil became a critical factor in the ability to successfully wage war.

Currently, petroleum is among our most important natural resources. We use gasoline, jet fuel, and diesel fuel to run cars, trucks, aircraft, ships, and other vehicles. Home heat sources include oil, natural gas, and electricity , which in many areas is generated by burning natural gas. Petroleum and petroleum-based chemicals are important in manufacturing plastic, wax, fertilizers, lubricants, and many other goods. Thus, petroleum is an important part of many human activities.

Petroleum, including liquid oil and natural gas, consists of substances known as hydrocarbons. Hydrocarbons, as their name suggests, comprise hydrogen and carbon , with small amounts of impurities such as nitrogen, oxygen , and sulfur. The molecules of hydrocarbons can be as simple as that of methane, which consists of a carbon atom surrounded by four hydrogen atoms, abbreviated as CH₄. More complex hydrocarbons, such as naphthenes, include rings of carbon atoms (and attached hydrogen atoms) linked together. Differences in the number of hydrogen and carbon atoms in molecules as well as their molecular structure (carbon atoms arranged in a ring structure, chain, or tetrahedron, for example) produce numerous types of petroleum.

Different types of petroleum can be used in different ways. Jet fuel differs from the gasoline that automobiles consume, for example. Refineries separate different petroleum products by heating petroleum to the point that heavy hydrocarbon molecules separate from lighter hydrocarbons so that each product can be used for a specific purpose. Refining reduces the waste associated with using limited supplies of more expensive petroleum products in cases in which a cheaper, more plentiful type of petroleum would suffice. Thus, tar or asphalt, the dense, nearly solid hydrocarbons, can be used for road surfaces and roofing materials, waxy substances called paraffins can be used to make candles and other products, and less dense, liquid hydrocarbons can be used for engine fuels .

Petroleum is typically found beneath the surface of the earth in accumulations known as fields. Fields can contain oil, gas, tar, water , and other substances, but oil, gas, and water are the most common. In order for a field to form, there must be some sort of structure to trap the petroleum, a seal on the trap that prohibits leakage of the petroleum, and a reservoir rock that has adequate pore space, or void space, to hold the petroleum. To find these features together in an area in which petroleum has been generated by chemical reactions affecting organic remains requires many coincidences of timing of natural processes.

Petroleum generation occurs over long periods of time—millions of years. In order for petroleum generation to occur, organic matter such as dead plants or animals must accumulate in large quantities. The organic matter can be deposited along with sediments and later buried as more sediments accumulate on top. The sediments and organic material that accumulate are called source rock. After burial, chemical activity in the absence of oxygen allows the organic material in the source rock to change into petroleum without the organic matter simply rotting. A good petroleum source rock is a sedimentary rock such as shale or limestone that contains between 1% and 5% organic carbon. Rich source rocks occur in many environments, including lakes , deep areas of the seas and oceans , and swamps. The source rocks must be buried deep enough below the surface of the earth to heat up the organic material, but not so deep that the rocks metamorphose or that the organic material changes to graphite or materials other than hydrocarbons. Temperatures less than 302°F (150°C) are typical for petroleum generation.

Once a source rock generates and expels petroleum, the petroleum migrates from the source rock to a rock that can store the petroleum. A rock capable of storing petroleum in its pore spaces, the void spaces between the grains of sediment in a rock, is known as a reservoir rock. Rocks that have sufficient pore space through which petroleum can move include sandstone , limestone, and rocks that have many fractures. A good reservoir rock might have pore space that exceeds 30% of the rock volume. Poor quality reservoir rocks have less than 10% void space capable of storing petroleum. Rocks that lack pore space tend to lack permeability , the property of rock that allows fluid to pass through the pore spaces of the rock. With very few pores, it is not likely that the pores are connected and less likely that fluid will flow through the rock than in a rock with larger or more abundant pore spaces. Highly porous rocks tend to have better permeability because the greater number of pores and larger pore sizes tend to allow fluids to move through the reservoir more easily. The property of permeability is critical to producing petroleum: if fluids can not migrate through a reservoir rock to a petroleum production

well, the well will not produce much petroleum and the money spent to drill the well has been wasted.

In order for a reservoir to contain petroleum, the reservoir must be shaped and sealed like a container. Good petroleum reservoirs are sealed by a less porous and permeable rock known as a seal or cap rock. The seal prevents the petroleum from migrating further. Rocks like shale and salt provide excellent seals for reservoir rocks because they do not allow fluids to pass through them easily. Seal-forming rocks tend to be made of small particles of sediment that fit closely together so that pore spaces are small and poorly connected. The permeability of a seal must be virtually zero in order to retain petroleum in a reservoir rock for millions to hundreds of millions of years, the time span between formation of petroleum to the discovery and production of many petroleum fields. Likewise, the seal must not be subject to forces within the earth that might cause fractures or other breaks in the seal to form.

Reservoir rocks and seals work together to form a trap for petroleum. Typical traps for petroleum include hills shaped similar to upside-down bowls below the surface of the earth, known as anticlines, or traps formed by faults. Abrupt changes in rock type can form good traps, such as sandstone deposits next to shale deposits, especially if a sand deposit is encased in a rock that is sufficiently rich in organic matter to act as a petroleum source and endowed with the properties of a good seal.

An important aspect of the formation of petroleum accumulations is timing. The reservoir must have been deposited prior to petroleum migrating from the source rock to the reservoir rock. The seal and trap must have been developed prior to petroleum accumulating in the reservoir, or else the petroleum would have migrated farther. The source rock must have been exposed to the appropriate temperature and pressure conditions over long periods of time to change the organic matter to petroleum. The necessary coincidence of several conditions is difficult to achieve in nature.

Petroleum exploration and production activities are performed primarily by geologists, geophysicists, and engineers. Geologists look for areas of the earth where sediments accumulate. They then examine the area of interest more closely to determine whether or not source rocks and reservoir rocks exist there. They examine the rocks at the surface of the earth and information from wells drilled in the area. Geologists also examine satellite images of large or remote areas to evaluate the rocks more quickly.

Geophysicists examine seismic data, data derived from recording waves of energy introduced into the rock layers of the earth through dynamite explosions or other means, to determine the shape of the rock layers beneath the surface and whether or not traps such as faults or anticlines exist.

Once the geologist or geophysicist has gathered evidence of potential for a petroleum accumulation, called a prospect, an engineer assists in determining how to drill a well or multiple wells to assess the prospect. Drilling a well to explore for petroleum can cost as little as $100,000 and as much as $30,000,000 or more, depending on how deep the well must be drilled, what types of rocks are present, and how remote the well location is. Thus, the scientists must evaluate how much the well might cost, how big the prospect might be, and how likely the scientific predictions are to be correct. In general, approximately 15% of exploration wells are successful.

Once a successful exploration well has been drilled, the oil and/or gas flow are pumped to the surface of the earth through the well. At the surface, the petroleum either moves through a pipeline or is stored in a tank or on a ship until it can be sold.

Estimates of the amount of recoverable oil and natural gas in the United States are 113 billion barrels of oil and 1,074 trillion cubic feet of natural gas. Worldwide estimates of recoverable oil and natural gas are 1 trillion barrels of oil and 5 quadrillion cubic feet of natural gas. These worldwide reserves are expected to supply 45 years of fuel at current production rates with expected increases in demand. However, such estimates do not take into account reserves added through new discoveries or through the development of new technology that would allow more oil and natural gas to be recovered from existing oil and natural gas fields.

Daily consumption of oil in the United States exceeds 17 million barrels of oil per day, of which approximately 7 million barrels are in the form of gasoline for vehicles. Over half the petroleum consumed in the United States is imported from other countries. (Assuming oil costs $20 per barrel and 8.5 million barrels per day are imported, over one billion dollars per week are spent on oil imports). While the United States has tremendous reserves of petroleum, the undiscovered fields that remain tend to be smaller than the fields currently producing petroleum outside of the United States. Thus, less expensive foreign reserves are imported to the United States. When foreign petroleum increases in price, more exploration occurs in the United States as it becomes more profitable to drill wells in order to exploit smaller reservoirs.

Current research in petroleum includes many different activities. Within companies that explore for and produce petroleum, scientists and engineers try to determine where they should explore for petroleum, how they might recover more petroleum from a given field, and what types of tools can be lowered into wells in order to enhance our understanding of whether or not that individual well might have penetrated an oil or gas field. They also examine fundamental aspects of how the earth behaves, such as how rocks form and what forms of life have existed at various times in the earth's history. The United States Geological Survey continues to evaluate petroleum reserves and new technology to produce oil and gas. The federal government operates several facilities called Strategic Petroleum Reserves that store large quantities of petroleum for use in times of supply crisis.

Petroleum exploration specialists are using a type of geophysical data known as three-dimensional seismic data to study the structures and rock types below the surface of the earth in order to determine where exploration wells might successfully produce petroleum. Geochemists are assessing the results of studies of the chemistry of the surface of the earth and whether or not these results can improve the predictions of scientists prior to drilling expensive exploratory wells.

Significant recent discoveries of petroleum have been made in many areas of the world: Algeria, Brazil, China, Egypt, Indonesia, the Ivory Coast, Malaysia, Papua New Guinea, Thailand, the United Kingdom, and Vietnam, among others. In the United States, the Gulf of Mexico , Gulf Coast states, California, and Alaska continue to attract the interest of explorers.

See also Fossils and fossilization; Fuels and fuel chemistry; Geochemistry; Petroleum detection; Petroleum, economic uses of; Petroleum extraction; Petroleum, history of exploration; Sedimentation; Syncline and anticline