Crude oil

Crude oil

Crude is a natural oily, combustible liquid with a specific odor, consisting essentially of a complex mixture of hydrocarbons of different molecular weight and some other chemical compounds. Refers to caustobioliths (fossil fuels).

The overwhelming part of oil deposits is confined to sedimentary formations. The color of oil is usually pure black. Sometimes it varies in reddish-brown shades (from dirty yellow to dark brown, almost black), occasionally there is oil tinted in light yellow-green color, and even colorless, as well as saturated-green oil. It has a discriminant odor, also ranging from mildly pleasant to oppressive and very unpleasant. The color and odor of oil is largely due to the presence of nitrogen-, sulfur- and oxygen-containing components, which are concentrated in the lubricating oil and oil residue. Most hydrocarbons (except aromatic hydrocarbons) in their pure form are odorless and colorless.

During the 20th century and into the 21st century, oil is one of the most important extractable resources for humankind.

For its chemical composition and origin, oil is close to natural combustible gases and ozocerite. Those fossils are combined under the common name of petrolites. Petrolites belong to an even broader group of the so-called caustobioliths - combustible minerals of biogenic origin, which also include other fossil fuels (peat, brown and black coal, anthracite, shale).

Oil is found along with gaseous hydrocarbons at depths from dozens of meters to 5-6 km. However, at depths in excess of 4,5-5 km, gas and gas condensate deposits with an insignificant content of light fractions predominate. The maximum number of oil deposits is located at a depth of 1-3 km. At shallow depths and at natural seepage to the earth's surface, oil converts into dense malthouse, semi-solid asphalt and other formations - for example, bituminous sands and bitumen.

Benchmark Grades of Oil

Benchmark grades of oil (reference grades, benchmark crude) are the types of oil with a certain composition (sulfur content, density), the prices of which are commonly used in setting prices when buying and selling various types of crude oil for the convenience of oil producers and consumers.

There are three main benchmark brands in the world: BrentBlend, WestTexasIntermediate (WTI) and DubaiCrude. Quotes for those brands, published by quoting agencies, determine prices in the main regions:

  • Brent - produced in the North Sea for the markets of Europe and Asia. Prices for approximately 70% of exported brands of oil are directly or indirectly derived on the basis of Brent quotes.
  • WTI (WestTexasIntermediate), also known as (Texas) LightSweet - for the western hemisphere (USA) and as a reference point for other types of oil. In the XX century, it had been the only benchmark grade for a long time.
  • The DubaiCrude benchmark brand is widely used in determining the prices of oil exported from the Persian Gulf countries to the Asia-Pacific region.

Earlier, the OPEC had used its own benchmark, the weighted average cost of 12 different brands of oil exports by OPEC, which is called the OPEC oil basket (ReferenceBasketofcrudes).

Normally, benchmark brands are associated with certain main field or with a group of deposits, the oil of which has similar properties and is openly traded on the market with sufficient liquidity. That way, Brent originally meant oil produced in the UK in the cognominal offshore fields (discovered in the 1970s), but later Platts added oil extracted from three neighboring fields of Britain and Norway (BFOE) thereto. The standard US grade - WTI (also LightSweet) is the light oil produced in Texas.

The most significant agencies that publish average quotes for benchmark oil grades (Brent, WTI) daily are the price agencies Platts and ArgusMedia, less popular are AsiaPetroleumPriceIndex (APPI), ICIS LondonOilReport. Quotations of price agencies are indicated in medium- and long-term contracts for the supply of about 90% of exported oil, while, depending on quality, it can be sold at a discount or with an additional payment relative to the benchmark grade.

Oil production is a complex production process, including geological exploration, drilling and construction of wells, their repair, purification of extracted oil from water, sulfur, paraffin and much more. By means of lifting, modern methods of extraction of fluids or oil well fluid (including oil) are divided into:

  • blow (fluid outflow is effected by reservoir pressure);
  • gas lift;
  • electric centrifugal pump unit (ESP);
  • electric progressive cavity pump artificial lift method;
  • sucker-rod pumping, often driven by a ground-based beam-pumping unit;
  • other.

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