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Oil (petroleum)

Oil (petroleum) basics

What is crude oil and what are petroleum products?

We call crude oil and petroleum fossil fuels because they are mixtures of hydrocarbons that formed from the remains of animals and plants (diatoms) that lived millions of years ago in oceans, lakes, and swamps before dinosaurs roamed the earth. Over millions of years, the remains of these animals and plants were covered by layers of sand, silt, and rock. Heat and pressure from these layers turned the remains into what we now call crude oil or petroleum. Petroleum means rock oil or oil from the earth. Crude oil is found in large underground deposits, in tiny spaces within sedimentary rocks, and near the surface in tar (or oil) sands. Petroleum products are made from crude oil and other hydrocarbons contained in natural gas. Petroleum products can also be made from coal, natural gas, and biomass.

Diatom image: Group of cleaned frustules

Diatoms magnified under a microscope.

Source: Image used by permission from Micrographia

Three images about Petroleum & Natural Gas Formation. Adapted from the National Energy Education Development Project.
									The first image is about the Ocean 300 to 400 million years ago. Tiny sea plants and animals died and were buried on the ocean floor. Over time, they were covered by layers of sand and silt.
									The second image is about the Ocean 50 to 100 million years ago. Over millions of years, the remains were buried deeper and deeper. The enormous heat and pressure turned them into oil and gas.
									The third image is about Oil & Gas Deposits. Today, we drill down through layers of sand, silt, and rock to reach the rock formations that contain oil and gas deposits.

Source: U.S. Energy Information Administration (public domain)

Getting (producing) oil

The United States is one of the largest crude oil producing countries

About 100 countries produce crude oil. The United States was the top crude oil producing country in 2018 through 2022. U.S. oil refineries obtain crude oil produced in the United States and in other countries.

Where is U.S. crude oil produced?

Crude oil is produced in 32 U.S. states and in U.S. coastal waters. In 2022, five states combined accounted for about 72% of total U.S. crude oil production.

  • The top five crude oil-producing states and their percentage shares of total U.S. crude oil production in 2022 were:
  • Texas42.5%
  • New Mexico13.3%
  • North Dakota8.9%
  • Colorado3.7%
  • Alaska3.7%

In 2022, about 14.5% of U.S. crude oil was produced from wells located offshore in the federally administered waters of the Gulf of Mexico and about 0.1% was produced in federal waters off the coast of California.

Although U.S. crude oil production went down in most years between 1985 and 2008, annual oil production went up in nearly every year from 2009 through 2019, reaching the highest amount on record in 2019. Less expensive ways of drilling for and producing crude oil helped to increase production, especially in Texas, North Dakota, Oklahoma, New Mexico, and Colorado. U.S crude oil production declined in 2020 and 2021 mainly because of the effects of the COVID-19 pandemic on the economy.

Many countries produce crude oil

In 2022, 98 countries produced about 80.75 million barrels of crude oil and five countries combined accounted for about 52% of the total.

  • The top five crude oil producing countries and their percentage shares of total world crude oil production in 2022 were:
  • United States14.7%
  • Saudi Arabia13.2%
  • Russia12.7%
  • Canada5.6%
  • Iraq5.5%

Offshore drilling

What is offshore?

Image of a coastline
Image of a coastline

Source: Stock photography (copyrighted)

Map showing Exclusive Economic Zone around the United States and Territories
Map showing Exclusive Economic Zone around the United States and Territories

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.

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.

Source: National Energy Education Development Project (public domain)

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 miles 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. America’s first offshore wind energy project, the Block Island Wind Farm off the coast of Rhode Island, became operational in December 2016. 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 potential ocean energy sources.

Read about Energy Ant's visit to an offshore rig.

What fuels are made from crude oil?

After crude oil is removed from the ground, it is sent to an oil refinery where different parts of the crude oil are separated into useable petroleum products. These petroleum products include gasoline, distillates such as diesel fuel and heating oil, jet fuel, waxes, lubricating oils, and tar (asphalt) and feedstocks (raw materials) for making chemicals.

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

Source: Stock photography (copyrighted)

What is a refinery?

Petroleum refineries convert crude oil and other liquids into many petroleum products that people use every day. U.S. refineries produce about 45 gallons of petroleum products from a 42-gallon barrel of crude oil because of refinery processing gain. This increase in volume is similar to what happens to popcorn when it is popped. A corn kernel is smaller and heavier than a popped kernel. The types and amounts of products produced varies from month-to-month and year-to-year as refineries change production to meet demand for petroleum products and to make the most profit.

Most refineries focus on producing transportation fuels. On average, U.S. refineries produce, from a 42-gallon barrel of crude oil, about 19 to 20 gallons of motor gasoline, 11 to 12 gallons of distillate fuel, most of which is sold as diesel fuel, and 4 gallons of jet fuel. More than a dozen other petroleum products are also produced in refineries. Petroleum refineries produce liquids the petrochemical industry uses to make a variety of chemicals and plastics.

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.

Refining process

How crude oil is refined into petroleum products

Petroleum refineries change crude oil into petroleum products for use as fuels for transportation, heating, paving roads, and generating electricity and 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:


Modern separation involves piping crude oil through hot furnaces. The resulting liquids and vapors are discharged into distillation units. All refineries have atmospheric distillation units, while more complex refineries may have vacuum distillation units.

Diagram of a refinery distillation column and major products produced.
Fluid catalytic cracking distillation unit
Richmond Refinery, Fluid Catalytic Cracking Distillation Column.

Source: Chevron (copyrighted)

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

The lightest fractions, including gasoline and liquefied refinery gases, vaporize and rise to the top of the distillation tower, where they condense back to liquids.

Medium weight liquids, including kerosene and 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.

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, pressure, catalysts, and sometimes hydrogen 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. Complex refineries may have one or more types of crackers, including fluid catalytic cracking units and hydrocracking/hydrocracker units.

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 are stored temporarily in large tanks on a tank farm near the refinery. Pipelines, trains, and trucks carry the final products from the storage tanks to other locations across the country.

Oil & the environment

How does oil affect the environment?

Although petroleum products make life easier, finding, producing, and moving crude oil may have negative effects on the environment. Advances in oil exploration, production, and transportation technologies 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

Hydraulic fracturing, or fracking, is a way to produce oil from shale and other tight underground rock layers. Fracking has helped the United States to increase oil production and reduce oil imports a lot in recent years. However, this method has effects on the environment. Fracturing rock uses large amounts of water and may use chemicals that could be harmful to humans and animals. Faulty well construction and improper handling may result in leaks and spills of fracking liquids. In some areas of the country, large amounts of water used for oil production may affect the availability of water for other uses, including for the plants and animals that live in and close to nearby rivers and streams.

Hydraulic fracturing may also produce large amounts of wastewater from fracked wells that contains harmful compounds. Because treating the wastewater can be difficult and expensive, in some places it is pumped (injected) deep underground. Unfortunately, this disposal method may cause earthquakes that are large enough to damage buildings.

Oil spills

Most oil spills happen because 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 work 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 declined a lot during the 1990s partly because of these double-hull standards.

After the Deep Horizon drilling rig explosion and oil spill in the Gulf of Mexico in 2010, the U.S. government and the oil industry reviewed drilling technologies, procedures, and regulations to help avoid similar accidents in the future. 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 better 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 set new standards for railroad tank cars, braking controls, and train speed limits to reduce the chances for railroad accidents and oil spills.

Restoring old well sites and creating artificial reefs

When oil and natural gas wells become uneconomic, they should be plugged and sealed and the area around the well restored. These procedures are designed to properly seal off subsurface rock formations and to remediate (restore) well sites to their original condition. Wells that are not properly plugged and abandoned can remain a possible hazard, potentially leaking fluids and gases and interfering with future surface development.

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.