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Oil (petroleum)

Energy Ant

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Oil (petroleum) Basics

What is crude oil and what are petroleum products?

Crude oil is a mixture of hydrocarbons that formed from plants and animals that lived millions of years ago. Crude oil is a fossil fuel, and it exists in liquid form in underground pools or reservoirs, in tiny spaces within sedimentary rocks, and near the surface in tar (or oil) sands. Petroleum products are fuels made from crude oil and other hydrocarbons contained in natural gas. Petroleum products can also be made from coal, natural gas, and biomass.

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Getting (Producing) Oil

U.S. refineries obtain crude oil produced in the United States and in other countries. Different types of companies supply crude oil to the world market.

Where is U.S. crude oil produced?

Crude oil is produced in 31 U.S. states and in U.S. coastal waters. In 2015, about 65% of U.S. crude oil production came from five states:

  • Texas—37%
  • North Dakota—12%
  • California—6%
  • Alaska—5%
  • Oklahoma—5%

In 2015, about 16% of U.S. crude oil was produced from wells located offshore in the federally administered waters of the Gulf of Mexico.

Although total U.S. crude oil production generally declined between 1985 and 2008, annual production increased from 2009 to 2015. More cost-effective drilling technology helped to boost production, especially in Texas, North Dakota, Oklahoma, New Mexico, and Colorado.

Many countries produce crude oil

About 100 countries produce crude oil. In 2014, 47% of the world's total crude oil production came from five countries:

  • Russia—13%
  • Saudi Arabia—13%
  • United States—11%
  • China—5%
  • Canada—4%

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Offshore Drilling

What is offshore?

Image of a coastline
image of coastline from above

Source: Stock photography (copyrighted)

Map showing Exclusive Economic Zone around the United States and Territories
Map showing Exclusive Economic Zone around United States and territories.
Click to enlarge »

Source: National Energy Education Development Project (public domain)

Diagram of shore and ocean overlaid with territorial sea, Exclusive Economic Zone, the Continental Shelf, and Continental Slope
diagram of land and ocean overlayed with 3 miles of territorial sea, 200 miles of Exclusive Economic Zone, the Continental Shelf, and Continetal Slope.
Click to enlarge »

Source: National Energy Education Development Project (public domain)

The coastlines of the United States are not the actual borders of the United States. The U.S. border is actually 200 miles away from the coastline. This area around the country is called the Exclusive Economic Zone (EEZ).

In 1983, President Ronald Reagan claimed the EEZ in the name of the United States. In 1994, all countries were granted an EEZ of 200 miles from their coastlines under the International Law of the Sea.

The ocean floor extends from the coast into the ocean on a continental shelf that gradually descends to a sharp drop, called the continental slope. The width of the U.S. continental shelf varies from 10 miles to 250 miles (16 kilometers to 400 kilometers). The water on the continental shelf is relatively shallow, rarely more than 500 feet to 650 feet (150 meters to 200 meters) deep.

The continental shelf drops off at the continental slope, ending in abyssal plains that are 2 miles to 3 miles (3 kilometers to 5 kilometers) below sea level. Many of the plains are flat, while others have jagged mountain ridges, deep canyons, and valleys. The tops of some of these mountain ridges form islands where they extend above the water.

Several federal government agencies manage the natural resources in the EEZ. The U.S. Department of the Interior's Bureau of Ocean Energy Management and Bureau of Safety and Environmental Enforcement manage the development of offshore energy resources by private companies that lease areas for energy development from the federal government. These companies pay royalties to the government on the energy resources they produce from the leased areas in the ocean. Most states control the 3-mile area that extends off of their coasts, but Florida, Texas, and some other states control the waters for as much as 9 to 12 miles off of their coasts.

Most of the energy the United States gets from the ocean is oil and natural gas from wells drilled on the ocean floor. Other energy sources are under development offshore. An offshore wind energy project is underway off the coast of Rhode Island and other wind energy projects are under consideration in several other areas off the Atlantic coast. Wave energy, tidal energy, ocean thermal energy conversion, and methane hydrates are other energy sources currently under development or exploration.

Read about Energy Ant's visit to an offshore rig or learn about jobs in the offshore.

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What Fuels Are Made From Crude Oil?

What is a refinery?

Petroleum refineries convert crude oil and other liquids into many petroleum products that people use every day. Most refineries focus on producing transportation fuels. On average, U.S. refineries produce about 19 gallons of motor gasoline, 12 gallons of ultra-low sulfur distillate fuel, most of which is sold as diesel fuel, and 4 gallons of jet fuel from a 42 gallon barrel of crude oil. More than a dozen other petroleum products are also produced in refineries. Petroleum refineries also produce liquids that are used by the petrochemical industry to make a variety of chemicals and plastics.

A photo of the Pascagoula Refinery in Mississippi
A night photo of the Pascagoula Refinery, Mississippi

Source: Stock photography (copyrighted)

Refineries operate 24/7

A refinery runs 24 hours a day, 365 days a year and requires a large number of employees. A refinery can occupy as much land as several hundred football fields.

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Refining Process

How crude oil is refined into petroleum products

Petroleum refineries change crude oil into petroleum products that are used as fuels for transportation, heating, paving roads, and generating electricity. Petroleum products are also used as feedstocks for making chemicals.

Refining breaks crude oil down into its various components, which are then selectively reconfigured into new products. Petroleum refineries are complex and expensive industrial facilities. All refineries have three basic steps:

Diagram of a refinery process flow. Adapted from Chevron.

Note: LPG is liquid petroleum gas.
Source: Adapted from Chevron


Modern separation involves piping crude oil through hot furnaces. The resulting liquids and vapors are discharged into distillation units.

Inside the distillation units, the liquids and vapors separate into petroleum components called fractions according to their weight and boiling point. Heavy fractions are on the bottom and light fractions are on the top.

The lightest fractions, including gasoline and liquid petroleum gas (LPG), vaporize and rise to the top of the distillation tower, where they condense back to liquids.

Medium weight liquids, including kerosene and diesel oil distillates, stay in the middle of the distillation tower.

Heavier liquids, called gas oils, separate lower down in the distillation tower, while the heaviest fractions with the highest boiling points settle at the bottom of the tower.

Fluid catalytic cracking distillation unit
Richmond Refinery, Fluid Catalytic Cracking Distillation Column.

Source: Chevron (copyrighted).

Refining workers overlooking a refinery
Caltex, Star Petroleum Refinery, Refining workers overlook refinery

Source: Chevron (copyrighted).


After distillation, heavy, lower-value distillation fractions can be processed further into lighter, higher-value products such as gasoline. This is where fractions from the distillation units are transformed into streams (intermediate components) that eventually become finished products.

The most widely used conversion method is called cracking because it uses heat and pressure to crack heavy hydrocarbon molecules into lighter ones. A cracking unit consists of one or more tall, thick-walled, rocket-shaped reactors and a network of furnaces, heat exchangers, and other vessels.

Cracking is not the only form of crude oil conversion. Other refinery processes rearrange molecules to add value rather than splitting molecules.

Alkylation, for example, makes gasoline components by combining some of the gaseous byproducts of cracking. The process, which essentially is cracking in reverse, takes place in a series of large, horizontal vessels and tall, skinny towers.

Reforming uses heat, moderate pressure, and catalysts to turn naphtha, a light, relatively low-value fraction, into high-octane gasoline components.


The finishing touches occur during the final treatment. To make gasoline, refinery technicians carefully combine a variety of streams from the processing units. Octane level, vapor pressure ratings, and other special considerations determine the gasoline blend.


Both incoming crude oil and the outgoing final products need to be stored. These liquids are stored in large tanks on a tank farm near the refinery. Pipelines then carry the final products from the tank farm to other tanks across the country.

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Oil & the Environment

How does oil affect the environment?

Crude oil is used to make the petroleum products we use to fuel airplanes, cars, and trucks; to heat homes; and to make products such as medicines and plastics. Although petroleum products make life easier, finding, producing, and moving crude oil may have negative effects on the environment. Technological advances in exploration, production, and transportation of oil and enforcement of safety and environmental laws and regulations help to avoid and reduce these effects.

Technology helps reduce the effects of drilling for and producing oil

Exploring and drilling for oil may disturb land and marine ecosystems. Seismic techniques used to explore for oil under the ocean floor may harm fish and marine mammals. Drilling an oil well on land often requires clearing an area of vegetation. However, technologies that significantly increase the efficiency of exploration and drilling activities also reduce effects on the environment. Satellites, global positioning systems, remote sensing devices, and 3-D and 4-D seismic technologies make it possible to discover oil reserves while drilling fewer exploratory wells. Mobile and smaller slimhole drilling rigs reduce the size of the area that drilling activities affect. The use of horizontal and directional drilling makes it possible for a single well to produce oil from a much larger area, which reduces the number of wells necessary to develop an oil resource.

Hydraulic fracturing

An oil production technique known as hydraulic fracturing, or fracking, is used to produce oil from shale and other tight geologic formations. This technique has allowed the United States to significantly increase domestic oil production and reduce U.S. oil imports. Hydraulic fracturing has some effects on the environment. Fracturing rock requires large amounts of water, and it uses potentially hazardous chemicals to release the oil from the rock strata. In some areas of the country, significant water use for oil production may affect the availability of water for other uses and can potentially affect aquatic habitats. Faulty well construction or improper handling may result in leaks and spills of fracturing fluids.

Hydraulic fracturing also produces large amounts of wastewater that may contain dissolved chemicals and other contaminants, which may require treatment before disposal or reuse. Because of the amount of water used and the complexity of treating some of the wastewater components, treatment and disposal are important and challenging issues. Wastewater is frequently disposed of by injection into deep wells, typically into saltwater aquifers. The injection of wastewater can cause earthquakes that may cause damage and are large enough to be felt.

Oil spills

Most oil spills are the result of accidents at oil wells or on the pipelines, ships, trains, and trucks that move oil from wells to refineries. Oil spills contaminate soil and water and may cause devastating explosions and fires. The federal government and industry are developing standards, regulations, and procedures to reduce the potential for accidents and spills and to clean up spills when they occur.

After the Exxon Valdez oil spill in Prince William Sound, Alaska, in 1989, the U.S. Congress passed the Oil Pollution Act of 1990, which requires all new oil tankers built for use between U.S. ports to have a full double hull. In 1992, the International Maritime Organization also established double-hull standards for new oil tankers in the International Convention for the Prevention of Pollution from Ships (MARPOL). The amount of oil spilled from ships dropped significantly during the 1990s partly because of these double-hull standards.

The Deep Horizon drilling rig explosion and oil spill in the Gulf of Mexico in 2010 prompted the U.S. government and the oil industry to review drilling technologies, procedures, and regulations to reduce the potential for similar accidents to occur. The U.S. government also replaced the Minerals Management Service (MMS), which administered offshore oil and natural gas leases, with the Bureau of Ocean Energy Management (BOEM) and the Bureau of Safety and Environmental Enforcement (BSEE) to provide more effective oversight and enforcement of environmental regulations for offshore energy development.

Fish swimming through Rigs-to-Reefs project
Fish swimming through rigs to reef project.

Source: Courtesy of the Mississippi Department of Marine Resources

In response to several major accidents involving trains carrying crude oil, the U.S. Department of Transportation and the Federal Railroad Administration established new standards for railroad tank cars, braking controls, and speed restrictions to reduce the potential for railroad accidents and oil spills.

Restoring old well sites and creating artificial reefs

Oil wells are plugged when they become uneconomic, and the area around the well may be restored. Some old offshore oil rigs are tipped over and left on the sea floor in a Rigs-to-Reefs program. Within a year after a rig is toppled, barnacles, coral, sponges, clams, and other sea creatures cover the rig. These artificial reefs attract fish and other marine life, and they increase fish populations and recreational fishing and diving opportunities.