Crude oil and natural gas are the two main sources of the energy we use every day. Before either natural gas or the products refined from crude oil – mostly gasoline and heating oil – reach our homes or cars, each goes through a complicated process and travels long distances. Let’s follow the process from start to finish.
Gasoline Basics Heating Oil Basics Natural Gas Basics For More Information
Gasoline Basics
Americans consume more gasoline than any other petroleum product – some 360 million gallons a day. More than 40 percent of the crude oil refined in the United States becomes gasoline. Although some gasoline is imported from refineries in Canada, the Caribbean and elsewhere, most is produced in U.S. facilities and transported throughout the country by pipelines, and tanker trucks.
1.
Oil Well – Crude oil is discovered following lengthy scientific studies to determine the possible presence of underground deposits of petroleum (oil and related liquids). Contrary to popular belief, oil is trapped in the tiny pores of underground rock – not contained in subterranean pools. After studies determine the potential presence of an oil-bearing formation, an exploratory well is drilled. It’s not unusual for the well to turn out to be unsuccessful – a “dry hole.” If resources are discovered in commercial quantities, a production well is installed. The oil -- driven by the natural gas, which is often under high pressure -- flows to the surface. Over time, the pressure often decreases, requiring the installation of a pump on the well. Wells can be pumped from the surface by the familiar rising and falling “horse head” pump jacks or by long slender submersible pumps that operate deep inside the well bore. Water, steam and natural gas are often injected into older fields in order to increase the amount of oil produced.
2.
Crude Oil Tanker – Crude oil produced in other countries such as Venezuela, Norway or Saudi Arabia is another important source of raw material for gasoline refined in this country. Most often it is transported by large tankers and delivered to docks near refinery installations. In addition, some gasoline is manufactured in offshore refineries and shipped to the U.S. as a finished petroleum product. More than 60 percent of all the oil consumed in the United States is imported. Tankers also bring Alaska’s crude oil production to refineries on the West Coast.
3.
Pipeline and Pumping Station – Crude oil destined to become gasoline most often is moved to refineries by pipeline, although tanker trucks are often used to pick up the oil produced in smaller, scattered fields. Pumping stations keep the crude oil moving. They are spaced from 20 to 200 miles along the route, depending on the pipeline’s pressure and the terrain through which it is running. One of the longest and largest pipelines in the United States is the 800-mile-long Trans Alaskan Pipeline completed in the 1970s.
4.
Refinery – Crude oil is transformed into a variety of petroleum products inside a refinery. Often these are huge complexes in which the crude oil undergoes several different processes before emerging as a final product ready to ship to consumers. Depending upon the markets they serve and the type of crude oil they are processing, some refineries may emphasize the production of gasoline, while others may focus on making heating oil or other petroleum products. However, there are limits to how much gasoline “yield” can be obtained from a barrel of crude. In general, yields vary between 35 and 50 percent.
5.
Processing – The basic refining processes are separation, conversion and treatment.
Separation is most commonly accomplished by heating the oil in tall distillation towers. Vapors form as the oil is heated, and at various levels in the tower, the vapors condense and are drawn off for further processing. Gasoline vapors tend to be the lightest and are drawn off at the top. Heating oil and diesel are toward the middle, while heavy fuel oil and asphalt-like materials condense at the bottom.
Following distillation, the molecular structure of the separated fractions may undergo conversion in reformers, catalytic cracking units, alkylation units and other refinery equipment. Here heat, pressure and chemical catalysts break heavier oil elements into lighter ones (such as gasoline) or combine several light molecules into a few heavy ones for fuels such as high-octane aviation gas.
Finally, many petroleum products undergo treatment processes of some kind in order to remove chemical impurities. Sulfur is a common impurity found in most crude oil, which with advanced treatment methods, can be reduced to near-zero levels in gasoline and distillates. Removing sulfur significantly decreases the amount of polluting sulfur dioxide that is formed when heating oil, diesel fuel and gasoline are consumed. Since 1995, air emission regulations in several major metropolitan areas have made it necessary for refiners to adjust gasoline components in order to produce “reformulated” gasoline (RFG). This fuel, which contains less benzene and more oxygenate and has a lower evaporation rate than normal gasoline, is intended to help reduce air pollution during the hot summer months.
6.
Transportation to Markets – Pipelines are the most common method of moving finished petroleum products from the refinery to the consumer. More than 200,000 miles of petroleum pipelines, most of it underground, distribute crude oil and products to all regions of the country. Pipeline transportation is relatively slow – products move at about 3 to 8 miles per hour -- but huge amounts of product can be delivered in this manner at low operating cost and with a high degree of reliability.
7.
Local Terminal – At the local terminal, gasoline distributors pick up their product, which has been delivered by pipeline or occasionally by barge, railroad car or tanker truck. Most often the terminal consists of a collection of storage tanks and a loading rack, where the distributors’ trucks line up to be filled.
8.
Service Station/Convenience Store – Trucks from the local terminal deliver gasoline into underground tanks at the nation’s 168,000 service stations, convenience stores and other retail outlets. Pumps on the service islands of these facilities remove the gasoline from storage to place it in the gas tanks of the customers’ vehicles. More than 80 percent of gasoline outlets are now convenience stores, offering fuel as well as a variety of everyday products. Unleaded regular makes up two-thirds of all gasoline sales.
Back to top
Heating Oil Basics
Heating oil, which is often refined from imported oil, is used primarily in homes and businesses in the Northeastern states. It is very much a seasonal fuel, with highest demand in January and February. Heating oil, along with diesel fuel, are frequently lumped together as “distillates” since their composition is very similar. Refineries have the ability to shift production between the two products in response to changing seasonal demand. In the fall, heating oil production is emphasized in order to build inventories for the coming winter. By early spring, refineries swing back to diesel fuel production.
1.
Imported Crude Oil Tanker – Crude oil produced in other countries such as Venezuela, Canada or Saudi Arabia provides the raw material for much of the heating oil refined in this country. Most often it transported by large tankers and delivered to docks near refinery installations. In addition, some heating oil is manufactured in offshore refineries in the Caribbean and elsewhere and shipped to the U.S. as a finished petroleum product. More than 60 percent of all the oil consumed in the United States is imported.
2.
Pipeline and Pumping Station – Crude oil destined to become heating oil is moved to refineries most often by pipeline. In many cases, the oil is transported just a short distance. However, for heating oil manufactured for the Midwest market, the oil may be transported more than a thousand miles – from the Texas Gulf Coast to refineries in Illinois, for example. Pumping stations keep the crude oil moving. They are spaced from 20 to 200 miles along the route, depending on the pipeline’s pressure and the terrain through which it is running.
3.
Refinery – Crude oil is transformed into a variety of petroleum products inside a refinery. Often these are huge complexes in which the crude oil undergoes several different processes before emerging as final products ready to ship to markets. Not all refineries are geared to producing heating oil. Refineries in California, for example, produce comparatively little heating oil because of the small demand for the product. Instead, West Coast refineries emphasize production of transportation fuels such as aviation fuel, diesel and gasoline.
4.
Processing – The basic refining processes are separation, conversion and treatment. Separation is most commonly accomplished by heating the oil in tall distillation towers. Vapors form as the oil is heated, and at various levels in the tower, the vapors condense and are drawn off for further processing. Gasoline vapors tend to be the lightest and are drawn off at the top. Heating oil and diesel are toward the middle, while heavy fuel oil and asphalt-like materials condense at the bottom. Following distillation, the molecular structure of the separated fractions may undergo conversion in reformers, catalytic cracking units, alkylation units and other refinery equipment. Here heat, pressure and chemical catalysts break heavier oil elements into lighter ones (such as gasoline) or combine several light molecules into a few heavy ones for fuels such as high-octane aviation gas. Finally, many petroleum products undergo treatment processes of some kind in order to remove chemical impurities. Sulfur is a common impurity found in most crude oil, which with advanced treatment methods, can be reduced to near-zero levels in gasoline and distillates. Removing sulfur significantly lessens the amount of polluting sulfur dioxide that is formed when heating oil, diesel fuel and gasoline are consumed.
5.
Transportation to Markets – Pipelines are the most common method of moving finished petroleum products from the refinery to the consumer. More than 200,000 miles of petroleum pipelines, most of it underground, distribute crude oil and products to all regions of the country. Pipeline transportation is relatively slow – products move at about 3 to 8 miles per hour -- but huge amounts of product can be delivered in this manner at low operating cost and with a high degree of reliability. Tank trucks may be used to transport products to markets that are relatively close to the refinery the refinery. In addition, trucks as well as railroad tank cars are used to transport small-volume, specialty products that are not economical or practical to ship by pipeline.
6.
Local Terminal and Home Delivery – At the local terminal, heating oil distributors pick up their product, which has been delivered by pipeline, barge, railroad car or tanker truck. Most often the terminal consists of a collection of storage tanks and a loading rack, where the distributors’ trucks line up to be filled. Last stop in the distribution chain: the homeowner’s storage tank.
Back to top
Natural Gas Basics
Like oil, natural gas is an energy resource that lies hidden beneath the ground, trapped in porous rock formations. In fact, the two resources are often found together. Deposits of natural gas lie throughout the United States, but the most prolific production areas are in the Gulf of Mexico and the western and southwestern states. Although most natural gas undergoes some processing before delivery to consumers, it does not require the extensive refining necessary to turn crude oil into useful products. Consumers think of natural gas as primarily a fuel for heating and cooking, but it is also used widely for electric power generation, in industrial processes and for petrochemical manufacturing.
1.
Natural Gas Well – Natural gas is discovered following lengthy scientific studies to determine the possible presence of underground deposits of natural gas and crude oil. Contrary to popular belief, neither oil nor natural gas is contained in subterranean pools or caverns. Instead, they are trapped in the tiny pores of underground rock. After studies determine the potential presence of an oil- or gas-bearing formation, an exploratory well is drilled. It’s not unusual for a well will turn out to be unsuccessful – a “dry hole.” If resources are discovered in commercial quantities, a production well is installed. In discoveries yielding both oil and natural gas, the gas, which is lighter than crude oil, often collects near the top of the formation. A production well taps into this area. The gas, which is often under intense pressure, flows naturally to the surface. Over time, the pressure may decrease, and artificial means may be required to push the gas to the surface.
2.
Separator – Although much natural gas comes from the well nearly ready-to-use, some of it reaches the surface mingled with oil and water. A separator removes the oil and water, with the oil moving on to a refinery and the water being injected back into the ground, where it can be used to maintain the pressure of the reservoir. About one-third of the natural gas in this country is so-called “associated” gas, meaning that it is produced along with oil.
3.
Gas Processing Plant – Natural gas often contains petroleum liquids in vapor form that can be extracted in a natural gas processing plant. These plants, which are located in or near producing fields, employ large compressors and other equipment to extract ethane and similar petroleum liquids from the gas. In the process, so-called “wet gas” is transformed into “dry gas.” The extracted liquids are moved by pipeline to fractionation facilities and refineries, where after further processing, they become important components in fuels and petrochemicals. Nearly 80 million gallons of petroleum liquids are extracted from natural gas each day – the equivalent of about a third of the nation’s daily crude oil production.
4.
Pipelines and Compressor Stations – All natural gas produced in the United States is transported by pipeline. Pipelines from individual wells to centrally located processing plants are called gathering lines. From the plants, processed gas is channeled into large gas transmission systems that carry the fuel throughout the country. To maintain pipeline pressure, transmission lines are dotted with compressor stations, where the gas is given an additional boost. The United States contains more than 1.2 million miles of underground natural gas pipelines.
5.
Underground Storage – Since natural gas consumption is heaviest during the winter, excess gas production is put into storage during the spring and summer months when demand slacks off. Some gas is stored in large above ground tanks near the areas where it is consumed, but most stored gas is placed in underground caverns, created in hollowed-out airtight salt deposits. When cold weather hits, these caverns serve as extra “wells” to help meet greater demand.
6.
Odorant Added – After processing (which may include the removal of sulfur) natural gas has very little smell or a “sweet” petroleum scent. Therefore, as a safety measure, an strong odorant is added to gas before it reaches consumers. The odorant is a mercaptan -- a foul-smelling family of petroleum compounds made up of sulfur, carbon and hydrogen. When people “smell gas,” they are actually smelling the mercaptan that has been deliberately added to the gas.
7.
Natural Gas Distributor – The distributor is the last step in natural gas delivery before the product reaches customers. Distributors build and operate the complex of underground pipelines that may reach every home, business, school, hospital and industry in a community. The distributor also may maintain some short-term tank shortage for peak winter demand, but most the supply comes from pipelines tied to distant storage caverns and directly to producing gas fields. Distributors serve more than 60 million customers.
Back to top
For More Information
Facts on Fuels, created by the American Petroleum Institute, provides quick data on the primary petroleum fuels as well as natural gas and emerging energy technologies.
Petroleum 101, an overview of petroleum production and consumption in the United States, provided by U.S. Energy Information Administration.
Natural Gas 101, an overview of natural gas is produced and used in the United States, provided by U.S. Energy Information Administration.
Biofuels and Renewables 101, an overview of how biofuels, wind power, hydroelectric and other renewable energy sources are produced and consumed in the United States, provided by U.S. Energy Information Administration.
Back to top