What actually is oil?
When scrolling through social media or news sites today, it’s common to see headlines about an LPG shortage, countries releasing oil reserves, or rising naphtha prices. Most people tend to skim past these reports and continue with their day. However, recent events have brought the world’s oil-related crisis to our doorsteps. With restaurants in India closing early due to a gas shortage, people are turning to induction cookers as a substitute. The demand for LPG cylinders has surged, and crude oil prices briefly spiked to $120 per barrel, a level unseen since 2022.
The International Energy Agency (IEA) made history by agreeing to release 400 million barrels from its members’ strategic reserves, more than double the amount released during Russia’s invasion of Ukraine. In light of these events, it has become evident that there are many terms and byproducts associated with oil that remain a mystery to most of us. Understanding the connection between them, the essence of oil itself, and where all these products like LPG and LNG originate from is crucial.
Crude oil can be traced back to around 100 million years ago when microscopic marine organisms such as algae and bacteria perished and settled at the ocean’s bottom. Over millions of years, these organic remains were buried under sediment and rock layers, undergoing intense heat and pressure that transformed them into a thick liquid trapped within subterranean rock formations – this liquid is crude oil. The term “crude” simply signifies raw and unprocessed oil in its natural state. Petroleum is another word used interchangeably for the same substance.
Not all crude oil is alike; it varies based on weight and sulfur content. Light crude contains shorter, simpler hydrocarbon molecules, making it easier for refineries to extract gasoline and diesel from it. In contrast, heavy crude comprises more complex molecules, which are challenging to process. Furthermore, crude oil can be classified as sweet or sour based on its sulfur content. Sweet crude contains minimal sulfur and requires less processing, while sour crude contains high sulfur levels that necessitate treatment before use. These distinctions play a significant role in pricing and processing crude oil globally.
Middle Eastern crude oils like Saudi, Iraqi, Kuwaiti, and Iranian varieties tend to be heavier and sourer, requiring extensive processing. In contrast, US and Norwegian crude oils are lighter and sweeter, commanding a premium due to their ease of processing. Refineries worldwide share a common goal of converting any type of crude oil they receive into valuable products.
To make crude oil usable, the process of fractional distillation is employed. This method involves heating crude oil until it vaporizes, then directing the vapor into a tall steel tower with varying temperatures, where different molecules condense at different heights based on their boiling points. The fractions obtained from this process yield various products: LPG, naphtha, petrol, kerosene, diesel, fuel oil, and bitumen. These products are integral to everyday items and activities, from household gases to road surfacing materials.
In addition to crude oil, natural gas is often found in the same underground reservoirs as oil and is usually lighter, floating above the liquid oil layer. Natural gas and crude oil are distinct commodities, albeit closely related in terms of discovery and extraction. Both hold significant importance in the global energy landscape, with natural gas serving as a vital component alongside crude oil.