Facts About Oil

  • Oil is a hydrocarbon derived from organic material typically from seas and lakes buried under great pressure and heat.
  • Oil has three main properties: density, viscosity, and solubility.
  • Oil falls into two categories:
    1. Conventional oil starts at zero, rises rapidly to a peak or managed plateau, then it eclines exponentially to exhaustion. Conventional oil is cheap, easy, and fast.
    2. Non-conventional (heavy) oil rises slowly and has a long plateau of production until exhaustion. Non-conventional is expensive, difficult, and slow.
  • Crude oil is classified as light, medium, or heavy, according to its measured API gravity.
    1. Light Crude has an API gravity higher than 31.1 °API.
    2. Medium Crude has an API gravity between 22.3 °API and 31.1 °API.
    3. Heavy Crude has an API gravity below 22.3 °API.
  • API Gravity is a measure of how heavy or how light a petroleum liquid is compared to water. If its API gravity is greater than 10, it is lighter and floats on water; if less than 10, it is
    heavier and sinks. Most values fall between 10 and 70 API gravity degrees.
  • There are five primary types of crude oil:
    1. West Texas Intermediate (WTI) Oil, aka Texas Sweet Light, is a type of crude oil used as a benchmark in oil pricing and the underlying commodity of New York Mercantile Exchange’s oil futures contracts. WTI and Brent Crude are usually referenced in Western news reports about oil prices. WTI is lighter than Brent Crude. Its properties & production site make it ideal to be refined in the US. Typical price difference per barrel is about $1 more than Brent, and $2more than OPEC Basket.
    2. Light Crude is crude oil with a low wax content.
    3. Sour Crude has a hydrogen sulfide level greater than 1%. It also contains carbon dioxide.
      It is usually processed into heavy oil such as diesel instead of gasoline to reduce processing costs. Venezuela is the world’s major producer.
    4. Sweet Crude contains less than 0.5% sulfur, and contains trace amounts of hydrogen sulfide and carbon dioxide. It is commonly used for processing into gasoline.
    5. Brent Crude consists of Brent Crude, Brent Sweet Light Crude, Oseberg, and Forties. Brent Crude is sourced from the North Sea. The name ‘Brent’ comes from the formation layers – Broom, Rannoch, Etieve, Ness and Tarbat. Oil production from Europe, Africa and the Middle East tends to be priced relative to this oil. Brent is ideal for production of gasoline and is typically refined in Northwest Europe. Typical price difference per barrel is about $1 less than WTI and $1 more than OPEC Basket. Brent Crude has an API gravity of around 38.