Categorization of Crude Oil - Literature review Example

The Global Oil Scenario – from background to the present Abstract This assignment highlights various aspects of the oil scenario present globally today. It initiates from introducing the natural resources and highlighting oil as one of greatest blessings of God for human beings. It then moves on to categorizing oil into the two fundamental forms i.e. conventional and non-conventional and its features that distinguish them. This is done so that in the later part, the movement from conventional mode to the non-conventional one can be explained with ease, as it is a major indicator of the world’s movement towards oil crisis. The assignment then moves on to discuss the various aspects related to the present oil scenario and how rapidly the world is moving towards the credit crunch, and despite this factual reality, people are still in the denial phase. The possible reason for this can be the fundamentals of economics i.e. supply vs. demand. People see that they are getting the fuel means the underlying resource is present. However, the fact of the matter is that the giant fields are exhausting and depleting at a rapid pace, and this has led to the exploration of the expensive-to-explore- oil fields. Additionally, OPEC has also cut its oil supply, and majority of the big suppliers are using the most avoided mechanisms and least preferred methods for oil extraction, which clearly embark the depletion of oil at their fields. Despite these, alternate fuel sources such as solar, nuclear, and other forms are yet to make a big time impact in their contribution to fulfilling the global demand for energy. Therefore, the manufacturers should look towards developing fuel efficient systems, and the governments should intervene in this scenario and support the cause of alternate energy resources. These steps can delay, if not completely avoid, the issue of oil depletion from its respective resources. Introduction The world today is full of mysteries and miracles, and each mystery and miracle in itself depicts the presence of a high command controlling various variables that derive these issues and instances. Within these mysteries and miracles of life are filled with gifts of nature from God. Oil is one of the most incredible gifts of nature, found and explored from the heart of the planet, and is the source of fuel for various equipments, industries, automobiles, and other engine-based technologies. According to Nersesian (2007), the world has always assumed oil as something that is present and would always remain present through out; however, facts are much beyond this. Like other resources, oil is also present in a probability based determined quantity globally at various places in the world. Categorization of Crude Oil In accordance with Pahl (2008), crude oil is the fundamental refined form of oil extracted from various places and is then refined further to form products such as petrol, diesel, and other forms of hydrocarbons. However, primarily, based on the utility of the crude oil, it has been categorized into two major categories i.e. the conventional and the non-conventional forms. Conventional Vs. Non-Conventional Crude Oil Labban (2008) states that this categorization of crude oil is based on different variables. Primarily, the means of utilization, and mode of extraction, and the cost of exploration and extraction defines that the oil is conventional or non-conventional. Conventional, on a general note, is the one that is easily extractable or relatively easier to extract, the cost of exploration and extraction is on the lower side, and the means of utilization is easier i.e. after the exploration, the oil can be converted to utilizable format without much of an extensive processing. The non-conventional crude is the other way around. The Present of Oil Situation At present, the world is moving towards the crunch situation by all perspectives and means, since the rule of thumb states, each up is followed by a down, so the boom witnessed in the recent past has now caused a dip to the global economy. According to Leeb (2007), the rise in the economic cycle witnessed boom in the utilization of oil for various aspects. Accordingly, the daily extraction of oil had to move up, and subsequently, the natural resource has doubled its speed towards exhaustion. On an average, the annual extraction of oil is fairly stable between 27 and 30 billion barrels. It is noticeable that recently, oil economists forecasted the natural reserves to be around 900 bill barrels, which means an average of 30 billion barrels annually, would lead us to having oil reserves for three decades as a maximum. In accordance with the rule of economics as applied here, as the extraction moves up and gets closer to this forecasted quantity, the price would also increase, despite the dip at present. Margonelli (2008) states that the most amazing fact remains that (1) the general public is not very much aware of this scenario (2) those responsible for telling them about this are still in the denial face of these facts, and (3) those who are aware of this are not very much serious in reaching a conclusion. Probably, these all entities have a high faith in the miracles of nature for providing further resources. Some Important Facts Following are some important facts to consider that lead to the simple conclusion that exhaustion of oil resources is not far away: Exhaustion of the Giant Oil Fields Margonelli (2008) states that there are two major categories in oil fields that constitute the major chunk of supplies; these are the super giant and giant oil fields, contributing close to 40% of the global oil supply. The oil fields having capacity or holding oil from 4-10 billion barrels is considered as a giant oil field, while the ones that hold over 10 billion barrels of oil are referred to as super giant oil fields. It is noticeable that the present giant and super giant oil fields have been around for over decades now, and are very closed to complete depletion. Research reveals that the least preferred mechanism for oil extraction is the usage of water to extract oil, and it has been witnessed that many of these big fields, particularly those in Saudi Arabia are using this mechanisms for over a year now which implies that the depletion phase of these fields is very close by. Increased Utilization of Non-Conventional Oil Despite being expensive, difficulty associated with extraction and exploration, and other variables creating a big difference between conventional and non-conventional reserves, countries are now rapidly moving towards the non-conventional reserves as their viability was increasingly becoming possible, particularly following the recent big time rise in global oil prices. However, Labban (2008) states that with the major slump as of present, their viability has declined so the projects have been halted for a while, but there are foreseeable signals that sooner than now, these sites would again become viable and would thus be explored to a good potential. Cut of Oil Supply from OPEC Labban (2008) further states that the OPEC countries have recently cut their oil supply following the great slump in the global oil prices, and the same has been presented as the reason for doing this. However, the underlying reason is the fact that cheaper oil reserves i.e. conventional reserves from which exploration and extraction was easier have nearly exhausted, and now the supplying states are moving towards the non-conventional reserves, which are of course expensive. Subsequently, supplying oil at the present low prices of approximately $50 a barrel is becoming relatively in-viable. Remarks & Alternate Fuel Resources Despite these issues being in the limelight since a while, and having made an impact as the fact rather than news, yet there very less concern about this issue globally. Today as well, oil and gas constitute around two third of world’s energy supply needs. The alternate fuel resources such as solar, nuclear, and hydrocarbons, are still in their infancy stages despite a great many efforts made since a few years. In accordance with the figures stated by Labban (2008), nuclear energy contributes approximately 8%, while hydrocarbons constitute a mere 3% approximately towards meeting the global energy demand today. The day seems very far off when the world can rely on alternate energy sources. However, there are positive influences shown by factors such as ethanol, a major form of hydro carbon that has been used with a mix of mainly petrol to increase productivity and efficiency, and at the same time, the fact that a mix with petrol for instance 70% would imply a one litre solution having 70% petrol and 30% ethanol. If this mix becomes acceptable globally, it would simply imply that the consumption of petrol would reduce to 70% of where it stands today, while ensuring that the cost also goes down since ethanol is a by-product of sugar industry, and not much expensive in comparison to oil prices. Recommendations As witnessed from the discussion in this assignment, it is clear that the days of oil-freedom are far gone, and it is the time when appropriate savings must be done. Past was the time when 6-cylinder cars used to run on roads, and fuel efficiency was a word never known, while today is the time when a common man should enhance his interest in these issues, and assist in promotion of fuel efficient engines, taking care of the environment by means of reduced consumption of oil and gas engines. Now are the days when car manufacturers, for example, advertise about fuel efficiency in their cars, factory equipment manufacturer talk about the lesser consumption of energy associated with the plants and equipments that they manufacture. This should have been adopted years back when highly fuel inefficient vehicles and plants were used, but nonetheless. Though too late, but this can still have a significant impact on our future. There are two major insights taken from this research, and are proposed as recommendations as follows: Fuel efficient systems and engines As readily mentioned, manufacturers of automobiles and other items that consume energy resources are now binding themselves to the issue that the systems they produce must be fuel efficient, and their effectiveness should be able to make an impact on the global oil demand. In the similar regard and context, as stated by Yergin (2008), the efforts of various vehicle manufacturers such as Toyota and Honda should be appreciated; particularly Honda coming up with hybrid cars is an incredible move and would definitely assist in fuel efficiency becoming the subject of concern for automobile manufacturers. Stress on utilization of alternate energy sources The times of NGOs (Non Government Organizations) are gone as their effectiveness can be seen in the energy crisis issue. It is time for governments to intervene and support the utilization of alternate energy sources and having such projects boosted up. The governments should have incentive schemes for those involved in developing such projects. Alongside, the institution should also assist in deployment of alternate energy sources at various points within the country like windmills for example or ethanol based petrol; another classy example can be CNG (Compressed Natural Gas), etc. Conclusion Oil and gas are the gifts of nature, likewise other gifts; appropriate utilization and reduced misusing of these gifts is what would lead to long-lasting or at least delaying the depletion of such and other natural assets that we have in the world today. At the same time, as mentioned, the usage of alternate energy sources should also take place so to reduce the burden from the major supplier of world’s energy demand. Though steps not taken at the right time to delay this crunch of oil to possibly centuries; but even today, the right steps at the right time can delay this crunch to a wider margin of time, giving us an appropriate spam of time to adjust to the newly established and adopted energy resources. References Daniel Yergin (2008) The Prize: The Epic Quest for Oil, Money & Power. Simon & Schuster. Greg Pahl, Bill McKibben (2008) Biodiesel: Growing a New Energy Economy, Second Edition. Chelsea Green Publishing. Lisa Margonelli (2008) Oil on the Brain: Adventures from the Pump to the Pipeline. Broadway Books Mazen Labban (2008) Space, Oil and Capital. Routledge Roy L. Nersesian (2007) Energy for the 21st Century: A Comprehensive Guide to Conventional and Alternative Sources. M.E. Sharpe Stephen Leeb, Glen C. Strathy (2007) The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel. Grand Central Publishing Read More