INTRODUCTION TO OIL AND GAS INDUSTRY

INTRODUCTION TO OIL AND GAS INDUSTRY

1. FORMATION OF OIL AND GAS

Hundreds of millions of years ago, organic materials such as prehistoric plants and animals
accumulate at bottom of oceans, rivers and swamps. As water is deep whatever dies at top
sink to the bottom which leads to pile up of these organic materials
Living things are made of Proteins, Carbohydrates, Lipids, Fats and Lignin.

When these decomposing organic are getting compressed under more and more material in an
anoxic environment, they break down. The organic matter dies and finds its way to a place
without oxygen to avoid regular decomposition as the sea floor in ocean is not very
oxygenated. More and more dead materials build up leading to piling and adding more
pressure. The pressure of all the materials forces the water out and leads the organic materials
to break down. Due to the high heat and pressure, chemical reaction takes place forming
kerogens1. Over millions of years with more heat and pressure the catagenesis2 take place
(Kerogens cooks into HC chains). These are stuck in the pores of surrounding rock.

Depending on the amount of pressure, heat and type of organisms, determines if the
organisms will become natural gas or oil. The more heat, lighter the oil. If there is even more
heat and the organisms were mostly plants, natural gas is formed. Once the oil and natural gas
is formed, it migrates through pores in the rock until it gets trapped under cap rock and clay
where the oil can no longer get through. This is where we find oil and gas today

1. Kerogens: Solid organic matter in sedimentary rocks consisting of an estimated 1016 tons of carbon. It is the most
abundant source of organic compound on earth

2. Catagenesis: Process of cracking which results in conversion of organic kerogens into HC (Hydrocarbon)

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1.1. How Are Oil/Natural Gas Formed?

Stage 1 - All of the oil and gas we use today began as microscopic plants and animals
living in the ocean millions of years ago. As these microscopic plants and animals
lived, they absorbed energy from the sun, which was stored as carbon molecules in
their bodies. When they died, they sank to the bottom of the sea. Over millions of
years, layer after layer of sediment and other plants and bacteria were formed.
Stage 2 - As they became buried ever deeper, heat and pressure began to rise. The
amount of pressure and the degree of heat, along with the type of biomass, determined
if the material became oil or natural gas. More heat produced lighter oil. Even higher
heat or biomass made predominantly of plant material produced natural gas.
Stage 3 - After oil and natural gas were formed, they tended to migrate through tiny
pores in the surrounding rock. Some oil and natural gas migrated all the way to the
surface and escaped. Other oil and natural gas deposits migrated until they were
caught under impermeable layers of rock or clay where they were trapped. These
trapped deposits are where we find oil and natural gas today.

1.2. Where is Petroleum Found?

Oil and natural gas reserves are found in many parts of the world. In the past, demand
was low and reserves were easy to find. In fact, the first users of oil depended on
surface seepage for their supplies. However, as demand has increased, all the easy-to-
find oil has been used.

Today, oil exploration takes place in some of the most challenging places on earth.
We are now looking for new oil reserves thousands of feet under the ocean and in
areas of climatic extremes. (You’ll find more information on these technologies under
"Exploration and Production."

1.3. Will We Run Out?

We don't have to worry about running out of oil or natural gas any time soon.

At our current rate of use, we have oil and natural gas reserves to last 60-90 years.
And while the total amount of oil and natural gas isn't increasing, our ability to find
and extract oil and natural gas from new sources expands almost every day!

We now produce natural gas from buried coal seams, oil and natural gas from deep
deposits located miles beneath the surface of the earth, and in the deep ocean,
hundreds of miles offshore and in water depths greater than 10,000 feet. (You’ll find
more information on these technologies under “Exploration and Production.”)
Finding economical ways to extract oil from coal tars and oil shales could provide
supplies for hundreds of years.

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The oil and natural gas industry is also investing in alternative energy such as wind,
solar, geothermal and biomass to make these potential energy resources more reliable
and affordable to meet the growing need for energy.

2. EXPLORATION AND PRODUCTION

2.1. INTRODUCTION

Exploration is the process of trying to find accumulations of oil and natural gas
trapped under the Earth’s surface. Production is the process of recovering those
hidden resources for processing, marketing and use.

To understand the challenges the oil and natural gas industry faces in exploration and
production, it helps to understand how oil and gas accumulations – often called
“reservoirs” – develop in the first place:

• Oil and natural gas are formed when decaying plants and micro-organisms are
trapped in layers of sediment and – over the course of millions of years –
become buried deep within the earth, where underground heat and pressure
turn them into useful hydrocarbons, such as oil and natural gas.
• The layers of rock in which hydrocarbons are formed are called source rocks.
High pressures underground tend to squeeze hydrocarbons out of source rocks
into what are called reservoir rocks. These are rocks, such as sandstone, which
feature pores large enough to permit fluids like oil, natural gas, and water to
pass through them. Since oil and natural gas are less dense than water, they
will float upward toward the surface. If nothing stops this migration, the oil
and natural gas may reach daylight through what is called a surface seep.
• More often, however, hydrocarbons’ path upward is blocked by a layer of
impermeable rock, such as shale, or by some other geologic formation. These
trap the oil and natural gas, either in an underground pocket or in a layer of
reservoir rock, so that it may be recovered only by drilling a well.

2.2. EXPLORATION

There isn't any way to be absolutely sure where new oil and natural gas reserves are
located, so petroleum engineers need to collect clues as to what lies deep beneath the
earth's surface. Advanced technology has revolutionized the exploration process for
oil and natural gas, and helps them pinpoint potential reserves with greatly improved
accuracy. This results in fewer wells, and lowered exploration costs.

Engineers can gather above-ground clues using airplanes and satellites to map the
surface, to identify promising geological formations, and to look for oil and natural
gas seeps. Ships can do the same for the ocean floor.

But engineers often get much more useful information by looking at geological
structures and rock properties below the surface. They use a number of strategies
including:

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• Seismic Surveys
Seismic surveys are done by sending high-energy sound waves into the ground and
measuring how long they take to reflect back to the surface. Since sound travels at
different speeds as it passes through different materials, computers can use seismic
data to create a 3-D map of what lies below the surface.

Geologists and geophysicists – known as "explorationists" – use these 3-D seismic

images to look for accumulations of oil and natural gas. Engineers then use the data to
plan the safest, most cost-effective well path to the reservoir.

Once a reservoir has been located and put into production, a series of 3-D seismic
surveys can be taken over time to see if all of the oil and natural gas reserves are
being efficiently drained. If not, additional wells can be drilled to produce these
bypassed pockets of reserves.

While seismic data are extremely useful to geologists, these surveys are also very
expensive.

• Exploration Wells
When the data indicate a likely site for oil and natural gas reserves, an exploration
well is often drilled. Rock samples from the well are brought to the surface and
analyzed. Well logs measure the electrical, magnetic and radioactive properties of the
rocks.

By examining this information, a geologist can learn a great deal about the sub-
surface structures and whether or not the site is likely to produce oil and natural gas in
economic or "paying" quantities.

• Gravity and Geomagnetic Surveys

These relatively inexpensive techniques can identify potential oil and natural gas
bearing sedimentary basins and structures. High-resolution aero-magnetic surveys
done by special aircraft can also show fault traces and differentiate between different
rock types near the surface.

2.3. CREATING A DRILL SITE

Drilling for oil and natural gas is a complex process, but advanced technology has
made the job more efficient and productive while providing less impact on the
environment. Want to see how the oil and gas industry does it? Click each numbered
component in the drawing to learn more.

• Some people believe that oil and natural gas companies can explore for oil
wherever they want. This is not true. Companies must secure permission from
the owner of the mineral rights, whether the owner is a private citizen or the
government. Many mineral owners and the government allow oil and natural
gas companies to compete to drill on their land. The companies assume all the
costs and risks of drilling and, in return, pay the mineral owners a portion of
what they find and a signing bonus to secure the drilling rights. The share of

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the production paid by the company to the mineral owner is called a royalty
payment.
• The drilling derrick is used to position and support the drill string. Modern
drilling equipment comes in a wide range of sizes. Many wells can be drilled
with equipment that requires far less space than in the past.
• Drill rigs now run on electricity to supply the power to turn the bit and raise
and lower the drill pipe and casing. Since most drilling occurs in remote areas,
the electricity is supplied by electric power generators that run on diesel fuel.
These generators make drilling rigs much quieter than in the past.
• The drill bit uses three conical shaped cutting surfaces to grind rock into rice-
sized particles. The newest bits drill 150 percent to 200 percent faster than
similar bits just a few years ago! The drill string consists of lengths of pipe
fastened to each other and to the drill bit. The drill string transmits power from
the top drive to the drill bit.
• As the drill cuts into the rock, drilling mud is added to the hole. This helps
cool the drill bit, and the mud is circulated to bring cuttings to the surface. The
weight of the drilling mud keeps the hole open. It also helps counteract the
pressure of any gas or fluids encountered along the way, in this way
preventing a well from loss of control or "blow out.”
• Protecting the aquifer from contamination is a major concern of the oil and
natural gas industry. Casing made of steel or high-tech alloys is lowered into
the hole and cemented into place to protect fresh water aquifers. The casing
also keeps the hole open so that oil and natural gas can be brought to the
surface.
• To reduce waste, the drilling mud is passed through a sieve where the ground
rock particles or cuttings can be removed. Then the mud is recycled back into
the hole.
• Dirt and rock cuttings are removed from the hole and temporarily stored
nearby. Holding areas are carefully sited, lined and often times covered with
nets to protect local wildlife.
• All aspects of the drilling operations are closely monitored to ensure efficient
drilling and safety. Electronic sensors measure drilling rates, vibration,
pressure, rock type, mud properties and many other drilling parameters.
Computers monitor operations and collect data from inside the well. With
advanced communications technology, drilling personnel can share and review
this data with engineers and geologists located thousands of miles away. If a
problem is detected, the rig can be safely and quickly shut down.

2.4. DRILLING RIGS

• There are many different types of drilling rigs. Which rig selected depends on the
specific requirements of each drill site. Roll your mouse over each picture to see
what kind of rig it is.
• Land Based Drilling Rigs - The land-based drilling rig is the most common type
used for exploration. This site is using a conventional, land-based drilling rig that
is smaller and more efficient than those used in the past.
• Slim Hole Drilling Rig - A conventional drill bore might be 18 inches in
diameter; a slimhole bore can be as little as 6 inches. A slimhole well drilled to

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14,760 feet may produce one-third the amount of rock cuttings generated by a
standard well. The size of the drill site can be as much as 75 percent smaller, since
slimhole equipment requires less space than conventional equipment. However,
slimhole drilling is not technically feasible in all environments.
• Coiled Tubing Drill Rig - Conventional wells are drilled using sections of rigid
pipe to form the drill string. In some cases, coiled tubing technology can replace
the typical drill string with a continuous length of pipe stored on a large spool.
This approach has many benefits, including reduced drilling waste and minimized
equipment footprints, so it is especially useful in environmentally sensitive areas.
This technology is best suited to re-entering existing wells, and when multiple
casing wells are unnecessary.
• Jackup Drill Rigs – These rigs may be used in relatively shallow water -- less
than 300 feet deep. A jackup rig is a floating barge containing the drilling
structure that is outfitted with long support legs that can be raised or lowered
independently of each other. The jackup, as it is known informally, is towed onto
location with its legs up and the barge section floating on the water. Once at the
drilling location, the legs are jacked down onto the seafloor, and then all three legs
are jacked further down. Since the legs will not penetrate the seafloor, continued
jacking down of the legs raises the jacking mechanism attached to the barge and
drilling package, and slowly lifts the entire barge and drilling structure to a
predetermined height above the water. These rigs are extremely strong, since they
have to withstand ocean storms and high waves. These rigs are moved by simply
by moving the legs up and down, which makes them cost-effective and easily
shifted out of harm's way during storms.
• Semi-Submersible Rigs – Drilling in water deeper than 300 feet demands some
kind of floating platform to hold the rig. Semi-submersible rigs are floating
vessels supported on large pontoon-like structures that are submerged below the
sea surface. As with jackup rigs, the operating decks are elevated as much as 100
or more feet above the pontoons on large steel columns. This design has the
advantage of submerging most of the area of components in contact with the sea
and minimizing loading from waves and wind. Semisubmersibles can operate in a
wide range of water depths, including deep water. Semi-submersibles can either
be attached to the ocean bottom using strong chains and wire cables or may utilize
dynamic positioning to remain stationary during drilling without anchors.
• Drill Ship - For exploration targets farther offshore, specially designed rigs
mounted on ships can drill a well in water depths up to 10,000 feet. These rigs
float and can be attached to the ocean bottom using traditional mooring and
anchoring systems, or utilize dynamic positioning to remain stationary during
drilling without anchors.

2.5. ADVANCED DRILLING TECHNIQUES

Oil and natural gas wells have traditionally been drilled vertically, at depths ranging
from a few thousand feet to as deep as five miles. Today, advances in drilling
technology allow oil and natural gas companies to reach more reserves while reducing
environmental impact by:

• reducing the surface “footprint” of drilling operations,

• drilling smaller holes and generating less waste

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• creating less noise,

• avoiding sensitive ecosystems, and
• Completing operations more quickly.

Here are some technologies used:

Horizontal Drilling - Horizontal drilling starts with a vertical well that turns
horizontal within the reservoir rock in order to expose more open hole to the oil.
These horizontal “legs” can be over a mile long; the longer the exposure length, the
more oil and natural gas is drained and the faster it can flow. More oil and natural gas
can be produced with fewer wells and less surface disturbance. However, the
technology only can be employed in certain locations.
Multilateral Drilling - Sometimes oil and natural gas reserves are located in separate
layers underground. Multilateral drilling allows producers to branch out from the
main well to tap reserves at different depths. This dramatically increases production
from a single well and reduces the number of wells drilled on the surface
Extended Reach Drilling - Extended Reach Drilling - Extended reach drills allow
producers to reach deposits that are great distances away from the drilling rig. This
can help producers tap oil and natural gas deposits under surface areas where a
vertical well cannot be drilled, such as under developed or environmentally sensitive
areas. Wells can now reach out over 5 miles from the surface location. Offshore, the
use of extended reach drilling allows producers to reach accumulations far from
offshore platforms, minimizing the number of platforms needed to produce all the oil
and gas. Onshore, dozens of wells can be drilled from a single location, reducing
surface impacts.
Complex Path Drilling - Complex well paths can have multiple twists and turns to
try to hit multiple accumulations from a single well location. Using this technology
can be more cost effective and produce less waste and surface impacts than drilling
multiple wells.

2.6. WELL EVALUATION

Rock and fluid properties will determine how much oil and natural gas can be
recovered from a reservoir. After an exploratory well has been drilled, it is evaluated
to determine if there is enough oil and natural gas in the reservoir to make it
economically feasible to initiate recovery operations.

Drill Cuttings and Core Samples - As the drilling mud is brought to the surface, it is
run through a sieve to removed the drill cuttings (pulverized rock) before the mud is
recycled down into the well. Small pieces of rock are selected for microscopic
analysis to determine the type of rock being drilled, how porous it is, and whether oil
is present. The drilling mud also is analyzed with sensors to see if trace amounts of oil
or natural gas are present — an indication of a possible accumulation at depth. In the
past, rock cuttings were the principal source of well information.
Well Logging - A special bit can be used to cut a cylindrical piece of rock that can be
brought to the surface for analysis. The core is sent to a laboratory where the exact
porosity and permeability can be determined. This gives a good indication of how
well oil or natural gas would flow through the rock. Fluid samples can be taken and
analyzed to determine the amount and type of hydrocarbon present in the rock.

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Wells are completed for production if the value of the recoverable oil and/or natural
gas is greater than the cost of drilling and producing them and delivering them to
market. If not, the well is plugged In accordance with industry standards and federal
or state requirements (depending on the location) and the site is restored.

2.7. COMPLETION

Preparing a well for production is a complex process. Press the Play button to see
each step in the process.

Step 1 - A pipe, called the casing, is lowered down the drilled hole. Sections of casing
fit together just like the drill pipe. Cement is then pumped through the bottom of the
casing so that it fills the area between the casing and side of the well. The casing
prevents oil, gas and deep brines (underground salt water) from entering and
contaminating aquifers (underground fresh water).
Step 2 - Because the casing and the liner must remain in a well for a long time and
their repair or replacement would be costly, another string of pipe is placed in the well
through which oil or gas is usually produced. This string of pipe is called "tubing".
This is like a double-hulled tanker in that it provides an extra layer of protection for
groundwater supplies. Tubing is pulled out of the hole on occasion and inspected to
see if it needs to be repaired. (Casing is cemented in and can be repaired, but not as
easily as the tubing).
Step 3 - Operators do not want anything but oil and natural gas to enter the well. To
allow underground fluids to enter the pipe and flow to the surface, the tubing and
casing must be perforated. Explosive charges are lowered to the precise depth of the
oil reservoir. Detonating the charges forces holes in the casing. Fluids can then flow
into the casing and up the tubing toward the surface.
Step 4 - A "Christmas Tree" is a device that is placed on the well at the surface. It
regulates the flow from the well into the pipelines that take the oil and natural gas to
facilities for processing and sale. It consists of a series of valves that are opened and
closed to regulate flow for optimum field production or to shut down a producing well
if a problem is detected. Some Christmas Trees have computer systems that allow
them to be monitored, opened and closed remotely.

2.8. Extracting Oil and Natural Gas

Extracting oil and natural gas from deposits deep underground isn’t as simple as just
drilling and completing a well. Any number of factors in the underground
environment – including the porosity of the rock and the viscosity of the deposit --
can impede the free flow of product into the well. In the past, it was common to
recover as little as 10 percent of the available oil in a reservoir, leaving the rest
underground because the technology did not exist to bring the rest to the surface.
Today, advanced technology allows production of about 60 percent of the available
resources from a formation.

Primary recovery first relies on underground pressure to drive fluids to the surface.
When the pressure falls, artificial lift technologies, such as pumps, are used help bring
more fluids to the surface. In some situations, natural gas is pumped back down the

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well underneath the oil. The gas expands, pushing the oil to the surface. Gas lift
technology is often used in offshore facilities. Primary recovery often taps only 10
percent of the oil in a deposit.
Secondary recovery is the most widely applied enhanced recovery technique. Water
that is produced and separated from the oil in the initial phase of drilling is injected
back into the oil-bearing formation to bring more oil to the surface. In addition to
boosting oil recovery, it also disposes of the wastewater, putting it back where it came
from. This can bring an additional 20 percent of the oil in place to the surface.
Enhanced recovery techniques are used to mobilize the remaining oil. There are
three common approaches: thermal recovery, gas injection or chemical flooding.
• Thermal recovery entails injecting steam into the formation. The heat from
the steam makes the oil flow more easily, and the increased pressure forces it
to the surface.
• Gas injection uses either miscible or immiscible gases. Miscible gasses
dissolve CO2, propane, methane or other gasses in the oil to lower its viscosity
and increase flow. Immiscible gasses do not mix with the oil, but increase
pressure in the “gas cap” in a reservoir to drive additional oil to the well bore.
• Chemical flooding involves mixing dense, water-soluble polymers with water
and injecting the mixture into the field. The water pushes the oil out of the
formation and into the well bore.
Enhanced recovery techniques are employed to bring as much as 60 percent of the
reserve to the surface.

2.9. SEPARATING OIL, NATURAL GAS AND WATER

Oil generally comes out of the well mixed with water and, often, small amounts of
natural gas. Similarly, natural gas often comes out of the ground mixed with water
vapor and other gases. These various components must be separated before "pipeline
quality" oil and/or natural gas can be sent to market.

To remove water and natural gas from oil, the mixture is passed through a device that
removes the gas and sends it into a separate line. The remaining oil, gas and water
mixture goes into a heater/treater unit. Heating helps to break up the mixture so that
oil separates from water, which is more dense. Any remaining natural gas, which is
less dense than oil, rises to the top. The gas is removed for either processing or
burning; water is removed and stored for further treatment.
Additional separation of oil from wastewater is accomplished using hydrocyclones.
Hydrocyclones spin the oil/water mixture, and use acceleration to separate oil from
water. Water is forced to the outside of the hydrocyclone, where it is removed.
Because most wastewater is very salty, it cannot be used as a water resource. Instead,
it is injected back deep into the subsurface, usually into the same formation where the
oil and water came from, helping force more oil out of the reservoir.

In some areas of the western United States, the produced water extracted with natural
gas from coal beds may be suitable for agricultural, livestock, and wildlife use. This
water is usually much less saline than produced water from deeper gas-bearing
formations.

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One promising new separation technology is the freeze-thaw/evaporation (FTE)

process. Using a freeze crystallization process in the winter and natural evaporation in
the summer, wastewater is separated into fresh water, concentrated brine, and solids.
The fresh water can be used for agriculture or livestock, and the volume of waste
requiring disposal is greatly reduced. This approach is useful only in areas with hot
summers and cold winters -- like the Rocky Mountains.

Offshore, the salty water is tested to make sure that it does not contain any oil or other
impurities that could hurt sea life, and is then put into the ocean. This practice has
been studied extensively and is closely monitored to ensure that it does not harm
marine life. The fact that most offshore platforms are rich in marine life attests to the
safety of this approach.

2.10. Protecting Sensitive Environments

Many of the U.S.’ untapped oil and natural gas resources lie beneath sensitive
environments ranging from the Arctic tundra to the southern wetlands to offshore
sites. Over the past four decades, the oil and natural gas industry has developed
innovative approaches for operating in these sensitive areas, improving both
environmental and economic performance.

Protecting the Ocean - From the Gulf of Mexico to the North Sea, the oil and natural
gas industry is using advanced technology to search for new energy resources in
deeper water while improving environmental and safety precautions.
• Advanced 3-D seismic surveys enable operators to pinpoint potential reserves
more accurately, which translates into fewer wells drilled and faster, more
efficient resource recovery.
• Side-scan sonar is used to identify safe sites for production platforms,
avoiding sensitive habitats and unstable areas.
• Extended reach and horizontal wells reduce the number of wells and
production platforms needed to develop the field.
• Safety and Environmental Management Programs have practically eliminated
oil spills from offshore platforms. Subsea blowout preventers, along with
steady advancements in well engineering and equipment and procedures to
manage subsurface pressures or "kicks" are used to maintain well control even
in very deep water.
• Protecting Wetlands - Today, almost everyone realizes the important role
wetlands play in the environment. Where there are potential oil and natural gas
reserves located under wetlands, the oil and natural gas industry takes care to
minimize risks.
• Arctic Challenges - The Arctic presents some real obstacles to producing
energy, including extremely low winter temperatures and very remote
locations. Advanced technology has allowed the oil and gas industry to expand
the areas that can be explored, while protecting the sensitive Arctic
environment.
• To avoid damaging the tundra, exploration is only conducted during the
winter. This allows the use of roads, bridges, drilling pads, and airstrips
constructed of ice, which melt away each spring. For sites that are too remote

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for ice roads, alternate means of transportation are used. Large all-terrain
vehicles with huge balloon tires carry equipment across the frozen tundra
leaving no tracks, or helicopters are used to move equipment and materials.
• Advanced horizontal and multilateral drilling is employed to allow the
industry to develop large reservoirs with far fewer surface locations and wells.
Over 40,000 acres of subsurface reservoir rock can now be drained from a site
that takes up less than 10 acres on the surface.

2.11. Restoration of Land-Based Sites

After 15-30 years of production, most oil or natural gas wells reach their economic
limit and need to be shut down. Dry holes – wells that do not produce as expected –
must also be addressed. Today, oil and natural gas companies consider site restoration
a critical operations activity. Teams of environmental and engineering professionals
and skilled equipment operators handle restoration to bring sites back to original or
better condition.

The restoration of land-based wells is discussed below. Restoration of offshore sites

will be discussed separately.

About 17,000 land-based sites are closed and restored every year. This involves filling
the casing with cement and removing the wellheads, pumps jacks, tanks, pipes,
facilities and equipment. Then the wellbore is plugged to prevent underground fluids
from getting into groundwater. Waste-handling pits, if present, are properly closed,
and the location is restored to near-original condition.

Bioremediation - At some sites, the soil can become contaminated with hydrocarbon
molecules. In the past, these sites were often addressed by digging up the soil and
moving it to a special landfill. Today, many sites are restored using bioremediation--
the stimulation or placement of oil-eating microorganisms in the soils to digest
hydrocarbons. This is a very effective and natural approach that causes minimal
disturbance to the land while reducing landfill requirements.

Recycling - Advanced technology isn't always the best answer. Sometimes a creative,
low-tech approach is the right answer. In Pennsylvania, sediment that collects at the
bottom of oil storage tanks is used as a component in paving mix on local roads. This
saves costs for the producers and reduces landfill requirements. Drill cuttings from
drilling operations can be mixed with cement to produce bricks The cuttings produced
from just one well can make up to 700,000 new bricks!

2.12. RESTORATION OF OFFSHORE SITES

Almost 100 offshore platforms are taken out of service each year. For smaller
structures in shallow waters, companies dismantle the platform, which is then brought
to shore for refurbishment or reuse.

In water deeper than 100 feet, and at more remote locations, a rigs-to-reefs approach
can be used.

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In this approach, all waste materials and useful equipment are removed from the
production platform. The platform is then toppled on site or cut and moved to a new
site and allowed to come to rest on the sea bottom.

Within a year, the platform will be covered with marine life. The hard surfaces attract
invertebrates such as barnacles, corals, sponges and clams. These, in turn, attract
resident reef fish like snapper and grouper, and can also provide breeding and rearing
habitat for juvenile fish of a number of other species.

A sunken platform can actually attract and support 20-50 times more fish than the
ocean's naturally flat, soft bottom.

3. NATURAL GAS PROCESSING

3.1. INTRODUCTION
Although natural gas and crude oil often can be found in the same location, they take
completely different routes from the wellhead to you, the consumer. While crude oil
and refined products can travel through a chain of pipelines, tanker ships, trucks and
the like, 99 percent of natural gas makes the journey entirely through pipelines made
of durable carbon steel. This makes it important to bring recovered natural gas into
line with market specifications before it enters the main interstate pipeline system.
The natural gas used to cook our food and/or heat and cool our homes is 90 percent
clean-burning methane, the simplest form of hydrocarbon. But that's not the case for
natural gas as it comes out of the ground. Depending on the location of the well and
the geologic conditions that created the gas in the first place, contaminants such as
water, sulfur and natural gas liquids (including ethane, propane and butane) may be
present. So-called “gathering pipelines” collect natural gas from wells in a given
region and deliver it to local processing plants. The processed gas then enters
the interstate pipeline distribution system.

3.2. DEHYDRATION

Natural gas often comes out of the ground mixed with water vapor. This "wet gas"
can be separated using two primary methods:

Glycol dehydration – Wet gas moves through an inlet pipe into a tank called a
"contactor." A rounded cap over the inlet pipe forces the gas to flow down into a pool
of glycol solution at the bottom of the tank. Glycol has a strong affinity for water, so
the water molecules from the wet gas bond to the glycol molecules in the solution.
The vapor-free natural gas is collected from the top of the contactor.
Because water boils at 212F and glycol doesn't boil until 400F, simple heating is all
that is required to vaporize the captured water so the glycol solution can be reused.

Solid-desiccant dehydration - This method is typically more effective than glycol

dehydration, but requires higher volumes of natural gas moving under high pressure.
The wet gas is pumped downward through a tower filled with a solid desiccant

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(drying agent). The desiccant attracts and binds the water molecules so that only dry
gas flows out the bottom of the tower.
When the desiccant has captured all the water it can, operators flush the tower with
heated gas that re-vaporizes the water molecules, thereby "reactivating" the desiccant.

3.3. SWEETENING

Natural gas that contains sulfur is called “sour gas” because sulfur has a strong rotten-
eggs odor. The process of removing sulfur from natural gas is therefore called
“sweetening.”

Sulfur in natural gas occurs as hydrogen sulfide, which must be removed because it is
toxic when inhaled and is highly corrosive to pipeline walls. Also, if recovered in
sufficient quantities, hydrogen sulfide can be neutralized to yield pure, marketable
sulfur.

The most common sweetening process is similar to glycol dehydration. In this

instance, the absorbent liquid is a solution of sulfur-attracting amines. The cap over
the inlet pipe forces gas to pass through the amine liquid, which captures the sulfur
molecules while the natural gas bubbles out of the liquid to be collected from above.

3.4. NATURAL GAS LIQUIDS

The natural gas we use in our homes is mostly methane, the simplest form of
hydrocarbon. But natural gas at the well may include other hydrocarbons, such as
ethane, propane, butane and pentane. Each of these so-called "natural gas liquids" - or
NGLs - has its own unique properties that make it suited to a specific use: For
example, butane is used in lighters, while propane is used in backyard grills and home
heating systems. Processing facilities remove NGLs so they can be recovered and
used separately.

Most NGLs can be removed using an absorption process that passes the mixed gases
through a pool of gas-absorbing oil that catches the heavier hydrocarbons but allows
the methane to move through. However, light hydrocarbons such as ethane are
tougher to recover. Small amounts of these light hydrocarbons can be left in natural
gas with no ill effects. If larger quantities are present, however, they can be removed
using a process called cryogenic expansion.

A "cryogenic" process is one that takes place at very low temperatures. In cryogenic
expansion, a powerful fan blows cooled gas from a narrow pipe into an expansion
chamber. This reduces the vapor pressure of the gas, which has the effect of further
reducing the gas temperature to approximately -120F. At this temperature, methane
remains a gas while other hydrocarbons become liquid and can be removed. The
collected NGLs are then separated from one another using another temperature-based
process. As discussed in the "Refining", each type of hydrocarbon has a unique
boiling point - the temperature at which it converts from liquid to vapor. Recovered
NGLs pass through a series of progressively warmer chambers, each heated to a
temperature that will vaporize a specific hydrocarbon from the remaining liquid.

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4. OIL TANKERS

4.1. INTRODUCTION

Advances in exploration and production have helped to locate and recover a supply of
oil and natural gas from major reserves across the globe. At the same time, demand
for petroleum-based products has grown in every corner of the world. But supply and
demand are rarely concentrated in the same place. Transportation therefore is vital to
ensuring the reliable and affordable flow of petroleum we all count on to fuel our cars,
heat our homes and improve the quality of our lives.

Tankers and pipelines are proven, efficient and economical means of connecting
petroleum supply and demand. Supply-end pipelines carry crude oil from well to a
loading terminal at a port. Tankers then carry the crude oil directly to demand-side
pipelines that connect to the refineries that convert the raw material into useful
products. Select the dates at left to see how the shipping of crude oil has evolved over
time into the high-tech, reliable and environmentally sound system we enjoy today.

1885 - The United States and Russia were the major producers of crude oil, most of
which was refined into kerosene. Invented in 1854, kerosene was in demand because
it burned cleaner and brighter than other lamp fuels, such as whale oil. Kerosene from
American refineries was soon crossing the Atlantic to meet growing demand in
Europe.
The first oil exports crossed the ocean aboard all-purpose sailing ships, stored in the
same wooden barrels usually used for wine.

Some of these ships were later outfitted with large-volume tanks to increase their
carrying capacity.

Eventually, ships were built specifically to carry oil and petroleum products. The
Glückauf, launched in 1886 and featuring an extra-strong hull, reinforced construction
and specialized oil-handling systems, is considered the forerunner of modern oil
tankers.

1955 - The automobile revolutionized American life in the first half of the 20th
Century and created increased demand for gasoline. Oil also helped power rebuilding
efforts after two destructive world wars. To ensure adequate supply to meet the
growing demand, exploration and recovery efforts focused on new sources in the
Middle East and Canada.
The need to deliver more oil called for larger tankers. Early iron and steel vessels
were built using the same principles as wooden sailing ships -- lateral framing pieces
attached to a single keel -- but problems with weight distribution and structural
rigidity limited tankers to 82,000-barrel capacity. In 1908, Sir Joseph Isherwood
patented a new shipbuilding technique that included frames and bulkheads running
front-to-back and used the ship's floors to increase rigidity. By the early 1950's,
"supertankers" built using a modified version of Isherwood's system had capacities of
more than 280,000 barrels.

2002 - In the latter half of the 20th Century, advances in exploration and recovery
technology opened up new supplies of oil and natural gas all around the world. To

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make long-distance transportation more cost-effective, tanker manufacturers

developed "very large capacity carriers," or VLCCs, that can carry more than
1,400,000 barrels of crude oil.
Larger tankers conserve energy and reduce transportation costs. That's because
although it requires more energy to power a larger ship, the rate of increase is less
than the rate of increase in carrying capacity. For example, 16,000 horsepower are
needed to drive a 420,000-barrel tanker, while 42,500 horsepower can propel a
1,820,000-barrel ship at the same speed. That means it takes less than three times the
power to deliver more than four times the oil, reducing total energy consumption and
saving fuel.

4.2. TANKER DESIGN

Today's cutting-edge tankers are the product of a commitment to safety combined
with the power of computer-assisted design. As a result, the new ships traveling the
seas are stronger, more maneuverable, and more durable than their predecessors.

Double Hulls - By 2015, all tankers operating in U.S. waters will be double-hulled
vessels. This hull-within-a-hull configuration provides an extra measure of security:
In the unlikely event of a collision or grounding, the outer hull will bear the brunt of
the impact while the interior hull keeps the cargo secure and prevents oil from
entering the marine environment.

Redundant Systems - In an effort to build ships capable of withstanding even the

most extreme circumstances, many tankers are now equipped with redundant, or
duplicate, systems. If the original system is compromised for whatever reason, a
second, fully functional backup is on hand. This concept is put to use in navigation --
with back-up GPS systems, for example -- and down below in redundant engine
rooms. Duplicate rudders and propellers have the added benefit of improved
maneuverability, enabling the ship to rotate 360° in a fixed position.

Single-Operator Capability - A highly trained bridge crew is the key to effective

decision-making on the seas. Once a decision is made, however, modern tankers
allow a single deck officer to make all the appropriate adjustments to the ship's speed
and heading from a central command station. This allows for faster response in
critical situations.

4.3. NAVIGATION

Before they can be certified to pilot a tanker, deck officer candidates must spend
hours in sophisticated bridge simulators gaining hands-on experience with today's
state-of-the-art navigation systems, including:

Electronic Chart Display (ECDIS)

Automated Radar Plotting Aid (ARPA)
Automatic Identification Systems (AIS)

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ECDIS - The electronic chart display and information system (ECDIS) contains
detailed maps of the route, including water depths, underwater hazards and port
configurations. Information from a satellite-based global positioning system (GPS)
plots the ship's location on the map. Data from the helm feeds automatically into the
ECDIS computer, which displays both the ship's heading (where the bow is pointed)
and its actual movement through the water. Deck officers can then see clearly if winds
or currents are affecting the ship's course. An alarm will sound if the ship drifts off of
its pre-set course.

ARPA - Today's radar has the power of computers behind it. Automated radar
plotting aided technology (ARPA) not only locates objects within radar range, but
also calculates the speed and course of any moving objects. This information, which
can be fed into the ECDIS screen, can be used to project the object's relative vector -
its movement relative to the ship if both continue at their current speed and heading.

AIS - Ships large and small now feature advanced radio beacons, called automatic
identification systems (AIS) that broadcast their identity, course, speed and position.
A tanker captain can use the system to identify all vessels in surrounding waters and
establish radio communications with those ships as needed.

4.4. LIGHTERING

Large-scale transportation of crude oil helps conserve energy and reduce costs over
long distances, but many large tankers can't access U.S. ports when fully loaded
because their draft - the distance from the water line to the bottom of the boat - is too
deep. Lightering - transferring crude oil from supertankers to smaller tankers capable
of navigating our waterways - is a simple but effective solution to the problem. More
than 25 percent of the 7.5 million barrels of crude oil imported to the United States
every day is lightered, mostly in the Gulf of Mexico and along the East Coast.

Lightering can take place either underway at sea or at anchor. Rubber fenders are
placed over the ships' sides to prevent damage to their hulls. Crude is offloaded
through flexible pipelines from the larger ("mother") ship to the smaller ("daughter")
tanker or barge. The daughter ships can then offload their oil cargo at the nearest port
or at more distant locations, as markets demand. In some cases, the mother tanker can
also proceed to port once sufficient crude has been off-loaded to reduce the ship's
draft.

For example, fully loaded Suezmax tankers enter the Delaware Bay with a draft of 55
feet and are lightered to less than 40 feet. The lightered tankers can then proceed to
refineries located up the Delaware River.

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4.5. Louisiana Offshore Oil Port

The Louisiana Offshore Oil Port (LOOP) is another innovative solution to the
problem of supertanker size. This revolutionary offshore facility allows supertankers
to transfer their cargoes of crude oil directly into a pipeline network reaching more
than 50 percent of U.S. refinery capacity - all without leaving the safety of deep Gulf
waters.

Located 18 miles off the coast of Louisiana, where the water is approximately 115
feet deep, LOOP features three separate mooring stations anchored to the ocean floor
and connected to an underwater pipeline system. The modular design means that up to
three supertankers can unload their cargo of oil at the same time.

Mooring - Flexible hoses at the mooring station carry crude oil from the tanker into
the underwater pipeline. The mooring buoy and hoses can rotate through 360 degrees,
allowing the tanker to maintain a favorable heading into the wind and waves
throughout the unloading process. All LOOP operations are monitored from the state-
of-the-art central control platform.

Pumping - Two sets of four diesel-powered pumps - one on the offshore platform, the
other where the underwater pipeline comes aground - keep the crude oil flowing at a
rate of more than 100,000 barrels per hour. The pumps work like an electric fan: The
diesel engines spin rotors that create suction like the blades of a fan. Crude oil is
drawn from the line coming in from the mooring stations and forced through the
outgoing line, headed toward the storage facility.

Storage - Oil gathered at the LOOP facility is stored in underground caverns carved
out of a salt dome millions of years old. This geologic formation is ideal because the
oil can neither dissolve nor move through the cavern walls. Each cavern is a closed
system because what volume isn't filled with oil is filled with brine (i.e. salt water).
Since crude oil is less dense than brine, it floats on top. Pumping oil from the offshore
pipeline into the cavern forces brine up through pipes at the bottom and into surface
reservoirs. When it's time to send the oil to the refinery, brine is pumped back into the
bottom of the cavern, pushing the oil out through pipes at the top.

5. REFINING OIL

5.1. INTRODUCTION

Every barrel of crude oil holds remarkable potential: to keep us warm, to keep us on
the go and to provide the building blocks for countless products we depend on every
day.

The job of the refinery is to unleash that potential by sorting and improving the
hydrocarbons within the crude. Gasoline, propane, jet fuel, heating oil and
petrochemicals are just some of the specially formulated products leaving the refinery.

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Technicians in a central control room can fine-tune refinery operations to produce the
desired mix of products. For example, the same barrel of crude can be processed to
yield more heating oil in winter or gasoline in summer driving season. Within the
refining system, nothing is wasted and the byproducts from one process often are
integral to another

5.2. DSTILLING
Hydrocarbons are basically chains of carbon and hydrogen atoms. The number of
carbon atoms in the chain and the way that chain is arranged will determine the
properties of the hydrocarbon. For example, the average hydrocarbon in diesel fuel
has 16 carbon atoms, while the hydrocarbons in gasoline have about half as many.
Meanwhile, an eight-carbon hydrocarbon may be either naphtha or gasoline,
depending on its molecular structure.

The easiest way to tell one kind of hydrocarbon from another is by its boiling point.
Just as water goes from liquid to vapor at approximately 212° Fahrenheit, each type of
hydrocarbon changes from liquid to vapor within a specific temperature range. In
general, the more carbons in a molecule, the higher the boiling point.

The refining process therefore begins by cleaning or desalting the crude oil and then
heating it until only waxy residual hydrocarbons remain in liquid form. The mixed
hydrocarbon vapor rises through a distilling column, getting cooler as it goes up.
When a hydrocarbon cools below its boiling point, it reverts to liquid form. Stacks of
trays collect the liquid hydrocarbons, which have now been sorted into several distinct
streams.

Surprisingly simple devices called bubble caps are the keys to how a distilling column
works. Each collection tray has a network of raised perforations that allow vapor to
rise through the tray but prevent the collected liquid from pouring down to the tray
below. A bubble cap fits loosely over each perforation forcing the vapor to pass
through the hydrocarbon liquid before it continues its upward journey. Contact with
the liquid cools the vapor so that the heavier hydrocarbons become liquid, too.

5.3. CRACKING

In general, refineries aim to maximize the amount of gasoline produced. To

accomplish this, a number of processes have been created to convert other kinds of
hydrocarbons into gasoline. For example, cracking takes the long carbon chains of
heavy gas oil and breaks them into shorter-chain hydrocarbons, including gasoline.

The kind of cracking process used will determine the mix of end products. Fluid
catalytic cracking yields mostly gasoline and diesel, as well as some light gases.
Hydrocracking yields kerosene instead of diesel.

Fluid catalyst - As the name implies, fluid catalytic cracking uses a free-flowing
catalyst to help break apart molecules of heavy gas oil. The catalyst is actually a fine,

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slick powder that causes bonds within the hydrocarbon chain to snap. Once the
process is complete, the contents of the reaction chamber are spun into a cyclone that
separates the heavier catalyst from the lighter hydrocarbons so that the catalyst can be
reused.

Hydrocracking - This process uses hydrogen and pressure combined with a solid
catalyst to break apart longer hydrocarbon chains. Because the catalyst is fixed in
place, there is no need for an additional step to separate the catalyst from the cracked
product.

Hydrogen not used in the cracking process is cycled back through the system. This is
just one example of the efficient reuse of resources within the refinery.

5.4. REFORMING
Reforming is a process designed to increase the volume of gasoline that can be
produced from a barrel of crude oil. Hydrocarbons in the naphtha stream have roughly
the same number of carbon atoms as those in gasoline, but their structure is generally
more complex. Reforming rearranges naphtha hydrocarbons into gasoline molecules.

The reforming process involves three separate catalytic reactors, each one taking
place under carefully controlled temperature and pressure levels. Naphtha is mixed
with hydrogen and fed through each reactor chamber in sequence. Additional
hydrogen formed by the catalytic reactors is recovered and put to use in subsequent
reforming and in other processes throughout the refinery. The other products of
reforming are light gases and a high-octane gasoline blending component called
reformate.
The octane rating of reformate is important because it affects the octane rating of the
gasoline you buy at the pump. By controlling the temperature and flow rate of the
reformer, refinery operators can increase the octane rating of the reformate, but that
also has the effect of producing less reformate. The reverse is also true: If demand for
high-octane gasoline is lower, the reformer can be adjusted to produce more reformate
with a lower octane rating.

5.5. BLENDING (VAPOR PRESSURE)

To better understand the need for gasoline blending, it helps to understand the basic
workings of your car's engine:

1. Gasoline vapor mixes with air in the cylinder chamber.

2. The cylinder compresses the air/gasoline mixture.
3. The spark plug fires when the cylinder achieves maximum compression, which
ignites air/gasoline mixture.
4. The force of the combustion pushes the cylinder down, which turns the drive
shaft, generating useable power.
5. The byproducts of combustion are let out of the chamber when the cylinder is in
its down cycle.

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6. Fresh gasoline vapor enters the chamber on the up cycle and the process repeats.
It's a simple mechanism, but it requires the right fuel: The key considerations
are vapor pressure (RVP) and octane rating.

Vapor pressure - If you leave a dish of water out at room temperature, it will
eventually evaporate - turn from liquid to vapor - even though the water never
approaches its boiling point. Just how quickly the water evaporates depends on the air
pressure in the room. At high altitudes, where the air is thinner, the air pressure is
lower, so the water will evaporate faster than it would at the same temperature in a
room at sea level.

Gasoline also evaporates, and your car’s engine relies on a controlled amount of vapor
flowing into the combustion chamber in order to start and run efficiently. Vapor
pressure - measured in terms of RVP - determines the amount of surface pressure
required to keep gasoline from changing from liquid to gas. If the RVP is too low,
there won't be enough hydrocarbon vapor available to start a cold engine. If the RVP
is too high, too much of the gasoline will evaporate before reaching the engine,
causing vapor lock.

Because the gasoline recovered from the distilling, hydrocracking, catalytic cracking
and reforming processes have distinct RVPs, the RVP of the combined gasoline will
depend on the make-up of the mixture.

During the winter, even the highest-RVP gasoline won't meet the higher-RVP
demands of your car’s engine. That's why refineries add butane, which has a very
high RVP, to raise the RVP of the blended gasoline to the desired level.

5.6. BLENDING (OCTANE)

Octane – A gasoline’s octane rating measures its resistance to “engine knock.”
Gasoline vapor heats up as the cylinder compresses it; if it heats up too quickly,
combustion will occur before the cylinder reaches its peak and the spark plug fires.
The mistimed combustion causes a vibration – a “knock” -- that results in engine
wear. Finely tuned, higher performance engines generally require higher-octane rated
gasolines.

As with RVP ratings, gasoline octane ratings vary from one refinery process to the
next, but are generally lower than required for efficient engine operation. Refineries
therefore add alkylate – produced from the light gases generated by catalytic
cracking – to raise the octane rating of blended gasoline.

5.7. TREATING
Today's gasoline is engineered to be the cleanest ever, protecting both the
environment and our health. Several processes are used to remove impurities,
including a sulfur-removal technique called hydrotreating. Sulfur in crude oil may be

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either attached to the surface of a hydrocarbon or part of its chemical structure. Either
way, hydrotreating effectively removes sulfur from the hydrocarbon stream.

In hydrotreating, hydrocarbons and hydrogen are heated together and then fed into a
reaction chamber containing a special catalyst. When the hydrocarbon and hydrogen
molecules come in contact with the catalyst, a chemical reaction occurs that strips
sulfur from the hydrocarbon to form hydrogen sulfide.

The hydrogen sulfide is removed and neutralized in a separate process. The sulfur
compounds produced from this process are used in other applications such as
fertilizers and pharmaceuticals.

6. REFINED PRODUCT PIPELINES

6.1. INTRODUCTION

The majority of products leaving the refinery - including gasoline, diesel fuel, home
heating oil and kerosene (jet fuel) - travel to regional distribution centers via a
network of underground pipelines that can range from 8" to 45" in diameter.

But chances are that you've never noticed the more than 95,000 miles of refined
product pipelines that traverse the United States. That’s because pipeline operators
seek to minimize their environmental impact by carefully selecting routes, by
maintaining their equipment for safe, reliable operation and by restoring the landscape
over the completed pipe.

The following is a brief overview of the pipeline system:

• Each of the nation's major pipelines carries products from many refineries.
Feeder lines coming in from an individual refinery meet up with the main, or
"trunk," line at a junction, usually controlled by a ball valve.
• A series of pump stations along the pipeline help keep the liquid product under
pressure and moving forward. The pumps, similar to those detailed in the
"Transport to Refinery" section, can adjust pipeline pressure according to
factors such as pipeline diameter and the specific properties or the product
being carried.
• The distribution center features large-capacity storage tanks for each of the
products moving through the pipeline. As product flows into the distribution
center, samples are removed and tested in a sample house. The tests ensure
that the right product is directed to the right storage tank. The tests also
identify where one product ends and another begins - an essential feature
because multiple products travel through the line one after the other.

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6.2. CONTROL CENTER

State-of-the-art of technology allows an entire pipeline system to be operated from a

single control center, maximizing safety and efficiency.

From the control center, which is staffed around the clock?

• Operators can regulate valves and pump stations all along the pipeline to keep
batches of product moving through the pipeline on schedule.
• Technicians constantly monitor real-time data from sensors placed all along
the pipeline route. By comparing the actual pressurization and rate of flow
within the pipeline to their predicted levels, the control center can identify and
trouble-shoot any irregularities.
• Should there be a breech in the pipeline due to accident or structural failure,
the control center operator can immediately shut down and isolate the affected
portion of the pipe, limiting the amount of product that might be released into
the environment.

6.3. MAINTENANCE

The United States enjoys one of the safest, best-maintained and reliable pipeline
systems in the world. Devices called "pigs" help pipelines stay free-flowing and detect
potential problems before they happen.

Scraper pigs feature a bowl-shaped attachment at the front that removes and collects
any residues deposited on the pipeline wall. Technicians load the pig into the pipeline
at a service junction and it is propelled by the contents of the pipeline to the next
service junction. Technicians then remove the pig and the scraped-off debris.

Scrubber pigs takes the scraper pig a step further, using a mechanized set of rotating
brushes to remove debris from the pipe's interior surface.

"Smart pigs" are equipped with on-board diagnostic systems that can identify any
deviations in the pipe wall due to corrosion or other sources of damage. Technicians
analyze data collected by the "smart pig" and, if necessary, determine the proper
maintenance or repair strategy.

"Smart pig" technologies include:

o Satellite-based global positioning systems to pinpoint the location of any

irregularities.
o Calipers to precisely measure the width of the pipeline.
o Magnetic sensors to measure the thickness of the pipeline wall, identifying any
thinning due to corrosion.
o Ultrasound scanners identify thinning walls, as well as loose coatings or
surface deformations.

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6.4. BATCH MANAGEMENT

Pipelines operate most efficiently when there is a steady, uninterrupted stream of

product moving from refinery to market. If there are gaps between batches of product,
pumps have to work too hard to keep the pipeline contents under pressure and moving
forward.

o Because a variety of refined products move through the same pipelines, some
mixing occurs where the trailing end of a batch of one product meets the
leading edge of the next batch of product in the line. If the two products are
similar, such as different grades of gasoline, this "interface" can be
incorporated into the lower-grade product.
o When two dissimilar products, such as diesel fuel and gasoline, come into
contact, the blended product is called "transmix." The transmix is collected
separately, and then trucked back to a refinery for reprocessing.
o In some cases, pipeline operators will separate especially sensitive products,
such as jet fuel, from other pipeline contents using spherical plastic "pigs" to
prevent transmix.

6.5. DISTRIBUTION CENTERS

Most refined products travel the final leg to market by truck. For example, the
gasoline that fuels your car, truck, minivan or SUV probably arrives at your local
service station by tanker truck. Most of today's tankers have three or four separate
compartments so, at the distribution center, lines from several storage tanks come
together at a single loading "rack." This allows the driver to fill each tank
compartment with the desired product -- multiple grades of gasoline, diesel fuel --
without moving the truck.

o The driver follows a strict safety protocol while loading the truck, one product
at a time. A metered pump delivers a preset amount, and then shuts off.
o Each tank compartment is likely to contain gasoline vapor left over from its
previous contents. To improve air quality, product is loaded from the bottom
of the compartment. This pushes the vapor up and out through a pipe at the top
of the tank. (There is a sensor at the top of the compartment that protects the
truck from being overfilled.) The collected vapor is drawn out and reprocessed
to liquid form and added back into the tanks.

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7. NATURAL GAS PIPELINES

7.1. INTRODUCTION

Currently, over 95 percent of natural gas used in the United States moves from well to
market entirely via pipeline.

Natural gas pipeline networks are generally broken into three distinct systems:

• Gathering systems carry natural gas from individual wells for bulk processing
at a treatment facility,
• Transmission systems carry the processed natural gas, often over long
distances, from the producing region to local distribution systems around the
country.
• Local distribution systems deliver natural gas into our homes, businesses and
power plants.
• Natural gas pipelines are generally smaller in diameter than petroleum
pipelines. Pipelines in the gathering and distribution systems range from 6" to
16" in diameter, with certain segments as narrow as 1/2". The pipes making up
the interstate transmission system range in diameter from 16" to 48"

7.2. COMPRESSORS
Natural gas can travel through literally thousands of miles of pipeline in the journey
from the well to your home. Compressors placed at key intervals - usually every 40 to
100 miles along the pipeline network - keep the natural gas moving evenly and
reliably.

A so-called "reciprocating" compressor uses a piston to reduce the volume of its

compression chamber, increasing the pressure of the gas inside. When the outlet valve
opens, the pressurized gas rushes out into the next section of the pipeline. Most
reciprocating compressors are powered by natural gas drawn directly from the line.

Natural gas pipelines also employ turbine compressors, which are similar in design to
the jet engines found on commercial aircraft. And in a few limited circumstances,
where strict air emission rules require, pipelines also use compressors powered by
electric motors.

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7.3. CITY GATES

A distribution system, such as a local utility, connects to the interstate pipeline at a

"city gate." This facility reduces the pressure of the natural gas from its transmission
rate (from 200 to 1,500 pounds per square inch) down to a rate more appropriate to
consumer usage (as low as 3 psi). The city gate also adds sour-smelling Mercaptan to
the naturally odorless gas to make it easier to quickly sniff out a natural gas leak.

7.4. STORAGE

Production rates and pipeline throughput are relatively fixed, but demand for natural
gas - a popular home-heating fuel - is significantly higher during the winter months.
This makes delivery-side storage capacity essential to assuring a steady, reliable
supply of natural gas when you need it most.

Natural gas is most often stored in depleted (empty) natural gas or oil fields. These
underground formations have already proven they can securely trap and contain
natural gas, so they make useful reservoirs for natural gas delivered through the
interstate pipeline. Natural gas may also be stored in underground salt caverns --
geologic formations whose walls are impermeable to natural gas.

Also there are over 100 natural gas utilities that liquefy natural gas for aboveground
storage. This is not an unusual practice and it offers another safe, proven natural gas
storage alternative for the future. Liquefied natural gas is also proving to be an
important new option for transporting natural gas from regions not served logistically
or economically serviceable by pipelines.

7.5. LIQUIFIED NATURAL GAS (LNG)

Some natural gas sources are too difficult or too expensive to reach via pipeline.
Converting natural gas to liquid form - which occurs at approximately -260F -
decreases its volume by more than 600 times and allows other transportation options,
such as specially outfitted tanker ships and trucks, to be used. Once the liquefied
natural gas reaches its destination, it is revaporized and transported through existing
pipelines.

The insulated tanks that store LNG use "autorefrigeration" to keep their contents cold.
First, the natural gas is chilled to -260F° -- the temperature at which it condenses from
gas to liquid. At that point, any heat gained from the atmosphere outside the tank is
offset by the cooling effect of the resulting LNG evaporation within the tank. (Just
wet your hand and let it air dry; you’ll feel evaporation’s cooling effect for yourself.)
Any re-vaporized natural gas can be vented and recovered for use.

STARWAY TRAINING CENTER Page 25