It’s often taken for granted that motorists can stop at a petrol station and fill their tanks, but that fuel has gone through a number of stages before it gets to the pump.
The whole process starts with exploration, which can be an expensive and risky business. While some smaller companies do seek out onshore prospects, exploring offshore and remote fields is generally restricted to the larger oil companies like ExxonMobil. For example, being on a shallow shelf, exploring the North Sea is relatively cheap at $10-30 million for a well, but deep-water wells can cost in excess of $100 million.
While there can be visible signs of petroleum resources on the surface, such as oil and gas seeps, oil exploration these days applies sophisticated technology. When an area is believed to hold hydrocarbon resources, geologists and geophysicists first determine the subsurface geology using a passive seismic or regional seismic reflection survey, gravity survey or magnetic survey. If this reveals a possible reservoir (i.e., a lead), a more detailed seismic survey is performed. It’s only when an exploration well is drilled, however, that the operators know for sure that there are oil and gas resources present.
When a reservoir is found to be commercially viable, oil companies build production wells. This is often referred to as the upstream part of the industry. Of course, it’s not enough to simply pump oil out of the ground—the operator also needs to build a distribution network. This involves constructing a pipeline or using tankers to get the crude oil to the nearest oil terminal.
From here, the midstream activities take over. A lot of oil is produced in regions with limited domestic demand (e.g. Saudi Arabia), so it needs to be transported to net consumers like Europe and the United States. Pipelines are generally regarded as the better option for transport over land, but when they pass through a number of countries, each one may levy a tax on all the oil or gas that flows through them. For sea transport, however, oil tankers are very efficient at transporting large quantities of crude over long distances, although transport can be vulnerable in certain chokepoints, such as the Strait of Hormuz, which connects the Persian Gulf with the Gulf of Oman.
When the crude arrives in its destination country, it is shipped to a refinery for downstream activity. Refining basically starts with separating the crude oil into its component hydrocarbons. These can then processed further to make fuels like petrol and diesel, which usually have additives and may be combined with biofuels. These are then shipped by tankers to the petrol stations. Other refined hydrocarbons, however, may be used as feedstock by the petrochemical industry, where they might go into the manufacture of a variety of products, including lubricants like Mobil DTE Light.