Oil Extraction, Petroleum Extraction

June 29, 2010Oil and Gas Industryby EconomyWatch

0

Oil extraction or petroleum extraction is the extraction of usable crude oil from regions having suitable surface and underground configurations.

Economics of Oil Extraction

The primary challenge in oil extraction is to find ways to minimize upfront costs and optimize the extraction process to yield maximum profitability. Establishing an oil extraction system should be both technically feasible and economically viable.

Major factors that affect oil prices by impacting the extraction process and cost are:

  • The subsurface condition of a reservoir: Highly feasible extraction sites have already been explored. The cost of extracting from the remaining sites is higher due to their less favorable geographic conditions.

 

  • Drilling procedure: Onshore drilling generally requires low investments and bear lower economic risks. Offshore drilling consumes over 65% of the planned investments before the extraction process commences, increasing the risk of losses.

 

  • ‘Peak oil’ concerns: This implies the point at which oil production begins to decline due to the maximum oil extraction rate being attained. Concerns over reaching peak oil have escalated the oil extraction costs.

Oil Extraction: Alternative Methods

Some alternative methods of oil extraction are:

  • Fischer-Tropsch Method: It includes a catalyzed chemical reaction of converting methane and coal into various forms of liquid hydrocarbons. Cobalt and iron are the commonly used catalysts in the method. This process helps to produce synthetic lubricants (synthetic petrol) to power automobiles and jets. The technology has been commercialized in Malaysia (Shell) and South Africa (Sasol).
  • Karrick Process: The process was developed by Lewis C. Karrick, an oil-shale technologist. It involves low-temperature carbonization (LTC) of carbonaceous materials, such as lignite, coal and shale. These are shielded from air exposure and heated at a temperature between 680°F (360°C) and 1380°F (749°C). This helps to extract oil and gasoline for commercial use.
  • Thermal Depolymerization (TDP): The process starts with hydrous pyrolysis, which involves the heating of organic compounds at a high temperature (in the presence of water). This helps in reducing complex organic materials, such as biomass, into light crude oil.

Oil price spikes from 2004 to 2008 led to the growth of alternatives procedures for extracting oil. Popular alternative sources of oil extraction are tar sands and oil shale.

These resources are available in large quantities. However, they are explored rarely due to the high costs and environmental threats associated with them.