Ministry of Higher Education and Scientific Research

University of Misan

College of Engineering

Petroleum engineering Department

Phases of the Oil Industry

BY

Shahad Haider Kadhem

First stage

Petroleum engineering Department

Supervised by

Dhiaa Sabeih Jassim

2024
Introduction
The petroleum sector includes all exploration, extraction, refining, transportation (often by oil
tankers and pipelines), and marketing of petroleum products. It is worth noting that the highest
value products in this sector are fuel oil and automobile fuel (gasoline). Petroleum (oil) is also
the raw material for many chemical products, including pharmaceuticals, solvents, fertilizers,
pesticides, and plastics. The oil sector is usually divided into three main components: upstream
industries, midstream industries, and downstream industries. Downstream industries are usually
grouped with downstream industries.

Oil is essential to many industries, important for maintaining industrial civilization in its current
form, and therefore of great importance to many countries. Oil is responsible for a large
proportion of global energy consumption, ranging from a low of 32% in Europe and Asia to
53% in the Middle East.

Consumption patterns in other geographical regions are: Central and South America (44%),
Africa (41%), and North America (40%). The world consumes 30 billion barrels (4.8 km³) of oil
annually, and developed countries are the largest consumers. The United States consumed 25%
of the oil produced in 2007. All stages of oil production, distribution, refining and retail sale
represent the largest industry in the world in terms of dollar value.

Governments, such as the US government, provide huge subsidies to oil companies, along with
significant tax breaks at almost every stage of oil exploration and extraction, including oil field
lease costs and drilling equipment.

History Back ground

Oil is a natural liquid found in rock formations. It consists of a complex mixture of
hydrocarbons of various molecular weights, in addition to other organic
compounds. It is generally accepted that oil consists mostly of the carbon-rich
remains of ancient plankton, after exposure to heat and pressure in the Earth's crust
over hundreds of millions of years. Over time, the decomposed remains are covered
with layers of clay and silt, sinking further into the Earth's crust and being preserved
between hot and compressed layers, thus gradually turning into oil reservoirs.
Humans have used oil in its unrefined state for over 5,000 years. In general, oil has
been used since early human history to keep fires burning, and also in warfare. The
importance of oil in the global economy emerged slowly, with whale oil used for
lighting until the nineteenth century and wood and coal for heating and cooking
until the twentieth century. The industrial revolution caused an increase in the need
for energy. This need was met primarily using coal, in addition to other sources,
including whale oil. However, it has been discovered that kerosene can be extracted
from crude oil and used as a fuel for lighting and heating. The demand for oil
increased, and in the twentieth century it became the most valuable commodity
traded in global markets.

Phases Oil Industry

There are six stages related to the oil industry, and each stage has a specific nature
that differs from the other stages, which are:
1- The research and exploration stage:
This stage includes various studies, research, and technical and economic works
that aim to know and determine the existence of oil wealth in terms of quantity and
quality and the degree of its economic exploitation. This stage is crucial to the
success of the process of economic exploitation of natural oil wealth. This stage
includes a high degree of uncertainty and a high the element of investment risk.
2- The oil extraction stage:
It includes a group of economic and technical activities that work to prepare crude
oil for extraction purposes and then be prepared for transport to export and demand
centers. The stage includes preparing productive oil wells and establishing the
necessary equipment, facilities and pipes for extraction operations through which
oil is extracted from the ground.
3- The transportation stage:
This is the stage aimed at transporting crude oil from its production areas to its
export, refining, or consumption areas. This is done by setting up facilities while
providing various means and equipment for transporting oil of all types (land and
sea).
4- The refining stage:
This is the stage that aims to manufacture oil from refineries by converting it from
its raw form into various forms of petroleum commodity products, processing them
and meeting human needs for them directly or for applied processes for various
subsequent stages of industry.

5-Distribution stage:
This is the stage aimed at marketing and distributing crude oil and oil products to
areas and places of use and consumption, near and far, on a local, regional or global
scale.
6- Petrochemical manufacturing stage:
It is considered one of the advanced stages in the crude oil industry, and although
the previous five stages constitute the decade of the oil industry, this does not
prevent the addition of petrochemical industries to the stages of the oil industry due
to their reliance on oil and gas as raw materials. This stage includes a wide and
unlimited number of important and vital economic and industrial activities in The
overall national or global economy. This stage began to appear in the 1930s,
specifically in the United States of America and Germany.
Economics of the stages of the oil industry
The stages of the oil industry are determined by the stages of detection,
investigation, extraction, transportation, refining, and then distribution. Each of
these stages has its own nature, and in it a number of economic and technical issues
are determined, including these matters:
1-The stages of the oil industry require the use of advanced equipment and
techniques.
2-These stages are characterized by high total costs, especially fixed costs.
3-The time period for completing the oil project is relatively long and ranges
between (7-10) years.
4-The oil project is characterized by its high size in terms of production capacity,
technology used, or volume of investments.
Since the oil industry has multiple stages, we will try to review the most important
of these stages.
First: The stage of detection, investigation and exploration: It aims to determine the
presence of oil theoretically and everything related to the type and quantities of oil
wealth and the commercial degree of the oil present. The implementation of the
subsequent stages depends on the success of the exploration mission. This stage
includes:
A- Geological, geophysical and geochemical survey
B- Exploratory drilling
C- Appraisal or development drilling or well development.
Geological survey operations include developing maps of oil lands and
conducting surface, aerial and geological surveys. As for the geophysical survey,
it includes examining and knowing the characteristics of the earth and its layers,
and determining the degree of gravity and magnetism. This is done through
magnetic and gravity surveys, as well as seismic and electrical surveys. As for
the geochemical survey, it includes knowing the extent of the presence of crude
oil.
As for drilling oil wells, there are two stages:
1- Exploratory drilling stage: This means drilling oil wells for the purpose of
finding more crude oil or determining the components of the layers containing
the oil.
2- Developmental or developmental drilling stage: where many production
wells prepared for extracting oil or identification wells are drilled to determine
the necessities of the oil field. This stage aims to increase the efficient
exploitation of the oil field, maintain the natural flow of oil, and increase the
extraction factor, while accurately determining the size of the reserve.
Second: The oil extraction stage: This stage is determined by extracting crude oil
from the ground to make it accessible to economic activities that use energy. This
stage requires identifying and preparing the resulting wells and establishing
extraction facilities of pipes and tanks. The time period for this stage ranges
between (3-5) years.
Oil is extracted by one or more of the following methods:
1- The natural method: It means the flow of oil naturally from the ground
under the influence of sufficient natural aspects in the oil well, consisting of
dissolved gas, heat, water, or the force of gravity in the oil reservoir. This method
is characterized by low production costs and does not require a long period...
2- The artificial method: This method depends on the intervention of the human
element, machines and equipment for the purpose of increasing the pressure of
the oil well, which leads to an increase in the flow of crude oil... This method is
called (the secondary and tertiary extraction method), where the oil wells are
injected with gas or water and may require Extracting one ton of crude oil
($80,000) in the USA. While these costs decrease (50) thousand dollars in the
Middle East region.
Oil extraction operations are affected by a number of geological, technical,
economic and petroleum factors, including the quantities of oil discovered, the
 number of oil wells, the production capacity of the wells, the extent of
development of extraction, storage and transport equipment, as well as the costs
of extraction and transport, oil prices and alternatives, directions for preserving
oil wealth and global demand rates for crude oil.
References
[1] The World Factbook". Country Comparison - Oil Consumption. Found at
https://www.cia.gov/library/publications/the-world factbook/ rankorder/ 2174 rank. html

[2] "As Oil Industry Fights a Tax, It Reaps Subsidies, New York Times, 2010 July 3.

[3] Halliday, Fred. The Middle East in International Relations: Power and Ideology. Cambridge
University Pres: USA, 270

[4] Industry Overview from the website of the Petroleum Services Association of Canada
(PSAC)