Petroleum

Petroleum, or crude oil, is a liquid fossil fuel found in underground rock layers that is composed of a complex mixture of various hydrocarbon molecules. Petroleum comes in varying qualities depending upon the percentages of specific hydrocarbons contained within the liquid and amount of contaminants such as sulfur found dissolved in the petroleum. Petroleum can be found in underground reservoirs either on its own or more commonly along with natural gas. Oil wells bring conventional petroleum to the surface where it is transported to refineries, usually by pipelines, in order to be refined into numerous useful products including gasoline, diesel, jet fuel, propane, fuel oil, plastics, and asphalt. Energy can also be derived from unconventional petroleum resources such as heavy oil, tar sands, and oil shale which will be discussed under Advanced Technologies.

It is estimated that 60% of the world’s remaining recoverable reserves of conventional petroleum lie within the Middle East, led by Saudi Arabia which may hold 22% of the world’s conventional petroleum reserves. In comparison, the U.S., which has been meticulously explored for oil deposits, possesses only 2.4% of the world’s remaining conventional petroleum reserves.

Within the U.S., most of the country’s petroleum production comes from the Gulf Coast and Midwest regions as well as California and Alaska. Most all of the onshore petroleum production is mature and production rates have been declining rapidly in most regions. Making up for some of these declines has been the increased production of petroleum from offshore reserves in the Gulf of Mexico. The remainder of petroleum consumption in the U.S. is made up for with petroleum imports which have been rising rapidly over the last two decades and now equal 60% of total domestic petroleum consumption.¹

North Carolina must import all the petroleum it uses from other states and countries as the state does not produce any petroleum itself.

How It’s Used

Petroleum is the largest source of primary energy consumption in the U.S., providing 39% of the energy used to fuel the nation’s economy. Two-thirds of this petroleum is consumed by the transportation sector, fueling the country’s cars, trucks, trains, and planes. 97.5% of the energy used by the transportation sector comes from petroleum.² As a result, the mobility and freedom that Americans enjoy along with the access to tens of thousands of products not made within the local economy is almost completely dependent upon petroleum. Most all of the petroleum used within the transportation sector goes towards powering internal combustion engines which have an average fuel efficiency of only 20%.

The U.S. industrial sector accounts for an additional quarter of all U.S. petroleum consumption. Much of this demand is from the petrochemical industry which uses various refined petroleum products as plant fuel and feedstocks for creating products such as plastics. Petroleum is also used by industries to generate mechanical power and process heat, as well as to create products such as lubricants, waxes, and solvents.

Smaller percentages of petroleum are burned to generate space heat in the residential and commercial sectors and to generate electricity.

Environmental Impact

The burning of petroleum for primary energy accounts for 42% of carbon dioxide emitted from the energy industry in the U.S., making petroleum combustion the largest source of carbon dioxide emissions in the country.³ Consequently, petroleum consumption is the chief contributor to the threat of Global Warming within the U.S.

The use of petroleum for fuel by on-road and off-road vehicles is particularly damaging to the environment as mobile sources account for over half of nitrogen oxide⁴ and three-quarters of carbon monoxide emissions.⁵ Both these harmful pollutants are precursors to the formation of ground-level ozone, the main component of smog, and a significant health threat to people living in urban areas of the U.S. Nitrogen oxide is also a major contributor to the eastern United States’ acid rain problems and a potent greenhouse gas. The burning of petroleum products in the transportation sector is also the main source of emissions for many hazardous air pollutants such as benzene and formaldehyde which cause cancer and other negative health impacts for humans, plants, and wildlife.⁶

In addition to the negative environmental impacts from the burning of petroleum, there are also dramatic local and region impacts from the spilling of petroleum during transportation and storage. These oil spills have drastic impacts on local plant and wildlife as well as potentially contaminating local ground and drinking water. The trend in recent decades has been positive with fewer overall oil spills, especially large tanker and barge spills, but the U.S. still averaged 320,000 barrels of spilled petroleum annually in the 1990s.⁷

Advanced Technologies

The recent inability of petroleum production to meet rising global demand has led to a booming industry in developing alternative liquid fuels. Two such technologies for generating refined petroleum products, Coal-to-Liquids and Gas-to-Liquids, are discussed in the Coal and Natural Gas sections. Likewise, there are many methods of converting renewable resources such as biomass into liquid fuels. Further information about these resources can be found within the biomass section. But as important as these resources may be to the future supply of liquid fuels in the U.S., they both pale in comparison to the potential capacity of three unconventional energy resources, extra-heavy oil, tar sands, and oil shale, which are or could be developed economically in the coming decades.⁸

90% of the world’s extra-heavy oil can be found in Venezuela while 81% of the world’s tar sands are located in Alberta, Canada. Together, these two unconventional petroleum resources equal 3.6 trillion barrels of petroleum, making it likely that these resources are greater than the ultimately recoverable reserves of conventional petroleum. The tar sands of Alberta in particular have undergone a boom in investment and production in recent years as new technologies combined with increased petroleum prices have created a market for the resource.

As with extra-heavy oil and tar sands, oil shale is an abundant resource. It is estimated that 2.9 trillion barrels of the resource could be recovered for use with at least 750 billion barrels of this resource located in the Rocky Mountain region of the U.S. Cost-effective methods of extracting the energy from oil shale are still under development but as oil prices continue to rise, producing liquid fuels from oil shale becomes increasingly more attractive.

It is important to note that there are significant environmental concerns with utilizing each of these three resources. The production of all three resources requires large amounts of water and energy. Consequently, carbon dioxide and other hazardous air emissions from the production and refining of these unconventional energy resources are likely to be significantly higher than for conventional petroleum resources.

An important technology that may affect the demand for petroleum in the future is the development and growing popularity of hybrid vehicle technology. Hybrid vehicles utilize large batteries and an additional electric motor to achieve higher fuel efficiencies than standard cars and trucks. As battery technology improves, the need for the gasoline powered engine will decrease with the ultimate goal of developing an all-electric vehicle that will meet the demands of American drivers. A further technology that has potential is the fuel cell powered vehicle. Fuel cells generate electricity directly rather than relying on an engine to generate mechanical power. As a result, fuel cells have the potential to improve vehicle fuel efficiencies significantly and can be powered by refined petroleum products or pure hydrogen generated from renewable sources.

North Carolina Sustainable Energy Association

Petroleum

How It’s Used

Environmental Impact

Advanced Technologies