The Global Oil Industry

BADM 381: September 30, 2008

Kelley Sheehan
Kailyin Young
Caleb Ganzer
Caroline Bobrecki

Proven World Oil Reserves

Rank

Country
World

Oil - proved reserves

(bbl)

Date of Information

1,331,000,000,000

1 January 2006 est.

Saudi Arabia

264,300,000,000

2007 est.

Canada

178,800,000,000

1 January 2006 est.

Iran

138,400,000,000

2007 est.

Iraq

115,000,000,000

1 January 2007 est.

Kuwait

101,500,000,000

2007 est.

United Arab
Emirates

97,800,000,000

2007 est.

Venezuela

79,140,000,000

2007 est.

Russia

60,000,000,000

1 January 2006 est.

Libya

45,000,000,000

2007 est.

10

Nigeria

37,250,000,000

2007 est.

12

United States

21,760,000,000

1 January 2006 est.

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2178rank.html

Petroleum Intelligence Weekly's Ranking

of Top Oil Companies

Rank
2006

Rank
2005

State
Ownership %

Company

Country

Saudi Aramco

Saudi Arabia

100

NIOC

Iran

100

Exxon Mobil

US

BP

UK

PDV

Venezuela

Royal Dutch Shell

UK/Netherlands

CNPC

China

11

ConocoPhillips

US

Chevron

US

10

Total

France

https://www.cia.gov/library/publications/the-world-factbook/rankorder/2178rank.html

100
100

Published December of 2007

Saudi Aramco
Operations in:
Exploration, production, refining, marketing, and
international shipping.

The company has approximately one fourth of

world oil reserves
The company is headquartered in Dhahran, Saudi
Arabia and employs about 52,100 people.
State Owned

National Iranian Oil Company

(NIOC)
State owned
Involved in:
exploration, refining, and transportation of oil, gas,
and petroleum products. The company primarily
operates in Iran where it is headquartered in Tehran,
Iran

NIOC produces more than 3.9 million barrels of

crude oil per day from its 138.4 billion barrels of
reserves.

Exxon Mobil
Engaged in
exploration and production, refining, and marketing of
oil and natural gas. The company is also engaged in the
production of chemicals, commodity petrochemicals, and
electricity generation.

Exxon also set an annual profit record by earning

$40.61 billion last year
nearly $1,300 per second in 2007.

Organization of Petroleum
Exporting Countries (OPEC)
Created in 1960
Original Member Countries

Iran
Iraq
Kuwait
Saudi Arabia
Venezuela

Objective statement

OPEC 149th Conference

Conference of OPEC members met on the 9th and
10th of September
Non-OPEC members attended
Minister of Petroleum of Egypt, the Deputy Prime
Minister of the Russian Federation and the Minister
of Energy & Mining of the Republic of Sudan,
Discussed
energy market stability and security, enhancing
socio-economic development, alleviating poverty
and protecting the environment, recognizing that
energy is central to the achievement of the
Millennium Development Goals

US Oil Imports
Crude Oil Imports (Top 5 Countries)
(Thousand Barrels per Day)
Country

Jul-08

Jun-08

YTD 2008

Jul-07

YTD 2007

CANADA

1,960

1,883

1,899

1,818

1,872

SAUDI ARABIA

1,661

1,479

1,543

1,434

1,411

MEXICO

1,200

1,124

1,194

1,469

1,457

VENEZUELA

1,187

1,085

1,038

1,167

1,117

741

946

993

890

1,003

NIGERIA

Total Imports of Petroleum (Top 5 Countries)

(Thousand Barrels per Day)
Country

Jul-08

Jun-08

YTD 2008

Jul-07

YTD 2007

CANADA

2,383

2,359

2,459

2,386

2,458

SAUDI ARABIA

1,673

1,493

1,558

1,436

1,435

VENEZUELA

1,340

1,215

1,196

1,399

1,363

MEXICO

1,290

1,254

1,302

1,611

1,593

NIGERIA

822

1,020

1,052

906

1,054

China Oil Imports

Half of its imports is from the Middle East
In 2006, one-third of its oil imports from Africa,
Angola, the Republic of Congo, Equatorial Guinea,
and Sudan
It has also sought supplies from Chad, Nigeria,
Algeria, and Gabon.
The International Energy Agency projects China's net
oil imports will jump to 13.1 million barrels per day
by 2030 from 3.5 million barrels per day in 2006.

Oil Consumption and Consumer

Responses to Oil prices

Did you know?

The United States alone consumes about 20,687
barrels of petroleum products each day almost
half in the form of gasoline?
Next in line is China with about 7,201
Although the United States is the worlds third
largest crude oil producer, less than 35 percent
of the crude oil used by U.S. refineries was
produced in the United States.
We are the 3rd largest crude oil producer, but most
of the petroleum we use is imported.

Did You Know?

The United States produces about
10% of the worlds petroleum and
consumes 24%.
o

About 20.7 millions barrels per day, making us

the worlds largest petroleum
consumer. (2007)

How dependent are

we on foreign oil?
The United States
imported about 58% of
the petroleum, that we
consumed during 2007.
About half of these
imports came from the
Western Hemisphere.

Gasoline (Cents per Gallon)

09/22/08

Change from
Price

Week Ago

Year Ago

U.S.

3.718

-.117

.906

EastCoast

3.721

-.88

.952

NewEngland

3.601

-.54

.862

CentralAtlantic

3.634

-.38

.878

LowerAtlantic

3.821

-.136

1.034

3.754

-.192

.893

GulfCoast

3.678

-.79

.973

RockyMountain

3.651

-.103

.834

WestCoast

3.693

-.77

.784

California

3.725

-.79

.764

Midwest

Gas Prices now

In the U.S.

Average: $3.73

A look around the World

Nation

Gaza Strip

PriceinUSD
Regular/Gallon
*****$26.50****

Nation

PriceinUSD
Regular/Gall
on

Bolivia

$1.95

Turkey

$11.18

Iraq

$1.44

Netherlands

$9.97

Ecuador

$1.40

Norway

$9.95

Egypt

$1.24

Zambia

$9.88

Denmark

$9.29

Oman

$1.18

Findland

$9.27

Yemen

$1.14

Italy

$9.09

Qatar

$0.73

Belgium

9.03

Liby

$0.50

Portugal

$8.85

Saudi Arabia

$0.47

Sweden

$8.69

Iran

$0.41

Iceland

$8.68

http://www.portfolio.com/interactive-features/2008/08/Gas-Prices-Around-the-World

The winner goes to.

Venezuela: $0.12 per gallon
Venezuela has the world's cheapest gas.
Motorists love it. They're buying cars at a record pace.
BUT
The nation's capital, Caracas, is having a problem
with clogged streets and air pollution.

Why Such a big difference?

The main factor in price disparities between countries
is government policy, Many European nations tax
gasoline heavily, with taxes making up as much as 75
percent of the cost of a gallon of gasoline.
Many of the low prices such as in Venezuela are the
result of a big government subsidy.
In a few Latin America and Middle-East nations, such
as Venezuela and Saudi Arabia, oil is produced by a
government-owned company and local gasoline
prices are kept low as a benefit to the nation's
citizens.

What now?
Since many consumers around the world are paying
outrageous prices for gas, they are urging for
o
o

Changes in policies
Finding and investing in alternative sources for fuel

Besides the economic need there is also needs

because of environmental, geopolitical and
sustainability concerns .
o

Environmental groups have for years been arguing that we shall

all have to live radically different lives when the oil reserves are
finally exhausted.
The benefit of the present oil price hikes could be to focus attention
on the possibility of a world less dependent on oil.
The truth is that they probably never will be. Oil will simply become
too expensive to compete with other fuels.

Renewable Resources
Renewable energy is energy generated from natural resources
which are renewable (naturally replenished)
Success Stories
Germany
Hydropower
Solar Power

Wind
Biomass

Requiring utilities to buy

renewable power
A good idea
80%
A bad idea
20%

Ethanol
Ethanol is a renewable fuel made from various
plant materials, which are called "biomass.
o Examples: Switchgrass, hemp, corn, willow,
sugarcane
o biofuels emit far fewer greenhouse gasses
United States
o corn grain
o

Food versus fuel debate

Brazil
o sugar cane

Using more biofuels

A good idea
45%
A bad idea
55%
Total responses to this
question: 41876

Hybrids
A hybrid vehicle is a vehicle that
uses two or more distinct power
sources to propel the vehicle. Power
sources include:
o On-board or out-board
rechargeable energy storage
system (RESS)
o Gasoline
o Hydrogen
The term most commonly refers to
Hybrid-electric vehicle (HEV) which
includes internal combustion engines
and electric motors

Nuclear Power
Some people still put their hopes in
nuclear power, which makes far less
of a contribution to global warming
Today, more than 15% of the world's
electricity comes from nuclear power
The long-term radioactive waste storage
problems of nuclear power have not been
solved.
o Concerns about health risks
The world's nuclear industry has had
serious accidents. Many people
therefore reject new nuclear plants in
the belief that more accidents are
inevitable.
Building more nuclear plants
A good idea
79%
A bad idea
21%
Total responses to this question:
43308

Conservation
Some people suggest that
greater concentration on
conservation is key
o Most of us all over
the world still waste
fuel on a excessive
scale, and the
savings we could
make by greater
efficiency, and by
just switching off,
are immense.

QuickTime and a
TIFF (Uncompressed) decompressor
are needed to see this picture.

The Heated Debate

on Drilling

The heated debate on drilling:

The debate on drilling has been going on since 2004.
When Americans began weighing the pros and cons to
offshore and Alaskan drilling.
A few pro's:
Lower fuel prices
Less dependency on foreign oil

Con's:
Continue to destroy the environment

Natural disasters here has spurred even more talk on this

debate. Generally because hurricanes in the paths of oil
production rigs because they create imbalances to supply
and demand which affect the price of gas.

Political Standpoints on Drilling:

Republicans:
promote supply-side solutions like drilling offshore and in an
Alaska wildlife refuge.
At the Republican National Conference Presidential Nominee John
McCain calls for "Drill Baby Drill" and "Drill Now".
Democrats:
mostly push demand-side ideas such as renewable energy
sources.
opposition comes from the idea that drilling will affect natural
habitats and have a small impact on gas prices.
Democratic Presidential Nominee Barack Obama encouraged
inflating tires to the proper level instead of drilling. But in August
shifted his opposition to drilling saying he could support the new
drilling proposal drafted by Congress (Saine).

The Oil and Natural Gas Value Chain

1)Exploration- Seismic exploration locates hydrocarbons on land or under the sea
2) Preparing the Drill
3) Drill to receive the resources
4) Extracting the oil
5) Production and Transport:The oil and gas are then transported, either by ship or pipeline, to
processing facilities. Facilities remove impurities and convert oil and gas to refined products and
petrochemicals we use daily.
6) Market- at the gas pump

1) Seismic Exploration
Seismic waves reflect off rock formations
and travel back to hydrophone receivers.
Geologists then estimate the structure and
types of formations under land by
measuring travel times of the returned
energy.
This tells them where to drill.

2) Preparing to drill requires:

Clearing the land and building access
roads.
Have a source of water nearby, or drill a
water well.
Digging a reserve pit for rock and mud that
comes up in the drilling process.

Examples of drill ships

The Discoverer Deep
Seas drill ship sits off
the coast of Louisiana
as Chevron drills for
oil in the Gulf of
Mexico.

Drilling off the

coast of Cuba.

continued value chain

3) Drilling:
Drill the surface hole, and after reaching the preset depth, cement the casing so it does not
collapse.
Drilling continues in stages: They drill, then run
and cement new casings, then drill again.
Run tests to make sure they are at the right
depth.
4) Extracting the Oil:
Remove the drill, and place a pump on the well
head.The pump system forces the pump up and
down, creating a suction that draws oil up
through the well.
If the oil is too heavy a second hole is drilled
where steam pressure is injected.
Heat from the steam thins the oil, and the
pressure pushes it up the well.
.

5) Production
Gas and oil are gathered and transported, through pipelines or ships, to processing
facilities.
Gasoline and natural gas are used as fuel in the transportation sector.
Oil can be stored in specially built tanks before being processed into products or
exported.
Oil and gas can be used as fuel in the generation of electrical power.
Oil and gas are exported either as refined products or crude oil in specialized tankers.
6) Social and Economic Benefit
The activities of the oil value chain create wealth in
the form of taxes, and dividends for countries and
help provide more employment opportunities.

Oil Barrel Politics:

Running on Volatility

The Oil Curse

1970s
o
o

Oil Boom
Fast Growth among
OPEC nations

2005
o

After decades of sluggish

growth, if not recession,
over 50% of countries
poorer

Dutch Disease
1960s

Oils Political Effects

1) Economic and Political
Instability

Volatile prices = volatile job

market
When people are out of
work they are more
susceptible to violence

Oils Political Effects

2) Supports Insurgents
Steal & Sell
Extortion
Political Alliances

Oils Political Effects

3) Increases Separatism
Massive revenues, little
disbursement of wealth
Underrepresented locals
bear brunt of costs

The Oil Producing Countries is

relatively fixed, right?

Wrong!
:(

Countries contending for Arctic

Ocean Drilling & Shipping Rights

Canada
Denmark
Russia
Finland
USA

Russia staking its claim

Russia petitioned UN to extend continental
shelf - seeking exclusive exploration rights
2007, Russia planted a flag on the extreme
edge of its continental shelf, under the North
Pole

Works Cited
Freundenrich Ph.D., Craig. "How Oil Drilling Works". 2008
http://science.howstuffworks.com/oil-drilling3.htm
National Gas Company of Trinidad and Tobago. "Natural Gas Value
Chain". 2007
http://www.ngc.co.tt/knowledge/knowledge_value_chain.htm
Reuters, Thomas. "Five Questions about U.S. offshore Drilling" 14 July
2008.
http://www.reuters.com/article/newsOne/idUSN1443189420080715?
sp=true
Saine, Cindy. "Obama Softens His Stance on Offshore Oil Drilling" 02
August 2008
http://www.voanews.com/english/archive/2008-08/2008-08-02voa7.cfm?CFID=42787907
&CFTOKEN=5617557
UTC Energy Investment Series. "The Energy Value Chain"
http://www.ttutc.com/news/article/energy/value_chain.pdf
http://money.cnn.com/2008/02/01/news/companies/exxon_earnings/
http://www.energyintel.com/documentdetail.asp?document_id=218175
https://www.cia.gov/library/publications/the-worldfactbook/rankorder/2178rank.html
http://www.washingtonpost.com/wpdyn/content/article/2008/06/09/AR2008060900714.html
http://www.saudiaramco.com/irj/portal/anonymous
http://library.marketlineinfo.com.proxy2.library.uiuc.edu/library/
http://www.opec.org/aboutus/history/history.htm
http://www.businessspectator.com.au/bs.nsf/Article/Statement-from-149thMeeting-of-the-OPEC-Conferenc-JC58W?OpenDocument

Sources

Borgerson, Scott. Arctic Meltdown. Foreign

Affairs, March/April 2008
Carbon-cutters.com (Oily World Image)
Ebrahim-zadeh, Christine . Finance &
Development. IMF. V40, 1. March 2003.
media.washingtontimes.com (background
image)
Nasa.gov (North Sea Image)
Ross, Michael. Blood Barrels. Foreign
Affairs, May/June 2008
Russia-ic.com
Wikimedia.org (OPEC image)
worldproutassembly.org (arctic sea image)

Sources
http://72.3.136.90/NACS/Resource/PRToolkit/Ca
mpaigns/prtk_gp2008_Resources.htm
http://www.npr.org/templates/story/story.php?sto
ryId=6542617
http://money.cnn.com/galleries/2008/news/0807/
gallery.energy_solutions/13.html
http://www.eia.doe.gov/oil_gas/petroleum/info_g
lance/Petroleum.html
http://www.portfolio.com/interactivefeatures/2008/08/Gas-Prices-Around-the-World
http://www.nytimes.com/2006/04/10/world/ameri
cas/10brazil.html