Oil. Gas. Gasoline. Natural gas. Petroleum. Collectively referred to as ‘oil’, today they are foremost in American minds even with the price per barrel sliding from $145 (July 2008) to a bit less than $100 today. Americans don’t easily forget their ‘energy crunches’! 

Remember ‘1974’? 

Well, half of America was not yet born.  But what are our societal memories, as well as individual memories?

 -  ‘1974’ automatically evokes memories of long lines at gas stations, and gas stations literally running out of gasoline after the federal government imposed ‘wage & price controls’.  Usually, only after ‘oil crisis’ do we recall …

 -  “Seasons In the Sun” or “The Steak”

 -  “Tornado Super Outbreak” or East African drought

 -  “Lucy” skeleton, or Patty Hearst’s ‘Stockholm effect”

 -  first deep-space probe pictures of Mercury, or Skylab’s multi-wavelength pictures of the Sun from Earth orbit

 -  seemingly unstoppable terrorist bombings and skyjackings

 -  Even Nixon’s resignation usually comes to mind only after ‘oil crisis’.

How about ‘1978’? 

 Recalling that year reflexively evokes American (societal & individual) memories of needing an entire $20 bill for filling the gas tank. 

 -  ‘1978’ was a hammer-blow ‘oil’ reminder.  Only later do we recall …

 -  disco and Saturday Night Fever

 -  Susan B. Anthony dollar coin

 -  USSR’s Cosmos 954 satellite spreading nuclear reactor fuel in Canada

 -  cardinals selecting two Pope John Paul’s within as many months

 -  two Voyager spacecraft giving us our ‘grand tour’ of the giant gas planets

 -  that Pluto had a moon

 -  Usually, we remember the hit to our wallets before recalling even the Camp David Accords

Oil is important. It’s a historically uniquely powerful & portable energy source. We use a lot of it. Other countries also use a lot of it, and in dramatically increasing amounts. Developing nations, like China and India (with a third of world population), reminds us how oil has uniquely improved lifestyles. For the foreseeable future, the developed & developing world’s lifestyle would collapse without oil.

But one cannot coherently discuss an issue without knowing basic context. One thing’s for sure, neither the schools nor government, and not the ‘media watchdogs’ either, have yet provided our society a comprehension of ‘the world of oil’. How many Americans have taken the time to learn on their own? Where would the average American possibly think to start? Even on the web, what sites are bona-fide, and which have agendas that allow them to show only part of the picture?  This essay can help. Basic context starts with basic terms. We must start discussion by agreeing what words mean. Meanings also provide insight. Let’s learn & use some basic terms already specifically defined and well in use by people who must use precise terms within the petroleum industry – some ‘oil jargon’.

A. Five Availability terms. (aka categories of Reserves & Resources)

1. Proven Reserves: petroleum in oil fields that are already producing, because companies have drilled a sufficient number of wells to gauge the range of oil-production depths, and the span of the field in latitude & longitude. There are enough wells, that are producing for long enough time, that we can measure changes in underground pressure – the gradual slowing of the force that pushes oil out through the oil wellheads. 

 - That is, we know there’s oil, and we have a good idea how much. 

 - Examples: Prudhoe Bay, original (1910s) Texas oil fields, Wyoming’s ‘Overthrust Belt’.

 - Stats on ‘proven reserves’ are at bottom of this essay.

2. Potential Reserves: petroleum in oil fields that companies have discovered, but have not extensively drilled. There are not enough wells to fully characterize the field’s extent. The wells drilled haven’t been producing long enough to demonstrate how many years (decades) before the field will ‘dry out’.  

 - That is, we know there’s oil, and can roughly approximate, but we’re still just guessing more than we are basing conclusions on real statistically-based assessments. 

 - Examples: ANWR, various Nevada and Kansas regions, MacKenzie River Delta (Canada’s Arctic Ocean shore)

3. Sub-economic Resources: we’ve enough geologic assessment (seismic, rock maps, satellite imagery, field investigation, test wells, etc) to know that the underground has some oil. We have a pretty good idea how much, at a level of certainty similar to Potential Reserves. We know a bunch of oil is there, but can’t get it out of the ground because at least one of two things is ‘too low’. First, it could be that the price per barrel is too low to make this field profitable. Second, it could be that the current state of petroleum technology is too low to solve technological problems associated with drilling enough wells to (safely and/or economically) recover the petroleum. 

 - That is: we know it’s there, but we just can’t (yet) get at it.

 - Examples: 

       - - Shale-oil and coal-liquification (until recent technology advances made this economical)

       - - deep-sea Brazilian oil deposits (though this technology is rapidly advancing)

       - - oil fields in which well-head pressure has dropped too low, such that it literally costs more to pump out the oil than the oil sells for; this example type is characterized by being always a moving financial & logistical target, balanced also against costs of shutting down a field and then starting production back up again.

4. Undiscovered Resources: areas of the world in which we simply haven’t explored for oil. Reasons can be technological shortcomings, climatic challenges, and political issues like crime, corruption, regulation, lawsuits, international sovereignty, or warfare.

 - That is, we lack all data with which to say whether there is – or is not – any oil there.

 - Examples:   

       - - regions of western Nevada, where environmentalists ensure ‘grouse mating season’ interrupts all petroleum exploration activities; 

       - - areas of northern South America where exploration is unsafe due to crime and warfare; 

       - - most all of China; national sovereignty of the Nation-State System confers on Beijing the right to explore mostly only with China’s own nescient oil industry.

5. Off-limits Resources: these oil fields are in various stages of discovery and characterization; they can be potential reserves or undiscovered resources. Domestic or international politics prevents drilling production wells, and/or using already-existing production wells, and/or outright prevents even pre-drilling exploration.

 - That is, the only real limitations to drilling & production are purely political.

 - Examples:   

       - - the USA continental shelf within USA’s Economic Exclusion Zone, barred by USA law; 

       - - the very shallow South China Sea, with it’s internationally contested Economic Exclusion Zones, contested by China, Philippines, Malaysia, and Vietnam, among other countries.

B. Six Production & Distribution terms.

1. drilling rig: collection of metal structures and pipes, to drive diamond-studded drilling bits into Earth, either to explore for oil deposits or to tap found oil fields for greater production out of that field. On-shore rigs are two stories tall, with a derrick towering more than a hundred feet even above that. Off-shore drilling rigs are situated on floating, relatively sea-stable platforms. 

 - On-shore rigs cost about $30 million to build or replace, and operate at about $33 thousand per day. 

 - Off-shore rigs cost about $1.5 billion to build or replace, and operate at about $250 thousand per day.

 - Current technology allows wells to depths of 25,000 feet down; a few to 35,000 feet; max depth of not quite 7 miles. 

 - Generally, costs increase as well depth increases.

 - Drillbits do wear out. Even diamonds grind down after continually eating into hard rock, pressed by the weight of all the hundred-foot pipe sections between the bit and the rig. All those pipe sections gotta get hauled back up, and stacked for re-use when a new bit goes back down, before workers can screw a new bit on to the bottom of the bottom pipe. Then the rig workers start lowering pipe back down, gently, to the bottom, to resume drilling deeper.

 - Pipes do break. Then workers gotta pull all still-connected pipe sections back outta the hole. Then the engineers decide whether to send a grapple down on the bottom of a pipe to pull out the broken portion of sections – and the valuable diamond-studded drill bit at the bottom of the hole. After pipe recovery, then drilling can commence again. What of lost time, money, and all other effort, if that broken segment of pipe – and the drillbit at it’s deepest end – is simply not recoverable?

 - It’s actually pretty amazing, to think of: a long metal pipe, unseen through thousands of feet into Earth, in aprox 100-foot sections threaded together in a string up to seven miles long, making revolutions-per-minute to grind a diamond-studded drill bit against hard rock … and not continuously breaking! 

2. refinery: a factory to take raw crude, and separate it into it’s various grades of petroleum products, from kerosene & butane to gasoline & diesel fuel, to lubricating oils and petroleum jelly quality of products. Refineries also separate out the various levels of impurities (like water and minerals).

3. pipeline: above-ground or buried pipes. They move crude oil from wells to refineries, with or without transshipment between trucks, trains, and (ship) tankers. They also take refined grades of petroleum from refineries to oil-fired plants and various distribution points. Examples:

 - The probably most-famous pipeline is the Trans-Alaska Pipeline that ships crude oil from Prudhoe Bay oil field to tanker ships in ports in southern Alaska. 

 - Pipelines are legion between Texas-Louisiana origin and East Coast destination. Mostly, they ship refined products from refineries to customers in the DC-Boston Megalopolis.

 - Newer pipelines now cross the northern plains and Canada’s plains. Mostly, they bring oil to USA customers from fields & refineries in/near the Rockies and from Canada’s western plains.

4. horizontal drilling: the technique, increasingly developed in the last decade, of drilling a well at an angle other than ‘straight down’. Three decades ago, the angle variation was limited to plus or minus about three degrees from vertical. Today, there is no real technological limit. Thus, China’s oil drilling rigs sited between Florida and Cuba, could theoretically be drilling USA oil from within Cuba’s Offshore Economic Exclusion Zone, not merely pumping oil from Cuba’s side of an oil field that exists on both sides of the Zone boundary. Drilling another country’s oil was one of the factors behind 1970s & 1980s tensions between Iraq & Kuwait; two of the oil fields spread on both sides of the Iraq-Kuwait border. Horizontal drilling costs about twice as much as vertical drilling.

5. 3-D Seismic Exploration: a technique geologists use to ‘map’ underground rock formations. Crews set up seismic recorders in a pattern across the land. Then they set up ‘something’ to make a very low-level earthquake. The ‘something’ can be sticks of dynamite, or a truck with a ground ‘thumper’ on the underside. The seismic recorders pick up the vibration as it echoes off different rock layers that have different densities; echoes are pronounced from boundaries between the layers. 

 - Recent technological advances have also allowed geologists to detect whether given ‘pockets’ of folded rocks contain oil or water or other substances – or are dry. This saves the time & cost of drilling a well into promising pockets that contain no oil after all. The science is not perfect – not yet, anyway – and not all geologists are equally trained/experienced at interpreting how the signals can now reveal changes in travel time that indicate the nature of material the ground wave traveled through.

 - Other technological advances, such as within computer modeling softwares, have allowed geologists to go from two-dimensional depth-maps to three-dimensional computer-aided visualization. The leap to three dimensional visualization has given geologists not only new visualization tools for assessment, but also for clearly explaining, to investors and company managers, why they assess oil is (or is not) at any particular location and depth. (Recall, drilling for oil isn’t just about the right spot on the ground, it’s just as important to drill to the right depth!)

 - Overall, recent technological advances in the exploration arena have dramatically reduced the risk of drilling ‘dry holes’ in the process of drilling a fields first exploration wells. That ‘dry hole’ rate in ‘wildcatting’ used to be nine in ten wells. Now the rate is down to about three in ten.

6. porosity & permeability: much like water in a jar filled with pebbles, oil is found in the spaces between the rocks. Porous rocks have pretty decent ‘pockets’ for oil to reside between rocks. Permeable rocks allow oil to flow from one location to another. A company can drill a well into porous rocks with lots of free oil that flows out, but if the rocks aren’t permeable, the well can only realize the oil very close to the well shaft before going dry. Oil companies developed ‘fracing’ – a way of forcing more permeability into oil-bearing rock layers. The more porous & permeable the rock, the longer an oil well is producing oil at least possible cost…

C. ‘Proven Reserves’, by the numbers, over 50 years, world-wide:

- 1953: 115,117 million barrels

     - - top tier: 25% USA,

     - - 2nd tier: 16% Kuwait, 16% Saudi Arabia, 11% Iran, 10% Iraq, 8% Venezuela

     - - Remainder: 14% all lesser possessors

- 1979: 625,356 million barrels

     - - top tier: 27% Saudi Arabia

     - - 2nd tier: 12% Kuwait, 10% USSR, 7% Iran, 6% Iraq, 5% UAE, 5% Mexico, 4% USA, 4% Libya, 

     - - Remainder: 3% China, 3% Venezuela; 14% all lesser possessors

- 2002: 1,025,336 million barrels 

     - - top tier: 26% Saudi Arabia

     - - 2nd tier: 11% Iraq, 10% Kuwait, 9% Iran, 8% UAE, 6% Venezuela, 5% Russia

Observations:

 - dramatic increase, over 50 years, of at-the-time-unused ‘proven reserves’, despite ever-increasing oil consumption

 - exploration just keeps finding more oil

 - drop in USA ‘proven reserves’ is due to USA legislating & litigating itself out of ability to seriously explore, combined with ‘rest of the world’ exploring as fast as allowed by money and technology and training

[Fairness in advertising: Duck Archer is not, and never has been, employed in (or by) the petroleum industry. Nor has he ever been employed in (or by) any of the industry’s related industries (like parts manufacturers, for example).  As well, he has never been employed in (or by) any organization opposed to the petroleum industry.  Indeed, Duck Archer spends as much and as little of his money for all petroleum products as anybody else in the USA. The only beneficial relationship Duck Archer has with the petroleum industry is living with this historically abundant energy source, and plastics and all the other amazing petroleum spin-off products that make today’s American living the wealthiest & most comfortable in all history. This essay is intended, thus purely, to knock some air out of the hype, and strike some sense into the nation’s petroleum debate.]