The History of Petroleum in the United States

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The History of Petroleum in the United States

Petroleum, also known as crude oil, and natural gas are carbon-based fuels trapped under the earth’s surface. Plant and animal remains from millions to hundreds of millions of years ago formed carbon-based fuels. And they are a couple of the most important natural resources we use today.

Petroleum and natural gas can be found in just about every aspect of our lives. From the time you wake up and go to work to the time you sleep, you are most likely using them in one form or another. Your heated home. The electricity you use for your lights and computer. And the car you use to drive to work. You guessed it! These are all things that require petroleum or natural gas.

US oil and natural gas are resources that play a big part in the US economy today. And the history of US oil and natural gas production date back to 1859. Let’s take a look at the history of US oil and natural gas exploration, production, processing, transportation and marketing.

 

Exploration and Production

The US was not the first country to extract oil to be used as a resource. Crude oil was actually believed to be used first in the Middle East by ancient Babylonians and Egyptians for things like construction and mummy preparation! It would be many years later before oil was understood and used to its full potential. But first, it would have to be discovered in the US. And in the US, the first successful and commercially viable well was discovered in 1859, starting the history of US oil production.

It all began in Titusville, Pennsylvania when Colonel Edwin Drake was looking for a source to extract kerosene. At the time, kerosene was widely used as a light oil. It was a popular, clean fuel that could be used to light homes for cheap. And gasoline, which had few commercial uses at the time, was only a byproduct of kerosene.

In Pennsylvania, Drake created the first commercial well for oil using a new drilling technique. The new technique used a pipeline in boreholes. This allowed for much deeper drilling compared to how things were done previously. And it allowed for much larger, viable quantities of oil to be extracted from deep within the earth. He was able to go down 69 feet before hitting both oil and natural gas!

Before Drake used the new drilling technique, people had been skimming oil off the surface of the water in Pennsylvania’s Oil Creek or collecting oil from the region’s salt wells. As you can imagine, it was very time-consuming and not the most effective way to obtain oil. However, with the well’s success and a high demand for the natural resources, the start of an oil rush had begun.

After Drake’s oil well in Titusville, oil extraction began. And a pipeline to bring natural gas to a village was built. Western Pennsylvania became a popular area for other people who were interested in oil exploration. That later led to researching refinery techniques as well as oil exploration in other areas. In 1861, oil was discovered in Kern County, California. And in Texas, oil was discovered in 1901.

And what about natural gas? Well, natural gas started as an unpopular byproduct of oil exploration. It was almost exclusively used as a source of light. However, new uses for the gas led to more exploration and later trying to figure out a way to best transport the natural resource. In the past, natural gas was often discovered alongside oil or by noticing air seeping from the ground; maybe from bubbles in the water or in a flame.

The first large-scale exploration and extraction of natural gas began in the late 20th century. In southern Tennessee and Texas, the Barnett Shale was explored, and by 2006, about 40,000 wells for gas production were in place! And in 2019? According to the Environment Impact Assessment, the US will have produced an average of 92.1 billion cubic feet of gas a day. That’s 10 percent more than the previous year!

Today, both oil and natural gas exploration and production is a lot more scientific. Geologists will first look for an area where shale, a kind of rock, is formed. Why look for rock? Shale formations often contain large accumulations of oil and natural gas.

Geologists can look at exposed rocks on the surface of the earth or drill cores deep into the earth to get a better idea of what rocks are present. They can also conduct a seismic survey, sending waves through the earth to collect information on the different properties in the layers of the earth.

After collecting information, geologists piece everything together before deciding on the best place to drill for oil and natural gas. It can be very complicated, and each method can have uncertainties as the data collected cannot always tell you exactly what is below the earth’s surface. However, petroleum and natural gas’s high demand continues to be the reason for their continued exploration and production.

A lot has changed since the 20th century in the US. After 1901, over 1,500 oil companies started up within a year. And today, there are around 9,000 independent producers of natural gas and oil in the US. The exploration and production of oil and natural gas went through a lot of change and rapid growth. And now, of those 9,000 producers, there are over 900,000 gas and oil wells in the US that are actively producing natural resources, and production does not seem to be slowing down.

The History of Petroleum in the United States

Processing (Refining)

What does it mean to refine crude oil? To put it simply, it means heating and breaking down the petroleum to produce different products such as diesel, jet fuel or gasoline. Crude oil is like a mixture of all the products. And the mixture needs to go through a refining process in order to separate, convert and treat it.

Crude oil can have a number of different molecules present depending on the deposit. That means each oil well may have a different composition and properties. So in order to use the natural resource, it needs to be heated and separated.

Natural gas is less complicated than processing crude oil, but it is just as necessary to refine natural gas before its use. Consumers will use natural gas that is almost entirely made of methane. However, like crude oil, raw natural gas contains other compounds and needs to be processed. Some of the gas can separate from oil on its own, while other times, equipment known as Low-Temperature Separators use pressure differentials to separate the natural gas.

Let’s go back and take a look at the pivotal moment in US oil production history – the first oil well in Titusville, Pennsylvania. Before the first US oil well, petroleum was not available in large quantities. It was gathered from natural seepage through the earth’s surface, and was not in large enough quantities which limited its use. However, after being able to extract sufficient amounts of crude oil, large-scale refining systems were in development.

Refineries started with simple distillation units called stills. They were used to separate the different products in petroleum through means of heating the crude oil in a vessel. Then, the vapors were condensed into liquid fractions. Depending on the temperature at which the crude oil is heated, a different product could be separated from the mixture. Who knew crude oil could be so complex?

In the beginning, the main product that oil refineries were able to get was kerosene. Later, they were able to separate other fuel products. The products include things like gasoline, diesel fuel, waxes, asphalt, heating oil and lubricating oils. Different uses for the products began to emerge. And the demand for gasoline accelerated dramatically when Henry Ford created an affordable car in 1908. And it is still in high demand today!

With the demand for automotive fuel on the rise after 1910, refiners had an incentive to develop more sophisticated technology to increase their yield of gasoline. A process called thermal cracking, which heated heavier oils, was the earliest process. Pressurized reactors were used to split large molecules to get smaller fractions like gasoline and light industrial fuels.

The 1930s and WWII also contributed to the improvement of the refining process where catalysts were used to improve quality and increase the supply of fuels. Can you guess why? Fuel was an indispensable resource needed to fuel tanks and other forms of transportation during the war. And come the 1950s and 60s, demand for jet fuel and lubricating oils led to more improvements in catalytic reforming processes to increase yields.

There were many factors that played an essential part in the history of petroleum. John. D. Rockefeller was another one of these factors playing a major role in refining oil. In 1865, he started the Standard Oil Company. And he was known as the first “baron” to the oil industry. His career started in refining, and his company came to control 90 percent of the refining capacity in the US in 1879. Today, you may recognize the company ExxonMobil, Rockefeller’s successor company.

In the US today, you can find four of the largest refineries in the world! Two of the refineries are located in Texas, and the other two being in Los Angeles. Each refinery has the capacity to refine between 500,000 to 600,000 barrels of oil a day. And on top of that, 35 states in the US have refineries! Refining has become big business in the US.

Processing petroleum has become more sophisticated over the years. Who knows what it might look like in the future.

 

Transportation

With a high demand for oil and natural gas, transporting the natural resources was also something that had to be addressed.

There were no oil pipelines back in the day. So transportation was a lot more tricky. The first method that was used to transport oil was in wooden barrels. They were carried on horse drawn carts and carried down to rail road stations. And from there, the railroad system was used to transport the oil barrels to refineries before being unloaded.

Can you imagine all those barrels being packed, moved around by horse and then moved by train? This method of transportation was highly inefficient. It was a very slow process and expensive. Simple pipelines that were made from wood were later created to help cut costs. And gradually, as demand increased, sturdier pipelines made of iron and steel were built to help with transportation.

Over time, a transport system using tanker trucks was used and became the primary way to move crude oil to the refineries in the 1940s. Well sites would have large field storage tanks which would hold the oil until tanker trucks arrived. The trucks started off carrying between 40 and 50 barrels, but later were built to eventually hold up to 220 barrels of petroleum.

After a while, transporting with tanker trucks reached capacity limits. It was then that pipeline systems that stretched long distances were being considered. There was a lot of uncertainty as there were risks like pipe clogging. But they were eventually considered the most economical way to move large amounts of crude oil over long distances. And it was definitely a whole lot better than having to move barrels by horse!

Today, oil can be transported by pipeline, rail, truck or ship. Pipelines are most commonly used to move crude oil from the well to facilities and refiners. Rail is also an option for long distance shipping. Trucks limit oil storage, but offer flexibility when it comes to transporting oil to different destinations. They are usually used as the last step when transporting oil to storage destinations. And lastly, ships are also an option when transporting oil in bulk at a fraction of the cost when compared to pipelines.

The options for transportation of natural gas were a little less varied compared to US oil transport. When Colonel Edwin Drake dug the 1859 well and hit oil and natural gas, US natural gas production got its start. And that is when a small pipeline was built to transport the natural gas 5 1/2 miles to a nearby village. It was moved safely and easily to the village for use, but it was still difficult to transport the gas very long distances.

In 1891, one of the first major pipelines for natural gas made a pipeline 120 miles long from Indiana to Chicago. It worked, but it was still not efficient enough until the 1920s. It was then that more effort was put into creating an improved pipeline infrastructure for natural gas. Advances in pipe production including new techniques in welding led to a boom in pipeline construction, allowing for thousands of miles of US pipeline.

Today, natural gas, like oil, is mainly transported along pipelines. The gas needs to be highly pressurized in order to move it. And to make sure the air stays pressurized, there are compressor stations located along the pipeline to compress the gas through use of a motor, engine or turbine. And when companies cannot transport on land, they have the option to liquefy it and then transport it by ship!

 

Marketing

US oil and natural gas production help people commute to work, keep their homes warm, and enable them to do a multitude of other activities. You can buy and sell oil and gas just about everywhere.

In the past, petroleum was mostly taken to extract kerosene. And most of the other products in petroleum would go unused and discarded. However, in the 20th century, oil became a preferred source of energy. And with that, gasoline sales surpassed kerosene sales. As for natural gas, it was often burned because it was an unwanted byproduct before the 1920s. But as people began to realize its many uses, it became a product worth extracting.

So as the use of oil and gas became more popular, more companies were in search of ways to market their product. Different ways to improve exploration, production and processing would help US oil and gas market growth. New models for business and services continue to evolve. These result in reduced operation costs and promote growth in the market.

Many US companies take on various pipeline projects to help expand production and sustain growth. Market players also invest in plans that help increase oil and gas product demand. In addition, government policies support the exploration and production of US oil and gas and encourage companies in the industry to boost US oil and natural gas investments. What does this all do? It helps with oil and gas markets and ensures continued growth.

The history of US oil production and US gas production have a rich history. Everything from their exploration, production, refinement, transportation and marketing have changed, advanced, and grown over the years. It is unknown what the future holds for these natural resources, but until we stop using or decrease the amount of things we use these products for, US oil production and natural gas production will still hold a place in our foreseeable future.

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