FOSSIL FUELS I
Approximately 83 % of the energy used in
the US comes from fossil fuels
Oil and Natural Gas (Petroleum)
Oil Shale and Tar Sand
US Energy Sources (2010)
Results in various hydrocarbons (organic
compounds with mostly Hydrogen and
Carbon in them…more later). These can
be solid, liquid, or gas.
Liquid and gas migrate through porous rock
layer (sand stone) until they get caught
in a trap or escape.
A few miles across
Approximately 1 mile down (sometimes
VERY HARD TO FIND
Types of Oil Traps
Tools for Searching for Deposits
Easy to do over a wide area, but is a very
coarse measurement. Good to pick out
regions for further study
Look at the rocks and minerals in the region.
Certain types are indicative of hydrocarbon
Tools for Searching for Deposits
Mapping of surface conditions begins with
reconnaissance, and if that indicates the presence of
hydrocarbons, then detailed mapping begins.
Originally, both of these maps required field work.
Often, the mapping job became easier by using aerial
After the mapping, much of the more intensive
exploration depends on geophysical methods
(principally, seismic) that can give 3-D constructions of
subsurface structural and stratigraphic traps for the
hydrocarbons. Then, the potential traps are sampled
by exploratory drilling and their properties measured.
Gives a detailed picture of the subsurface
Used over limited but promising areas.
Example Seismic Image
US Oil & Gas Locations
Eventually you must drill a wildcat well.
(1st well in a region.)
Even with all of the research, only 1 out of
9 wildcat wells results in a commercially
Historically, it takes about 11 years for a
new discovery to begin producing.
gets 15% of oil
(pumping water down
the well) gets another
65% is still down
Much more expensive
Works by reducing surface tension and viscosity
of the oil
Enhanced Production Methods
Pump in pressurized Carbon Dioxide to
Pump in steam to reduce viscosity
Add detergent to reduce surface tension
with surrounding rock (then flood with
What is in
These are the Alkanes
Product Percent of Total
Lubricants 0.9 %
Other Refined Products 1.5 %
Asphalt and Road Oil 1.9 %
Liquefied Refinery Gas 2.8 %
Residual Fuel Oil 3.3 %
Marketable Coke 5.0 %
Still Gas 5.4 %
Jet Fuel 12.6 %
Distillate Fuel Oil 15.3 %
Finished Motor Gasoline 51.4 %
One barrel contains 42 gallons of crude oil. The total volume of products
made from crude oil based origins is 48.43 gallons on average - 6.43
gallons greater than the original 42 gallons of crude oil. This represents a
"processing gain" due to the additional other petroleum products such as
alkylates are added to the refining process to create the final products.
Additionally, California gasoline contains approximately 5.7 percent by
volume of ethanol, a non-petroleum-based additive that brings the total
processing gain to 7.59 gallons (or 49.59 total gallons).
Fun Fact to know and tell…
The refining of oil
is a very energy
of the total US
into running oil
Gasoline Octane Rating
Normally, gasoline is composed of
hydrocarbons with 5 - 10 Carbon atoms.
Each one burns differently.
Octane: C8H18 is a standard for
comparison, it burns very smoothly.
Heptane: C7H16 burns explosively, causes
inefficiency and engine “knock”
Pure Octane: 100
Pure Heptane: 0
90% Oct, 10% Hep 90
Using additives we may also produce a fuel
with the same level of “engine knock” as a
given Octane-Heptane mix. This is given
the same octane rating (tetraethyl lead
was the old additive… it is now illegal.)
Burning of Gas (Ideal)
2C8H18 + 25 O2 16 CO2 + 18 H2O + energy
Octane + Air Carbon Dioxide + Water + energy
2C8H18 + 25O2 14 CO2 + 2CO + O2 +
18H2O + energy.
In addition, since there is Nitrogen in the
air we get nitrous oxides (big part of
N2 +2O2 2NO2
N2 +O2 2NO
Gas Taxes (Chicago)
After cost of gasoline (oil, refining, transportation),
taxes are the largest contributor to the cost at
$0.579 for gasoline $0.657 for diesel
Federal – $0.184
Illinois - $0.201
Cook County - $0.0647
City of Chicago - $0.1275
$0.003 for underground storage tank fund
Should federal and/or state gas taxes be
raised or lowered?
Explain your reasoning.
Revenues Net Profit
Company ($billions) ($billions) Profit Margin
Wal-mart 408.2 14.3 3.4 %
Exxon – Mobil 284.7 19.3 6.8 %
Chevron 163.5 10.5 6.4 %
General Electric 156.8 11.0 7.0 %
Bank of America 150.5 6.3 4.2 %
ConocoPhilips 139.5 4.9 3.5 %
AT & T 123.0 12.5 10.2 %
Ford Motor Co. 118.3 2.7 2.3 %
JP Morgan Chase 115.6 11.7 10.1 %
Hewlett-Packard 114.6 7.6 6.6 %
Berkshire Hathaway 112.5 8.1 7.2 %
Citigroup 108.8 -1.6 -1.5 %
Profits! (2010): Most Profitable
Rank Company Revenues Profit margin
85 Merck 27,428.30 12,901.30 47.03645505
39 Goldman Sachs Group 51,673.00 13,385.00 25.90327637
94 Philip Morris International 25,035.00 6,342.00 25.33253445
36 Microsoft 58,437.00 14,569.00 24.93112241
72 Coca-Cola 30,990.00 6,824.00 22.02000645
33 Johnson & Johnson 61,897.00 12,266.00 19.81679241
75 Abbott Laboratories 30,764.70 5,745.80 18.67660013
40 Pfizer 50,009.00 8,635.00 17.26689196
58 Cisco Systems 36,117.00 6,134.00 16.98369189
22 Procter & Gamble 79,697.00 13,436.00 16.85885291
56 Apple 36,537.00 5,704.00 15.61157183
98 Travelers Cos. 24,680.00 3,622.00 14.67585089
20 International Business Machines 95,758.00 13,425.00 14.01971637
50 PepsiCo 43,232.00 5,946.00 13.75370096
19 Wells Fargo 98,636.00 12,275.00 12.44474634
62 Intel 35,127.00 4,369.00 12.43772597
7 AT&T 123,018.00 12,535.00 10.18956575
59 Comcast 35,756.00 3,638.00 10.17451617
9 J.P. Morgan Chase & Co. 115,632.00 11,728.00 10.1425211
65 Prudential Financial 32,688.00 3,124.00 9.557023984
Company Revenue ($billions) Profit ($billions) %
Wal-mart 351 11 3.13
Exxon-Mobil 347 39.5 11.38
General Motors 207 -2 -0.97
Chevron 200.5 17.1 8.53
ConocoPhillips 172.4 15.6 9.05
General Electric 168.3 20.8 12.36
Ford Motor 160.1 -12.6 -7.87
Citigroup 146.8 21.5 14.65
Bank of America 117 21.1 18.03
AIG 113.2 14 12.37
JP Morgan / Chase 100 14.4 14.40
Berkshire Hathaway 98.5 11 11.17
From 1977 to 2004, federal and state governments extracted $397 billion by
taxing the profits of the largest oil companies and an additional $1.1 trillion in
taxes at the pump. In today's dollars, that's $2.2 trillion.
From a Feb 2008 article…Over the last three years, Exxon Mobil has paid an
average of $27 billion annually in taxes. That's $27,000,000,000 per year, a
number so large it's hard to comprehend.
Here's one way to put Exxon's taxes into perspective.
According to IRS data for 2007, the most recent year available:
Total number of tax returns: 154 million
Total Adjusted Gross Income: $ 8.6 trillion
Federal Revenue from Income Taxes: $1.55 trillion
Number of Tax Returns for the Bottom 50%: 77 million
Total Income Tax Paid by the Bottom 50%: $44.8 billion (2.89 %)
People earning less than $32 900.
Exxon-Mobil’s effective tax rate is 41 %.
Paying Dearly to Drill
"Our industry is one of the most heavily taxed in the world," says Gantt Walton,
an Exxon spokesman. "While our worldwide profits have grown, our worldwide
income taxes have grown even more." Walton says.
From 2003 to 2007, Exxon's earnings grew by 89%, while income taxes grew by
170%. Much of that growth was overseas. Oil-producing countries charge
companies like Exxon dearly to dig for oil. Arrangements vary from country to
country, but Russia and Libya charge companies up to 90% of the revenues they
collect for extracting oil, according to Fadel Gheit, senior analyst for Oppenheimer.
These arrangements—whether production share agreements or royalty
contracts—are not disclosed by companies and governments.
Do oil companies make too much money?
Do oil companies pay enough or too much
in corporate taxes and other fees?
In general, what are your thoughts on
individual wealth, taxes and government?
Explain your reasoning.
WORLD & US OIL RESERVES
WORLD has around 1300 billion barrels
US - 23 billion barrels (1.9%)
Canada – 178.5 billion barrels
Where are the Proven Reserves
Rank Country Proven Reserves in Billion
1 Saudi Arabia 266
2 Canada* (tar sand) 178
3 Iran 138
4 Iraq 115
5 Kuwait 104
6 United Arab Emirates 97.8
7 Venezuela 87
8 Russia & East Europe 99
9 Libya 41
10 Nigeria 36
US Oil Produced and Found
What about ANWR?
The Alaska National Interest Lands Conservation Act (1980) established the
Arctic National Wildlife Refuge (ANWR). In section 1002 of that act, Congress
deferred a decision regarding future management of the 1.5-million-acre coastal
plain in recognition of the area’s potentially enormous oil and gas resources and
its importance as wildlife habitat. A report on the resources, including
petroleum, of the 1002 area was submitted to Congress in 1987 by the
Department of the Interior (DOI). Since completion of that report, numerous
wells have been drilled and oil fields discovered near ANWR, new geologic and
geophysical data have become available, seismic processing and interpretation
capabilities have improved, and the economics of North Slope oil development
have changed significantly.
A new assessment estimates that the total quantity of technically recoverable oil
in the 1002 area is 7.7 BBO (mean value), which is distributed among 10
plays. Most of the oil is estimated to occur in the western, undeformed part of
the ANWR 1002 area, which is closest to existing infrastructure. Furthermore,
the oil is expected to occur in a number of accumulations rather than a single
large accumulation. Estimates of economically recoverable oil, expressed by
probability curves, show increasing amounts of oil with increasing price. At
prices less than $13 per barrel, no commercial oil is estimated, but at a price of
$30 per barrel, between 3 and 10.4 billion barrels are estimated. Economic
analysis includes the costs of finding, developing, producing, and transporting oil
to market based on a 12 percent after-tax return on investment, all calculated in
constant 1996 dollars.