The Global Oil Industry

1. The Global Oil Industry BADM 381: September 30, 2008 Kelley Sheehan Kailyin Young Caleb Ganzer Caroline Bobrecki

2. Proven World Oil Reserves https://www.cia.gov/library/publications/the-world-factbook/rankorder/2178rank.html

3. Petroleum Intelligence Weekly's Ranking of Top Oil Companies https://www.cia.gov/library/publications/the-world-factbook/rankorder/2178rank.html Published December of 2007

4. 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

5. 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.

6. 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.

7. Organization of Petroleum Exporting Countries (OPEC) • Created in 1960 • Original Member Countries • Iran • Iraq • Kuwait • Saudi Arabia • Venezuela • Objective statement

9. 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

10. US Oil Imports

11. 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.

12. Oil Consumption and Consumer Responses to Oil prices

13. Did you know? The United States alone consumes about 20,687barrels 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 world’s 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.

14. Did You Know? The United States produces about 10% of the world’s petroleum and consumes 24%. About 20.7 millions barrels per day, making us the world’s largest petroleum consumer. (2007)

15. 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.

16. Gasoline  (Cents per Gallon) Gas Prices now In the U.S. 09/22/08 Change from Price Week Ago Year Ago U.S. 3.718 -.117    .906 East Coast 3.721 -.88    .952   New England 3.601 -.54    .862   Central Atlantic 3.634 -.38    .878   Lower Atlantic 3.821 -.136 1.034 Midwest 3.754 -.192    .893 Gulf Coast 3.678 -.79    .973 Rocky Mountain 3.651 -.103    .834 Average: $3.73 West Coast 3.693 -.77    .784   California 3.725 -.79    .764

17. A look around the World Nation Price in USD Regular/Gallon Nation Price in USD Regular/Gallon Bolivia $1.95 Gaza Strip *****$26.50**** Iraq $1.44 Turkey $11.18 Netherlands $9.97 Ecuador $1.40 Norway $9.95 Egypt $1.24 Zambia $9.88 Oman $1.18 Denmark $9.29 Yemen $1.14 Findland $9.27 Qatar $0.73 Italy $9.09 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

18. 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.

19. 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.

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

21. Renewable Resources Hydropower Solar Power Renewable energy is energy generated from natural resources which are renewable (naturally replenished) Success Stories Germany Wind Biomass Requiring utilities to buy renewable power A good idea           80% A bad idea    20%

22. Ethanol Ethanol is a renewable fuel made from various plant materials, which are called "biomass.” Examples: Switchgrass, hemp, corn, willow, sugarcane biofuels emit far fewer greenhouse gasses United States corn grain Food versus fuel debate Brazil sugar cane Using more biofuels A good idea     45% A bad idea     55% Total responses to this question: 41876

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

24. 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. 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

25. Conservation Some people suggest that greater concentration on conservation is key 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.

26. The Heated Debate on Drilling

27. 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.

28. 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).   Political Standpoints on Drilling:

29. 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

30. 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.

31. 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.

32. continued value chain • 3) Drilling: • Drill the surface hole, and after reaching the pre-set 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. • .

33. 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 BenefitThe activities of the oil value chain create wealth in the form of taxes, and dividends for countries and help provide more employment opportunities.

34. Oil Barrel Politics: Running on Volatility

35. The ‘Oil Curse’ 1970s Oil Boom Fast Growth among OPEC nations 2005 After decades of sluggish growth, if not recession, over 50% of countries poorer

37. Dutch Disease 1960s

40. Oil’s Political Effects 1) Economic and Political Instability Volatile prices = volatile job market When people are out of work they are more susceptible to violence

41. Oil’s Political Effects 2) Supports Insurgents Steal & Sell Extortion Political Alliances

42. Oil’s Political Effects 3) Increases Separatism Massive revenues, little disbursement of wealth Underrepresented locals bear brunt of costs

43. The Oil Producing Countries is relatively fixed, right?

44. Wrong! :(

45. Countries contending for Arctic Ocean Drilling & Shipping Rights Canada Denmark Russia Finland USA

46. 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

47. 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/2008-08/2008-08-02-voa7.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-world-factbook/rankorder/2178rank.html http://www.washingtonpost.com/wp-dyn/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-149th-Meeting-of-the-OPEC-Conferenc-JC58W?OpenDocument

48. 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)

49. 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/interactive- features/2008/08/Gas-Prices-Around-the-World http://www.nytimes.com/2006/04/10/world/americas/10brazil.html