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Education Section: About Oil

What is oil?

Oil is a natural resource formed from the remains of prehistoric plants and animals deposited in sedimentary rocks millions of years ago.  Subjected to intense pressure and heat over millions of years, these deposits went through complex chemical changes and eventually formed the substance we call crude oil.


Oil is a liquid mixture of carbon and hydrogen compounds, which has a lighter specific gravity than the water present in the earth’s crust.  The oil (and the natural gas often associated with it) gradually migrates upwards through the layers of rock and, where only porous rocks are present above it, eventually reaches the earth’s surface.  Here the gas and lighter components escape and the residue, known as bitumen remains on the surface.


Where non-porous rocks form a “cap”, gas and oil become trapped in “reservoirs” beneath the surface and it is these deposits that are exploited by drilling today.



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How do we get oil?

Man had discovered and was using oil and its elements, such as bitumen, that were available at the earth’s surface as long as 5,000 years ago.  The Chinese were the first to "drill" for oil in the 4th Century.  Using bits attached to bamboo poles they were able to access oil reserves 800 feet below the surface.  Bamboo pipelines connected oil wells with salt springs. Heat from the burning oil was used to evaporate water, leaving salt - a valuable commodity.


In 1853 the process of oil distillation was discovered and the first "rock oil" mine was opened in southern Poland in 1854.  The potential of this new technology was quickly appreciated and the modern oil industry was born.  It was not until 1859, however, that anyone successfully developed the means to drill into the earth in order to extract oil in commercially viable quantities from subterranean reservoirs.


The first well was drilled in Titusville, Pennsylvania.  While early explorers used diviners to try to locate oil reserves, a more scientific approach was soon implemented.  Today satellite photograhy and specialist surveying techniques allow companies to map geological structures in order to assess the likely extent and viability of fields before committing to expensive exploratory drilling.  However, the success rate is still no higher than ten percent worldwide.


Total known world oil reserves are estimated to be 1,000 billion barrels. Interestingly, this figure has remained the same for the last 20 years, despite the discovery of new reserves. Annual world consumption is more than 80 million barrels of oil per day. It is impossible, however, to accurately predict when oil will no longer be a viable resource.  Improved exploration techniques, more cost effective means of extraction and processing, improvements in energy conservation and in the utilisation and recycling of the products derived from oil, all impact on its value and availability as a natural resource.



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What do we use oil for?

During the late 19th century, crude oil was mainly used to produce kerosene.  The development of the internal combustion engine in the early part of the 20th century provided a worldwide demand that has sustained the industry to the present day.  Crude oil is refined and, in addition to fuel for cars, aeroplanes and other machines, its elements are used in the production of a wide range of products including:



  • Plastic products such as bottles, bags, toys and kitchen utensils.
  • Synthetic fibres such as polyester and nylon are used in clothes, carpets, ropes, nets, etc.

  • Synthetic rubber is used as a substitute for natural rubber in tyres.


Vitamins and additives

Petrochemicals derived from refining are used in vitamins, medicine and food products.


Cleaning products

The detergents found in most cleaning products are made from oil products.



Petrochemicals are used to make inks used in printing.



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Where is oil found?

The highest producing countries in the world are (millions of barrels per day):



Oil Production

Source: IEA (International Energy Agency) January 2007



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Is all oil the same?


In its unrefined state it is called crude oil. It varies in colour from bright orange to black. There are more than thirty grades of oil whose names often indicate their origin and qualities i.e. Arab Heavy, Brunei Light.  Crude oils vary in composition and viscosity, or resistance to flow.  Light sweet crude oils with low sulphur levels command the highest prices as an above average proportion of petrol can be extracted from them.  The heavier and thicker oils tend to be cheaper and often need to be heated to improve their flow rate for transportation.  They provide a greater proportion of heavy heating oil and processing costs are higher.


  • No heat fuel oil is a type of oil which does not require heating in transit.
  • Crude condensate is a by-product of oil and gas exploitation.  It consists of a complex mixture of hydrocarbons dissolved in the saturated gas found in oil and gas wells, and is condensed out of solution when cooled. This substance is used mainly in the chemical industry.


Oil is a vital resource which is used in some form in all the countries of the world, and those that do not have viable reserves of their own must import it.  It can be transported in its unprocessed state either by pipeline or ship.  Some producing countries also refine it and then export the resulting products, usually in specially designed ships that are smaller than those which carry crude oil.


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