1.2: Oil and Gas Industries

The role of the International and U.S. Domestic Oil and Gas Industries is to perform the safe, environmentally sound, and efficient discovery, extraction, transport, refining, and marketing of petroleum and natural gas and their refined products. Petroleum and natural gas engineers typically work to extract the crude oil and natural gas from the subsurface reservoirs and also have a secondary role supporting exploration geologists in the discovery of new oil and gas reservoirs.

The oil and gas industry can be classified into three broad segments: the upstream, the mid-stream, and the downstream sectors of the industry. This classification system is based on the direction in which crude oil and natural gas flow from the subsurface reservoirs (upstream sector) to the refineries and the markets (downstream sector) and, eventually, the consumers.

The upstream sector of the oil and gas industry is responsible for the discovery, extraction, and field processing of the crude oil and natural gas. As such, petroleum and natural gas engineers typically work in this sector of the industry. In this sector, petroleum and natural gas engineers work with geologists, geophysicists, other engineering disciplines (e.g., mechanical and chemical engineers), and other petroleum professionals (e.g., petrophysicists, paleontologists, etc.) to extract the crude oil and natural gas and to process the produced fluids to the specifications required by the field export systems (pipelines, tanker ships, etc.).

The mid-stream sector of the oil and gas industry is responsible for the export of the crude oil and natural from the field locations and for the transport of these products to the refineries. These refineries may be continents away from the original oil and gas fields. This transport process may occur onshore using pipelines, trains, or tanker trucks; over oceans and seaways using large tanker ships; and on inland lakes and waterways using smaller barges.

The downstream sector of the industry is responsible for the storage, refining, and marketing of the refined products to the consumers. Storage of the oil and gas may occur on the surface in “tank farms,” underground in old, abandoned oil and gas reservoirs, or in engineered, subsurface formations (e.g., hollowed out salt caverns). Storage may be required for crude oil as an unrefined inventory awaiting processing in a refinery or for storage as a refined product during seasonal lows in demand caused by the weather (e.g., heating fuels). Refining is the process of converting raw crude oil and natural gas into products in demand by industrial or individual consumers.

The international and U. S. domestic oil and gas industries form an integral part of the global economy. Oil and gas production influence all industrial sectors and geographical regions of the world, either as producers, consumers, or both. Figure 1.02 shows the energy mix in the United States by major primary energy source in 2015.

Global energy consumption (Figure 1.03) has a comparable energy mix as in the U.S..

Besides providing fuels to run automobiles, planes, ships or machinery, the primary energy sources shown in Figures 1.02 and 1.03 are also used to power electrical generation plants to provide secondary energy sources to consumers.

In addition to fuels, refined crude oil and natural gas provide other valuable products including kerosene for illumination, lubricants for machinery, butane and propane for recreational and industrial uses, asphalts for road construction, and feedstocks for the petrochemical industry. Figure 1.04 shows the typical product yield from a standard 42 gallon barrel of crude oil.