Fundamentals of Oil Industry

& Gas

By Hemant Kumar Domain Consultant Energy Practice

By the end of this presentation you’ll learn
• • • • • • • • The importance of energy in our lives Overview of oil and gas supply chain What are hydrocarbons Where do crude oil and natural gas come from How are they produced How are petrol, diesel etc are produced How are they delivered to us Who are various players in the industry

Chapter- 1 Introduction to Energy

You check your mails on your PC and find that you’ve won a quiz contest Picture This You read about the increase in crude oil prices in the newspaper You wash your most favourite T-shirt in washing machine You store the delicious dish you cooked last night in your fridge You spend quality time with your family watching a movie “dog’s life” .

Your house is sufficiently heated to protect you from cold weather. And light bulbs/tubes keep your house glowing at night .

And all that needs electricity to keep your day to day life running smoothly. The electricity comes from the power plant which runs on natural gas or coal .

And Picture This Also World is not so small and we require the means to move from one place to another. Fortunately we have various ways to do that Train for long distances Public Transport for daily commutation Our personal vehicles for outings Planes for faster long distance travel And we need roads for our vehicles to run on .

…….And we need fuel for all these modes of transport. Unless of course you want to use a bicycle To build roads we need TAR which is also called COAL TAR…… .

preparing food is no more inconvenient Plastic bags are widely used to carry the vegetables and other food items Vegetables we love to eat also need fertilizer We need fertilizer to grow the food crops .And can we live without food? Thanks to cooking gas.

needs lot of energy.To cut a long story short. The all-important energy comes from various sources like Crude oil & Natural Gas Wind Water Coal Sun . for preparing foods. The way. travelling.. comfort and safety. we live. recreation.

Types of energy Renewable Renewable Energy is energy derived from resources that are regenerative (can be replenished in a short period of time) or for all practical purposes cannot be depleted Renewable energy accounts for about 14% of the world's energy consumption The five renewable sources used most often include hydropower (water). wind. crude oil and natural gas are all considered fossil fuels because they formed from the buried remains of plants and animals that lived millions of years ago Nuclear Fuel Coal . gases and solids. solar. geothermal. Crude oil & Natural Gas Biomas s Wind Geothermal Sun Water Non Renewable Nonrenewable energy sources come out of the ground as liquids. Non-renewable sources of energy can be divided into two types: fossil fuels and nuclear fuel Coal. and biomass.

In the next chapters we’ll try to know more about hydrocarbons which are very important source of energy and critical to our economic growth and survival. Hydrocarbons (oil and gas). we should know that they are found. produced and delivered to us by oil and gas companies who engage in multiple activities which will be described in this presentation So let’s get ready to learn about oil and gas industry. • • • Finding & producing hydrocarbons Transporting hydrocarbons Refining hydrocarbons Selling the petroleum by products . When we talk about hydrocarbons. which are nonrenewable energy resources.Welcome to Oil and Gas industry • Now that we have understood the importance of energy in its various forms. contribute almost 50% of the total world energy requirement. we also need to know where it comes from.

Industry is organized into three broad categories based on the activities performed therein.Midstream. They are mainly a) Upstream (Finding & producing hydrocarbons) b) Downstream (Refining hydrocarbons and producing saleable petroleum byproducts) c) Retail (Selling the byproducts to all the users who need them).com Platform Producers Upstream Midstream Downstream Retail .Petroleum Value Chain Picture below gives an overview of the supply chain of the oil and gas industry. though is not a very popular term is used to describe the transport part.adventuresinenergy. Truck Refineries Wellhead Producers Terminal/Storage/H ub Location Bulk Terminal Storage Gas Stations Platform Producers Platform Producers Source:http://www.

Chapter.2 Origin of Oil & Gas .

four hydrogen atoms • From now we’ll use terms hydrocarbons and oil & gas interchangeably (which is perfectly alright) .What Hydrocarbons are • Hydrocarbons are naturally occurring chemicals that are made up of just two elements – carbon and hydrogen. • Chemicals based on carbon and hydrogen are called as hydrocarbons • The Simplest Hydrocarbon is methane (CH4) is made up of one carbon.

the remains were covered by layers of sand.html#How%20used . The word "petroleum" means "rock oil" or "oil from the earth." Nowadays the terms petroleum is used as a common denotation for crude oil and natural gas. Continued burial. As soon as the oxygen is used up. silt and mud.e. which cause physical and chemical changes in the organic. decay stops and the remaining organic matter is preserved.gov/kids/energyfacts/sources/non-renewable/oil. Hydrocarbon Formation Once the body of prehistoric animals and plants became trapped they partially decomposed using up the dissolved oxygen in the sediment. Heat and pressure from these layers helped the remains turn into what we today call crude oil . These produce tiny droplets of hydrocarbons Source. i.doe.Origin of Oil and Gas Oil was formed from the remains of animals and plants that lived millions of years ago in a marine (water) environment even before the dinosaurs.eia. the hydrocarbons.. Over the years.http://www. subject the organic matter to higher temperatures and pressures.

What a petroleum bearing rock looks like • Oil can be found with in the depth of ranging between 2km – 9km .Origin of Oil and Gas Facts • Oil & gas do not occur in an underground pool but lies in the pore pace of the rocks which are also called the source rocks • The oil & gas are forced through the rock on account of three reasons •Expansion of the oil itself •Expansion of gas from above •Pressure of the encroaching water from below.

a can of petrol and gas. A word of Caution: Don’t try it at home ☺ If it’s very difficult to do. You can imagine a sponge soaked with water or petrol. A rock will contain the hydrocarbon the same way. However a source rock as we call it will be no good on its own as oil & gas therein will leave the source rock and migrate to other areas. As shown in the picture below.Origin of Oil and Gas-Do it yourself You can visualize what a rock containing crude oil & natural gas would look like. take a bucket. in its pores. Try mixing them together and resulting mixture would resemble a reservoir. Does it make life difficult for those looking for large deposits of oil and gas? Not exactly! . don’t worry. Sounds simple!! Isn’t it? Except that a petroleum reservoir is more complicated in its nature and very difficult to find out.

Origin of Oil and Gas. Once their upwards movement is impeded by non permeable rocks also called trap or seal or cap rocks they tend to accumulate in the porous (containing pores) and permeable rocks also known as reservoir rocks. Petroleum SystemIs a oil & gas bearing structure containing source. oil and gas originate in source rock and once fully formed they start moving towards the surface through channels in the rocks surrounding the source rocks. An oil & gas field consists of one or many such petroleum systems Petroleum System Source Rock Pore is a small open space between the rock particles Permeability is provided by the channels connecting different pores .Petroleum System As we learnt. reservoir and cap rocks.

3 Oil & Gas Exploration & Production .Chapter.

Exploration.Finding Oil & Gas Oil & gas fields are identified using seismic data which is obtained from Seismic Surveys Seismic Data Acquisition Seismic Survey Seismic Data obtained from Seismic Survey Computer generated model of underground rocks and trapped oil&gas reserves Seismic Data processed at the Workstation .

A drill ship must stay relatively stationary on location in the water for extended periods of time. Drilling is done using drilling rigs each adapted to different water depths (more than 2000 m in some cases) Jack up Rig.is a ship designed to carry out the drilling operations in deep water.floats and retains its stabilized position by means of anchors fixed on the seabed. drilling is done which is also called as exploratory drilling. . This positioning may be accomplished with multiple anchors.is fitted with long support legs (3 0r 4) which are lowered until they rest on the sea bottom. This allows the working platform to rest above the surface of the water.Exploration. dynamic propulsion (thrusters) or a combination of these. as opposed to other floating rigs. Used in deep waters Sea Bed Water Level Drill Ship. Used in shallow depth Jack up Rig Semisubmersible Rig Drill Ship Semi-submersible Rig.Finding Oil & Gas To confirm the interpretations of the seismic data.

which is the most important part and also is hollow and very heavy. actual drilling may begin.Exploration. A drill string is composed of hollow lengths of pipe leading to the surface. Drill Bit .Exploratory Drilling Once an area has been selected and the right to drill thereon has been obtained. Rotary drilling operates on the principle of boring a hole by continuous turning of a bit. is attached to the drill string. more lengths of pipe can be added at the top. The most common method of drilling in use today is rotary drilling. As the hole gets deeper. The bit.

e. The life of an oil field continues for many is in place. The success rate also potential oil filed which is also called as prospect. Oil companies are using the modern technologies to increase the strike rate companies are using the modern technologies to increase the strike rate during exploration during exploration •Hydrocarbons discovered by the initial exploration wells are further •Hydrocarbons discovered by the initial exploration wells are further confirmed by appraisal drilling i. On an average the strike rate varies between 5% to 15%. It also means the of them would be dry holes. decision is taken whether to develop the field for commercial extraction or stop further activities in case the producible for commercial extraction or stop further activities in case the producible quantity of oil and gas do not justify the investment in development. drilling more wells in the area •Following appraisal drilling. drilling more wells in the area confirmed by appraisal drilling i. Oil ••Drilling aawell is aavery costly activities especially in deep water. attempting to recover the maximum quantities of oil and gas in the safest attempting to recover the maximum quantities of oil and gas in the safest conditions. studies and the eventual construction of the conditions. For example 10% strike rate the strike rate varies between 5% to 15%. Drilling well is very costly activities especially in deep water. quantity of oil and gas do not justify the investment in development. extraction can start. The success rate also known as strike rate depends on the geological history of the particular known as strike rate depends on the geological history of the particular region where exploratory activities are being performed.Oil & Gas Production Exploration Exploration •Oil companies have to drill many exploratory wells before discovering •Oil companies have to drill many exploratory wells before discovering aa potential oil filed which is also called as prospect. •Enormous thought goes into the best way of extracting the hydrocarbons. decision is taken whether to develop the field •Following appraisal drilling. means the 99of them would be dry holes.e. For example aa10% strike rate would mean one prospect among 10 exploratory wells drilled. Once everything is in place. It also would mean one prospect among 10 exploratory wells drilled. The life of an oil field continues for many years years Production Production . extraction can start. On an average region where exploratory activities are being performed. These forecasts. studies and the eventual construction of the installations constitute the development stage of the field. •Enormous thought goes into the best way of extracting the hydrocarbons. These forecasts. Once everything installations constitute the development stage of the field.

However drilling horizontal involves a lot of technical complexity and is also more costly Reservoir Small Drainage Area for Vertical Well Large Drainage Area for Horizontal Well . how many wells are required? Imagine A field spreads over a vast area. Moreover. A large number of vertical wells would therefore be necessary to completely extract the contents of a reservoir. at least several km² and sometimes more than 100 km² A traditional well (vertical or slightly deviated) only draws oil or gas from a radius of a few tens of meters. •. the technique enables a significant reduction in the number of wells necessary for a given development.Oil & Gas Production Production consists of bringing the hydrocarbons contained in the subsurface to the surface. Question is. such wells only cross the reservoir over the limited height of a vertical or near vertical cross section. This requires the use of a large number of wells. Thus. The horizontal well has a much greater length of contact with the reservoir.

safety equipments and other installations are set up.Development It’s not enough to drill wells in a field to ensure production.Oil & Gas Production. To ensure safe production from the high pressure fields. The picture below shows an offshore oil platform which takes production from 10-12 wells housed within the platform Oil Wells .

4 Oil & Gas Transportation .Chapter.

Transportation The crude oil & gas transportation begins from the wells where production from different wells is taken to a large processing platforms via small diameter (2-8 inches) pipes. sulfur. hydrogen sulphide removed. After processing crude oil and gas are sent to the their respective destinations. refineries & gas processing units via pipelines or tankers (more about these later) . At process platform oil. gas and water are separated and impurities like condensate.

Transportation FPSO ( Floating Production Storage Offloading) are used where it’s not possible or economically justifiable to install sea bed pipelines or expensive process platforms. Oil is processed and accumulated in the FPSO until there is sufficient to fill a transport tanker. FPSO’s find their application in sub sea wells in remote and deep water fields. In a sub sea well wells are located on the seabed as opposed to the conventional wells at the surface Oil Tanker The FPSO is usually a decommissioned oil tanker which has been stripped down and equipped with facilities to process and stabilize the crude oil and enable it to be connected to another oil tanker or transport tanker. at which point the transport tanker connects to the stern to the stern or bow of the FPSO and offloads the oil. Sea Bed .

time and availability. Let’s learn a little more about them . Maritime Pipelines Truck Railways Many factors determine the choice of one mode of transport over another like cost. Since most of crude oil & gas are found in remote places like deserts. accessibility. Sometimes many modes of transports are utilized to achieve this goal. Broadly there are four modes of oil & gas transportation Pipeline. transportation of crude oil to its destination (refineries) is sometimes very complicated. However in majority of the cases Maritime (large oil tankers) and Pipelines are the most preferred means of transport. distance. Railways & Trucks. Maritime. sea or hills. volume. the need to be sent to the refineries/processing units for further processing.Transportation Once the crude oil and natural gas are separated.

is extensive. The network of crude oil pipelines in the U. 800 mile long. has significant portions of the system above ground.of any nation in the world. pipelines permit the movement of crude oil to these areas with little or no disruption to communities everywhere. that connect regional markets . Carrying capacity of a pipeline is expressed in terms of thousands barrel per day Pipeline shown in the picture is Trans Alaska Pipeline System (TAPS).000 miles of crude oil trunk lines (usually 8 .S. unlike most pipelines. Since oil is produced in areas far away from major marketplaces where population and manufacturing centers are located. Due to the very nature pipelines are considered to be the safest. it’s one of the of the largest pipeline systems in the world. The oil travels in the pipelines at speeds of around 2m/sec (7km/h).Oil Transportation-Pipelines Pipelines are large diameter tubes that can transport enormous quantities of oil. The oil circulates by means of pressure maintained by pumping stations located every 60 to 100 km.24 inches in diameter) in the U. It’s also the most photographed pipeline as it.S. The United States has the largest network of energy pipelines – both oil and natural gas -. Pipelines are owned by the oil companies or third party operators who lease the pipelines to the oil companies. up to several tens of millions of tons per year. There are approximately 55. most efficient and economical way of transportation.

80. The six categories of vessels are: ULCCs and VLCCs (Ultra and very large crude oil container) – Largest vessels used for long hauls(carrying capacity.4% of the tanker capacity.200.000 to 200.000 to 80. independent owners account for approximately 80. These two are most commonly used.Oil Transportation-Maritime Maritime transport involves transporting crude oil through large oil tankers. based on their carrying capacity.10.000 dwt) • • • The seaborne crude oil transportation business is highly fragmented and is generally provided by two types of operators: independent ship owners and captive fleets of privately and state owned oil companies.000 dwt).Mid size vessels used for short to medium hauls(carrying capacity.Small size vessels used for short hauls (carrying capacity. Within the industry.4% of the world tanker fleet . Panamax and Handysize. The oil tanker fleet in divided into six major categories.000 dwt and greater) Suezmax and Aframax. and the top ten owners account for 26. In order to benefit from economies of scale companies typically charter the largest possible vessel that can be accommodated in their arrival and discharge ports.

liquefied natural gas) is used Source.http://www. That would cost … 600 times too much! The most usual method of transportation is therefore by gas pipelines. But in detail. the problems of transport and of storage of gas are the same as for oil. These gas pipelines are not visible: for reasons of safety and security they are buried underground. This means that. Overland or underwater transport by gas pipeline is preferred. The compressed gas circulates at high speed in a gas pipeline. a method of maritime transport based on the liquefaction of the gas (LNG.Gas Transportation Overall. the gas is in a gaseous state at normal pressures and temperatures. Unlike oil.com/content/oil-gas/distribution/supply-storage-gas. for the same quantity of energy. production and consumption points are far apart and gas has to be taken from one to the other.html . with the aid of compression plants positioned at regular intervals along the network. In certain cases where the construction of gas pipelines is technically impossible or too expensive. it occupies a volume 600 times greater than that of oil.planete-energies. Therefore. there is no question of chartering vessels to transport gas in its gaseous state. things are quite different.

the cargo of crude oil is discharged through pipelines to storage tanks in the refinery Storage tanks come in varying size (more than 500. These commitments have been incumbent on members of the European Union since 1968.000 litres) and can often be buried underground due to safety and security reasons In addition. the strategic stocks are managed by state or private organizations (or both) • Storage tanks at a marine terminal Storage tank . They are committed to holding stocks of petroleum products (crude and finished products) equivalent to 3 months of import quantities.Crude Oil Storage • • • At the marine terminal. the developed countries have realized for a long time now the strategic importance of oil. Depending on the country.

and there is no need to refrigerate the gas to liquefy it as in LNG. so that injection of the gas is not too expensive in energy terms. Only drawback is that such ideal sites are not numerous and in most of the cases liquefaction of gas to convert it into LNG is the only option Ariel view of a LNG plant • Source. There are two ways to store the natural gas.html .http://www. storage of gas is essential.com/content/oil-gas/distribution/supply-storage-gas. in LNG form in large tanks & underground reservoirs.planete-energies. Underground reservoirs offer enormous storage capacities to the extent of billions of m³. All one need is a suitable geological site which must must possess good reservoir and cap rock conditions and be located at a sufficiently shallow depth (around 500m).Gas Storage • Due to reasons such as seasonal fluctuation or supply-demand change.

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At sea. 1. It took company four summers. vessel occurred when the Exxon Valdez oil tanker emptied 11 million gallons of crude oil into Prince William Sound off the coast of Alaska in 1989. 10. the main issues are those of safety. . On land the state of oil pipelines must be continually kept under surveillance and worn equipment replaced. Storage facilities ensuring total safety and security must therefore be planned for petroleum products. 100 airplanes & $1.000 workers. Most dangerous are oil spills which pose enormous threat to the environment Same precautions go for storage also as enormous quantities of oil transported are not used immediately. security and respect for the environment. • Oil Spill Pipeline Leak The largest oil spill involving a U.Transportation & Storage-Safety Aspects • Whether oil is transported from production sites to the refineries by maritime or pipeline methods.000 boats. not only accidental oil spills but also the deliberate discharging of polluting products such as the residue from tank and bilge cleaning. everything must be done to avoid pollution.2 billion to clean up the spill.S.200 miles of rocky beach. killing hundreds of thousands of birds and marine animals and soiling more than 1.

Chapter.5 Oil Refining .

well adapted to their use. sulphuric or acid products which are very corrosive for metals That is why the crude oils must be purified and transformed into products having an almost constant composition. Let’s learn more about the refining and refineries… .Refining Crude Oil Why do we need to refine the crude oil? Why can’t we build engines that run on crude oil? We need to refine the crude oil because • Crude oil is an unstable mixture of several hydrocarbons in varying quantities according to the density of the products • There is not one type of crude oil but a multitude of different crudes • Different crudes contain dissolved gases. These transformations are carried out in refineries.

Kerosene. A refinery can occupy as much land as several hundred football fields. Just as a paper mill turns lumber into paper. 365 days a year and requires a large number of employees to run. Typical refinery products are LPG. Diesel. Workers ride bicycles to move from place to place inside the complex. a refinery takes crude oil and turns it into gasoline and hundreds of other useful products. A typical refinery costs billions of dollars to build and millions more to maintain A refinery runs twenty-four hours a day. Asphalt and Tar . Lubricating oil. Fuel oil. Gasoline. Paraffin wax.Introduction to Petroleum Refinery A refinery is a factory.

All refineries perform four basic steps: a) Separation (Distillation).What does refining actually do? Essentially. Moreover crude oil can be categorized under •Light •Heavy (Asphaltic) •Sweet (Non-sulfurous-less than 1% of sulfur) •Sour (Sulfurous-more than 1% of sulfur)) Crude oil processing consists of two parts Primary Processing. b) Conversion (Cracking) and c) Reforming d) Blending & Treatment Crude oil contains many components which differ in boiling points. refining breaks crude oil down into its various components. relative solubility.Output is raw (primary) products Secondary Processing.Output is commercial products which are used by us Crude Oil Primary Processing Raw Products Secondary Processing Commercial Products Separation Conversion . which then are selectively reconfigured into new products.

called gas oils. vaporize and rise to the top of the tower. Distillation causes separation of breaking up of crude oil into various petrochemicals Inside the towers. the liquids and vapors separate into components or fractions according to weight and boiling point. where they condense back to liquids. separate lower down.doe.) Source. The lightest fractions. stay in the middle. (Heavier liquids. while the heaviest fractions with the highest boiling points settle at the bottom.http://www. including gasoline and liquid petroleum gas (LPG).html . including kerosene and diesel oil distillates.gov/kids/energyfacts/sources/non-renewable/refinery.eia.Primary Processing-Separation Primary processing involves distillation at atmospheric pressure or under vacuum. Medium weight liquids.

Primary Processing-Separation AS we learnt that distillation is done using two methods a) Atmospheric distillation b) Vacuum Distillation Atmospheric distillation Vacuum distillation .

Secondary Processing-Conversion Primary products require further adjustment of chemical composition in order to become suitable for sale or petrochemical processing. A cracking unit consists of one or more tall. heat exchangers and other vessels. This transformation takes place during conversion stage. rearrange them to add value. instead of splitting molecules. The most widely used conversion method is called cracking because it uses heat and pressure to "crack" heavy hydrocarbon molecules into lighter ones. makes gasoline components by combining some of the gaseous byproducts of cracking. We’ll learn more about these processes Source. for example. a light.html .eia. Other refinery processes. which essentially is cracking in reverse. thick-walled. Conversion is directed towards maximum gasoline production Cracking unit Cracking is not the only form of conversion. The process. Alkylation’s. into high-octane gasoline components.http://www. Reforming uses heat.gov/kids/energyfacts/sources/non-renewable/refinery. horizontal vessels and tall. moderate pressure and catalysts to turn naphtha. bullet-shaped reactors and a network of furnaces. relatively low-value fraction. takes place in a series of large.doe. skinny towers that loom above other refinery structures.

significantly lowers the viscosity of heavy crude-oil residue without affecting the boiling point range. FLUID CATALYTIC CRACKING HYDROCRACKING Hydrocracking is a two-stage process combining catalytic cracking and hydrogenation. oil is cracked in the presence of a finely divided catalyst which is maintained in an aerated or fluidized state by the oil vapors. In delayed coking the heated charge (typically residuum from atmospheric distillation towers) is transferred to large coke drums which provide the long residence time needed to allow the cracking reactions to proceed to completion. wherein heavier feedstocks are cracked in the presence of hydrogen to produce more desirable products.Secondary Processing-Conversion Some of the conversion processes are shown below VISBREAKING A mild form of thermal cracking. DELAYED COKING .

For example. . Hydrocarbons in the Naptha (another petroleum byproduct) stream have roughly the same number of carbon atoms as those in gasoline.Reforming Reforming is another process designed to increase the volume of gasoline that can be produced from a barrel of crude oil. Reforming rearranges Naptha hydrocarbons into Gasoline molecules CATALYTIC REFORMING Catalytic reforming is an important process used to convert low-octane naphthas into highoctane gasoline blending components called reformates. but their structure is generally more complex.

and metals from liquid petroleum fractions. Impurities like Sulfur are also removed to make Gasoline as clean as possible CATALYTIC HYDROTREATING Catalytic hydrotreating is a hydrogenation process used to remove about 90% of contaminants such as nitrogen. . such as whether the gasoline will be used at high altitudes. refinery technicians carefully combine a variety of streams from the processing units. sulfur. To make gasoline. Among the variables that determine the blend are octane level.Blending & Treatment The finishing touches occur during the final treatment. vapor pressure ratings and special considerations. oxygen.

http://www. it gets bigger after it is popped.Some More About Refinery To Summarize every barrel of crude holds remarkable potential. Bottled Gas Petrol Other Products Liquefied Petroleum Gas (LPG) Chemical Works Heavy Fuel Oil Jet Fuel Jet Fuel Diesel Fuel & Heating Oil Gasoline Diesel Fuel Lubricating Oil Don’t be surprised to know that a barrel of crude oil after refining will provide slightly more than 1 barrel of petroleum products. For example.html#How%20used . You can see below that petroleum in its more refined form contribute heavily to the modern economy. It provides the building blocks for countless products we depend on every day. However the product mix can be changed as needed.doe. Source.gov/kids/energyfacts/sources/non-renewable/oil.eia. This gain from processing the crude oil is similar to what happens to popcorn. Wax Fuel Oil Power Station Tar (bitumen ) for roads If you are still wondering how much of what is produced here is a general breakup of the quantity of petroleum products produced in a refinery. However that would also mean something else will be produced less. the same barrel can be processed to yield more heating oil in winter.

Some More About Refinery
Types of refinery
•Topping – CDU •Hydroskimming – CDU + Reformer •Cracking – CDU + Cracker •Coking – CDU + Cracker + Coker

Some of the refineries we may not have heard of
In India
•Haldia Refinery (IOC) 116,000 bpd •Panipat Refinery (IOC), 240,000 bpd •Digboi Refinery(IOC), 13,000 bpd •Gujrat Refinery(IOC), 68,000 bpd •Barauni Refinery (IOC), 116,000 bpd •Guwahati Refinery (IOC), 20,000 bpd •Mathura Refinery (IOC), 156,000 bpd •Bongaigaon Refinery(BRPL), 48,000 bpd •Manali Refinery (CPCL), 185,000 bpd •Jamnagar Refinery (RIL), 660,000 bpd •Mumbai Refinery (HPCL), 107,000 bpd •Vizag Refinery (HPCL), 150,000 bpd •Mumbai Refinery (BPCL), 135,000 bpd •Kochi Refinery, 146,000 bpd •Numaligarh Refinery (NRL), 58,000 bpd •Mangalore Refinery (MRPL), 190,000 bpd

World's Largest Refineries
•Paraguana Refining, Venezuela - 940,000 bpd •SK Corporation, South Korea - 817,000 bpd •Reliance I, India - 661,000 bpd •GS Caltex, South Korea - 650,000 bpd •Exxon Mobil, Singapore - 605,000 bpd •Reliance II, India (proposed) - 580,000 bpd •Exxon Mobil, Baytown, USA - 557,000 bpd •S-Oil, South Korea - 520,000 bpd •Hovensa LLC, Virgin Islands - 495,000 bpd •Exxon Mobil, Baton Rouge, USA - 493,500 bpd •Shell Eastern, Singapore - 458,000 bpd

Chapter- 6 Oil Distribution

Oil Logistics
Each one of us is a user of petroleum products. Between the refinery, where heating oil, diesel, petrol and gas are produced, and the end user, there is a distribution network that is responsible for getting these products to their final destination. Making available to each person the right product, at the right time, at the right place and at the lowest cost and in optimum conditions of safety and security, is the objective of petroleum logistics.

Am overview of petroleum distribution network
Source- http://www.planete-energies.com/content/oil-gas/logistics-supply.html

it would require large numbers of road tankers covering enormous distances everyday to meet the consumption needs.000 and 300. river/canal barges. on average between 10. boats. to guarantee the maintenance of product quality and the absence of contamination by mixing.Oil Logistics. Petroleum depots are used as intermediate storage to serve a particular region. as well as special diesel fuels used by farmers and fishermen.html .http://www. and aviation fuel A petroleum depot consists of 10 to 30 steel tanks. from the refinery to the end user.com/content/oil-gas/logistics-supply. trains of tanker wagons. A tank can be as large as 60 000 m3.Petroleum Depots Taking the petroleum products directly from the refinery to the customer is a complicated task. Other advantage of having depots is smoothening demand-supply imbalance caused by increased demand or disruption in supply. Depot capacities are very variable. petrol and diesel.000 m3. The products are regularly inspected throughout the whole distribution chain. The principal products stored are heating oil. That’s where strategic stocks also come into picture The petroleum products are taken from the refineries to the depots by bulk transport methods: pipelines. In absence of any intermediary storage centres. Ariel View of Petroleum Depots Source.planete-energies. Each depot has 3 to 12 loading bays for the road tankers that will deliver the products to different consumers.

are supplied directly from the refineries by rail (tanker wagons). The major users. Let’s know more about these filling/gas station. by river and canal barges or even by pipelines carrying finished products.adventuresinenergy.com .Oil Logistics-Delivering to the End User Last step in petroleum supply chain is delivering the finished products to all the users who need them. For the other consumers like us. the distribution network involves intermediate stages. From petroleum depots. large numbers of road tankers deliver fuel to filling stations and heating oil and gas to individuals and to companies. Refinery Delivering fuel to the consumers Road Tankers Depots Hypermarket Petrol Pumps Petrol Pumps Petrol Pumps Source:http://www. industrial plants.

. where petrol is known as "gas" or "gasoline. it's called a Petrol Pump or petrol bunk. And finally in Indian English.“ Elsewhere in the English-speaking world the form "petrol station" or "petrol pump" are used. gas station or petrol station is a facility which sells fuel and lubricants for motor vehicles. the term service station ("servo") describes any petrol station. hydrogen. In Australia. fueling station. or kerosene. compressed natural gas (CNG). The term "gas station" is mostly used in the United States and Canada. biodiesel. ethanol. it is called a "gasoline stand". The most common fuels sold are gasoline (petrol) or diesel fuel. In Japanese English. Some stations carry specialty fuels such as liquified petroleum gas (LPG).Oil Logistics-Gas Station Filling station.

phmsa. from the refinery to the end user.http://primis.Gas Logistics The products are regularly inspected throughout the whole distribution chain.dot.htm . to guarantee the maintenance of product quality and the absence of contamination by mixing. Source.gov/comm/PetroleumPipelineSystems.

For example in Europe taxes on petroleum products are as high as 70% as a result of which a litre of petrol would be costlier in Europe than in US .Prices and Taxes Did you know that the price that you pay at the pump is a lot higher than the cost price of the products? Why this difference? It results from the fiscal policy in the consumer country. Price of petroleum products vary from country to country as tax rates are different. 12% of what you paid went to distribution & marketing. 18% to refining costs& profits. As you can see.78 litre) at a petrol pump in US in 2004. 23% to federal and state taxes and 47% to crude oil. Figure shows the various components of price of a gallon (3.

phmsa.gov/comm/PetroleumPipelineSystems.http://primis. Please go through the following picture to have a quick recap of what you have learnt so far.dot.htm . Source. you should have the understanding of the supply chain in Oil and Gas industry.Overall Oil & Gas Industry Supply Chain Till this point.

A quick Recap before we move to the last section We learnt so far • The importance of energy in our lives • Overview of oil and gas supply chain • What are hydrocarbons • Where do crude oil and natural gas come from • How are they produced • How are petrol. diesel etc are produced • How are they delivered to us .

7 Oil & Gas Producers .Chapter.

or develop fields that have been abandoned by the major companies. •Companies specializing in gas distribution. Example Suadi Aramco. such as OPEC (the Organization of Petroleum Exporting Countries). are also generally categorized as majors or supermajors. Transocean Sedco Forex These companies are involved in specific technical areas (geophysical surveying and analysis. which are often training centers too. Among the best known: Schlumberger. But they are not the only ones. •Small independent oil companies. A myriad of companies. supplying oil companies with personnel and equipment that the latter do not own or employ themselves. •International Oil Companies. which. the major oil companies and OPEC. depth imaging. mainly for exploration and production. The best-known are. Halliburton. production equipment ). of course. Examples include Exxon Mobil. Shell. the largest gas producer in the world •National agencies & government departments with responsibility for energy matters (For example DOE (Department of Energy) in the United States the DOE •International organization. Example. drilling.Oil & Gas Companies There are numerous actors in the world of oil and gas. the largest in terms of proven reserves and production. •Research institutes. BP. • Companies operating in the oil sector as suppliers of services to oil companies. OAPEC (the Organization of Arab Petroleum Exporting Countries) or the IEA (the International Energy Agency). in many countries.Goservices.Maurel et Prom in France. For example French Oil Institute •Independent consultants and other organizations or individuals who offer consultancy & design services and technical audits to the oil companies . such as Gazprom. manage oil production and defend national interests in the hydrocarbon sector. which take over oil fields near the end of their useful lives. organizations and consultants all play a part in the “hydrocarbon universe” •National companies. Total and Chevron/Texaco.

Some Statistics on Oil Majors Look at the graphs below to find out how the five majors compare with the other top companies in the world Profit (Million $) Revenue (Million $) Believe it or not. but Shell’s daily production is enough to meet India’s daily Energy consumption. .

This system has allowed OPEC to fix a range for oil prices and thus to maintain price stability. (what is called excess capacity). Iraq. in favor of the former. Algeria. At the beginning. to take account of the state of the world economy and its requirements. OPEC has virtually lost its ability to control prices. But since 2004. Qatar. Saudi Arabia. OPEC production has been working at almost full capacity and the possibilities of increasing production further. have become very limited. •OPEC works on the principle of limiting oil production by means of the allocation of quotas (authorized maximum quantities) to each of its members according to their reserves.Nigeria and Indonesia . Kuwait. the main objective of this organization was to redress the split of income between the oil producing countries and the oil companies. Venezuela. Venezuela. at regular or extraordinary conferences.The Institutions and Other Organization OPEC (Organization of Petroleum Exporting Countries) •Was founded in 1960 by Iraq. which have tended to soar in the recent times •Eleven members of OPEC are Saudi Arabia. As a result. Iran. These quotas are adjusted. Kuwait and Iran. Libya. the United Arab Emirates (UAE).

• • • . The IEA keeps a sharp eye on the evolution of oil markets. In 2005. economic growth and environmental protection. With regards to the Kyoto protocol. in which it recommended consumer countries to take preparatory steps to limit their oil consumption. all of which are industrialized countries and major hydrocarbon consumers. the IEA seeks to establish common ground and compromise solutions between signatories and non-signatories (the United States and Australia) of the protocol. governments of the member countries have undertaken to implement joint measures to deal with emergency situations concerning petroleum supplies. it had 26 members. In a completely new and unexpected step. at the initiative of the United States. The IEA is an autonomous unit within the Organization for Economic Co-operation and Development (the OECD). and also plays a more and more important role in the protection of the environment. In addition. It is an intergovernmental organization for the co-ordination of energy polices. and to the use of oil as an economic arm by Arab countries. The IEA works towards security of energy supplies. both to the OPEC offensive when petroleum prices rocketed at the end of 1973. They have also undertaken to pool information.The Institutions and Other Organization The International Energy Agency (IEA) • IEA unlike OPEC is an association of consumer countries. It was created in 1974. the IEA made a report public on the 28 th of April 2005. as a reaction.

8 Production & Consumption Pattern .Chapter.

UAE) boasts of 60% of total world oil reserves followed by Venezuela. Libya. Total world oil consumption as of 1st Jan 2007 were 1. Million Barrels as on 1st Jan 2007 Source.507 million barrels per day. Iraq. Nigeria and rest of world.Reserves Middle East (Saudi Arabia. Iran. Kuwait.World Oil and Gas Review .147. Russia.

Russia.Consumption US is way ahead of the pack when it comes to oil consumption followed by China. Japan.5 million barrels per day. Germany and India.World Oil and Gas Review . Total world oil consumption as of 1st Jan 2007 was 84. Thousand Barrels per Day as on 1st Jan 2007 Source.

Production Saudi Arabia claims the maximum contribution to the world oil production followed by Russia. Mexico and China. Iran. US.7 million barrels per day Thousand Barrels per Day as on 1st Jan 2007 Source. Total world oil consumption as of 1st Jan 2007 was 83.World Oil and Gas Review .

Consumption. Production and Reserves Comparison Snapshot .

http://www.com/content/oil-gas/logistics-supply/depots.planete-energies.html A cross section of an oil tank Back .

An inside view of a petrol pump/station Back .

html • http://www.gravmag.howstuffworks.com/oil.gov/basics/petroleum_ basics.doe.com/oildrilling.com/intera ctive/all_5000.html • http://science.html .adventuresinenergy.eia.html • http://www.planeteenergies.You can visit these sites for more learning • http://www.com/content/oil-gas.html • http://www.

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