PETROLEUM INDUSTRY OVERVIEW

The petroleum industry includes the global processes of exploration, extraction,

refining, transporting and marketing petroleum products. The industry is usually
divided into three major components: upstream, midstream, and downstream.

Upstream usually includes exploration, development, and production of crude oil

and natural gas. The midstream segment, as its name implies, encompasses
facilities and processes that sit between upstream and downstream segments.
Midstream activities can include processing, storage, and transportation of crude
oils and natural gas. Downstream activities usually include refining/hydrocarbon
processing, marketing, and distribution.

Exploration and production together is referred to as E&P. Exploration is about

finding underground reservoirs of oil and gas (oil and gas fields), and includes
structural geology studies, prospecting, seismic surveys, drilling activities that
take place before the development of a field is finally decided.

Determination of the number and location of reservoirs, types of wells, assessment

of oil recovery mechanism, design of wells to meet production requirements,
process facilities, infrastructure facilities, terminal/export facilities, and operating
and maintenance strategies is done in the development stage.

Production is the process of producing the discovered petroleum using drilled wells
through which the reservoir’s fluids (oil, gas, and water) are brought to the surface
and separated. In fact, bringing the well fluids to the surface and preparing them
for use in refinery or processing plants are called production.

Hydrocarbon fluids and gases are processed and separated into marketable
products or feedstock for the petrochemical industries in crude-oil refineries and
gas-processing plants. More than 2500 refined products are generally produced
from crude oil in the petroleum refining industry.

Service providers provide storage facilities at terminals throughout the oil and gas
distribution systems. These facilities are most often located near producing,
refining, and processing facilities and are connected to pipeline systems to
facilitate shipment when product demand must be met.

While petroleum products are held in storage tanks, natural gas tends to be stored
in underground facilities. In the other words, storage is used by all sectors of the
petroleum industry. Liquid petroleum products may be stored in above-ground or
underground steel or concrete tanks or in underground salt domes, mined
caverns, or abandoned mines.

Crude oil and gas are transported to processing facilities and from there to end-
users by pipeline, tanker/barge, truck, and rail. Pipelines are the most economical
transportation method and are most suited to movement across longer distances,
eg, across continents.
Tankers and barges are also employed for long-distance transportation, often for
international transport. Rail and truck can also be used for longer distances but
are most cost-effective for shorter routes.

CLASSIFICATION AND CHARACTERISATION OF PETROLEUM

In the petroleum industry, crude oil can generally be classified by the geographic
location it is produced in (eg, West Texas Intermediate, Brent, or Oman), its
gravity, sulphur content, etc.

Different types of petroleum contain different chemical compositions and

properties such as density, viscosity, colour, boiling point, pour point, etc., and
can vary widely among different crude oils. There are various methods of
categorising petroleum fluids. These include: -

1. Classification according to sulphur content

Sulphur is an undesirable impurity in crude oil and natural gas, and when it is
burned, forms sulphur dioxide, a gas that pollutes the air and forms acid rains. On
the basis of sulphur content, petroleum is classified as sour or sweet. Crude oils
with less than 1wt% sulphur content and more than 1wt% sulphur content are
called sweet and sour crude oils, respectively.

2. Classification according to petroleum base.

This is a very simple qualitative method which has been in use for many years.
The base is determined by observing the behaviour of the liquid residue remaining
after the lighter fractions (of lower boiling-point) have been distilled off from the
crude sample.

If the solid separating as the residue cools as a wax, the crude is described as
paraffinic base. If no wax separates but the cooled residue consists of asphaltic
material (bitumen) the crude is described as asphaltic base (or naphthenic base).
Crudes yielding cooled residues containing both wax and asphaltic material are
described as mixed base. It is found that the great majority of crudes are mixed
base.

This simple scheme is fairly primitive, and can be misleading, although it has long
been widely used. The term ‘naphthenic’ for asphaltic base crudes originated
through a misconception, and does not necessarily reflect the chemical
composition of the crude, as it has been found that some crudes classified as
asphaltic base contain only relatively small amounts of naphthenes while having
high aromatic contents.

3. Classification by characterisation factor.

This method is a quantitative one, and is based on the work of Watson, Nelson
and Murphy of Universal Oil Products (UOP). These workers defined a
characterisation factor (CF) based on the behaviour of the crude in a standard
IP/ASTM distillation procedure. (IP = Institute of Petroleum, ASTM = American
Society for Testing Materials).

The characterisation factor, given the symbol K or KW, is defined by:

Where
TB = average boiling point of crude (°R) at atmospheric pressure
d = specific gravity of crude (at 60°/60°F)

The average boiling point, TB, is obtained from the IP/ASTM distillation test data
by a prescribed averaging procedure.

It is found that:
Paraffins have K values above 12.0
Naphthenes have K values between 11.0 and 12.0
Aromatics have K values less than 10

K values have proved valuable for correlating properties of crudes and petroleum
fractions.

4. Classification according to API gravity

API gravity or density is defined by:

The API gravity is used to classify oils as light, medium, heavy, or extra heavy. As
the weight of oil is the largest determinant of its market value, API gravity is
exceptionally important. The ⁰API values for each weight are as follows:

• Light crude oil: ⁰API > 31.1

• Medium crude oil: ⁰API between 22.3 and 31.1

• Heavy crude oil: ⁰API < 22.3

• Extra heavy crude oil: ⁰API < 10

It is important to note that not all parties use the same grading.

5. Classification according to Solution/ dissolved Gas Oil Ratio

The solution gas-oil ratio (GOR) is a general term for the amount of gas dissolved
in the oil. Heavy oils (lower API gravity) have lower capacity to contain dissolved
gas than lighter oils therefore, they have low GOR.
PETROLEUM PRODUCTS AND UTILISATION

Petroleum is recovered mostly through oil drilling after studies of structural

geology, sedimentary basin analysis, and reservoir characterization (mainly in
terms of the porosity and permeability of geologic reservoir structures) are
completed.

Petroleum is refined and separated, most easily by distillation, into a large number
of consumer products, from gasoline (petrol) and kerosene to asphalt and
chemical reagents used to make plastics, pharmaceuticals, solvents, fertilizers,
pesticides, dyes, and textiles.

In fact, petroleum is used as fuel (primary source of energy) and in the

manufacture of a wide variety of materials, and it is estimated that the world will
need it until scientists can find and develop alternative materials and technologies.

Petroleum products are materials derived from crude oil (petroleum) as it is

processed in surface facilities and oil refineries. The majority of petroleum is
converted to petroleum fuels, which includes several classes of fuels.

According to the composition of the crude oil and depending on the demands of
the market, refineries can produce different shares of petroleum products.
Refineries also produce other chemicals, some of which are used in chemical
processes to produce plastics and other useful materials. Since petroleum often
contains sulphur-containing molecules, elemental sulphur is also often produced
as a petroleum product. Carbon, in the form of petroleum coke,
and hydrogen may also be produced as petroleum products.

Typical refinery products include: -

 Gaseous fuels such as propane.

 Liquid fuels such as automotive and aviation grades of gasoline, kerosene,
various aviation turbine fuels, and diesel fuels.
 Lubricants such as light machine oils, motor oils, and greases.
 Paraffin wax and slack wax.
 Sulphur
 Bulk tar and asphalt.
 Petroleum coke.
 Petrochemicals and petrochemical feedstocks. Petrochemicals are organic
compounds that are the ingredients for the chemical industry, ranging from
polymers and pharmaceuticals.

Numerous products are made from petroleum waste by-products including:

fertilizers, linoleum, perfume, insecticide, petroleum jelly, soap, vitamin capsules.
PETROLEUM OCCURRENCE AND RESERVOIRS

Petroleum occurs in solid, liquid or gas form. The colour of crude oil may range
from colourless to greenish-yellow, reddish, and brown to black. Light crude oils
are transparent, rich in gasoline, and the most valuable, while heavy crude oils
are dark coloured, viscous, and less valuable.

Petroleum systems occur in reservoirs within sedimentary basins—those areas of

the world where subsidence of the Earth’s crust has allowed the accumulation of
thick sequences of sedimentary rocks. Petroleum is composed of compressed
hydrocarbons, formed millions of years ago in a process that began when aquatic
plant and animal remains were covered by layers of sediments (particles of rock
and mineral).

The critical elements of a petroleum system are: -

(1) The source and source rock. The source is dead animal and plant matter.
This organic matter is incorporated into rock sediments and is continually buried
to form the source rock or “the Kitchen.” The source rock contains the organic
precursors which were converted into petroleum reservoir fluid under the
influence of temperature and pressure.

(2) The migration path, which is the path taken by the crude oil—or immature
crude oil that is not fully matured—from the source rock to the reservoir.
(3) The reservoir, which is a rock formation—such as sandstone, limestone,
chalk, or dolomite—that has sufficient porosity to store the fluid and sufficient
permeability for fluid mobility.

(4) The seal, which is impermeable basement rock and cap rock that prevent the
escape of the petroleum. Examples include mudstones, salt and other cemented
impermeable rocks

(5) The trap. This is a geometrical structure that contains petroleum. Examples
include; anticline trap, fault trap, salt dome trap, stratigraphic trap.

These critical elements of a petroleum system are also commonly referred to as

the five steps to heaven.

THE RESERVOIR

The critical part of the crude oil and/or natural gas system is the reservoir. Crude
oil cannot be retained as an accumulation unless there is a trap, and this requires
the boundary between the cap rock or other sealing agent but the exact form of
the boundary varies widely.

The simplest forms are the flat-lying convex lens, the anticline, and the dome,
each of which has a convex upper surface. Many oil and gas accumulations are
trapped in anticline or dome structures that are generally more easily detected
than some other types of traps, such as fault traps and salt dome traps. Thus,
reservoir evaluation is an important aspect of oil and gas production.

A reservoir is a subsurface porous permeable rock body or formation that has been
created by the sequential steps of deposition, conversion, migration, and
entrapment and has the ability to store fluids, such as natural gas, crude oil, and
water. As such, each reservoir will exhibit individual properties. Indeed, within a
reservoir, these properties may even change with longitudinal extent and with
vertical height of the reservoir.

Typically, reservoir rocks exhibit porosity—a measure of the openings in a rock in

which crude oil and natural gas can exist. Another characteristic of reservoir rock
is that it must be permeable—the pores of the rock must be interconnected
thereby allowing so that crude oil and/or natural gas mobility within the reservoir
and thence flow to a production well.

A reservoir with high porosity but low permeability is a general indication of

immobility of the gas and/or oil within the reservoir. In such a case, variations in
gas composition and crude oil composition from different locations within the
reservoir might be expected. Thus, reservoirs that are to be developed for crude
oil and/or natural gas production are characteristically large and extensive in
volume with a good fluid-holding capacity (high porosity) and also have the
capability to transmit fluids once penetrated by geological disturbances (such as
earthquakes) or anthropological disturbances, such as drilling a well into the
reservoir.