Notes from PGE 101 Introduction to Petroleum and Gas Industry

Introduction to Petroleum Industry

Course Overview

• Course Title: PGE 101 Introduction to Petroleum and Gas Industry
• Instructor: Dr. Samuel O. Osisanya, PE
• Credentials: BSPE (UI), MSPE (UT Austin), PhDPE (UT Austin)
• Affiliation: Visiting Professor, Department of Petroleum Engineering, The University of Oklahoma, Oklahoma, USA
• Date: December 2025

Chapter 1 - Introduction to Petroleum Industry

Petroleum Engineering Curriculum

• Basic Science/General Engineering Fundamentals

  • Geology
  • Rock & Fluid Properties

• Core PE Subjects:

  • Application & Economics
  • Drilling Engineering
  • Reservoir Engineering
  • Production Engineering

Course Content

1. Introduction to the Petroleum Industry & Nature of Oil and Gas
2. Petroleum Geology - Oil and Gas Reservoirs
3. Drilling and Completion Operations
4. Subsurface and Surface Production Operations
5. Fundamentals of Reservoir Engineering Systems
6. Petroleum Economic Analysis and Evaluation Concepts
7. Oil Industry Operational Safety Systems
8. Environmental Issues for Oil Exploration Related Activities
9. Security Issues in the Petroleum Industry
10. Downstream Activities of the Petroleum Industry - Refining, Petrochemical, and Natural Gas

Key Concepts in Petroleum Industry Introduction

• Figure Discussion:
  • Emphasis on the importance of safety in personnel and facilities.
  • Security of facilities and personnel highlighted as a significant concern in the 21st century.

Historical Context of Petroleum

• Petroleum Definition:
  • “Petroleum” translates to rock oil; historically known for over 5,000 years.
• Industrial Revolution:
  • Initiated around 1750, coinciding with technological advances (e.g., steam engine by James Watt in 1769).
  • Major political events included the American and French Revolutions (1775-1815).
• First Commercial Oil Industry:
  • Established in Rumania in 1857.
• Kerosene Age:
  • Spanned from 1859 to 1900.

Drilling Techniques and Industry Growth

• Drilling Techniques:
  • Cable tool drilling: Dominated from 1860 to 1930 (now obsolete).
  • Hydraulic rotary drilling: Prevalent since 1930, exemplified by the Spindletop well in Texas (May 1900 - June 1901).
• Emergence of Gasoline Age:
  • Innovations like the incandescent light (1878 by Edison) and internal combustion engines (1886 by Benz) led to increased oil demand.

Major Influences on Petroleum Demand

1. Incandescent Light (1878):
   • Created an electric power industry.
2. Internal Combustion Engine (1886):
   • Pioneered by Karl Benz and Gottlieb Daimler, stimulating the automotive industry.
3. Diesel Engine (1897):
   • Developed by Rudolph Diesel; increased petroleum demand.

• Spindletop Well (1901):
  • Marked a significant technological advancement in petroleum extraction.

Structure of the Petroleum Industry

• Overview:
  • Comprises thousands of independent companies across various functions including capital provision, management, technology, and personnel.

Levels of Industry Structure

1. Operating Companies:
   • Involved in exploration, drilling, production, transportation, refining, manufacturing, and marketing (e.g., ExxonMobil, Shell, BP, Chevron).
2. Operational Support Services:
   • Provide technical and supportive infrastructure.
3. Management and Financial Services:
   • Handle organizational structure, human resources, finance, accounting, etc.

Contributions and Achievements of the Petroleum Industry

• Global Impact:
  • Supplies products such as gasoline, kerosene, fuel oil, jet fuel, petrochemicals, lubricants, asphalt, etc.
  • Significant employment generator and stakeholder ownership.

Challenges Facing the Industry

• Primary Issues:
  • Improving oil and gas recovery economically and safely.
  • Environmental protection during exploration activities.
  • Ensuring security of personnel and assets.

Major Petroleum Regions of the World

• Geographic Classifications:
  1. The United States Realm
  2. The American Realm (excluding the US)
  3. The Eurasian Realm (Europe & Asia)
  4. The Middle Eastern Realm
  5. The African-Australian-Pacific Realm

Percentage Production by Region** (1979)**:

• United States: 34%
• Middle Eastern: 28%
• Eurasian: 14%
• African, Australian, and Pacific Realm: 11%.

Current Oil Price Data

• Crude Oil Price Fluctuations (1972 - 2004):
  • Price of Dubai crude oil averaged starting from $1.90 (1972) to $33.64 (2004).

Nature of Crude Oil and Gas

• Definition of Petroleum:
  • A mixture of naturally occurring hydrocarbons, existing in solid, liquid, or gaseous states depending on pressure and temperature (P & T).
• Crude Oil:
  • Most sought-after for transportation.
• Natural Gas:
  • Often produced alongside crude oil.

Physical Properties of Hydrocarbons

• Key Properties:
  • Specific Gravity (SG):
  • Defined as the mass of a liquid per unit mass of an equal volume of water, both specified under the same conditions of P & T.
  • Typical SG of crude oils: 0.75 to 1.0.
  • API Gravity:
    • Defined as oAPI = \frac{141.5}{SG} - 131.5.
    • Higher API gravity leads to higher crude oil prices.
  • Viscosity:
  • Measures resistance to flow, with typical values ranging from 0.3 to 1000 cp.

Major Petroleum Products

• Gasoline:
  • Types produced include motor and aviation gas.
• Jet Fuel:
  • A mixture of kerosene and oil with low freezing points used in aircraft.
• Kerosene:
  • Once dominant for illumination, now less utilized.
• Petrochemicals:
  • Include paints, synthetic rubber, detergents, plastics, etc.
• Fuel Oil and Lubricants:
  • Used for industrial power and automobile engines respectively.
• Asphalt:
  • Used for road surfaces, making up 90% of U.S. roads.

Summary of Major Petroleum Products from Crude Oil

Conclusion

• The petroleum industry remains foundational to global energy supply and has profound implications on modern societies, suggesting a need for sustained focus on innovation, safety, and environmental stewardship.