Oil Industry: Petroleum Extraction Process Abstract Petroleum, a kind of fossil fuel also known as crude oil, is most commonly used to fuel cars and other modes of transportation, so they can bring people to their respective destinations. Moreover, petroleum is also essential in the production of plastic, asphalt and tyres. Pesticides, detergents, packaging materials and furniture also contain percentages of petroleum. With the continuous advancements in technology and growth in demand of the society, one can definitely say that petroleum is one of the most important sources of energy.
The production of petroleum is composed of two parts: upstream and downstream. Upstream refers to the exploration and extraction of oil itself, while downstream refers to the supply and distribution. As the industry continues to grow and expand, impacts on the economy, environment and society cannot be avoided such as oil erosion, oil spills, and reduction of the capacity of the environment to support vegetation and wildlife. In addition, extraction can also cause the immigration of local groups, as their areas may be used as a base for the process.
Relationships between countries are also strained, as some fight for the resources available, some compete for who gets which country, who makes the most money out of the resource. The oil industry is doing wonders for the economy though, especially for countries where the oil itself is coming from, since the industry provides jobs for people, therefore decreasing the rate of unemployment. It also provides energy security, and boosts the economy. Royal Dutch Shell is an oil company recognized globally. It is active in 90 countries, and is the second-largest energy company according to Forbes magazine.
The researchers conducted a case study on this very company, focusing mainly on the actions they are taking to reduce the negative impacts caused by the industry. Chapter I Industry Description Petroleum is a fossil fuel formed from the decay and decomposition of organic matter. When the remains of plants and animals reach the seabed, layers of silt, composed of sand and sediments cover it up, forming a sedimentary rock. As years pass, layers increase and more and more pressure is applied, compressing the material and forming the oil.
This formation is due to the heat and pressure applied, changing the remains. Petroleum is stored in porous rocks and its viscosity varies as it is extracted. It is non-renewable, as it takes millions of years to form. As a matter of fact, the oil used today has been formed over the years, since geologic periods. This form of natural gas has actually been used since the ancient times. Egyptians used petroleum to coat mummies and seal pyramids. Babylonians and Persians used it to pave their streets, walls, and buildings together.
American Indians used it for medicine and fuel. Roman emperor, Charles V, used it to treat gout. But during this time, petroleum was only extracted when it bubbled to the surface, making it a scarce resource. In 1854, a lawyer named George Bissell, along with his peers, formed the Pennsylvania Oil Company, aiming to convert petroleum to kerosene to be used in lamps. After this company failed, they formed another one called the Seneca Oil Company, and hired Edwin Drake to drill for oil in a creek in the state. It was not long until he and his crew found oil 69 ? eet from the ground. He was able to produce thirty-five barrels a day, and was able to sell it for $20 a barrel. His good income convinced a lot to get in the business as well, even if they did not really know much about it. Pretty soon, the market got too chaotic, everyone hoping to find a well as deep as Drake’s, but to no avail, most only got up to four or five feet. John Rockefeller saw the bright future ahead of this industry, and decided to invest in oil refining in Cleveland. Pretty soon, he controlled about 26 of the refineries in Cleveland.
A refinery is an industrial plant used to purify a crude substance. With these investments, he felt he could practically run the industry that had so much potential for him. And with the industrial revolution taking place around the same time, the need for fuel increased as more cars are being produced, along with other goods that use fuel. In 1870, he created Standard Oil, which did nothing but progress, and allowed him to buy out competitors and continue to expand. It was only a matter of time until his company controlled 90% of the refining capacity.
Several other oil companies such as Pure Oil Company and Superior Oil Company have also been established over the years, allowing the industry to grow even more. After World War II though, the industry made a shift, and the Middle East lead the oil production industry. Petroleum has many uses in which makes it one of the world’s most valuable resources. A common use for this non-renewable gas is fuel. Fuel is important as it keeps any vehicle moving. And with the advancements in technology and increase in vehicle production, there is more and more need for fuel to keep the engines running.
But this is not the only purpose of petroleum as Sheryl Joaquin writes in her article in ezinarticles. com. According to Joaquin, plastic, which is used everywhere and anywhere basically, is made from petroleum. So one can only conclude how much petroleum is used every day on plastic usage alone. Asphalt also contains petroleum, and so does the rubber used in tyres. Pesticides, detergents, photographic film, packaging materials and furniture are only some of the many other products that contain petroleum. Petroleum has definitely improved the quality of life, helped energy traders make money.
Today, Saudi Arabia, Russia and the United States are the top oil producing countries. The oil industry can be classified into two parts, which is namely ‘upstream’ and ‘downstream’. The upstream sector mainly deals with the exploration and production of oil. It requires a lot exposure on the main field and relies on the contractors and technical services in the industry like geophysical surveys, drilling and cementing. Meanwhile, the downstream sector only focuses on the refinery, processing, distribution and market operations of the oil. Figure 1. Input-Output of Petroleum Industry The exploration for hydrocarbon deposits start with examining the land’s structure by viewing of geological maps and aerial photography. It was discovered that anticlines, areas where the land has been folded up, and faults had more chance of containing oil deposits. When an area has been considered as a potential site of extracting petroleum, more rigid and accurate tests are performed to gain more information on the underground formations. The three methods that are commonly used at the present time are seismic, gravimetric and magnetic survey.
In the onshore seismic method, a source releases a pulse of acoustic energy in the form of seismic waves into the different underground layers of the earth while some of the waves are bounced back to the surface. The reflected waves are picked up by sensitive devices called ‘geophones’ or seismometers and transferred to the recording truck through special cables to be digitized, filtered and interpreted by the geophysicists later on. Seismic waves are created by vibrations, similar to that of earthquakes. Dynamites were used before as the source of energy.
However, due to environmental considerations, new technologies were created to no longer use explosives to create vibrations that were needed. An example would be the usage of vibroseis as energy source wherein a generator hydraulically transmits seismic vibrations into the ground. The usage of a seismic vibration truck is also another alternative. It is a heavy wheeled vehicle, which has a special device that can produce the same kind of vibration of dynamites. Petroleum exploration is not limited to dry land only. It can also be held in bodies of water. Basically, the offshore seismic method is the same as the onshore seismic method.
Its only difference is that instead of using geophones in picking up seismic wave, hydrophones are used and a ship is the one relayed with the electrical signals. Also, large air guns are used to created seismic vibrations that are needed to gather data. The gravimetric method measures the slight differences of the Earth’s gravitational field using an aircraft or a survey ship. Because different rock types and formations have dissimilar effects on the gravitational field of the Earth, these small differences help the geophysicists acquire knowledge about the rock formations underneath the Earth.
The use of magnometers is another method used in the exploration of deposits. The device measures the magnetic properties of the underground rocks that help obtain the needed data to know their geological structures. After surveying a potential site, the oil company must settle the legal issues before the crew starts drilling. To prepare for the drilling operation, they must make sure that the land is vacant and even to be able to accommodate construction of access roads for oil transportation. Water is a necessity in drilling that is why water source nearby is also needed.
During the drilling process, the wastes composed of rock and mud should be dumped into a reserve pit that is lined with plastic. However, if the site is located in a ecologically sensitive area like a marsh or wilderness, the wastes that are produced should not be dumped on the site itself. After the necessary preparations, the land beside the main hole is dug up and placed with a pad or cellar that is usually 4000–15 000 m2 in size for single explorations. It is the one placed with the equipment and accessories that are needed for the excavation. A small drilling truck is usually used to drill a large and shallow portion of the hole.
Afterwards, the rig equipment can now be set up. The rig equipment contains certain major systems. The power system is composed of electrical generators, which provides electrical power through the diesel engines, which burn the diesel fuel. The mechanical system, which is comprised of the hoisting system and turntable, is driven by mechanical motors. The hoisting system is used to carry heavy materials while the turntable is a part of the drilling equipment. The rotating equipment is composed of Kelly, swivel, rotary table, drill bits, and drilling string that is comprised of a drill pipe and a drill collar.
The casing is a metal pipe which serves as a primary surface pressure control equipment. It also allows the circulation of mud and prevents the hole to disintegrate. The circulation system is composed of a pump which sucks the mud and pumps it in the drilling equipment, some pipes and hoses which serve as the connection of the pump to the drilling apparatus, a mud return line, a shale shaker which separates the mud with the rock cuttings, a reserve pit which serve as a “dump” for the separated rock cuttings, mud pits where the drilling mud is mixed and recycled, and the mud-mixing hopper where the new mud is mixed and sent to the mud pits.
The Derrick is the structure that supports the drilling equipment and can be used later on to attach additional pipes that are needed for the process. A blowout preventer is a valve used to relieve pressure to prevent malfunction or blowouts. The initial step in drilling is placing the drill bit, collar and drill pipe in the main hole. Afterwards the kelly and turntable is connected and actual drilling can now take place. The mud is circulated through the pipe to balance underground hydrostratic pressure and rocks are also flushed out.
Upon drilling in deeper areas, sections of pipes that are necessary are added. Tests are conducted upon locating hydrocarbon formation, which can produce waste in the form of oil, gas and water. The casing that is placed in the hole is then cemented to keep the hole from collapsing. Cement is pumped in the casing through using a bottom plug, cement slurry, a top plug and drill mud. The cement slurry’s movement, caused by the pressure from the drill mud fills the external part of the casing and the hole. The final depth is reached when the rock cuttings from the mud contain oil sand.
Tests such as well logging, drill system testing, and taking core samples will be conducted to confirm this finding. Well logging is where electrical and gas sensors are lowered into the hole to take measurements of the rock formations while drill system testing requires the lowering of a device into the hole to measure the pressures which will confirm the location of the reservoir rocks. They can also take core samples of rock to look for properties of the reservoir rock. If the tests confirm that they already reached the final depth, a perforating gun is used to generate holes in the casing where oil will come out.
A pipe is connected to the hole to transport the oil and gas through the well then a device called a ‘packer’ is placed outside the tubing and will expand to seal the outside of the tubing. Finally, a ‘Christmas tree’ or control valve is connected to the top of the tubing and cemented on top of the casing to control the released amount of oil. After the rig is removed, a pump is put to the wellhead, which sucks the oil out of the well. However, the rate of flow is not always constant because it depends on some factors like the viscosity of the oil, the properties of the reservoir, and the underground pressures.
That is why an artificial lift such as a pumping mechanism or injection of steam is needed for the oil to reach the surface. Nowadays, industries often inject water, gas or steam at the start to optimize the flow of oil. This process can also be called enhanced oil recovery. Before the exportation of oil, it goes through some production facility processes to separate oil, gas and water. The oil should be free of dissolved gas and the gas should also be stabilized and should not contain unnecessary components such as carbon dioxide and hydrogen sulphide. Chapter 2 Industry Profile I. International
As of 2008, the world use of non-renewable energy has been continuously growing. And based on BP2007 Review of World Energy, more or less 85% of the energy that we consume is non-renewable which may be harmful to our environment and its resources. Oil, coal and gas form the biggest percentage on the world’s use of energy, and these biggest sources of our energy are non-renewable. Oil, coal and gas are fuels formed by natural resources such as anaerobic decomposition of dead organisms. These fuels contain a high percentage of carbon and hydrocarbons. Hydrocarbons in air produce no harmful effects.
However, it undergoes chemical reactions under sunlight and nitrogen oxides thus forming photochemical oxidants which cause irritation in the eyes and lungs. As the world continues to consume a greater amount of non-renewable energy for daily use such as production and construction, not only does our natural resources exponentially deplete, the environment will soon be clouded with unhealthy chemicals suspended in the air. The remaining 15% of the world’s energy consumption are the following: Biomass, Hydroelectric, Solar Heat, Wind, Geothermal, Bio fuels and Solar PV which are all renewable energy.
Biomass is biological material derived from living, or recently living organisms, such as wood, waste and alcohol fuels. Biomass is commonly plant matter grown to generate electricity or produce heat. Hydroelectric, is the energy produced from moving water which is harnessed for useful purposes such as electricity. Solar or solar thermal energy is the energy used for water heating, space heating and cooling and process heat generation. The primary solar energy is solar water heating. Wind energy is formed by using turbines to produce electricity, windmills for mechanical power and wind pumps for drainage.
Simple, wind energy is the conversion of wind into more useful form of energy. II. Local It is stated that the installed capacity or the production capacity of a plant holds the coal on the top at 29%. It is followed by hydro energy at 21%, oil-based at 20% and natural gas at 12%. Wind, solar and biomass energy shares an installed capacity totaling to . 406%. The gross generation or the total amount of energy produced by a plant is dominated by coal here in the Philippines with 35% due to the numbers of coalmines. It was followed Natural Gas with 29% due to the discovery and development of such oil-deposits such as the Malampaya project.
Geothermal followed with 15%, Hydro with 12% and Oil-based with 9%. Production rate of wind, solar and biomass energy is at 0. 07%, 0. 02% and 0. 04% respectively. The figure states the supply and demand of crude oil on the different sectors of our country as of the year 2010. Supply does not meet the demand on LPG, premium and diesel primarily because of the Filipinos use vehicles as their means of transportation and the number of population in the country using LPGs as their means to cook their food. Supply meets demand, however, on regular such as oils that are use on motorcycles.
Supply also meets demands on oils used in fueling and maintenance AVTurbo or airplanes. Supply also meets demand on kerosene. In terms in the other use of crude oil in the country, there is a surplus in the supply since most of the parties included in the others such as power plants relied on other forms of energy that can give them electricity such as coal, geothermal, natural gas, etc. Chapter III Impact Assessment Oil and gas exploration and production operations can cause a number of impacts to the environment. The industry is conscious and aware of this and is trying to minimize if not reduce these impacts.
These could be human, socio-economic and cultural impacts; aquatic, atmospheric, terrestrial, and biosphere impacts, etc. Early phases of exploration are short term in nature. Drilling is the longest phase and can last for about one to three months or more depending on the nature of the whole process. To avoid, minimize, or mitigrate the impacts can be achieved through proper planning, design and control of operations in each phase. Since on-shore drilling is done on land, the environment is highly affected. Environmental impact is one of the main impacts of oil and gast exploration. Land use patterns change.
As a consequence, the agriculture of the area or country, fishing, logging which leads to the extinction of some species affecting the food chain, hunting, etc. face the consequence of on-shore drilling. The availability or access to goods and services such as housing, education, healthcare, water, fuel, electricity, sewage and water disposal, and consumer goods brought into the region change. Transportation systems, due to increased road, air, and sea infrastructure and associated effects, result to noise, accident risks, and many more. Soon enough a stable water supply, sewage and waste treatment, and health care will arise.
Under the environmental impacts would be the atmospheric impacts. This has attracted the government and the industry. The industry’s progression is limited due to the government’s laws to try to minimize emissions. There are many sources where these emissions come from. It could be from Flaring, venting and purging gases, combustion processes such as diesel engines and gas turbines, fugitive gases from loading operations and tankage and losses from process equipment, airborne particulates from soil disturbance during construction and from vehicle traffic.
When well testing is done, there are some air-born particulates that come from burning sources. The gases emitted include carbon dioxide, carbon monoxide, methane, volatile organic carbons and nitrogen oxides. The sulfur content of the hydrocarbon and diesel fuel when used as a source, bring out sulfur dioxides and hydrogen sulfide. The sulfur dioxides can cause odor around the facility. Volumes of atmospheric emissions depend on the nature of the process. Flaring of produced gases is a significant source of air emissions coming from production operations.
Other gases like methane should be considered. The World Resources Institute showed that the total methane emissions from oil and gas production in 1991 were 26 x 106 tons compared to the global total of 250 x 106. We all know that global warming is from these green house gases. The gas emissions should be watched in order to lessen the consequences in the future. There are aquatic impacts as well. These impacts are not necessarily from the sea or like the impacts of off-shore drilling. This pertains to the liquids that are produced in the on-shore drilling process.
Produced water, drilling fluids, cuttings and well treatment chemicals, wash and drainage water, sewerage, sanitary and domestic wastes, spills and leakage, cooling water are liquids produced. In drilling, the main aqueous effluents are drilling fluids. The high pH and salt content of certain drilling fluids and cutting, poses potential impact to fresh water sources. When these fresh water sources are affected, people, animals, and plants are affected as well. Other water streams such as leakage and discharge of drainage waters may result in pollution of ground and surface waters.
In line to the aquatic impacts, there are terrestrial impacts or impacts concerning the land. When oil pipes or wells are created, the land has to be cleared in order to do so. There is a physical disturbance as a result of this construction. The soil is then contaminated which ends up in spillage and leakage or solid waste disposal. Soil erosion is caused due to the change in soil structure, slope, or rainfall. Changes in surface hydrology and drainage patterns, increased siltation and habitat damage, reduces the capacity of the environment to support vegetation and wildlife.
This will affect the food chain and the main producers like plants causing diseases due to the lack of nutrients. Aside from these impacts, when logging is done, there is a loss of biodiversity. There is then a loss of species. For example, if the forests in Bohol are taken away for on-shore drilling, the tarsiers, which are native to Bohol, will be affected. If this species goes extinct, it will affect the tourism of the whole country. The aquatic and terrestrial impacts affect the ecosystem.
Plant and animals are affected by changes in their environment through the disruption in water, air, and soil/sediment quality and through disturbance by noise, extraneous light and changes in vegetation cover. This again will affect us humans due to our need of food for survival. Ecology is highly affected. The habitat, food and nutrient supplies are first affected, which changes the breeding areas, migration routes, which here in the Philippines is a major stop for most of the birds since it is still quite warm during the winter season in other countries. The animals that are affected in the food chain become vulnerable to predators.
There is then a change in species composition and primary production cycles. There are many other factors that may make the oil extraction more harmful than it already is. This could be from fires, unplanned plan upset and shutdown events, natural disasters like flood, earthquake, and lighting, spillage of fuel, oil, gas, chemicals and hazardous materials, oil or gas well blowout, and on the far extent, war or sabotage. The environment is so important and it is affected greatly by on-shore drilling. There are not only environmental impacts but social impacts as well.
When the oil exploration or production process starts, the local groups, specifically, indigenous people are driven out. By having foreigners to come into certain countries affect the socio-cultural systems such as the social structure, organization and importantly the cultural heritage, practices and beliefs. The rights to the access to these areas are a big issue especially for those countries who are able to extract oil. The ones with the access should be the country where this area is. The only problem is that some countries do have the oil but do not have the equipment to be able to get oil.
Specifically, the countries that really benefit from oil are those in the Middle East where oil is abundant. Economically this is good for them. Oil in their country would be cheaper since there is less transportation needed. In connection to their economy, impacts economically are also present. Daniel (July 2011) listed 4 benefits of oil drilling. First, it creates employment opportunities. Oil drilling creates employment opportunities particularly in the area where oil is being drilled. The local people are able to get jobs in drilling sites and thus lessen the number of unemployed people in that region.
The pay largely depends on skill requirements. Surveys show that experienced rig workers get more than $95, 000 every year. The second benefit is that is boosts the economy. Oil is one of the most valuable commodities in the world today. If the oil comes from a certain country, it is most likely that their economy will be enhanced due to the high demand for oil. Third, it provides energy security. Oil drilling provides energy security to the host country. It reduces the dependency on foreign supplies and thus reduces the price of oil in that country. Other countries will also benefit from the reduced prices.
It will allow them to produce high quality and cheap services and products. Lastly, oil drilling allows that construction of better infrastructure. These infrastructures are used for the process of refining and distribution. There are a number of tax benefits as well. According to the Energy Capital Group (ECG), there are tax incentives that are provided to stimulate domestic natural gas and oil production financed by private sources. The Intangible Drilling Cost Tax Deduction is one. The intangible expenditures of drilling such as labor, chemicals, grease, etc. are usually 65 to 80 % of the cost of a well.
It is considered as IDC or Intangible Drilling Cost. It is 100% deductible during the first year. The example the ECG gave is a $100,000 investment would yield up to $75000 in tax deductions during the first year. Another deduction would be the Tangible Drilling Cost Tax Deduction. The total amount of the investment allocated to the equipment “Tangible Drilling Costs” (TDC) is also 100% tax deductible. There is an act called the Tax Reform Act of 1986 shows the thought of “Passive” income and “Active” income. The act prohibits the offsetting of losses from Passive activities against income from Active businesses.
Another tax benefit is the Small Producers Tax Exemption. This provides special tax advantages for small companies and individuals. There are more tax deductions like Lease Costs, Alternative Minimum Tax, and the Tax Bill which gives incentive to marginal well. There are so many impacts that oil exploration and production brings up. The industry has to watch out for these impacts to make life better. It can be positive on one side but negative for the other. Recently, Celis (Aug 2011) posted his article entitled “Philippines will seek oil in South China Sea”. The Philippines plans to auction off areas of the South China Sea.
This may be off-shore drilling but in connection to the impacts, this will surely bring up concerns for the country. Socially, it will help the Philippines grow in its relationships with other countries. Economically, we might earn from it in a sense that we earn from those who will be taking oil from our country. These countries will be able to sell the oil for a cheaper price since less transportation will be needed to transport the oil here to the Philippines. This will benefit a lot of people. The only problem may be the environmental impacts. We may lose aquatic species which we are rich in.
Is quite scary to know that we may lose one of the things we are rich at. The country’s focus should be sure before any plans are pushed through. We might earn more if we use our natural resources, specifically the species here to our advantage. On-shore drilling is not the only process to take into consideration. There are many other ways to extract oil and in the oil industry, there are many processes involved. There are so many things to be considered. This assessment will help us in the future plans of our country and the rest of the world. Chapter IV Current IMEENVI Approach
Oil pollution is one of the most common problems that the oil industry has. Pollution is any harmful substance whether natural or artificial that contaminates the well-being of the environment. In this case Oil Pollution is when petroleum oil contaminates the environment as a result of, or during the processes of extraction and exploitation, storage and transportation of petroleum oil (2007, Saro Pyagbara). The sources of Oil pollution in the extraction process are seismic survey, gas flares and oil spills, they all contribute not only in harming our environment but the socially beings of the community as well.
Issues on environmental concerns like carbon emission, incineration ban, and waste management has risen throughout the years and with the rise of these issues regarding the environment, the petroleum oil industry has become aware of the negative impacts their industry emits to the environment and is looking for ways and solution to resolve the issues. Solutions practiced by the industry include the intervention of the government to process of extraction, research and development on technology and equipment, prevention of the release of ollutants and constant maintenance of pipelines and equipment on the site of extraction. The Government has initiated ways to support the petroleum industry in their effort in solving or minimizing their negative effects on the environment. Today the Government has been giving out incentives those Petroleum Companies to conduct further research on more efficient oil drilling equipment. Funds from these incentives are collected from value added tax imposed by the government. They also get their funds from heavy polluters by imposing a higher tax rate on pollution.
LINGO or Low Impact Natural Gas and Oil is a project of the Department of Energy of the United States wherein it seeks to improve and innovate the current technologies and methods that minimizes the negative impact of oil extraction. The petroleum companies with the help of the government have made technological advancement. Machines are built to become more efficient in extracting the oil from the ground. In the US, over 9 billion dollars are spent in the protection of the environment this includes the budget for research and development for better machines and more efficient method of extraction and the study on other sources of energy.
Oil is a non-renewable source of energy; this is why these petroleum companies are looking at renewable energy as an alternative source not only for energy, but also for income. Currently, we have hydroelectric, biomasses, wind power and solar power as our alternative sources. The best way of stopping or controlling the negative effects on the environment is to prevent it from happening. Like any waste management process, prevention and reduction is still an option. The industry has taken account prevention as solution to their problem.
One source of oil pollution is the oil spills that occur during the process. Oil spill are caused unintentionally by the leakage of pipelines and flow lines. Petroleum companies minimize the occurrence of these oil spills. First, if these oil spills happen it means that the oil company will not be able to maximize their income. The oil will become waste instead of money and since its waste and if it is not disposed properly and the government has high pollution taxes, the company will have to pay extra.
Second is the oil can heavily damage bodies of water. The oil can thicken the density of the water thus depriving the underwater plants and animals of their needed sunlight causing the plants to die. Oil spills can be prevented by the constant maintenance done by the petroleum company. The oil industries also have their ways of dealing with the social problems they cause. Social problems include the driving out of indigenous people from the extraction site thus driving out culture with it and the health care and safety of those live near the site.
The oil industry is governed by the Safety and Environmental procedures imposed by independent regulating bodies like the American Petroleum Institute and the Occupational Safety and Health Administration. These independent regulating bodies are still part of the oil industry; they serve as the guide and basis for the proper process. The industry also provides training, education and livelihood to the locals of the host country. They also provide a relocation area for those who live on the drilling site and also educate those living near the site on the safety rule and regulation.
Infrastructures like hospitals, houses, schools etc. are built and there would be energy security within the host country. Chapter 5 Case Study: Pilipinas Shell Who would have thought that a small seashell shop could evolve into one of the most influential energy companies in the world today? Marcus Samuel certainly did not. He and his son worked together in selling seashells in their store, which later turned into an import-export business. Samuel’s son, having delivered 4,000 tons of Russian Kerosene to Singapore and Thailand, practically started their whole business of exporting oil.
Royal Dutch was formed in Netherlands to compete with Britain’s fleet. It was not long until the two companies decided to merge together as one, seeing a better future as allies rather than competition. Thus, they formed Royal Dutch Shell, which is one of the most recognized energy companies today. Today, Royal Dutch Shell is active in more than 90 countries, and is providing 93,000 jobs for people worldwide. With the continuous advancements in technology and improvements in the way of life, it is no surprise that the petroleum companies are exhibiting great performances, as their product is basically making the whole world go round.
Upstream and downstream are the two main processes undertaken for the whole production of fuel. Upstream refers to the exploration and extraction, while downstream is the manufacturing and distributing of fuel. But despite the convenience petroleum companies provide by fuelling cars everywhere enabling people to get from one place to another, the bad effects caused by the production of their goods cannot be avoided. The whole process of drilling and extraction alone causes harm not only to the environment but possibly to the economy and the society as well.
The theory of sustainable development practiced by Shell shows that not only are they aware of the bad effects their industry brings to the environment, they are also taking steps to actually solving or at least reducing the problem. “We help to meet the world’s growing energy needs in economically, environmentally, and socially responsible ways”. The company has actually done a lot through the years, aiming to achieve sustainable development. Shell has launched several programs like the Shell WAM Foam, which reduces CO2 emissions, and energy efficient programs in the refineries to open the eyes of everyone to the dangers drilling bring.
Awareness is anyone’s secret weapon, as indifference will never achieve anything. Moreover, the company is aiming to improve the process of production, so as to lessen energy-use, and to avoid spills. Shell has also invested in programs that should help in making the plants more energy efficient, and reduce gas flaring in Nigeria. They have also worked alongside several environmental organizations, in support of the conservation of energy and improve the standards and practices in taking care of the environment. Climate change, being one of the problems the Earth is facing today, is also taken into consideration.
There have been actions taken against this as well. Today, the company is trying to produce more natural gas, which prove to be 40% more efficient than gas from modern coal plants. Natural gas is also known to emit less CO2, which would of course be good for the environment. They also cost less, and are quicker to build compared to other sources of electricity such as wind and solar. Shell is also investing on LNG, or liquefied natural gas, which is known to be easier to store and transport to markets worldwide.
The company is currently helping in the advancement of carbon capture and storage technologies. Lastly, not only is Shell the source of modern energy needed via cleaner products like natural gas, it is also the source of livelihood in some areas. Employment of locals as workers and contractors are done usually to help out the society they are stationed in. The Health, safety, security, environment and social performance (HSSE and SP) policy is applied across all companies under the Royal Dutch Shell umbrella, and was created to protect people and the environment.
Not only is it for the protection of people and environment, but also for the contribution of the company to their places of operation, if ever they are in need of help in any way whatsoever. From this set of policies, employees of Shell are expected to use material and energy efficiently, to do no harm to other people, to protect the environment, and to lead in the promotion of the best practices in the protection of the environment in the industry. Before business plans are approved, they are actually checked to see if they follow the HSSE and SP.
An oil spill refers to the presence of large amounts or layers of crude or refined oil on land or seawater. It is mainly caused by man, either by accident or during an operation, and affects the environment greatly. Exposure to the material released during an oil spill may cause hypothermia and damage to the immune system of animals. It can also damage sea grass beds and the tainting of algae. It is therefore important that actions are taken for prevention, to avoid oil spills, so as to not harm the environment further. The strategy of Shell is to fix it from the root of the problem, to avoid future oil spills.
The HSSE and SP control framework contains a manual teaching how to react in emergency situations. The company also requires their employees to be well trained in their specific areas, as to avoid accidents and future mistakes, as oil spill is usually a result of human error. Larger ocean vessels are also required to have double hulls to meet the ship quality assurance standards of the company. Chapter VI Findings and Recommendations The oil industry is very much aware of the bad effects it has on the environment and is also very risky. Oil leakages in pipelines have occurred in the past.
If one part of the ecosystem is damaged by oil, everything follows. The oil can seep to the ground water thus contaminating it. Ground water is fresh water, if oil contaminates it, we can run out of fresh water. It then affects the species that lives on the fresh water. But if the production of oil stops the economy and society will also be affected. To prevent such disaster to occur, installation of a shutdown valve to allow early isolation in case of an oil spill and leak detection systems such as pressure sensors, shut-in systems and pump of systems can be applies.
The mere extraction of oil is already harmful to the environment. That is why technologies that are more effective and at the same time less harmful to the environment should be researched on and produced. Before, the use of dynamite to detect potential lands with oil was the norm. Now, they use seismic trucks that vibrate the lands. This, in fact, only produces noise unlike the dynamite that pollutes the environment. Also when extracting, whenever shot-hole methods are employed, we can change the size and hole depth to reduce noise levels.
Proper plugging of holes will also help to reduce noise dispersion. Another factor is the air emissions of Greenhouse gases such as carbon dioxide, which are still present because of gas flaring and venting. A possible solution is to provide a route for the associated gas to a flare efficient system, carry out control measures such as preventing blow outs by ensuring sufficient exit velocity and providing wind guards, and the usage of high integrity pressure protections to reduce flaring.
The Philippines is a coal-powered country. Crude oil is mostly used in Diesel and it is the most demanded by crude users. This means that the target market of oil here in the Philippines is public transportation or jeeps; diesel is the most used by the PUJ and some high-end automobiles. This should be used as an advantage to give power to machines instead of using oil. We believe that we must find a way to produce cars, jeeps, etc. , that can be powered with something else aside from diesel.
The hybrid cars could be a good solution for this. Also, in the local scene, we can see that there is no nuclear source of energy while 6% of the world’s energy consumption is from nuclear energy. Although it may be dangerous, looking at Japan, raising the use of nuclear plants may help a little in reducing the oil consumption. In our case study with Shell, they are now working towards a greener world, as it continues to promote sustainable development, and apply the HSSE and SP policy in all aspects of the company.
Future researchers do a case study on a different oil company to compare approaches to reduce negative impacts. To sum it up, oil is very helpful but also a big contributor to pollution. The very basic solution is to find other alternative sources that are eco-friendly. However, some “eco-friendly” products are still quite harmful to the environment, in the sense that the extraction itself causes harm one way or another. To solve this, further modifications and improvements should be done.