Supply Of Oil

This article focuses on supply of oil, exploration and production, along with the data that measures the upstream and downstream activities of the industry. Upstream activities are closer to the source, and "downstream" activities, such as refining and marketing, are closer to the consumer.

Finding and supplying oil isn't a simple task and involves a series of steps like identifying a prospect, and testing the rock. Later on, drilling a well to determine if the find is commercially viable becomes the deciding factor for further drilling and to install production wells. Gathering pipelines are then further assembled to transport the oil to central points to ship them further.

There is maximum risk in the investment because of the high expenditures and great uncertainty that oil will be found. But recent technological advances have minimized the uncertainties, thus turning this segment of industry greatest in terms of profit and return on investment. This has enhanced the oil market success, even in a low-price environment.

Sedimentary rock have tiny pores which allow the petroleum to seep in and act as "reservoir rocks" which hold the oil like a sponge and form a petroleum trap. Some of the regions in world, like the Middle East have numerous and larger petroleum traps holding the oil in substantial pools. Other regions, like the United States also have large oil deposits, although it is more expensive and difficult to identify and produce oil from here.

Drilling for oil uses a variety of techniques like core sampling and seismic testing to identify a prospective site for oil production. Technological advancement has made huge improvements in these methods. After these initial exploratory tests, companies then drill to confirm the presence of oil or gas. They can find a successful well containing either oil or gas, and often both, or an unsuccessful well, where the drilling did not find any or enough oil or gas.


fter discovering a successful well, production wells are put in place with further drilling. Tanks, pipelines and gas processing plants are placed so as to produce the oil. The oil which is extracted is the crude oil which must be refined into usable products.

The next step in oil production depends a lot on the naturally occurring pressure in the underground oil reservoir, which is an important determinant of the economical success of the reservoir. The characteristics of the trap, the reservoir rock and the production history pressure are the influencing factors for the reservoir pressure. For example, the reservoir in the Middle East continues to exhibit great pressure to force the oil out whereas, in the United States , oil is produced using some kind of artificial lift. Today, using a method called “waterflood,” is more effective which forces the oil to the drilled shaft or "wellbore."

It is interesting to note that technological advancement has made finding and supplying oil much cheaper than before. The impact of technology is great as it has enhanced the likelihood of finding oil, while eliminating the poor prospects. The latest drilling and production technologies have made it possible to exploit even those reservoirs that would formerly have been economically unviable.

Technology has made oil exploration and production safe both for the industry and the environment. Today, offshore production can be operated from onshore, with automatic shutoff systems, minimizing the pollution risk and damage. It has rejuvenated offshore exploration and oil supply.

Oil supply can have a considerable impact on prices in oil market. Some geopolitical events like troubles between Venezuela and the United States can alarm investors and lead to price volatility. But as per the energy analysts, recent price increases do not reflect major changes in supply of oil.

Oil supplies have remained within a relatively healthy range.

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