Lecture 2 History of the Petroleum Industry Weibo Sui College of Petroleum Engineering China University of Petroleum (Beijing)

Petroleum Petroleum includes crude oil and natural gas; Petroleum industry = oil and gas industry petroleum = petra (rock) + oleum (oil) ( Courtesy of Houston Geological Society )

La Brea Tar Pits in Los Angeles

Natural gas bubbles in Oil Seeps

Oil seeps in the sea

Oil Seeps in Oceans – Gulf of Mexico (Courtesy of National Geographic) A satellite survey published in January of 2000 counted 600+ natural oil seeps within the Gulf. A 2003 National Academies study estimated that about 980,000 barrels of oil, or about 41 million gallons, seep into the Gulf - every year. (Jamie Friedland, 2010) (Courtesy of NASA) What’s the difference between natural oil seeps and oil spills? (Deepwater Horizon Gusher)

Middle East

Weapon “Greek Fire”

“Seneca Oil” A poem…for Seneca Oil The healthful balm, from Nature’s secret spring, The bloom of health, and life, to man will bring, As from her depths the magic liquid flows, To calm our sufferings, and assuage our woes. (headaches, toothaches, deafness, stomach upsets, worms, rheumatism, dropsy, heal wounds)

China

James Young (UK), Araham Gesner (Canada)

“Drake Well”, Pennsylvania, US (1859) “Colonel” Edwin L. Drake Pioneer of First American Commercial Oil Well George Bissell Lawyer, New York James Townsend Banker, New Heaven Benjamin Silliman, Jr. Professor, Yale Univ. William A. Smith Driller

Oil lake, oil Creek and oil city

Boom and Bust

Baku, Azerbaijian.

Markets lost and gained

Henry Ford

SPINDLETOP (Texas, Jan 10 th, 1901) “The first American gusher blew in with a mighty roar that was heard around the world. For if Drake’s well signaled the birth of the oil industry, Spindletop gave birth to Age of Liquid Fuel, and in so doing changed the lives of everyone on earth.”

Pattillo Higgins (1863~1955) Patillo Higgins [courtesy Amoco Torch] Pattillo Higgins (December 5, June 5, 1955) was a businessman as well as a self-taught geologist. He earned the nickname the "Prophet of Spindletop" for his endeavors in the oil business, which accrued a fortune for many. He partnered to form the Gladys City Oil Gas and Manufacturing Company and later, established the Higgins Standard Oil Company.

Captain Anthony F. Lucas (1855~1921) Captain Anthony F. Lucas (courtesy Amoco Torch) Anthony Francis Lucas ( ) was a Croatian-born oil explorer. With Pattillo Higgins he organized the drilling of an oil well near Beaumont, Texas that became known as Spindletop. This led to the widespread exploitation of oil and the start of the petroleum age.

Spindletop, Texas America’s first gusher This scene illustrates the densest drilling in Texas. By 1903, more than 400 wells had been drilled on the dome. (Courtesy of the American Petroleum Institute)

Oil and Gas Value Chain

Players 1. Fully Integrated: engaged in all aspects of the oil and gas industry from exploration to marketing. (ExxonMobil Corporation, BP, Chevron, ConocoPhillips, Shell etc.) 2. Independent Producers: only explore and/or produce crude oil and natural gas. (Apache Corporation, Devon Energy Corporation, Pioneer Natural Resources and XTO Energy Corporation)Apache CorporationDevon Energy CorporationPioneer Natural ResourcesXTO Energy Corporation 3. Independent Refiners: purchase crude oil and process it into finished products. (Frontier Oil Corporation, Holly Corporation etc.)Frontier Oil CorporationHolly Corporation 4. Independent Marketers: purchase refined products, usually gasoline, and sell them at retail outlets. (RaceTrac, QuikTrip, Costcos, Albertson's, and Wal-Mart etc.)RaceTracQuikTripCostcosAlbertson'sWal-Mart 5. Pipeline Companies: transport crude oil, refined products, natural gas and natural gas liquids using networks of pipes and pumping or compressor stations. (Colonial Pipeline Company, Trans Alaskan Pipeline System etc.)Colonial Pipeline CompanyTrans Alaskan Pipeline System

Players 6. Service Companies: support the primary functions of the value chain. ( (Halliburton Company, Schlumberger, BJ Service etc.)Halliburton CompanySchlumberger 7. Trade and Professional Organizations: Trade organizations collect industry data, hold meetings, and advocate public policy beneficial to the industry. ( (American Petroleum Institute, American Gas Association and Independent Petroleum Association of America)American Petroleum InstituteAmerican Gas AssociationIndependent Petroleum Association of America 8. Government Agencies and Research Organizations: regulate industry operations to ensure compliance with state and Federal laws and compile industry statistics. (Department of Energy, Environmental Protection Agency etc.)Department of Energy, Environmental Protection Agency 9. National Oil Companies: government-owned oil and gas organizations (Saudi Arabian Oil Company, Petroleos de Venezuela. S.A., Petroleos Mexicanos, CNPC, SINOPEC)Saudi Arabian Oil CompanyPetroleos de Venezuela. S.A.Petroleos Mexicanos

Job Position in Petroleum Industry 1. Geoscientists 2. Petroleum Engineers 3. Mechanical Engineers 4. Chemical Engineers 5. Industrial Engineers 6. Analysts and Traders 7. Oil Drillers and Seismic Crews 8. Oilfield Workers 9. Pipeline Workers 10. Plant Operators 11. Terminal Operators and Truckers 12. Service Station Attendants 13. Landmen 14. Petroleum Attorneys 15. Petroleum Accountants 16. Human Resources 17. Information Technology 18. Administrative Assistants