What Oil and Gas Are

Formation

Petroleum formed from the remains of marine organisms deposited in ancient basins, buried under sediment, and subjected to heat and pressure over millions of years. Organic-rich rock — the source rock — converted that material into hydrocarbons as it passed through a temperature window: oil at moderate depth and temperature, gas at greater depth and higher temperature.

Four conditions must coincide for a commercial accumulation to exist:

• A source rock that generated hydrocarbons.
• A migration path allowing them to move upward through the rock.
• A reservoir rock — porous and permeable, typically sandstone or carbonate — able to hold and yield fluid.
• A trap and seal — an impermeable cap rock and a geometry that stops further migration.

The absence of any one of them is why most of the earth's subsurface contains no producible hydrocarbons, and why exploration is difficult.

Composition

Crude oil is a mixture of hydrocarbon molecules of many sizes, plus sulphur, nitrogen, oxygen and metals. Its characteristics matter commercially:

• Density, expressed as API gravity. Lighter crude yields more of the valuable products and generally commands a higher price.
• Sulphur content — "sweet" crude is low in sulphur and preferred; "sour" crude requires more processing and poses handling hazards.
• Viscosity, pour point and wax content, which determine how easily it flows and what heating or treatment it needs.

Natural gas is mostly methane, with varying amounts of ethane, propane and butane — the natural gas liquids — plus contaminants such as carbon dioxide, hydrogen sulphide, nitrogen and water. Gas found with oil is associated; gas found alone is non-associated.

Products

From crude oil: liquefied petroleum gas, gasoline, jet fuel and kerosene, diesel and heating oil, fuel oil, bitumen, lubricants, waxes, and the petrochemical feedstocks that become plastics, fertilisers, synthetic fibres, solvents and pharmaceuticals. From natural gas: fuel for power generation, heating and industry, feedstock for ammonia and methanol, and natural gas liquids.

It is worth remembering that a substantial and growing part of the industry's output is not burned at all but becomes materials — a point that matters when thinking about the industry's future.