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G ∑ THE SEVEN SISTERS— OLD AND NEW In chapter 2 we saw something of the oil industry’s past; here, I examine in more detail its present and future. Oil is our biggest single source of energy, as we saw in figure 2.6. Most of this energy is used for transportation, and almost all transportation is fueled by oil. Natural gas—often but not always associated with oil for geological reasons—is the world’s second most significant source of fuel, and in the future it will overtake oil; between them, they account for 65% of our energy needs today. Oil and natural gas form the subject of this chapter. We will examine their extraction, refining and distribution , environmental and economic impact, and their future as primary energy sources. Overview We have found many applications for crude oil today beyond the obvious and most significant use as a fuel for transportation (gasoline, diesel, and jet fuel). We use oil as a lubricant; we use it as tar and asphalt. Components of crude oil make para≈n wax or can be used to manufacture di√erent plastics. The raw stu√ that comes out of the ground is a variable mixture of di√erent hydrocarbon compounds, as we will see when I discuss the refining process. Here, we need to know that crude oil comes out of the ground sweet or sour, light or heavy, and with a variable viscosity (resistance to flow). Sweet oil has low sulfur content. Since sulfur has to be extracted from oil before it can be used as a fuel, sweet oil is preferable to sour oil, which has a high sulfur content and is therefore more expensive to refine. Light oil has a lower density and viscosity than heavy oil. This is because it consists of a low percentage of the large, heavy hydrocarbon molecules that form resins and wax, and a high percentage of light hydrocarbon molecules, such as octane, The Seven Sisters—Old and New ∞≠∑ that are used as fuel. Thus, given that most crude oil is earmarked for fuel, light crude is more desirable than heavy crude. Oil from di√erent parts of the world has di√erent characteristics. West Texas Intermediate is very sweet (with a sulfur content of only 0.24%) and very light—good stu√ if you are a petroleum engineer. Brent Crude (from under the North Sea o√ the coasts of Scotland and Norway) is sweet and light but not quite as sweet and light as WTI. Dubai Crude is light but sour (2% sulfur content). The type of crude oil that is extracted from tar sands (also know as ‘‘oil sands’’) is both very heavy and sour. As you might imagine , no oil company would bother with tar sands oil if there were enough sweet and light crude; 40 years ago this oil was simply too expensive to extract and refine and so was left in the ground. Today, tar sands and oil shale figure prominently in our supply and crucially in our reserves. We will see in a later section why our attitude to tar sands oil has changed. Volatility Here is a broad hint as to why less attractive tar sands have become important over the last 40 years: conventional oil deposits (those not from shale or tar sands) tend to be in unstable parts of the world—unstable both geologically and politically. Geologically, oil is found in young sedimentary rocks close to recently active tectonic plate boundaries—read earthquake risk. Politically, the easiest oil to extract happens to be underneath volatile parts of the human world (Iran, Nigeria, the Middle East, Russia, Venezuela).1 The distribution of proven oil reserves is very uneven. More than half of the proven reserves are in Saudi Arabia, Kuwait, Iran, and Iraq: over 65% of crude oil comes from 1% of the giant fields. Oil as a chemical substance is volatile. Oil geopolitics is volatile. Add to this heady mix the volatility of big business, which oil extraction and refining certainly is, and you can understand very easily why crude oil prices fluctuate wildly, a situation shown in figure 5.1, where prices are graphed for the years 1987–2011. Nor was the situation more stable in the past: figure 5.1 omits the upheavals of the 1970s (the 1973 OPEC oil embargo, the 1979 Iranian revolution). I will not provide you with a history or an analysis of the politics...

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