Introduction World Oil Gas 2v6w1p

THE WORLD OF OIL & GAS INTRODUCTION TO THE WORLD OF OIL & GAS

TRAINING MANUAL Course EXP-PR-DI040 Revision 0.2

Exploration & Production Miscellaneous Courses Introduction to the World of Oil and Gas

VTHE WORLD OF OIL & GAS INTRODUCTION TO THE WORLD OF OIL & GAS SUMMARY 1. ENERGY SOURCES .......................................................................................................4 1.1. Energy...what are we talking about? .........................................................................4 1.1.1. History of energy sources..................................................................................5 1.1.2. Forms of energy ................................................................................................8 1.2. Worldwide energy consumption ................................................................................9 1.2.1. Fossil energy: a disappearing species?...........................................................11 1.2.1.1. Oil...............................................................................................................11 1.2.1.2. Natural gas.................................................................................................14 1.2.1.3. Coal............................................................................................................16 1.2.1.4. The thorny problem of reserves .................................................................18 1.2.1.5. Oil reserves: for how much longer?............................................................19 1.2.2. Renewable energy sources: at what price?.....................................................21 1.2.3. Nuclear energy ................................................................................................26 1.2.3.1. countries ............................................................................................26 1.2.3.2. Uranium reserves.......................................................................................26 1.2.3.3. Reserves and the future of nuclear energy ................................................27 1.3. The major stakes: what future will energy have? ....................................................28 1.3.1. Economic stakes: the management of energy consumption ...........................28 1.3.2. Geopolitics of oil and energies ........................................................................32 1.3.3. The Hubbert peak............................................................................................34 1.3.4. Mankind and the planet ...................................................................................35 1.3.4.1. Energy and environment: the stakes..........................................................37 1.3.4.2. Greenhouse effect......................................................................................37 1.3.4.3. Sustainable development ...........................................................................39 1.3.4.4. Technological risk ......................................................................................40 2. OIL AND GAS................................................................................................................45 2.1. Fossil fuel energy: a long travel through time..........................................................45 2.1.1. Big Bang theory...............................................................................................46 2.1.2. Our solar system and planet Earth ..................................................................47 2.1.3. Origin of life .....................................................................................................48 2.2. Oilfields and gas fields ............................................................................................50 2.2.1. The hydrocarbons ...........................................................................................52 2.2.1.1. Reminders and definitions..........................................................................52 2.2.1.2. The hydrocarbons ......................................................................................52 2.2.1.3. The paraffin hydrocarbons or alkanes........................................................54 2.2.2. Source rocks ...................................................................................................55 2.2.3. Sedimentation .................................................................................................56 2.2.4. Migration of oil up to the surface .....................................................................57 2.2.5. Reservoir rock .................................................................................................57 2.2.6. Cap rock, an impermeable barrier ...................................................................58 2.2.7. Hydrocarbon trap.............................................................................................59 Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.2.8. Preservation of oil and gas ..............................................................................60 2.3. Exploration for oil and gas.......................................................................................61 2.3.1. Where to look for fields?..................................................................................61 2.3.2. Exploration of the substratum..........................................................................64 2.3.2.1. Exploration by seismology..........................................................................65 2.3.2.2. Studies prior to drilling................................................................................67 2.3.3. Assessing the oil reserves before drilling ........................................................69 2.3.3.1. Reserve types ............................................................................................70 2.3.4. Logistics for setting up oil drilling .....................................................................71 2.3.5. Instructions for drilling operations ....................................................................72 2.3.6. Role of drilling mud..........................................................................................73 2.3.7. How to know if oil or gas has been found? ......................................................74 2.3.8. After drilling .....................................................................................................75 2.4. Production of oil and gas.........................................................................................76 2.4.1. Instructions for the development of the oil production centre ..........................77 2.4.2. How to produce? .............................................................................................77 2.4.3. The various recovery mechanisms ..................................................................79 2.4.4. Life of oil and gas fields ...................................................................................80 2.4.5. Abandonment and dismantling of a field..........................................................81 2.5. Transportation of oil and gas ...................................................................................82 2.5.1. Oil transport.....................................................................................................82 2.5.1.1. Transportation by maritime means.............................................................83 2.5.1.2. Transportation by land ...............................................................................85 2.5.1.3. Le stockage du pétrole ...............................................................................87 2.5.2. Le transport du gaz .........................................................................................87 2.5.2.1. Gas storage in tanks ..................................................................................89 2.6. Oil trading................................................................................................................90 2.7. Oil and gas refining .................................................................................................91 2.7.1. Oil refinery: instructions for use .......................................................................93 2.7.2. Refined oil products.........................................................................................97 2.8. Petrochemistry .......................................................................................................99 2.8.1. Polymerization...............................................................................................101 2.8.2. Petrochemical engineering ............................................................................102 2.9. Oil logistics and supply..........................................................................................104 2.9.1. Oil fuel depots ...............................................................................................105 2.9.2. A priority issue: security.................................................................................106 2.10. Consumption of petroleum products....................................................................109 2.10.1. The different types of fuel oils......................................................................110 2.10.2. Quality of service .........................................................................................111 2.10.3. Prices of crude oil fuels and the rate of the oil barrel...................................114 2.11. The major actors in the hydrocarbon world .........................................................116 2.11.1. The institutions and other organisations ......................................................117 2.11.2. World oil companies ....................................................................................118 2.11.2.1. Major oil companies ...............................................................................119 2.11.2.2. National oil and gas companies .............................................................121 2.12. Production and consumption statistics of oil and gas ..........................................123 2.12.1. Oil ................................................................................................................123 2.12.2. Gas..............................................................................................................126 Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.13. The future of oil and gas......................................................................................128 2.13.1. Oil ................................................................................................................128 2.13.2. Gas..............................................................................................................130 3. TOTAL .........................................................................................................................132 3.1. Total at a Glance (2005 figures) ............................................................................132 3.2. Promoting Progress and the Future of Energy ......................................................134 3.3. Customer-Focused Brands ...................................................................................134 3.4. Total’s values ........................................................................................................135 3.5. Implementing a Proactive Ethical Process ............................................................135 3.6. Corporate Social Responsibility.............................................................................136 3.7. Strategy.................................................................................................................136 3.7.1. Upstream Strategy .......................................................................................137 3.7.2. Downstream Strategy ....................................................................................137 3.7.3. Chemical segment.........................................................................................138 3.7.4. Shareholder Base..........................................................................................138 3.7.5. A global group with European roots ..............................................................139 3.8. Focusing on broader employee diversity...............................................................139 3.9. Group Organization ...............................................................................................140 3.9.1. The Executive Committee and the Management Committee ........................140 3.9.2. Mission of the Board of Directors ..................................................................141 3.10. Total, A Multicultural, Richly Diverse Group ........................................................142 3.11. Total history.........................................................................................................143 3.12. Logo history.........................................................................................................151 4. YOUR SUBSIDIARY....................................................................................................153 5. GLOSSAIRE ................................................................................................................154 6. FIGURES.....................................................................................................................155 7. TABLES .......................................................................................................................159

Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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1. ENERGY SOURCES Energy, what an enormous subject! As vast as the universe. Our universe is overflowing with the boundless energy of billions of galaxies, all in ceaseless movement and each made up of billions of stars radiating heat, light and electromagnetic waves. And among this myriad of stars is the sun, generously spreading its rays over the earth and nurturing life here on earth: the life of a multitude of organisms, including animals, which use this energy to live and move around. These organisms include a very special animal: Man. For several thousand years and most notably in the last two centuries, humans have found the simple energy of their muscles to be insufficient. We have built a modern industrial civilisation and, to make it work, we have tamed the energy sources available in nature: for example, the wind, moving water and the burning of wood. And more recently we have exploited the less obvious resources, hidden under the ground or difficult to control; resources such as coal, oil, natural gas and nuclear fission. Today, Man has arrived at a turning point in his history. Those forms of energy which he uses the most, based on fossil sources (oil, gas and coal), are going to become scarcer and scarcer. Renewal will take millions of years! There is no miracle solution to this problem, but there are a large number of actions which, put together, will enable us to overcome the difficulties that lie ahead. It will be up to each one of us to play a role in meeting the huge challenge of ensuring that our future children will be able to have access to the energy that is essential for life. Meanwhile, let’s take off on our grand voyage around the energy question!

1.1. Energy...what are we talking about? In Ancient Greece, several centuries before Christ, energeia meant “working” or “in action”. French and English have kept this sense of the word. Energy is force in action everyday!! Kicking a football gives rise to a movement of the ball in the direction of a teammate or the opponent’s goal. The force of the , or the shot, imparts energy to the ball. The flame of a gas cooker provides the energy necessary for the water to cook the pasta. The energy produced by the jet engines of a plane means that it will fly and not crash to the ground. The energy from a waterfall allows us to make electricity. Light energy from the sun is responsible for the growth of plants. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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From the above, a first simple definition can be deduced: Energy represents the ability to produce action. For example, it can give rise to movement, it can change the temperature of a body or it can transform matter. Energy comes from different sources that can be found naturally: wood, coal, gas, wind, sunlight, moving water and uranium. It can take different forms, for example: heat energy, muscular energy, mechanical energy, chemical energy and electrical energy. And energy is capable of being transformed from one to another of its many forms.

1.1.1. History of energy sources From the beginning of time, right up to the present, mankind has always been motivated to use all the resources provided by nature to make his life easier and more pleasant. And, of course, energy has always been man’s best friend in this quest.

Figure 1 : Energy through the ages


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What is the oldest form of energy used by man? Without any doubt, it is fire! Our distant ancestors, men of prehistoric times, learnt to use wood to keep themselves warm and to cook their mammoth steaks - almost certainly burning their fingers a little at the start! Energy from the biomass, in other words the energy used in chemical form by human beings, had just found its first applications. And then came the wind! The first sailing boats are thought to date from 3000 BC. The use of wind energy was born. The first windmills appeared with the Persians, around 2000 BC. The technique would not be imported into Europe until the 12th century AD, a thousand years later. The famous Dutch windmills sprung up throughout the countryside in the 14 th century. All these enemies of Don Quixote were mainly used to grind grain or to pump water. The Dutch, in particular, used them not only to dry out their polders, the land tenaciously won from the sea, but also to turn their sawmills and to manufacture oils. On the other side of the North Sea, England did not remain idle: it was there that the shape of the windmill sails was perfected, using scientific calculations. In the 19 th century, there were almost 10 000 windmills in England. Tiny windmills, used to pump water, appeared in the countryside at the same time. Equipped with numerous blades and of small diameter, they had very little in common with modern wind turbines. After air … water! Close cousins of windmills, watermills also go back to ancient times. They represent a first stage in the domestication of hydraulic energy. They were used for the same purposes as windmills. Dams have also existed for a very long time. The first may have been built in Egypt, by the Pharaoh Menes, in 2900 BC. They were used to store water for cultivation and for human and animal consumption. It was only after the discovery of electricity, that they were used to produce energy. These ancient energy sources are used even more nowadays, but of course, with vastly improved technology. And other energy forms have made their entrance onto the stage: modern energy sources. Modern, yes, even if they are not all young. First and foremost, the energy sources that gave rise to the two major industrial revolutions were coal (which was originally wood) in the 19th century and oil (as well as natural gas) in the 20th century. It is due to these fossil fuels that the rich countries have been able to make energy available to their populations, in sufficient quantities to have enormously changed everyone’s life. Finally, the discovery of natural radioactivity in 1896 opened the way for control of the atom. The energy from nuclear fission was born. This is the energy liberated when the very large atoms of uranium are split. For those countries that made the choice (for example ), it is an important means of production of electricity. It is the most recent of energy forms, the first nuclear power plants dating from the 1950’s.


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Figure 2 : Nuclear energy And then, there are the energy sources of the future. Of these, the use of solar energy remains the most recent (from the beginning of the 1970’s). Strangely enough, the discovery of how sunlight could be changed into an electrical current (the photovoltaic effect: the transformation of sunlight into electrical current) is older than that of radioactivity, dating as it does from 1839. But industrialists waited for the first oil crisis in 1973 before becoming seriously interested. In the case of geothermal energy, the water in the deep substrata that is naturally warm or very hot is used for heating purposes or for the production of electricity. Even if Asterix and Caesar already knew of the existence of hot springs, they used them above all for their baths. Like solar energy, the use of geothermal energy dates from the second half of the 20th century. And then, there are those sources we do not yet know how to handle … Energy sources that man has not yet managed to control to his advantage. Perhaps the day will come when we know how to use … Natural electricity, otherwise known as lightning. A flash of lightning abounds with furious energy. Unfortunately, after a lot of attempts that have failed, we still do not know how to recover it. It is too intense and too violent, and besides, we don’t know how to forecast when or where it is going to occur next. At best, thanks to lightning conductors, we manage to protect houses and buildings, where it could otherwise do an awful lot of damage.


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The tides, sea currents and ocean waves all possess enormous energy, but we don’t yet know how to capture it economically. Research is ongoing. Only one plant exists that produces energy from the tides on an industrial scale, and it is located in . It is the tidal plant at Reims in Brittany. The temperature difference between the surface and the depths of the oceans also theoretically gives us a way to produce electricity. But at present this thermal energy of the oceans seems to be too difficult and costly to recover. And perhaps the inexhaustible energy source really does exist. It is nuclear fusion, the energy of the stars, the transformation of two tiny atoms of hydrogen into an atom of helium that is hardly any larger, liberating an enormous quantity of energy when there are billions and billions of atoms that fuse together! Hydrogen is present in large quantities on Earth; it is one of the components of water; so this source of energy would be abundant and available for a very, very long time. For the moment, we are at the research stage, but there are so many technical difficulties that no one knows if we will be successful one day. In the meantime, the military know how to liberate this energy; but without being able to control it: it is known as the H-bomb (the hydrogen bomb) that, unfortunately, cannot be used for civil purposes such as producing electricity.

1.1.2. Forms of energy Energy from these sources can show itself in different ways. We speak therefore of forms of energy. All these energy forms have one characteristic that is particularly interesting for our daily life: they can be transformed or converted from one form to another. For example, an internal combustion engine transforms chemical energy (the fuel) first into thermal energy and then into mechanical energy by means of the pistons that are part of the motor. Radiant energy from the sun is at the heart of the phenomenon of photosynthesis (the process that helps plants develop and grow) and of the natural cycle of water (the evaporation phase) . Thermal energy is produced by solar radiation or by the burning of combustible matter such as wood. Mechanical energy gives rise to the displacement of objects or solid bodies. Chemical energy is stored in matter, in the molecules, which need a large input of energy for their creation. For example, explosives are concentrates of chemical energy. The electrolysis of water produces chemical energy in the form of hydrogen and oxygen. Energy is present in a chemical form in the battery if a car. Electrical energy corresponds to the displacement of electrical currents in conducting bodies (usually metals). It exists in nature as lightning, which moves through the air; or again, in the form of static electricity (electric charges present on a non-conducting body).


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1.2. Worldwide energy consumption Today, more than ever before, man’s requirements for energy are colossal and everincreasing. The consumption of primary energy is continually increasing throughout the world. (We speak of primary energy when it has to be transformed before being used – principally into electricity or into mechanical work in the engines of vehicles or other machines.) Energy consumption jumped 38% in the 2 decades from 1982 to 2002. And the rate of increase reduced only slightly over the period: + 20% between 1982 and 1992, and 15% from 1992 to 2002. Figure 3: View of the Eurostar. Energy comes largely from raw materials extracted from the ground (oil, gas, coal, uranium). Companies operating in these major sectors must meet an increasing world demand for energy; they continually have to strike a balance between supply and demand, neither of which are uniformly spread over the planet. There are the major producers of primary energy materials who supply the world and the large consumers whose own energy production does not satisfy their needs. Companies in the energy sector much therefore also provide for the transfer of energy raw materials from producers to consumers. Moreover, once they have been extracted from the substratum, those energy raw materials are not reconstituted and replaced. They are non-renewable energies sources. A problem therefore exists concerning reserves, a problem that can be summarised in a single question: how long will the energy resources, which mankind has been using for the last 150 years, remain available to the world?


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Figure 4: Changes in world consumption (in % Mtoe) It can be seen that, over a 20-year period, the share of oil (more than 1/3 of world consumption in 2002) has reduced, whereas the shares of gas (1/4 of world consumption) and of nuclear electricity (scarcely 2% of world consumption) have increased. Oil and gas represent almost two thirds of world energy consumption; coal about one third. Nuclear electricity and renewable energy taken together do not even attain 5% of the total. The share of hydroelectricity has remained stable. The share of other renewable energies is increasing, but although electricity production from “new energy sources” has been multiplied by almost 10 in the 20-year period, its share in primary energy production remains very small (0.23% in 2002). In 2002, renewable energy sources represented just 2.4% of energy consumed worldwide (2% in 1980) – really very little!


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1.2.1. Fossil energy: a disappearing species? Let us have a detailed look, on the one hand at the main consumers of fossil energy throughout the world, and how their consumption has changed over the last 10 years, and on the other hand at the zones of production throughout the world. 1.2.1.1. Oil Consumption 2004 103 b/d

Variation of the consumption / 10 years

Consumption per inhabitant (barrels/year)

United States

20 731

17%

25,4

Canada

2 294

30%

25,9

Mexico

1 970

2%

6,7

Brazil

2 140

28%

4,2

Venezuela

560

27%

7,7

2 650

–8%

11,7

1 977

6%

11,9

Italy

1 881

1%

11,8

England

1 827

0%

11,2

Spain

1 573

41%

13,3

Holland

947

24%

21,2

Turkey

683

26%

3,4

Belgium

641

26%

22,5

Russia

2 770

– 13 %

7,1

Saudi Arabia

1 845

43%

27,4

Iran

1 510

34%

7,9

Egypt

590

32%

2,9

South Africa

502

22%

3,9

Japan

5 353

–4%

15,3

China

6 400

102%

1,8

India

2 450

73%

0,8

South Korea

2 149

17%

16,4

Indonesia

1 200

54%

2

Taiwan

965

46%

14,9

Australia

877

12%

15,8

Malaysia

515

36%

7,4

Country

Table 1: World fossil energy consumption in the world – Oil Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Figure 5: World oil consumption 2004

Figure 6: World oil production 2004 Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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The principal consumer countries are, without any surprise, the developed countries of North America, Europe and Asia. The grand champion of oil consumption: the United States. With a little less than 5% of total world population, America consumes a quarter of all the oil produced each year and that rate of consumption is not slowing down: +16% in the decade from 1993 to 2003, about the same as the average for the world as a whole. In Asia, consumption is exploding. China has almost doubled its consumption in 10 years and there are no signs of it stopping there. In this period the consumption of the whole of the Asia-Pacific zone has exceeded that of the North American zone. With a 39% increase on average over the decade, Asia has become the new oilconsuming giant. But who can blame these developing countries for wanting to offer their populations the same comforts as those available to the rich countries? Until today, increases in oil consumption have always been balanced by equivalent increases in production, even if at times tensions have resulted in hikes in the price of crude oil, such as in 2004/2005. The countries that have made the biggest efforts over the last 6 years are not those belonging to OPEC. Globally, OPEC production has even gone down slightly. There are two main reasons for that: In 1982, in a violent post-oil-crisis rebound, oil prices dropped significantly. That was the year when OPEC decided to install its policy of quotas, that is to say, to give each of its a total volume of crude production that should not be exceeded: the aim being to control production and hence prices, and to conserve reserves for future generations. This policy has worked well on the whole. It has allowed OPEC to dig less deeply into its reserves than non-OPEC countries, whilst at the same time maintaining relative price stability. Certain OPEC countries, in particular those of the Arabian Peninsula and Iraq, possess very large reserves, but their production capacities have changed very little for at least 20 years. Increasing capacity would mean very heavy investment, which, for the moment, has not been forthcoming. The result is that, for many of them, their maximum production year is situated towards the end of the 1990’s. On the other hand, exploration and development of new oil fields has made significant progress in several non-OPEC regions (around the Caspian Sea, in the Atlantic Deeps, in Brazil and in Angola, …). Other countries, both OPEC (Indonesia) and non- (United States, Norway, United Kingdom, Egypt) have seen their production drop in the last 10 years or towards the end of the 1990’s. For them it is a case of declining reserves: they have probably already attained a production peak (1970 in the United Sates, 1996 in Indonesia and Egypt, 1999 in the United Kingdom and 2000 in Norway) that they will never be able to exceed in the future. Their production will gradually decrease in the coming years. These countries have without doubt attained their Hubbert peak. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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1.2.1.2. Natural gas Who are the main gas consumers worldwide? Country

Consumption 2004 (Gm3)

United States

635

Canada

96

Mexico

50

Argentina

38

England

98

101

Italy

81

Holland

51

45

Russia

454

Ukraine

86

Uzbekistan

50

Iran

86

Saudi Arabia

66

United Arab Emirates

40

Egypt

31

Japan

84

Indonesia

37

China

38

Malaysia

33

Thailand

30

Table 2: World fossil energy consumption in the world – Natural gas

Figure 7: World gas reserves in 2004 (Gm³ / year) Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Figure 8: Gas consumption in 2004 (Gm³ /year)

Figure 9: Gas production in 2004 (Gm³ /year) As in the case of oil, the major consumer countries for gas are the developed countries and often also developing countries having significant production of their own together with a large population (Iran, Egypt, Uzbekistan …). Consumption of gas is increasing steadily every year, more rapidly even than oil. It progressed some 24% during the 10 years between 1993 and 2003. As is the case for oil, the Middle East has major gas reserves (41% of world reserves). But its production remains limited (10% of world production). In fact, the major consuming countries of North America and Europe draw on their own reserves, partly because the distribution of gas is proportionally more expensive than that of oil. It is therefore less attractive to bring gas from far away. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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1.2.1.3. Coal Coal has represented more than 1/3 of world primary energy consumption for the last 30 years. The principal consumer countries (figures for 2004) are the following; they are often countries that have their own significant reserves. COUNTRY

Coal consumption (black coal+ brown coal) in millions of tons

China

2 062

United States

1 107

India

478

280

Russia

258

Japan

204

South Africa

195

Poland

153

Australia

150

South Korea

91

Greece

80

Turkey

70

England

67

Ukraine

78

Kazakstan

73

Taiwan

63

Czech Republic

63

Table 3: Consumption of coal (high-carbon coals + lignite) in millions of tons 2004 For most of these countries, the figures for consumption and production are relatively close to each other (except for Australia, a major exporter). The same remark can be made at the level of continents or large geographical regions. Some countries are marginal coal exporters, others marginal importers. Compared to oil, gas and uranium, coal is therefore much less important in of international commerce. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Of course, it is nevertheless transported within producing countries, from the production areas to the electricity power stations and to the industrial boilers where it is used.

Figure 10 : Coal


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1.2.1.4. The thorny problem of reserves The reserves of primary energy (oil, gas, coal, uranium) are represented by the volumes of each raw material available within a country or in the world as a whole. When we speak of reserves, we generally mean the quantities whose existence is certain: these are proven reserves, which can be definitely relied on. At the same time technicians and forecasters try to calculate what may be the additional reserves that mankind could have available, in other words, possible reserves. Taking oil as an example, we will see that the figures for reserves, even proven reserves, are in fact very uncertain. Figure 11: World oil reserves on 01.01.2005

Let us look, first of all, at figures for oil reserves by country and by regions as at 01/01/2004. The figures given, in number of years of reserves, are based on the production of each of these countries in 2004. The table shows proven reserves. It can be seen that several countries in the Middle East, all of OPEC, hold between them 2/3 of world oil reserves; with a special mention for Saudi Arabia which, alone, possesses ¼ of world reserves. In total, OPEC holds 80% of these reserves, whereas the organisation currently only produces a little under 40% of the oil consumed worldwide. OPEC reserves are also very large when expressed in of years, often exceeding 100 years. The logical conclusion of all this is that the Middle East, which is already a strategic region for oil production, is going to become more and more so in the future. These figures of reserves appear to be very precise. Nevertheless, they must be treated with caution, because they can change rapidly form one year to another and they are themselves uncertain. They vary and are uncertain for reasons that are at once technical, economic, and political.


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Country

Reserves (billions of barrels)

Years of reserves

United States

21,4

11

Mexico

14,6

12

Canada

5

6

Venezuela*

77,2

82

Brazil

10,6

20

Ecuador

4,6

24

Norway

8,5

8

England

4,5

7

Russia

60

19

Kazakstan

9

24

Azerbaijan

7

62

Saudi Arabia*

261,9

79

Iran*

125,8

86

Iraq*

115

157

Kuwait*

102

118

United Arab Emirates*

97,8

108

Qatar*

15,2

53

Oman

5,5

20

Libya*

39

71

Nigeria*

35

41

Algeria*

11,8

19

Angola

5,4

14

China

18,3

14

India

5,4

22

Indonesia*

4,7

Table 4: Proven reserves * Member countries of OPEC (Organisation of Petrol Exporting Countries)

1.2.1.5. Oil reserves: for how much longer? Oil reserves Until the end of the 1980’s, exploration results and technical progress in assisted recovery methods in oil fields in production, effectively allowed renewal of reserves. That is why it has often been said “for 40 years, we have had 40 years of oil before us”. That was still the case in 2003, because the world had available 43 years of reserves.


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But for some years now, the renewal of reserves has no longer been guaranteed by exploration: the oil fields discovered are fewer and smaller (with the exception of several new regions, such as the Caspian Sea, for example). For the moment this situation still has no effect on production. But it is certain that one day; the offer of oil will no longer be able to keep up with an ever-increasing demand. The result will not be sudden disappearance of oil in 40 or 50 years; but, instead, a peak, after which production will begin slowly but inexorably to diminish. This peak, or point of maximum production, is called the “Hubbert peak”. At the moment, experts do not agree between themselves as to exactly when this peak will be reached. For the most optimistic, it will be in 30 years time, and for the most pessimistic, in 5 years! The point at which the Hubbert peak occurs is a parameter playing a role in the major challenges [link to 1.3] that await us in the coming years! Gas reserves World gas reserves are less concentrated regionally than those of oil. Nevertheless, the Middle East s for 40% of these reserves. But there is a competitive area, made up of Russia and the countries on the eastern coast of the Caspian Sea (Kazakhstan, Turkmenistan), which hold some 32% of world reserves. It is also worth noting the special case of Qatar, a tiny country on the Arabian Peninsula, which, with its super giant North Dome field, possesses almost 15% of the gas reserves of the planet! At present rates of consumption, gas reserves would last 20 years longer than those of oil. A brief reminder of the lifetimes represented by the reserves of different energy raw materials estimated on the basis of 2003 consumption: knowing that each of them has also its own “Hubbert peak”: Oil: about 40 years. Gas: about 60 years. Coal: about 200 years. Uranium: about 100 years


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1.2.2. Renewable energy sources: at what price? Today oil and gas are still relatively cheap. That is the main obstacle to development of renewable sources, which are more expensive. In the future, the prices of energy from fossil sources should increase. At the same time those of renewable sources should reduce, mainly as a result of technical progress and the manufacture of equipment in longer production runs. In the meantime, the renewable energy sources are therefore dependent on government aid if they are to make progress. There is no mystery: renewable energy sources are developing the fastest where they are the best ed, for example in where their use has been placed within a legal framework. Aid can take several different forms: Grants and direct aid; Purchase of the electricity produced at preferential tariffs, higher than normal tariffs (this is the solution imposed by the French government on the EDF, the French electricity distributor,); Tax breaks for individuals who install systems of renewable energy production in their homes. The limits of renewable energy are physical limits: the maximum area of cultivation that one can devote to the biomass for energy purposes, the number of wind turbines that can be installed on a site where the wind blows frequently, the surface area that can be devoted to the s of a solar heating installation … In the medium-term future, even if many of them have significant development potential, the renewable sources will not be able to supply the volumes of energy that the planet consumes by using fossil energy. The WETO 2003 report ( World Energy, Technology and Climate Policy Outlook) of the European Commission even forecasts that the share of renewable energy in world energy consumption is going to decrease progressively, from 13% to 8% between 2000 and 2030, despite the expected development of these new energy sources. This is because our consumption of energy will increase faster than the production of energy from renewable sources. This certainly does not mean that renewable energies have an insignificant role to play. Continued development and further research into even more efficient technologies must be pursued. Because in the longer term, it is those energy sources that will certainly take over from fossil sources when the latter approach exhaustion. However, these developments will go on alongside very significant energy savings, resulting in major changes in our lifestyle, movement and work.


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The countries which have chosen the path of renewable energy sources: All the renewable energies taken together scarcely represent 2.5% of world energy consumption. For the most part they are used to produce electricity, beginning with the principal renewable energy source currently exploited: hydroelectricity (2.2% of world energy production).

Figure 12: Electricity production from hydroelectric sources in 2004 (billions of kWh).

The example of hydroelectric energy:

The main producer countries for hydroelectric energy as at 2004 Country

Hydroelectric production (billions of kWh)

Canada

334

China

328

Brazil

318

United States

268

Russia

165

Norway

108

Japan

94

India

84

Sweden

64

Venezuela

62

59

Paraguay

52

Turkey

46

Italy

41

Table 5: Electricity production from geothermal, solar, wind, wood and biomass sources in 2004 (milliards de kWh)


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The hydroelectricity producing countries are also the consumers, even if certain countries such as export a little electricity to their neighbours. Analysed by continent or geographical region, hydroelectric energy appears to be more equably spread than the non-renewable sources of energy. The initial potential of developed countries has been largely exploited, and the possibility of new hydroelectric dams is limited. On the other hand, looking at the figures, it appears that Africa is far from having developed all its hydroelectric potential. The principal countries producing electricity from other renewable energy sources are the following: Country

Electricity production from renewable energy sources excluding hydroelectricity (billions of kWh)

United States

97,1

Canada

10

Mexico

8,8

Brazil

17,2

39,4

Spain

21,2

Finland

10,2

Italy

12,8

Denmark

9,7

England

8,1

Sweden

7,2

Holland

6,4

6

Japan

15

Philippines

9,8

India

6,4

New Zealand

3,8

Indonesia

6,1

Thailand

3,3

Australia

2,5

China

2,4

Table 6: Production of electricity from renewable energy sources excluding hydroelectricity 2004 2004 levels of production of electricity from renewable energy sources: geothermal + solar + wind + wood + energy from waste (incineration and methane production)


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It is largely the developed countries that are involved, even if Brazil (biomass), the Philippines (geothermal energy) and India (wind energy) stand out as pioneers of renewable energy among developing countries. Worthy of note is the tiny contribution from renewable energy in Russia and, above all, the situation in Africa where solar energy would nevertheless appear to be a promising energy source.

Research and technical progress for the future The technological principles of renewable energies are available, but much more can be expected from research into the improvement of efficiency of the techniques, for example: Improvement in yields of photovoltaic cells: research is ongoing into crystalline forms of silicon or other semi-conductors capable of going beyond the best yields currently attainable (16%); Learning how to install wind turbine farms at sea at lower cost; Productivity improvements for plants destined as green fuel; Continuation of tests of different installations for the capture of energy from waves and maritime currents, in order to select the most efficient methods before generalising their use; Improvement in procedures for the management of electrical energy, so that electricity resulting from intermittent energy sources, such as the wind and the sun, can be better integrated into the distribution network. The really positive surprise for mankind could come from the success of long-term research, already begun, aimed at controlling nuclear fusion. Nuclear fusion could theoretically allow us to achieve the energy dream: inexhaustible supplies in large quantities. But we won’t have an answer before 40 years at best.


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Figure 13 : Renewable energy sources


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1.2.3. Nuclear energy 1.2.3.1. countries In 2003, nuclear energy represented only 2% of the primary energy and 16% of the electricity consumed worldwide. In many countries, nuclear electricity represents only a very small percentage of national production. In OECD countries, this percentage is on average around 25%. In the emerging countries, the percentage should progress in the coming years, meaning that a response can be found to the enormous requirements of these countries, whose population continues to increase rapidly. The choice of nuclear energy is currently under question in a certain number of countries: Belgium, , and Sweden. Under pressure from their public opinion, these countries have had to undertake to close down their reactors, respecting programmes whose duration varies from country to country. They will have to replace this energy by other means of energy production, which will be compatible with respect of the Kyoto undertakings concerning emissions of greenhouse gases. 1.2.3.2. Uranium reserves Eight countries together for almost 85% of world reserves. Estimated reserves in 2001 (reserves exploitable at a cost of less than 80 US$/ton) are the following: Country

Uranium reserves in millions of tons

Percentage of the world reserves

Australia

667

26,5

Kazakstan

433

17,2

Canada

315

12,5

South Africa

231

9,2

Brazil

162

6,4

Namibia

144

5,7

United States

104

4,1

Uzbekistan

90

3,6

Table 7: Electricity production from nuclear sources in 2003 (billions of kWh). Most of these countries belong to the developed world, or are emerging or developing countries, which are not among the principal countries with petroleum and gas reserves (with the exception of Kazakhstan). The reserves represent more or less 50 years of consumption at present rates, that is to say largely comparable to those of gas and oil. However, they could be much larger than that. Indeed, it is difficult to evaluate real uranium resources. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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A serious prospecting effort remains to be undertaken because the stocks available for the moment are largely sufficient. There are therefore in all probability deposits awaiting discovery. That is why some experts already speak of 100 years or so of proven reserves as at today (more or less twice that of petroleum and half that of coal). In fact total listed mining resources exceed 17 million tons, which is about 300 years of current consumption. But conditions of access to these reserves, that is to say exploitation costs, are very different. And finally, exploitation of non-conventional uranium resources, for example those found in phosphates or in seawater, would allow reserves to be multiplied by at least a factor of 100. 1.2.3.3. Reserves and the future of nuclear energy Today, the nuclear industry is the object of numerous controversies in many parts of the world; controversies often based on irrational fears. The advantages of this energy source are widely recognised: the power that is available, the competitive cost of the electricity produced in this way, and the ability to generate electricity without harmful discharges into the atmosphere. But the nuclear industry frightens people and certain countries have undertaken, under pressure from their public opinion, to close down their nuclear reactors.


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1.3. The major stakes: what future will energy have? Just what is economic growth? Simplifying things, it is the capacity to produce more goods, products, merchandise and services each year than in the year before. And what is the best means of ensuring an outlet for this ever-increasing production? Quite simply by taking these products and services to the greatest number of people possible, that is to say, to each and every one of us. There, in a nutshell, is the principal of the consumer society in which we live. For that society to work well, three fundamental elements are required: The consent and the of the people in the system: that is why we work and receive a salary. In this way, we can buy the products and services resulting from our work and ensure material comfort in our everyday life. Money, that we call capital, for the construction, upkeep and development of factories, production units and service companies. This invested capital earns money through production and the growth of companies. A part of the money that is generated is used to finance new productive investments, and so the cycle continues. This is the principle (highly simplified) of capitalism, the predominant economic system in the greater part of the world. Energy to make the system work: producing and ensuring the transport and distribution of the products, merchandise and services, consumes energy. Oil is the form of energy that permitted the rapid economic development observed in the thirty years following the Second World War (the “Thirty Glorious Years”): It is an energy form that is liquid and hence easily transportable, has a high energy content and, up until the present time, has been cheap.

1.3.1. Economic stakes: the management of energy consumption Our society is evolving, therefore, in the direction of increasing production. Since it has a need to constantly progress, it encourages a continuous increase in the demand for products and services in the developed countries. The efficiency of the utilisation of energy – what is called the energy intensity (ratio of the consumption of energy to the Gross Domestic Product, or GDP) – is improving year on year in virtually all sectors; in industry, agriculture, in offices and in homes. There is one exception: transport. But that improvement is only sufficient to limit the annual increase in demand for energy, not to reduce the absolute level of demand. At the same time, our society has a natural tendency to extend the production and availability of products and services to the developing countries. Such is the case in China and India, where a part of the population is beginning to be able to afford material benefits which are quite normal in the rich countries. The inhabitants of the prosperous areas of these emerging countries want to install modern electrical appliances in their homes and have a car to move around. They travel both for their work and for their pleasure. The Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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means of production in these countries are developing to respond to these growing demands. So energy requirements in these countries continue to increase substantially and the energy intensity remains at a high level. Thus, economic growth and energy consumption are intimately linked. Increased growth leads to increased energy consumption. But the raw materials used to produce the enormous quantities of energy that we need are not inexhaustible. Nor can their production capacity be increased indefinitely.

Management of energy sources The major issue in the coming years is going to be to respond to a two-fold challenge on the energy front: In the short term, over the next few years, at most the next thirty, (this concerns us all directly!): to prepare ourselves for “the Hubbert Peak” for oil. The supply of oil to the market will begin to decrease whereas the demand will increase inexorably. In the long term, over the next fifty years or a little longer, (this concerns the children born today and those who follow): the beginning of terminal depletion of fossilised energy sources; first oil, then, twenty years later, gas. At that time, all that will remain will be coal reserves sufficient for several decades. Several responses are possible to these two situations, each requiring investment of such a magnitude that choices will have to be made. Those responses are the following: Give priority to energy supplies, continually developing the production capacity of fossil fuels, particularly oil. This response is based on optimistic hypotheses for oil reserves. It is the path chosen by the United States, accepting the May 2001 recommendations of the National Energy Policy Report, better known as the Cheney report, after the name of the Vice-President of the United States. Among developed countries, it is the choice that has also been made by Australia. Advantages: the inhabitants of these countries will be able to preserve their lifestyle for several additional decades. At the same time, the working of society will not be put at risk. Social tensions will be avoided for some time. Disadvantages: the problems of energy shortage are left for the next generation, that is to say those born today (people who are under twenty today will nevertheless experience these problems in their old age). At that time, the difficulties will be even thornier since the room for manœuvre, which we still have today with the relative abundance of oil and gas, will no longer exist. Besides, the ever-increasing requirements for oil could create serious international tension in the production zones. Finally by emitting more and more CO2 we take all the ecological risks as far as the consequences of the greenhouse effect are concerned. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Take action, as a priority, on the demand for energy, by attempting to limit energy consumption as far as possible. This is the direction recommended by Europe, that of the control of energy consumption and the adoption of the Kyoto Protocol. Advantages: in this way we will respond in a more flexible manner to the eventual problems. By anticipating them, their impact can be substantially reduced. Equally we begin to limit the emissions of greenhouse gases at levels already agreed. Disadvantages: our way of life will be called into question. The progressive abandonment of fossil energies will not be undertaken without profound changes in our society; in our way of consuming, moving around, working and so forth. Develop alternative energy sources. This response can accompany both development of fossil energy availability and efforts to limit consumption. Two main types of alternative energies exist: nuclear energy and renewable energy sources (hydroelectricity, solar, wind, geothermal and biomass). Advantages: It enables consumption of fossil energies to be reduced and their final depletion to be delayed. Moreover, the alternative energy sources do not emit greenhouse gases (or the CO2 is recycled, as is the case with biofuels) Disadvantages: based on our current knowledge, alternative sources of energy are not sufficient to replace the volumes of fossil energy that we are consuming today. Promote research into energy sources for the future. Currently this means, above all, the fission reactors known as “breeder reactors”, and the nuclear fusion process. Advantages: if we manage to control them, these energies will be virtually inexhaustible. They do not emit greenhouse gases. Disadvantages: the techniques used are very difficult to control, above all in the case of fusion. It is not yet known if we will succeed. Any eventual industrial applications (fusion power stations or operational breeder reactors) will not exist for at least fifty years. It is therefore impossible, as at today, to count on those techniques to solve the problems of oil shortages awaiting us in the future. Moreover, the research effort will be expensive: the experimental fusion reactor project, ITER, will cost around €10 billion to construct and to run for 20 years. The real energy issue for mankind is not therefore the choice of such and such a type of energy, but that of control of consumption. In the short term, that would allow us to economise on the use of fossil energy reserves and we could, therefore, better prepare for the final depletion of a part of fossil energy resources (oil and gas), towards the end of the century. In all the alternative strategies described earlier, whether we consume more or less oil, whether we call on wind and solar energy rather than nuclear, or the other way Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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round, we must prepare for changes in our way of life, in the sense of a making greater economies in the energy we use directly (car journeys, heating, electricity …) or indirectly (drinking water, everyday consumer products, international road transport …). And the sooner we start, the better it will be. For the moment, despite the Kyoto protocol, we haven’t really set off along the road! The table below presents energy forecasts for the world as a whole, taken from the WETO report (World Energy, Technology And Climate Policy Outlook) established by the European Commission in 2003. 1990

2010

2030

Population, billions of inhabitants

5,2

6,9

8,2

Energy consumption, toe/inhabitant

1,7

1,8

2,1

Electricity consumption, kWh/inhabitant

1,8

2,4

3,7

13%

11%

8%

4

4,3

5,5

Coal and brown coal

1 901

2 931

4 757

Oil

3 258

4 250

5 878

Natural gas

1 754

2 860

4 340

Nuclear

509

799

872

Hydroelectricity and geothermics

193

290

392

Wood and wastes

904

949

900

Wind, solar and small hydroelectricity

11

30

73

Part of the renewable energies in the total energy consumption CO2 emissions tons/inhabitant Energy production, millions of toe

Table 8: Energy forecasts for the world as a whole, taken from the WETO report (World Energy, Technology and Climate Policy Outlook) established by the European Commission in 2003


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1.3.2. Geopolitics of oil and energies Geopolitics studies the relationship between geography and the policies of nations. It takes into questions relating to raw materials including sources of energy, in particular oil which became a strategic raw material in the 20th century. Strategic, not only because it is vital to the functioning of the economy and society in general, but also because there are risks involved in its supply situation. So far, oil has remained plentiful and relatively inexpensive. We have not experienced shortages, except in times of war, for example during the First World War when the Germans sank American vessels which were supplying oil to the of the Three Nations Alliance (UK, and Russia). The most recent oil shortages date from 1974. In October 1973, war broke out between Israel and the Arab countries (the Kippur/Ramadan war). On the 17th of October, Arab oil producers decided to impose a petroleum embargo on ers of Israel (the United States, Portugal, the Netherlands, South Africa and Rhodesia). This embargo was lifted in July 1974, following its failure. In fact, the major petroleum companies, controllers of the distribution of world oil supplies, had allocated shortages between all industrialised countries, those targeted by the embargo along with the others. For the last 30 years, the developed countries have become used to a situation of plenty. Inexpensive oil and gas have made all alternative energy sources expensive in comparison. Moreover, the dependence of consumer countries on hydrocarbon producers has increased. A single model of economic development, that of the consumer society, is tending to become the rule everywhere, even in China, the last major country with a Communist political system. The result is globalisation: emerging countries and developing countries have also become dependent on oil from producer countries.

Future challenges So today, as the Hubbert Peak approaches, the whole world will be impacted by the inevitable reduction in supplies. A shortage could also happen if a serious crisis destabilises a major producer country, leading to a sudden drop in its production level. Faced with this two-fold threat, two policies are open to those countries having the financial means to react: Reduction of their dependence on oil by developing alternative energy sources (coal, nuclear, renewable energy) and above all by achieving significant energy savings; And/or ensuring that their energy supplies are safe from threat.


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The developing countries, on their side, have significant “deposits” of new types of energy (solar, wind, geothermal, hydroelectricity…) available for the production of electricity. But they need aid from the rich countries: On the one hand, to purchase and use the appropriate technologies, which are expensive in investment ; Also to purchase the plant and equipment enabling them to use the electricity produced (what is the point of having electricity if one has nothing to use it for?); On the other hand, to train personnel competent in these technical sectors, to ensure for example the distribution and maintenance of all the plant and equipment. The geopolitical problems posed for hydrocarbons can be clearly seen from a map of the world: The Middle East, which is very rich in oil and gas, is a long way from European consumers and even further from the United States and Japan. It is a region of widely diverse countries, peoples, religions and political regimes. Its history has been complex since ancient times. It is a region where the risk of conflict remains high, but which, fortunately, also has factors of stability, such as OPEC (the Organisation of Petroleum Exporting Countries). This producer organisation includes many Middle Eastern countries and plays an important role in the good management of world petroleum production, and, above all, in price stabilisation. The other major zone rich in hydrocarbons – Russia and the two states bordering the east coast of the Caspian Sea, Kazakhstan and Turkmenistan – can naturally supply Europe to the west and Japan, South Korea and China to the east. But these supplies will remain dependent on the goodwill of Russia, which can choose, in a situation where production becomes inferior to demand, to favour supplies to Europe or, on the contrary, to the Far East. Certain countries are attempting to escape from this control: for example, in a bid to by- the Russian network, BP and its partners have constructed an pipeline linking Bakou in Azerbaidjan to the Turkish port of Ceyhan. A part of the oil from Kazakhstan could also take this route, thus escaping from Russian control. Oil and gas are found elsewhere than in these two major zones, but such regions have smaller reserves. South America, and Venezuela in particular, export their crude largely towards North America, because of their geographical proximity and the enormous requirements of the United States! The geopolitics involved in other energy sources pose fewer problems. Coal is much more widely spread throughout the world, and the major s are in general also major producers. As far as uranium is concerned, the greater part of the reserves are held by rich countries (Australia, Canada, the United States). And, above all, the Hubbert Peak for these two resources is situated much further away in time than for oil and gas.


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Access to coal and uranium resources should not be affected by international tension for many years. Hydroelectric dams built across very large rivers which cross several countries can create tensions. For example, Syria and Iraq are protesting against current Turkish projects to build 22 dams on the Tigre and Euphrates rivers, resulting in a reduction in the flow of these two major rivers downstream from the dams. Water available for farmers would be reduced, and the ecological balance of the rivers themselves and the land along their banks threatened. That is without taking of the threat for inhabitants downstream posed by risks of dam bursts in a country like Turkey, which is subject to strong earthquake activity. On the other hand, these dams would enable control of the rate of flow of the two rivers, which would be favourable to farmers.

1.3.3. The Hubbert peak The Hubbert peak results from rules established by the American geologist King Hubbert in 1956. Using all the available data for production, reserves and the past pattern of discoveries for a given raw material, it is possible to forecast its world production curve. It takes a form close to that of a Gaussian or normal distribution, with production increasing until a peak is reached, beyond which production decreases ineluctably. King Hubbert made himself famous by forecasting the peak for the United States for the year 1970, a prediction subsequently confirmed by the facts. It is the date of the Hubbert peak that is particularly interesting, rather than the date of total exhaustion of petroleum resources, which will not occur for at least 50 years. Two schools of experts are at odds concerning the former date: The optimists: for them it will be in 20 to 25 years, even 30 years. Their arguments? World petroleum reserves are under-estimated. Regions overflowing with oil remain as yet completely untouched (the oceanic deeps, the polar zones). The bituminous sands until now little exploited will also contribute new reserves. And above all technical progress is going to allow recovery of far more than the current average of 30% of the oil contained in the substratum. Our best future oil fields are those that already exist! The pessimists: they expect the peak to occur in the next 5 years. Their arguments? World reserves of oil are over-estimated. The proof: the oil reserves of several Middle East countries increased by 50% in the 1980’s, at the time of the introduction of a policy of quotas by OPEC, without any major discovery to justify that increase. Oil from the Polar Regions is an illusion because it will be too expensive to extract. The treatment of bituminous sands is very expensive in energy and represents an ecological catastrophe. Finally, to believe in an extraordinary increase in the recovery factor, is to believe in Father Christmas! As far as gas is concerned, the Hubbert peak is displaced some 15 years after that of oil.


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Figure 14: The Hubbert peak

1.3.4. Mankind and the planet In the 20 th century, up to the beginning of the 1970’s, we thought that relations between Man and the Earth were harmonious. We firmly believed that raw material and energy resources would be available for a long time. Then, awareness of the limits of fossil energy resources began to grow, but only gradually. The principal danger envisaged at the time was of out-of- control population growth ( a doubling of world population every forty years) leading rapidly to the impossibility of feeding all the inhabitants of the planet from the middle of the 21 st century. This fear has now disappeared. The rate of growth of population has significantly diminished. Today, there are 6.5 billion people on earth, and population should stabilise at about 10 billion before the end of the century. But, in the meantime, other risks appeared towards the end of the 1980’s regarding the “materials” that had been thought to be inexhaustible and without any particular value: air, water, forests, the flora and fauna. Air? Pollution of the air by residues from our activities (ozone, SO2, nitrous oxides, fumes…) poses threats to our health, even if measures have been taken to impose limits as far as possible: the norms regarding atmospheric pollution are more and more severe. In Europe, they are defined in European Union (EU) directives and are constantly evolving: for example, in December 2003, the EU, the United States, Japan and China signed an agreement concerning problems of pollution resulting from means of transportation. Research within the framework of this agreement will enable new anti-pollution norms to be defined in these countries. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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The increase in the rate of discharge of greenhouse gases into the atmosphere threatens radical change in the climate of the planet. Water? With the increase in population, access to drinking water is becoming a problem in many countries: 1.2 billion human beings are deprived of water and 2.5 billions do not have access to purifying installations. Each year, 8 million people die after consuming contaminated water. All United Nations agencies have a “water resources” component in their programmes, but there is no single UN organisation in charge of water-related problems. Two institutions are working on the issue: the CME (“Conseil mondial de l’eau”, The World Council for Water), created in 1996 and based in Marseilles, and the GWP (Global Water Partnership). The CME currently brings together 330 : governments, multinational companies, NGO’s, research centres, foundations, banks…The objective of the two organisations is the same, to study water problems worldwide and to come up with a policy for the management of water resources. Producing drinking water does not pose insurmountable technical problems: one uses water purification plants or sea-water desalination installations. However this latter solution is very costly in energy . An initial solution would be waste limitation. For example, the Worldwatch Institute, an inter-disciplinary American research organisation, formed in 1974 to study environmental problems on a world-wide scale, estimates in its 2004 report that losses of drinking water by waste and leaks are 30% in Paris and 50% elsewhere in . Forests? Their rate of disappearance is increasing in the countries where they were so vast that no one worried in the early days of their exploitation: in the Brazilian Amazonian Basin, in Indonesia … Flora and fauna? We realise today that the problems go much deeper than the risk of disappearance of several emblematic animals: the giant panda, the snow leopard, the Sumatra tiger … The real problem is species which are disappearing in their thousands, at a rate much more rapid than that of natural disappearance. Bio-diversity itself appears threatened. All these problems are due to the impact of human activity. That is obvious in the case of forests and pollution. Most independent experts consider that it is also true for climate change.


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1.3.4.1. Energy and environment: the stakes During the second half of the 20th century, the average temperature of the earth’s atmosphere increased by 0.5°C. That doesn’t seem much, but scientists think that this increase has already had consequences: The recent frequency of record years: 1999, 2002, 2033 and 2004 were the four hottest years since the start of meteorological recordings in the 19 th century (study by James Hansen, of the Goddard Institute for Space Studies at NASA); An increase in the number of natural disasters, all causes taken together: o 10 to 20 per year from 1900 to 1960, o 70 to 80 per year from 1960 to 1980, o 160 to 220 per year from 1980 to 1990, o 350 to 400 per year between 1990 and 2000, in other words, double that of the previous decade. Among the causes of natural disasters, the number of earthquakes remained quite stable from 1980 to 2000, whereas the frequency of hurricanes and floods increased. Indeed, it is disasters linked to the climate that are becoming more numerous: an increase of between 10 and 20cm in the sea level; the displacement of tropical species towards the North, such as barracudas along the French coasts and tropical African fish in the Mediterranean. There have also been changes in the behaviour of migrating birds: migrations have been delayed, shortened in distance or even cancelled altogether. Scientists think that global warming is very probably due to a massive discharge of greenhouse gases by human activities. These emissions result above all from our consumption of fossil energy. 1.3.4.2. Greenhouse effect What is the greenhouse effect? It is a natural phenomenon! Earth receives its energy from the Sun in the form of heat and light. A part of the energy entering the atmosphere is absorbed by the atmosphere and the remainder heats the Earth. The Earth does not retain this energy and sends it back towards the exterior in the form of infrared radiation. The natural greenhouse gases, steam and carbon dioxide (CO2), retain part of this radiation, leaving the rest to continue its journey into space. The infrared radiation warms the atmosphere: if neither steam nor CO2 existed in the atmosphere, the average temperature on Earth would be – 18°C, whereas thanks to those gases, it is +15 °C. To accelerate the growth of plants in a greenhouse, horticulturists increase the ambient temperature by saturating the air with steam. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Why has the greenhouse effect become a problem? If the quantity of CO2 in the atmosphere increases, then more infrared radiation is retained and the temperature increases. On Venus, which does not receive very much more solar energy than the Earth, the atmosphere contains virtually only CO2, and its average surface temperature is +420 °C! By burning very large quantities of fossil energy (coal, oil, gas), man is gradually increasing the concentration of CO2 in the atmosphere. And his activities discharge other gases with an important greenhouse effect: methane, CH4, produced by waste tips, rice cultivation and the breaking of wind from cows. Its length of life in the atmosphere is 12 years, and its greenhouse effect 21 times stronger than CO2. nitrous oxide, N2O (laughing gas), discharged by nitrogen fertilisers. Length of life in the atmosphere 150 years; greenhouse effect 310 times stronger than that of CO2. gases of the fluorine family like the CFCs, used as cooling agents in air conditioners and propellants in aerosol canisters. Length of life in the atmosphere 120 years; greenhouse effect 16000 times stronger than that of CO2. Sulphur hexafluoride, SF6, used as a leak detector and as an insulator. Length of life in the atmosphere 50 000 years; greenhouse effect 24 000 times stronger than CO2. Who is responsible? Principally the developed industrial countries. The recent arrival of emerging countries amongst the emitters of greenhouse gases only heightens the problem. An American emits on average about 20 tons of CO2 per year, a Russian half of that, a Frenchman one third, a Chinese 10 times less, and an Indian 20 times less. What are the activities producing greenhouse gases? If we take as an example: road transport s for 25% of the total; industry in general for 20%; agriculture 19%; living accommodation, offices, businesses and state istration 18%; energy processing 13%; waste discharge in tips 3%; transport other than by road (excluding international air transport) 2%. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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What are the solutions? The only truly realistic solution is a major and rapid diminution in CO2 emissions. The theoretical level for stabilisation of the quantity of CO2 in the atmosphere corresponds to an emission of 0.5 tons of CO2 per year per inhabitant, that is to say about half of that generated today by an Indian, or by a Paris to New York return flight, or a 1500 km trip in an SUV! The Kyoto Protocol is a first step in the direction of reducing greenhouse gas emissions.

1.3.4.3. Sustainable development The United Nations Organisation insists on the right of every human being alive today and to be born in the future to have access to drinking water, to a sufficient and balanced diet, to basic health care, to education and to democracy. This is the minimal base of what is called sustainable development, that is to say the well-being of present generations without compromising that of the generations to come. Today, out of a population of more than 6 billion, 1.2 billion earn less than one dollar a day and 3 billion less than two dollars! Many among them do not benefit from the totality of the rights insisted on by the United Nations. Meanwhile, in the rich countries, everything around us says: “well-being is the power to continually buy all sorts of new things”. To supply this hyper consumer society with goods and merchandise, it is an inescapable fact that consumption of energy must remain at a very high level and always be on the increase. Very high or … too high? At current rates, depletion of the greater part of our fossil energy reserves is foreseeable before the end of the 21st century. But problems of soaring cost and deficits in energy availability will no doubt show themselves well before.

Growth or recession? Certain forecasters think that before we find ourselves trapped by the physical reality of limits on resources and therefore enter into a period of compulsory recession, the rich countries could give thought to the possibility of committing themselves to a society with negative growth. This would imply a realisation that human happiness can be something other than the plentiful supply of consumer goods … whilst preserving growth for those who have not yet obtained the fundamental rights of human beings. But a society of negative growth remains to be defined in its entirety and would necessitate upheavals that we are perhaps not yet ready to accept. Others are not convinced of the imminence of the difficulties and see no reason to question the economic orientations of our world. For them, growth continues to remain the Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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best means of fighting poverty and unemployment. They think that scientific and technical progress in the future will solve the problems before fossil energy sources are depleted. The near future, probably the next 30 years, will decide in favour of one or the other interpretation. In the meantime, it is up to each of us to think about the question, to make our own decisions and, perhaps, to put the fruits of our reflection to work in our daily life, whether it be in one direction or another. First and foremost, it is essential to understand and to analyse the data relevant to the problem, the risks and the hopes. Read – read a lot! – and listen, rejecting over-simplification (a real effort…but useful!). It is an unavoidable personal challenge to anyone who is interested in his or her future. By making use of our knowledge and finding time for reflection, we will be better equipped to respond to the challenges and issues of life.

1.3.4.4. Technological risk Any human activity can be the origin of an accident. They have an element of risk. This is true in daily life: in the car, on a sports field, at sea… Even at home since, every year, there are 18 000 deaths due to domestic accidents in . This also counts for activities which make use of technology: there is no « zero risk ». Starting the moment that man decides to produce, to transport or to mould a material for his profit, risks appear. A technological risk is the possibility of an accident on a site that uses dangerous products or processes. These products and processes may amplify the consequences of the accident. The factory personnel, the neighbours or even the environment are also liable to be affected, sometimes dramatically. So it is essential to be able to define the risks, in order to better counter them.

Measuring technological risk Where are the biggest risks to be found? The activities presenting technological risk. All industrial activities generate risks, mainly linked to the products that are stored or manufactured: Mining industries: those presenting operational risks (roof falls, firedamp explosions, and dust explosions in coal mines …) and those using highly toxic products (mercury salts, cyanides…); Nuclear power plants, where highly radioactive material is both manipulated and produced. Security measures are extremely severe, for example to anticipate the risk of fusion of a reactor core, or of an escape of radioactive material into the atmosphere;


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Chemical industries produce and/or use large quantities of substances that are often dangerous. These products are used in the manufacture of plastics, pharmaceutical products, fertilisers, sometimes explosives … In certain conditions they present risks of explosion or of the emission of toxic substances; Petroleum and petrochemical industries use, store and process gas, oil and all their derivatives. These plants must anticipate risks of fire, explosion, marine and ground pollution; Iron and steel industries process metallic derivatives at very high temperatures and can present risks of explosion and the escape of molten material. Very large hydroelectric dams, with the risks of bursting and consequent submersion of everything downstream; And other places, such as large grain silos, where explosions can happen caused by conflagration of dust …

What are the risks? How are the consequences of a technological accident measured An industrial accident can have three types of impact: Mechanical: an explosion causes a shockwave resulting from the sudden pressure increase at the centre. Specialists calculate the excess pressure engendered by the explosion and in this way determine risks to health (eardrums, lungs …) and to goods and property. Thermal: this results from combustion of a product, sometimes accompanied by an explosion. The consequences for people (1 st, 2 nd and 3 rd degree burns), are determined by calculating the amount of heat received per unit of surface area. Toxic: the inhaling or digesting of substances that are irritant, harmful or toxic, or the of such substances with the skin or mucous areas. The effects on human health can be immediate (acute toxicity), or long-term (chronic toxicity), and range from the benign (irritant substances) to the fatal (toxic substances).


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How can the consequences of a technological accident be quantified? The seriousness of a technological accident is defined by taking at one and the same time of the gravity of its effects (cf. above) and of the area affected. For example, a roof collapse at the bottom of a mine does not have an impact over the same area as a rail accident. In February 1994, the European Union decided to adopt the “European scale for industrial accidents”. Based on 18 parameters, this scale is extremely precise and enables clear definition of the impact and consequences of accidents. The scale contains: 2 parameters related to the quantities of dangerous materials (Q), 7 parameters related to human and social aspects (H), 5 parameters concerning consequences for the environment (ENV), 4 parameters covering financial aspects (€). For each of these parameters, there is a scale of 6 levels permitting quantification of the seriousness of the effects of an industrial accident. All that having been said, industrial activities are not like “the devil’s cauldron”: The activities have a reason. They supply the products necessary in our daily lives (energy, food, plastic materials, fertilisers, pharmaceutical products …) It is therefore essential to anticipate the risks. Prevention is an essential for public health. The protection of people and the safety of installations come before performance.

Anticipating industrial risks What are the regulations in force? In , as in numerous other countries, the State defines a legal framework for measures for the prevention of technological risk. Depending on the types of product stored or manufactured, companies whose activities imply an element of risk are classified according to three levels of potential danger: Companies subject to declaration are those that can be involved in low level risks or problems. There are some 450 000 such companies in , ranging from pig farms to candle making workshops to small gas storage units.


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Companies subject to authorisation are those that can be involved in significant risks. For example, storage units for more than 1.5 tons of ammonia, paper and carton warehouses... There are about 61 300 such companies in . Companies subject to authorisation with the same constraints as a public utility (they are commonly known as “Seveso classification” companies). In this case, the risks are major and require control of urban planning around the site. Included in the list are sites using or storing more than 20 tons of a highly toxic substance, or other high-risk sites. There are 1239 in . In each of these cases, the company submits its activities to the Prefect of the region who determines the safety measures to be taken. In order to define the level of danger applicable to the site, the nomenclature “IE” (installations classified for the protection of the environment) is used. This text defines the levels of quantities of product and types of activity beyond which the site is subject to one or another of the three danger level classifications. Finally, since what is known as the “Bachelot” law was ed in July 2003, plans for the prevention of technological risks (PPTR) have been progressively put in place. This law reinforces the legislation on industrial risks by putting into place: “ Comités Locaux d’Information et de Concertation (CLIC) ”, local committees for information and consultation, which keep the public informed and involved in the prevention of industrial risks; Protective measures to be taken by local people if their buildings do not provide sufficient protection in the case of an accident; Measures of control of urban planning which restrict the construction of dwellings around the sites. These measures can also impact on existing urban planning to safeguard or displace existing populations. In Europe, a directive exists for industrial risks: the SEVESO directive of 1982. Since 1996, it has been extended by the directive 96/82/CE known as SEVESO 2: New products were added to the list of dangerous substances. The legislation no longer aims simply at one particular installation within the plant, but at the whole site as soon as at least one of the installations has the SEVESO classification. This directive defines two classification levels according to the substances stored on the site and their quantity.


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The SEVESO directives also aim at improved exchange of information between member states and give a lot of attention to the potential cross-border impact of serious accidents. At an international level, the prevention of technological risks is covered by: Convention n°174 of the International Labour Organisation (ILO) concerning the prevention of industrial accidents (Geneva 1993), Convention of the Economic Commission of the United Nations for Europe (CEEUNO) concerning the cross-border impact of industrial accidents (Helsinki 1992).

What do industrial organisations themselves do to limit technological risks? Risk prevention is essential for industrial organisations. Safe surroundings where one feels at ease are essential for working. Above all it is necessary to evaluate the risks to which the enterprise is exposed and to measure the potential impact. Then, steps must be taken to reduce risks at source. This is achieved by ensuring satisfactory handling procedures for the products, providing safe installations, ensuring systems of surveillance and detection and rigorous training of employees. Finally it is essential to ensure strict control of the application of all these safety measures. Then procedures, which are to be applied in the case of an accident, must be put in place to ensure that the impact of an accident is brought under control as rapidly as possible. These procedures include fire safety installations (lances, extinguishers …), equipment to limit the impact of an explosion (protective banks, water curtains …) or of pollution (leak-proof installations …) and evacuation plans for the populations involved. To ensure the safety of sites and the control of operations and equipment installations, emergency safety teams have been set up on all industrial sites. These intervention teams have two essential missions: to ensure the security of each employee at his post (what is called the “operational security” aspect) and to protect industrial installations (what is called the “control of technological risks”).


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2. OIL AND GAS Discovering oil has been a formidable stroke of luck for man. Being a liquid and hence easily transportable, it makes a perfect energy product. When burnt in small quantities, it produces sufficient energy to turn the motors that drive all sorts of vehicles and make all sorts of machines work. Moreover, it can be transformed into a huge number of products which have themselves become the raw materials of our day-to-day lives: plastics, synthetic textiles … and many other diverse and varied products. Natural gas, which belongs to the same family as oil, that of the hydrocarbons, is systematically found with it in all the oil fields. Natural gas is a highly efficient energy product, especially for burning. In addition, certain of its compounds are used to manufacture polymers that are the basic elements of everyday items. But the stroke of luck represented by oil and gas has also become one of the major challenges of the present time. The ever increasing consumption of hydrocarbons threatens the ecological balance of our planet, particularly that of the Earth’s climate. Solutions will have to be found in the coming years and that will have an impact on each and every one of us. How are these hydrocarbons formed? Where are they found? How are they extracted and treated? The answers to these and other many questions are in the following pages! You will also find information there about the hydrocarbon business and about the actors in the petroleum business: large oil companies, research organisations … Ready to explore this world that is a little bit special, but fascinating at the same time? Here we go!

2.1. Fossil fuel energy: a long travel through time Where do hydrocarbons come from? It is a fossil energy source. OK, that is clear, but where do fossil energy sources come from? They were formed very slowly a long time ago from dead animals and plants. Yes, alright, but where did those animals and plants come from? They developed thanks to the energy of the sun. I believe you, but in that case … where did the sun come from? Like young children who always have another question when you give them an answer, we don’t immediately get to the question that is buried deep down in each one of us. Where do we come from? And, essentially the same question, where does our world come from? So let’s try to give an answer, starting at the beginning: where does our universe come from? Then we will talk about our planet in the solar system and about the miracle of the appearance of life and the hundreds of millions of years that were necessary to see that life evolve into Man, as we know him.


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2.1.1. Big Bang theory We have all taken advantage of a warm summer night, far away from the lights of the city, to stretch out on our backs and contemplate the wonder of the star-filled sky; this immense universe where our sun is but a tiny pinhead among billions and billions of other such objects. We consider the miracle of ourselves: a miniscule collection of matter that is able to think and dream, with a role to play in this concerto of the stars. And we know that all that matter, even the infinitely small part that each of us represents, probably has the same origin. The Universe is one! We have succeeded in giving it an age. The universe is 14 billion years old, three times as old as the Earth! It was born out of an extraordinary event, almost beyond the scope of our human brains to imagine: the Big Bang. The entire universe, as it exists now, gathered into a single microscopic point that suddenly expanded at fantastic speeds, hurling unimaginable quantities of matter and energy in every direction. And, after that colossal expansion, which is still going on, finishing up with what we observe in the sky today: some 100 billion galaxies, each containing several tens of billions of stars; and all those galaxies are inexorably moving away from one another.

Figure 15 : Genesis of the Universe Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.1.2. Our solar system and planet Earth On the scale of the age of the universe, the creation of the sun is very recent indeed. It was only five billion years ago, on the periphery of our Milky Way galaxy, that an enormous mass of hydrogen was concentrated – held together by gravity – to form the sun. The pressure and temperature of this gigantic sphere of gas increased sufficiently to start nuclear fusion reactions between the hydrogen atoms. As a result enormous quantities of energy were released: the very heat and light that warms our planet and maintains life. It is thought that the planets were formed at the same time as the sun, or a little after. The giant outer planets (Jupiter, Saturn, …) consist mainly of gas that did not attain sufficient mass to become a star. The interior planets close to the sun (Earth, Mars, Venus …) are said to be telluric because they are composed of rocky matter, agglomerations of cosmic dust, ice and heavy matter expelled from the sun. Everything happened under the effect of gravitation. Our earth is 4.6 billion years old. Its primitive atmosphere was largely composed of nitrogen, carbon dioxide and water vapour. As it condensed, this water vapour gave rise to a primitive ocean (called Iapetus), surrounding a single continent (Gondwana). If we look at a map of the world, we can see that things have changed an awful lot since; that is the effect of plate tectonics

Panges in the Triassic

End of the Triassic

End of the Jurassic

End of the Cretaceous

Today

The 12 tectonic plates

Figure 16 : Plate tectonics


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2.1.3. Origin of life Already-ancient traces of bacterial activity (stromatoliths) can be found in certain calcareous rocks 3.85 billion years old. On Earth, which is 4.6 billion years old, the appearance of life was therefore rapid.

Figure 17: Scale of geological time. Where does life come from? That is still a mystery. Until the 19th century, scientists believed in spontaneous generation. “If you put a dirty shirt, seeds and a piece of cheese in a hermetically sealed recipient, then after some time, you will find a mouse” the Belgian doctor Jan Batist Van Helmont wrote completely seriously in 1650. It was the experiments of Louis Pasteur that put an end to this belief. The theory of “vital force”, which stated as a principle that only living matter could manufacture the elements of which it consists, was overtaken in 1953 when Stanley Miller, a young student preparing his thesis, carried out an experiment that made him famous. He prepared a mixture of hydrogen, steam, methane and ammonia, meant to represent the composition of Earth’s original atmosphere and containing the four main elements making up living (organic) matter: carbon, hydrogen, oxygen and nitrogen. Then he subjected this mixture to electrical discharges simulating lightning and solar radiation. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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After letting it rest for several days, he was surprised to find cyanhydric acid, carboxylic acids and several amino acids … in short, a part of the elementary “building bricks” of life. However even if we know how to simulate the fabrication of the “bricks”, no-one has yet been capable of artificially constructing the “building”, a living cell with its reproductive material based on DNA. And nothing indicates that one day we will manage to do so. Created in the oceanic trenches near hot hydrothermal springs? By catalysis on the surface of certain damp rocks under bombardment by solar radiation much stronger than it is today? By panspermia, that is to say from very primitive living organisms travelling through space on comets or asteroids arriving from outside the solar system? Or by “something else”? At present, no one knows. All living beings on Earth, including human beings, are the descendants of these very old original living cells. Between the creation of primitive cells and the animals, plants and human beings of today, time has elapsed, a lot of time. Time necessary for the appearance and evolution of more and more complex and more and more specialised organisms adapted to their environment and living beside some of the survivors of species that had appeared earlier. Life making billions of trials and errors before a new viable being was generated, more evolved than its ancestors. Hundreds of thousands of years before certain monkeys that have disappeared today began to stand up and walk erect whilst at the same time the fingers of their feet atrophied to become toes. And, life had a hard life! Destructive climatic changes, waves of volcanic eruptions, cataclysmic collision with a giant asteroid, colossal fires on a planetary scale, each time life fought back against catastrophe, even if many species were lost on the way!


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2.2. Oilfields and gas fields The oil and the gas will be found underground. So it’s there, under our feet that they form and wait to be found. But is it possible to find oil or gas anywhere, under the Eiffel Tower or in one’s garden? There are underground accumulations of oil and gas – the reservoirs – in various places around the world. But, nevertheless, certain conditions must be combined for these accumulations to form. What we call the oil genesis according to 7 fundamental stages, is unavoidable and above all very, very slow. First, a material, capable of transforming into oil, is required; and this in sufficient quantities: this is the source rock. Then the conditions needed for the transformation (maturing) of this potential into oil and gas must be combined. Then all these new oils and gasses are displaced (migrations) towards the surface. During this migration, they must encounter a rock capable of accumulating large quantities: the reservoir. "Reservoir”: This is the term, used by scientists, to describe the place where a concentrated amount of oil and gas is found. So there are underground oil and gas reservoirs. While, to a layman, the word "reservoir", will be interpreted as an actual cistern or as the gas tank of a car. Actually, a reservoir is formed in a rock, meaning a solid, containing lots of small pores in which the oil and the gas accumulate. It’s from these types of rocks that we obtain the oil and gas that we use every day. This reservoir must be leak proof. So a barrier is required (overburden), an impermeable rock which prevents the oil and gas from continuing their journey. This rock is the overburden.

Figure 18: Derrick in the setting sun (Italy). Then, in order to accumulate quantities of oil or gas which are commercially feasible for exploitation, the subsoil should have a form (a closed form) which is large enough: this is the trap. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Finally, once they are comfortably nestled in their trap, the oil and gas must not be destabilized by exterior stress. Good conservation conditions are required.

Figure 19 : The formation of a deposit When oil & gas engineer teams study a zone, one of their main objectives is to determine if these seven steps actually have a good chance of happening. The whole of these seven steps is called an oil system.


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2.2.1. The hydrocarbons 2.2.1.1. Reminders and definitions In nature, the substances are always mixed. After separation of the various components of a mixture, pure substances are obtained. There are two kinds of pure substances: the compounds which are the pure substances, liable to decompose into other pure substances. the elements which are the pure substances that resist to all decomposition. a. Molecule A molecule is the smallest part of a pure substance, an element or a compound, which keeps the same properties as this substance. All the molecules of a same pure substance are identical. The molecule is made up of atoms. b. Atom The atom is the smallest part of a molecule. It’s in the form of atoms that the elements play a part in the constitution of the pure substances. The atom is made up of electrons which circle around the nucleus which is made up of neutrons and protons. 2.2.1.2. The hydrocarbons These are des chemical compounds which are solely made up of carbon and hydrogen atoms. The paraffin hydrocarbons or alkanes are part of the family of hydrocarbons. We find these along the whole chain of oil exploitation, from the reservoir to storage.


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Figure 20 : Molecular structures of saturated hydrocarbons - CnHn+2

Figure 21 : Molecular structure of branched saturated hydrocarbons


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Figure 22 : Molecular structure of an aromatic hydrocarbon CnHn

2.2.1.3. The paraffin hydrocarbons or alkanes They are composed of carbon and hydrogen atoms, the simplest amongst them being methane with chemical formula CH4. It’s a clear gas. From the general formula CnH2n+2, we then get ethane C2H6, propane C3H8, etc... Beginning from five carbon atoms, the hydrocarbons are liquids. Each equivalent carries a name with a numeric prefix (penta, exa, hepta, etc...) corresponding to the number of carbon atoms of which it’s composed. The designation "ane" indicates its being part of the group of the alkanes. Often the liquids are called the C5+. a. Isomers There is but one methane, one ethane and one propane, but starting from butane there are several possibilities for binding the carbon atoms with the hydrogen. So there are two alkanes with four hydrogen atoms: normal butane and isobutane. They have the same formula C4h10, but are notably distinguished by their boiling temperature. Starting from six carbon atoms, the number of isomers increases very rapidly. b. Some alkane properties The boiling temperatures increase with the number of carbon atoms. We have seen that at a standard temperature, starting from five carbon atoms, the alkanes are liquid (the ones we find in storage).


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Though the density of the alkanes is in close accordance with their amount of carbon atoms, this is not the case for the viscosity. When the number of carbon atoms in an alkane is superior to 14, they congeal at a temperature higher than 0°C.

2.2.2. Source rocks The oil and gas consist of hydrocarbons, molecules composed of carbon and hydrogen. We know that these hydrocarbons cannot exist for very long at the surface of our Earth because they are attacked by oxygen and devoured by bacteria that live in surroundings where air is present (aerobic bacteria). Thus, they are quite rapidly transformed into carbon dioxide (CO2) and water. Incidentally, hydrocarbons do not exist in deep layers of the Earth because, beyond a certain depth (around 10 km), they would be destroyed, since the temperature is too high (the further you plunge underground, the hotter it becomes!). So, where do these hydrocarbons come from? Their composition shows that they result from a transformation of organic matter consisting of living organisms that died a long time ago. When a plant or an animal dies on the surface of the earth, other living creatures generally recycle its matter. What is not devoured by predators, like vultures or bacteria, is oxidised into carbon dioxide and water, and this carbon dioxide feeds the growth of new plants. Nevertheless, a tiny part, perhaps 0,1%, of this organic mass escapes from the implacable cycle. In certain cases the remains of dead beings sink to the bottom of the seas. In this environment, very calm and poorly oxygenated, the organic remains are mixed with mineral matter (particles of clay, very fine sand…) to form dark and foul-smelling mud. This bad odour is characteristic of the action of anaerobic bacteria which don’t need air to live (they are a lot less greedy than their cousins on the Earth’s surface). Rock rich in organic matter A part of this organic matter is therefore preserved. The animals that produce it are minuscule or microscopic: principally marine plankton. The plant debris is carried away by the rivers that feed the sea. This organic matter, mixed with mineral sediments, accumulates little by little. For large quantities of oil or gas to be produced later, the proportion of organic matter must be sufficient, that is to say at least 1 to 2%, to constitute the source rock for our oil. 1 to 2 % does not seem a lot, but exceptional conditions are required to attain this percentage: a lot of plankton or plant debris and not too much mineral matter. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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A warm climate favourable to plankton; the absence of mountains nearby to limit the volumes of mineral sediment; and a delta or mouth of a major river to carry a lot of plant debris…all of these elements contribute to the formation of the source rock. Nevertheless, whilst this rock remains on the surface of the sea floor, it is unable to produce oil.

2.2.3. Sedimentation The sediments that accumulate on the sea floor gradually become thicker. It is a very slow phenomenon. From a few meters to a hundred or so meters every million years, the source rock is pushed down gradually under the accumulation of sediments that continue to be deposited. Fortunately, their weight provokes a progressive sinking which leaves room free for further sediments that continue to accumulate. This phenomenon, known as subsidence, is characteristic of sedimentary basins. It is a phenomenon of large amplitude. With the progressive sinking the sediments can reach several thousand meters in thickness, sometimes more than 8000 meters (8 km!) at the centre of the basin. The heat increases in the source rock that is gradually pushed down and buried, the temperature of the substratum rising on average by 3 ° C with every hundred meters of extra depth. The organic matter is also crushed more and more by the weight of the sediments, the pressure increasing by 25 bars per 100 meters. Consequently, at a depth of 1 km, the temperature is already 50°C and the pressure 250 bars. The organic matter is transformed very slowly as the atoms of carbon and hydrogen are reorganised and brought together. The nitrogen, sulphur and phosphorous, other essential elements for life, are gradually eliminated and the organic matter is transformed into kerogen. A temperature of around 100°C is necessary for the kerogen to begin to generate liquid hydrocarbons, oil and gas. This corresponds roughly to a burial at between 2200 and 3800 meters. The sinking continues and the production of liquid hydrocarbons attains a maximum, a peak. The liquids produced become lighter and tend more and more towards gas. Between 3800 and 5000 meters, the kerogen begins to produce the lightest of the hydrocarbons, methane gas. Thus, gradually, the source rock produces liquids and finishes by producing gas, before, finally, exhausting its potential. The interval between the depths at which the source rock produces liquids is called the oil window. The interval at which it produces gas is called … the gas window, of course! The relative proportions of liquid and gas produced depend on the nature of the source rock. For example, if the organic debris of which it is composed is principally of animal origin, it will produce proportionately far more liquids. Conversely, if plant debris dominates, it produces above all gas and not many liquids. In fact, if we consider oil generated at a depth of 3000 meters, and estimate an average sedimentation of 50 meters every million years, then 60 million years will have been necessary for these dead animals to be transformed into liquid hydrocarbons. It is not surprising that we classify oil as a non-renewable energy, is it? Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.2.4. Migration of oil up to the surface The newly born hydrocarbons are molecules of small size and they take up more space in the source rock than the original kerogen. They are therefore going to be permanently expelled into the rocks that surround the source rock. The gas and oil being lighter than water (which impregnates all the rocks in the substratum) then begin a slow rise towards the surface. That is migration. If they can, they slide between the mineral particles of rocks to climb vertically. Their speed of migration depends on the capacity of each rock in their path to allow the circulation of fluids. This capacity is called the permeability. If an impermeable rock stops them, they follow a lateral path along this rock, still in an upward direction, or they by paths through cracks and weaknesses in the rock. The molecules of gas that are smaller and more mobile climb more quickly and slide more easily into rocks that are not very permeable. A proportion of the hydrocarbons, mainly gas, are dissolved in the water that impregnates the rocks they traverse. Other hydrocarbons remain stuck to the grains of the rocks. These hydrocarbons interrupt the ascent; they represent what are called the migration losses. Such losses can be very significant, especially if the oil and gas take the longest path upwards. If nothing stops the hydrocarbons reaching the surface, the lightest fractions (gas and volatile liquids) are dispersed into the atmosphere before being destroyed. The heaviest are oxidised or devoured by bacteria. The only ones that continue to exist for some time are the extreme, heaviest fractions, in the form of almost solid tars buried a few meters to tens of meters below the Earth’s surface. The extra-heavy oil, Athabasca, as an outcrop or scarcely buried, is particularly difficult to exploit because of its very high density and viscosity. In the raw state it looks like a thick and sticky paste, thus its name of natural tar. Figure 23: The extra-heavy oil of Athabasca

2.2.5. Reservoir rock Oil and gas develop in a sedimentary basin. They are generated then migrate within sedimentary rocks. These rocks have one characteristic in common: they are all deposited in water (an ocean, a sea, a lagoon, a lake..) in the form of grains. These grains can be very large (gravel, for example), finer (sand) or of minuscule size, forming mud. These grains are in one with the other, but empty space remains between them, space that defines the porosity of a rock. This is measured as a percentage of the total volume of the rock. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Why are oilmen so interested in the porosity and the permeability of rocks? Quite simply because, for a rock to contain large quantities of oil or gas, it must have good porosity (sufficient empty space where the hydrocarbons go to replace the water), and good permeability (so that the petrol and gas can move rapidly when the time comes to pump them in order to exploit them). A rock that posses both a good porosity and a good permeability, is a reservoir. The better these two petro-physical characteristics of the rock, the better will be the reservoir. If the rock is fractured, its qualities as a reservoir are improved. Rocks that make a good reservoir are, in the majority of cases, sandstones or carbonates (calcareous and dolomite). Clays possess a lot of space between the particles of which they are composed but these particles take the form of flat sheets that are piled tightly against each other. Their permeability is virtually zero.

2.2.6. Cap rock, an impermeable barrier Once the hydrocarbons begin to migrate through a reservoir, continuing to rise in the water, a barrier is needed to stop them. If such a barrier is absent the reservoir will be nothing but a transit zone and the hydrocarbons will not be able to accumulate. To stop the hydrocarbons, an impermeable rock, called a seal or a cap rock, is necessary above the reservoir. Cap rocks are often clays and sometimes layers of crystallised salt. But any rock sufficiently impermeable will do the job. Some very compact carbonates work very well, for example.

Figure 24 : The oil and gas chain


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2.2.7. Hydrocarbon trap The reservoir has the capacity to accumulate very large quantities of hydrocarbons. The seal prevents them from rising towards the surface. But all that is insufficient for the accumulation of the hydrocarbons and for the formation of an oil or gas field. Indeed, once they arrive under the seal, these hydrocarbons slide into the empty spaces where they can continue to rise, via all the escape points. It is therefore necessary to have a large, closed volume so that the hydrocarbons accumulate in sufficient quantity to be profitably exploitable.

Figure 25: An anticlinal trap

This closed volume is called a trap. It is created by deformations in the rock layers. The lower its escape point compared to its summit, the bigger the trap.

Figure 26: Salt dome trap..

A trap filled with hydrocarbons can – depending on conditions – contain just oil or gas, or both. If there is oil and gas, the latter, being lighter, will collect at the top of the trap with the oil lying beneath.

It is important to that even when it appears there is only oil, significant quantities of gas is present. The gas is dissolved in the liquid. Similarly when it appears there is an accumulation of gas only, there is invariably present a fraction of light liquids called condensate. Furthermore, a little water always remains stuck to the grains of the reservoir rock. This is called the residual water. Figure 27: Fault trap.

Different types of traps exist. We classify them into two main families: structural traps, far and away the most numerous, and stratigraphic traps. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.2.8. Preservation of oil and gas Once cosily installed in their trap, the hydrocarbons are not completely protected from change. We know that they don’t like oxygen and bacteria. However when an accumulation of oil is too close to the surface, rainwater always ends up by entering into with it. This water carries oxygen and voracious bacteria which begin to attack the oil, provoking a significant diminution in the proportion of light and average liquid hydrocarbons, as well as a liberation of gas. After a while, all that remains are the heavy and viscous hydrocarbons that are difficult to exploit. If it has not escaped the gas is less attractive to us than the initial oil. This latter will have undergone serious deterioration: what a waste! The bacteria responsible for the alterations cannot survive at temperatures in excess of 50/55°C. The oil therefore remains protected as long as the temperature remains above this level. Broadly speaking, we can say that it is necessary to start worrying when the accumulations of hydrocarbons are found at a depth of less than 1000 meters. The accumulations found deeper are nevertheless not completely protected from upheaval. This time the threat comes from rock movements. These tectonic movements, if they happen, can destroy the trap, by significantly reducing its closure, even destroying it, or more often, breaking the seal by fractures or by cracks which the trapped hydrocarbons are going to rush into and escape. The trap is thus finished; empty!


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2.3. Exploration for oil and gas Oil and gas are found in the depths below ground. They have been waiting for us for millions of years. So it is necessary to go and look for them, and to do that there is only one way: to dig until you reach the deposits. These deposits are deeply buried, often several kilometres underground. Wielding a pick is not sufficient to make the oil gush! We use the technique of drilling. From the surface we can try to guess where the deposits are and propose hypotheses. But we’re never sure that they exist until we have reached them by drilling, until the hypotheses have been verified. Figure 28: A view of the installations and petroleum equipment at Prudhoe Bay, in the National petroleum reserve of Alaska.

Exploratory drilling is very expensive. It is better not to make a mistake when we decide! There are several ways of knowing where to drill. Certain techniques even allow us to see below ground. It is by putting together the ideas and the work of a whole team that we can maximise the chances of success. After the exploratory drilling we decide, according to the results obtained, to continue or to stop the work in that area.

2.3.1. Where to look for fields? Oil and gas develop in sedimentary basins. We are therefore going to be interested in those zones where superimposed layers of different rocks have accumulated over tens of millions of years. Sedimentary basins are numerous on the surface of our planet. They can be found, of course, at sea, but also on land, in zones that were in the past covered by the sea.

Figure 29: Map showing sedimentary basins worldwide. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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In the early days of the petroleum adventure, nowhere had been drilled: the basins were totally untouched by exploration. Today, virgin basins are very rare. Only a few such zones remain, because their climate or geography is very hostile, or because they are still protected for ecological reasons, such as in the Antarctic. Therefore we know which zones are rich in oil or in gas (or both), those are the prolific basins. Others are less rich and some totally sterile. Moreover, the sedimentary basins have been more or less explored. Those known for a long time have been the object of numerous drilling operations and are in little danger of revealing new, super-giant deposits or even ones of a biggish size: we say in this case that the exploration is mature.

Figure 30: Map of the continental shelf This is the case, for example, in the North Sea. The petroleum companies who explore are obviously going to aim at positioning themselves in regions which are still far from mature, to be able to discover big volumes of hydrocarbons. Nevertheless, exploration work remains to be done, even in the mature zones. There, it is a question of looking for smaller and subtler deposits (more difficult to see or to get images). Drilling can also be done alongside fields already discovered.

The frontiers? Can a petroleum company undertake drilling wherever it wants and whenever it wants? No, because what is under the surface of the earth belongs everywhere to the state. This is not only true on land, of course, but also at sea.

Figure 31: Map showing oil and gas regions worldwide.


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A country is owner of the mineral resources situated up to 200 nautical miles off its coasts and on the whole of its continental plateau (see illustration). The definition of maritime frontiers sometimes gives rise to bitter disputes, above all when there is oil involved!

Figure 32: Map showing exploration and extraction in the North Sea. All the petrol companies are interested in regions where an oil or gas potential exists. They are in competition. And the states, the owners, know it! Therefore, to better valorise their underground riches, these countries put the companies in competition, offering zones for exploration by auctioning them to the highest bidder, under a form of international tender. Interested companies send in their propositions: an undertaking for the total amount to be spent and for the volume of exploration work to be completed over a given period (in general from 2 to 5 years). The companies often act in groups of associates of 2 or 3 companies, which allows them to share the expenses (enormous!) and the risks (high!) if their propositions are accepted. At the due date of the tender operation, the countries examine all the offers and choose the company, or association of companies, that is going to be responsible for drilling the proposed zones. Once a company has obtained the exploration licence (or permit), work can begin. The company can at any moment negotiate the sale of part or all of its interests in the zone it has just acquired. For this reason, a sort of permanent market in zones for exploration exists. For some of the zones, exploration is just beginning. For others, drilling has already been carried out and, according to whether the results are positive or negative, interest in the zone increases or diminishes and its traded value likewise. Within all oil companies, there are teams of specialists who permanently follow all the propositions for sale of interests throughout the world. The sales or the exchanges of interests are the object of bitterly disputed negotiations.


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2.3.2. Exploration of the substratum The potential petroleum traps are deeply buried underground. Those directly visible from the surface have been drilled for ages. To identify potential traps, explorers employ a type of echo location called seismic search, the seismic reflection. Seismology gives an image of the substratum, but this image is fuzzy and not totally reliable. Competent and experienced people are needed to interpret it: the geophysicists. And it is also necessary to rely on local regional knowledge: studies, the surface geology, drilling operations already completed … Finally a synthesis of the study of all this data must be established, doing one’s best to forget nothing in the reasoning which leads to the conclusion that “there, we must drill there, because the chances of finding oil or gas are very good!” Visualising the substratum is a team task.

Figure 33 : Seismic analysis on land and at sea Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.3.2.1. Exploration by seismology In the early days of petroleum exploration, one had to be content to drill the traps visible from the surface, generally the anticlines (bulges of the geological layers in the substratum). But it was very quickly realised that this was no longer sufficient: many structures are masked by deposits of sediments that were laid down on top by the subterranean movement that created the trap. In addition, traps situated under the sea are completely invisible to the eye. From the 1930’s on, the miracle method was developed: seismic reflection. Its principle is simple: waves, caused by an explosion or by a heavy mass falling onto the ground, are sent through the ground. These vibrations move outwards in all directions. When they meet a geological layer, some of the waves are reflected (as with a mirror) and return towards the surface, whilst the others are refracted, continuing their way deeper. And so on. By placing very sensitive receptors (geophones) at a distance from the transmitter, a complex series of waves can be recovered and recorded. The first to arrive are those which moved along the surface, then come those which were reflected by the first geographical layer, then those reflected by the second, and so on. Figure 34: View of the vibrator trucks at the time of a seismic operation, in the Kharyaga field in Arctic Russia.

In this way the time can be measured that a wave reflected by a geological layer takes to move from transmitter to receiver. By changing the position of transmitter and receiver numerous times, an image can be constructed of the substratum and the geological layers in time and in 2 dimensions (2D). Hypotheses are then constructed concerning the speed of wave propagation in the different layers. This allows construction of an in-depth image that is extremely interesting for the geologists and drillers. Based on this image, a more detailed section can be developed.

Figure 35: View of a geophone and a collection box at the time of a seismic operation. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Using the whole series of these 2D images in time and in depth, maps of the substratum are drawn to evaluate the hydrocarbon traps.

Figure 36: Workers in the marshes during a seismic data acquisition campaign (Gabon).

In order to obtain a more precise and reliable image of the substratum, the technique of 3D seismic is used: it is more expensive, but a lot more efficient than the 2D. Often, it even allows the hydrocarbons in the geological layers to be identified directly. The receivers are placed in layers in order to construct an image of the substratum in volume (in 3 dimensions). Figure 37 : Computerised 3D model of a natural gas reservoir The technique of the 4D seismic goes even further, bringing into play the fourth dimension, time. On a field in production, several successive recordings are made by 3D seismic, at regular intervals of time. Later, comparison of the recordings allows the evolution of the field to be followed during its production phase. At sea, the seismic recording is made from a boat trawling behind it a series of floating receivers, the hydrophones. It is easier than on land because there is no natural obstacle to the displacement of the transmitter and the receivers of the waves. Figure 38: Seismic acquisition at sea, in the Palanca oilfield (Angola).

Computer analysis of the seismic waves that are recorded is extremely complex and necessitates very significant calculating capacity. Only progress in computing has made this type of operation possible. The computing power used is indeed similar to that used in Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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weather forecasting. The result of the computer analysis is an imagery of the substratum in 2 or 3 dimensions. The integration of this data by the geophysicists is done with the aid of extremely sophisticated programmes that help them to reconstitute the forms and physical properties of the geological layers. Using suitable glasses, the virtual 3D vision of the substratum allows the interpreters to better understand the geometry of the substratum.

Figure 39: view of the geovision (in 3d) room in the CSTJF The CSTJF (Centre Scientifique et Technique Jean Feger) at Pau () is a research centre specialised in geological research and in hydrocarbons. Seismic imagery is unfortunately not perfect and never 100% reliable. Problems can occur at the recording stage. There are difficulties of access in mountainous zones or in tropical forests (which slows down the work!). In addition, land with a soft and heterogeneous surface generates alterations in the waves that are often difficult to correct at the time of analysis. In the depth sections, it is also possible to have images that do not correspond to reality (artefacts), just like mirages. These are not always easy to differentiate from the genuine signal. Moreover, the signal weakens with depth (the farther it has to travel, the more energy it loses!). Finally seismic speeds are not known with precision, above all in little-drilled zones where the speeds have not been able to be measured. This can result in errors in the seismic sections and the maps in depth. 2.3.2.2. Studies prior to drilling The seismic sections and the in-depth geological maps of the different layers are indispensable, but they are not sufficient. Before drilling, numerous studies are undertaken. Regional studies first. On land, the geology of the surface is studied and attempts are made to extrapolate what is happening deep below the surface. On land, as at sea, the results of neighbouring drilling operations are found to be useful. One is able to see whether those drilling operations found reservoirs. One is able to see whether those drillings found reservoirs and their seals and whether they revealed accumulations or traces of oil and gas. If the results are positive, then attempts are made to know if these conclusions can be extrapolated to the zone it is Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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hoped to drill. If they are negative, one asks the question why and whether that is going to influence the intended drilling. By comparing with seismic sections from already drilled zones, attempts are made to see if the source rock, the reservoirs and the seals continue as far as the present zone or not. The question then is to know if they have preserved their qualities over the distance. The regional history of movements in the earth’s crust is then studied: tectonics, in order to know the conditions of formation of the traps.

Figure 40: Meeting concerning the logs (geological sections) of the Peciko p13 oil at Balikpapan (Indonesia). Finally, a good look is taken at the sedimentary characteristics of the zone, to try to reconstitute the epoch and the conditions of deposition of the rocks that subsequently became reservoirs or seals. Local studies are based principally on seismic sections and on in-depth maps of the zone. The object is to spot the reservoirs and their seals and the potential traps, and to define their geometry and the quantities of oil or gas they may contain. These potential traps are called prospects.

Figure 41: A senior gelologist and the head of the geosciences department for activities on the oil field of al Khalij, at Doha, in Qatar.

In parallel, the geologists evaluate the uncertainties and the risks of being completely mistaken! Other local studies can be made, for example a reconnaissance of the very small quantities of hydrocarbons on the surface. An increase in these surface indices compared to the average can reinforce the idea that there is oil or gas trapped just below. The synthesis of regional and local studies allows a full evaluation of the zone to be explored, by gathering together all the technical arguments indispensable to a decision: do we drill or not? The main thing is to forget nothing and to build a coherent analysis, using all the data.


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2.3.3. Assessing the oil reserves before drilling Exploration drilling operations is very expensive: at a minimum 3 to 4 million euros on land and 20 to 60 million euros at sea, but it can exceed 100 million euros for very deep drillings or those in difficult conditions. If the drilling is a success and it opens up hydrocarbon production, the investment is reimbursed by the production of oil. But if it is a failure, the company loses its investment. That is the reason why oil companies weigh very carefully the pros and cons before taking the decision to drill! By the end of the studies in a zone, geologists and geophysicists have defined a certain number of prospects. For each prospect they have calculated a range of probabilities for the accumulation of oil and gas. With the oil field engineers, they have also calculated a range for the potential reserves. The reserves represent that part of the accumulation that can be extracted and brought to the surface for exploitation. Why a range for the reserves and not a unique figure? Because all the parameters entering into the calculation of the accumulations and of the reserves are not precisely known before the drilling.

1 : Hoist 2 : Drilling rig 3 : Mobile hoist 4 : Hook 5 : Injection Head 6 : Mud injection column 7 : Rotating feed table for the drill train 8 : Draw-works 9 : Engine 10 : Mud pump 11 : Quagmire

Figure 42 : Drilling An oil company possesses prospects all over the world. But exploration budgets are limited and all the prospects cannot be drilled in the same year. A team exists therefore, which manages all the prospects. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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These people, technicians and experienced economists, decide each year the allocation of the exploration budget between the different subsidiaries worldwide. They approve, or not, the drilling propositions forwarded by the technicians or the subsidiaries. 2.3.3.1. Reserve types Proven: Discovered reserves which are reasonably sure to produce in the current technical and economical conditions - 90% chance that the final reserves are > or = to this value. Probable: Discovered reserves which are reasonably sure to produce in technical and economical conditions hardly differing from the current conditions - 50 % probability of existence. Possible: Reserves that have not yet been discovered and which have less chance of being produced - 10 % chance that the final reserves are > to this value.

Figure 43 : Proven reserves


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2.3.4. Logistics for setting up oil drilling Once the studies are terminated and the decision to drill taken, the drilling equipment must be installed at the location selected on the prospect maps. The co-ordinates of the locations are very precise, but the place on the ground that corresponds is not always easy to prepare. For that, a site study is undertaken, without forgetting the impact study, that is to say a complete inventory of the site before work starts (environmental impact …). At sea, the depth of the water is measured and the seabed studied to find out, for example, if it can the piles for a drilling platform. Equally, certain climactic data are studied: wind force, wave height, strength of currents. The necessary steps are taken to know the worst extremes of bad weather that are possible, in order to protect the installations from the worst storms. In certain closed seas sheltered from the extremes of bad weather, such as in the Netherlands, the drilling sites are surrounded by a veritable wall that avoids any contamination of the sea by waste or by polluting products. On land, obstacles can be found: inhabited zones, very uneven broken land, marshy areas… Those responsible for the site study determine the location that is the safest and the nearest possible to the co-ordinates planned. Then roads are constructed to bring in the equipment and to take it out at the end of drilling. On the site itself, the areas intended for the drilling operations, the technical buildings and accommodation are cleared of trees and undergrowth, raked, flattened and cleaned.

Le montage des installations Setting up the site takes several days. At sea, the equipment used (drilling platform or boat) is brought to the site by tugs, or arrives under its own power. Figure 44: Drilling site at Yariapo (Bolivia).

During the drilling period, a major logistics operation is maintained. The site must be supplied with equipment (drilling pipes, tubing), with products for the mud and with food for the personnel. The replacement of teams who go on rest leave must be planned, as must the comings and goings of people whose presence is not permanently necessary (shuttles on land and helicopters at sea). Very often, the first well drilled is a water well. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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At the end of drilling, the site must be restored to the state it was in before the work began. All pollution must be cleaned up, and, in particular, any quagmire must be carefully eliminated (residues of used drilling mud full of polluting matter), so that it doesn’t spread into the surrounding nature. Sometimes vegetation is replanted so that the site recovers its appearance prior to drilling. Figure 45: Drilling site at Yariapo (Bolivia), after end of drilling.

2.3.5. Instructions for drilling operations The hydrocarbon prospects, the objects of exploratory drilling, are deeply buried. These prospects are often at depths of 2,000 to 4,000 m, sometimes as much as 6,000m (the equivalent of 20 Eiffel Towers!). To get there a hole has to be drilled. The derrick (or mast) is the for the drilling system. It is a metallic tower thirty or so meters high, which is used to introduce the drilling pipes vertically.

Figure 46: The drill bit has very hard steel teeth or inserts.

At the end of the first drilling tube, is the drilling tool, in general a tri-cone (trepan) equipped with teeth or very hard steel pastilles. The trepan attacks the rock, a little by applying pressure, but above all by turning at adapted speeds, which can be very high: it pulverises the rock into small pieces. As the drill bites deeper into the substratum, a new nine meter drill pipe is added. It is screwed to the preceding one. And so the well progresses. The set of drill pipes with its trepan is called the drill train. For very hard rocks, the teeth of the trepans are not strong enough. Tools are then used that are made out of a single block of tungsten or set with diamonds; nothing resists them!


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The tubing To avoid collapse of the hole, a large hollow steel cylinder is inserted along its full length (like the drill pipes, it is fed down in segments and screwed one to another). It is the tubing. Once the tubing is installed, the drilling restarts, but the diameter of the hole has become smaller: the tubing that has just been inserted occupies space and reduces the initial diameter of the hole. Thus a drill hole of 50 cm diameter at the start can be reduced to 20 cm after the insertion of several tubes. Figure 47: Operators working on a drilling derrick on the Raissa, in the Mahakam delta (Indonesia).

2.3.6. Role of drilling mud By circulating continuously, the mud cools the drilling tool, helps to attack the rock by injection under pressure and cleans out the hole carrying away the pieces of crushed rocks. It is also indispensable for the maintenance of the borehole, insuring that the risk of collapse is avoided. The drilling mud is generally water-based with the addition of numerous products. First solid particles (often clays) used to increase the density. And then diverse chemical products used for properties adapted to the nature of the land being drilled and to ensure the stability of the mud. The density of the mud must be accurately calculated and precisely controlled. If it is too heavy, it is likely to penetrate at high speed into the reservoirs where the pressure is lower and the drilling is then in danger of “entering into losses” (instead of coming back up to the surface, the mud will disappear into the substratum). If it is too light, the water in the geological formations being drilled, at a higher pressure than that in the mud column, invades the hole and the drilling “enters into gains”. Unless the drilling team reacts very rapidly to this situation, the result can be an out-of-control eruption. The composition of the mud is specially adapted in each case, to the rock formations being drilled. The mud engineer, the “mud-man”, must continuously that it remains homogeneous and stable in its composition. He must also react very rapidly in the case of a problem and be ready to modify the composition of the mud as quickly as possible when required. Despite his name, which is not flattering, the “mud-man” has a very major responsibility on a drilling site!


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2.3.7. How to know if oil or gas has been found? It is the role of the geologist based permanently at the drilling site. There exist several ways of knowing if a geological layer impregnated with hydrocarbons has been found. The direct methods allow the presence of hydrocarbons to be confirmed. The gas dissolved in the mud is analysed continuously. When a rock is drilled, small quantities of methane gas are always liberated. It is what is called the gaseous background. If it is stable or it remains proportional to the rate of progress of the drilling, then everything is normal. But if it rises suddenly it is a signal to be on the alert! It is possible that one has entered a hydrocarbon reservoir. The geologist is also constantly examining the drilling spoils. He washes them to remove the impregnated mud and es them under an ultraviolet lamp. If the spoils contain hydrocarbons, they will emit an orange fluorescence.

Core sampling If the geologist thinks that the well is going through a reservoir, he can ask for a coresample. In this case the tube string is lifted and the drilling tool replaced by a coresampler. The tube string is lowered again and drilling continues but this time without grinding the rock: the sampler gently cuts out and “swallows” a cylinder of the rock that is raised once it is filled. The core-sample is very useful: one can see if it contains hydrocarbons, the reservoir characteristics can be directly measured and it can be used as a to indirect methods of evaluation.

Figure 48: View of the scanner in the core-sample library at the Centre Scientifique et Technique Jean Feger in Pau ().

The direct methods allow us to know if there are hydrocarbons in the rocks being drilled through, but they don’t give sufficient indications of the quantities that are present. For that, indirect methods exist, based on logging tools. These are tools that are lowered to the bottom of the borehole by cable. Then they are lifted slowly back up and on their way record certain data. It is by analysing the recorded data that the characteristics of the reservoirs and the proportions of gas or petrol contained in the pores of the rock can be defined.


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Figure 49: Geologist working in the core-sample library of the Centre Scientifique et Technique Jean Feger in Pau ()

Finally, there exists another direct method of hydrocarbon detection, a test that can be carried out: a pressure reduction is applied to a vertical interval where an oil or gas reservoir is thought to exist. The fluids contained in the rock are precipitated into the borehole and generally even climb back up to the surface. In all cases, they can be recovered and analysed.

2.3.8. After drilling When an exploration drilling is initiated, nothing is certain. In the past, only one exploration well in seven finally ended up as a productive deposit. Today, evaluation methods have been refined and little known zones are much more rare. So the average is rather one success in three or four exploration wells. In the case of success, certainly one is encouraged a lot! But, nevertheless, it is not the case that the field is going to be put into production immediately. Even if some of the uncertainties have been removed (there is oil and gas, there is a reservoir …), it is still necessary to drill several wells so that the deposit can be very well defined and the uncertainties further reduced. These complementary wells, which allow the deposit to be better understood, constitute the appraisal. As soon as the exploratory well is finished, a full study of the prospect, now called a discovery, is re-launched and a programme of appraisal is established.


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2.4. Production of oil and gas There we are, the exploration phase has finished: The production contract is signed with the country owning the rights below ground. The hydrocarbons discovered by the initial exploration well have been confirmed by the appraisal drilling. The oil and gas deposit is now better known.

Figure 50: Overview of the PUQ (Production Utilities and Quarters) platform and of the Elgin-Franklin offshore platform during a storm (Scotland). Many of the uncertainties, concerning the form of the deposit, the existence and the characteristics of the reservoirs and the lines of between hydrocarbons and water or between the hydrocarbons themselves, have been significantly reduced. All the knowledge gained encourages us to think that exploitation of the oil or gas will be a profitable operation. But, it is vital not to make a mistake! The exploration stage is expensive enough (several tens of millions of euros per well), but moving on to the development phase and subsequent extraction operations is even more ravenous for investment. We are often talking in of hundreds of millions of euros, sometimes over a billion! Enormous thought goes into the best way of extracting the hydrocarbons, attempting to recover the maximum quantities of oil and gas in the safest conditions. These forecasts, studies and the eventual construction of the installations constitute the development stage of the field. Once everything is in place, extraction can start. The life of an oil field continues for many years. Then comes the time when the decision is taken to terminate operations. Finally, the site must be restored to its natural state.


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2.4.1. Instructions for the development of the oil production centre Look before you leap, the essential motto for production! The decision will be influenced above all by economic considerations: is it profitable to begin extraction of the deposit that has been analysed? “Profitable” … that means that by selling the oil and gas to be extracted, we will be able to cover all the expenses of studies, construction of installations and of extraction operations during the life of the field. Cover the expenses … and make a little profit as well! These profitability calculations are complex, not so much from a theoretical point of view (no need to be Einstein …), but, above all, because there are many parameters and factors which come into play. Some of these parameters are very uncertain: for example, who can predict the price of a barrel of oil in 10 years time, when the oil field will be halfway through its life? We are forced to postulate hypotheses. All the available technical data is collected: the depth and the form of the deposit, the characteristics of the reservoirs, the types and distribution of the hydrocarbons, the accumulated volumes of oil and gas in the substratum. An attempt is made to estimate the number of wells that will be necessary. The production installations (for drilling, treatment of products brought to the surface, temporary storage and dispatch) are selected and sized in accordance with the technical data. Several different projects can be envisaged. After detailed comparison, the project having the best overall potential is retained. At the same time a production simulation is established, covering the whole period from the beginning to the end of the life of the field. This simulation is known as a production profile. It is a forecast of the annual production volumes from the field, which then enables the economists to establish economic forecasts on the basis of hypotheses for the hydrocarbon selling prices. Once the project appears economically solid, the decision to develop the field is taken: we move on to the stage of building the installations. At sea or on land, we are talking of an enormous site that grows out of nothing and will exist for a number of years, fifteen or so on average.

2.4.2. How to produce? Production consists of bringing the hydrocarbons contained in the substratum to the surface. This requires the use of a large number of wells. A field spreads over a vast area, at least several km² and sometimes more than 100 km². A traditional well (vertical or slightly deviated) only draws oil or gas from a radius of a few tens of metres. Moreover, such wells only cross the reservoir over the limited height of a vertical or near vertical cross section. A large number of vertical wells would therefore be necessary to Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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completely extract the contents of a reservoir. The horizontal well technique has totally revolutionised the industry, because such wells have a much greater length of with the reservoir. Thus, the technique enables a significant reduction in the number of wells necessary for a given development. Production drilling presents a number of challenges.

What is the principle of extraction? The basic principle is to generate pressure at the bottom of oil or gas wells, inferior to the pressure in the reservoir. As a consequence of this pressure difference, the hydrocarbons will move towards the well and thence to the surface. In practical , the well is totally lined with tubing right down to the reservoir. This tubing, difficult to move once it is fixed into position, guarantees the operational effectiveness of the well throughout its working life. The oil and gas are brought to the surface via another tube, in oil field jargon the (extraction) tubing, placed in the lining. This tubing is detachable and can be changed whenever corrosion or deposition problems appear. Sometimes, the oil field pressure is sufficient for the hydrocarbons to make their own way to the surface; in this case the well is said to be “eruptive”. In other cases wells are never eruptive. And in all cases, the oil field pressure diminishes gradually as production continues. After a certain time, it is no longer sufficient for eruptive extraction and it becomes necessary to stimulate production, what is called assisted recovery. On arrival at the surface, the output from the extraction wells begins its journey through the surface installations. Figure 51: Principle of oil extraction in ocean deeps.


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2.4.3. The various recovery mechanisms

Figure 52 : The various recovery mechanisms The PRIMARY recovery: The field produces by means of its own energy. Meaning that natural energy is used for the production of the fluids (initial pressure, rock compressibility, oil or gas compressibility, gravity, capillary forces. No outside energy is provided. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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The SECONDARY recovery: This solution is used when the natural energy is insufficient for the production of the fluids. The field then produces thanks to an outside action such as; water injection at the low points or in the aquifer (sometimes water injection starts together with the production, to increase production), gas injection at the high points or in the gas, or gas cycling by gaseous hydrocarbons (dry gas injection in the condensate reservoirs). The TERTIARY recovery: Use of complex methods such as the injections of miscible fluids, thermal methods and chemical methods. This method is called EOR (Enhanced Oil Recovery)

2.4.4. Life of oil and gas fields Events don’t necessarily always go as planned! Surprises can happen which will modify production forecasts. Good surprises: for example a field that continues in production beyond the time expected, 10 or 20% more oil volumes than were envisaged, it’s great for business! Or bad surprises: for example the productivity of a well can be inferior to forecasts. The quantity of oil produced each day can also be much lower than forecast, putting at risk the final profitability of the whole operation. The real disaster is when we are forced to prematurely stop production: an enormous investment almost entirely lost! These surprises demonstrate clearly that the knowledge that can be gathered about the substratum is always uncertain, even if one has done everything possible to reduce this uncertainty. That is why, during the whole life of the field, re-evaluations are made on a regular basis of the reserves remaining to be extracted – new evaluations that can go in an upward or a downward direction. They are essential in order to know when the operation must be stopped. The life of a field is variable: in general from 15 to 30 years. Longer for a really big one (a super-giant with a life of 50 years or more), shorter for deep-sea fields (5 to 10 years) because of the very high operating costs. The total life consists of 3 stages: the initial period (2 to 3 years) with a growth in extraction quantities as wells are sunk one after another. Then a long steady period during which annual production is stable. Finally a period of reduction, which varies from field to field, before the final closure. All the oil and gas contained in the substratum is not extracted, far from it! Depending on the type of reservoir, recovery can vary from 10% to a little more than 50% for oil fields. For fields of gas alone, we can often reach 60 to 80%. Therefore, significant quantities of oil remain in the substratum when operations are terminated. One of the challenges for the petroleum industry is to try to improve these recovery rates. Just a few percentage points gained on a major oil field represent enormous volumes. One percentage point of additional recovery in all the fields of the world would represent 2.5 to 3 years of annual worldwide consumption!


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2.4.5. Abandonment and dismantling of a field The answer is simple: as soon as the oil or gas starts to be more expensive to extract than it is sold for. In general that happens because of a drop in production, as a consequence of pressure reduction in the field. It can also happen when the proportion of water extracted increases rapidly, or again, for oil wells where the gas is not commercialised, when the proportion of gas makes a sudden jump (when the pressure descends beyond the thermodynamic bubble point). More rarely (fortunately!), a well can be prematurely abandoned following a bad surprise, for example a well productivity significantly below forecast. The life of a field also depends on the price of oil and gas. It is obvious that if the price of a barrel of oil goes from 25 to 50 dollars, all fields will be exploited longer than was initially planned. On the contrary, if there is a long-term drop in prices, certain fields will be abandoned earlier than planned. Figure 53: Dismantling the North East Frigg platform (Norway).

When a petrol company abandons a field, its life does not necessarily stop even then. If the field is no longer profitable for one company, other smaller companies may be interested in taking it over, because their overheads are lower, or they are satisfied with a profitability lower than that demanded by the major companies. Or again, the smaller companies may be content with production volumes that would no longer satisfy the large companies. The national company of the country involved sometimes also takes back fields abandoned by the companies.

Figure 54: Drilling site at Yariapo (Bolivia).

Quand la décision de fermer définitivement un gisement est prise, on ne laisse pas le chantier à l’abandon pourrir et rouiller.


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Les installations sont démantelées et les matériaux recyclés. Seules les têtes de puits sont conservées, pour des raisons de sécurité. Des équipes de spécialistes arpentent les lieux, à la recherche d’éventuelles pollutions.

Figure 55: Drilling site at Yariapo (Bolivia), after end of drilling.

Elles sont chargées d’un nettoyage attentif et complet du site. Une fois ce nettoyage terminé, c’est au tour d’équipes de réhabilitation d’intervenir. Elles reconstituent autant que possible le site initial avec sa végétation d’origine. En mer, les plates-formes fixes sont démantelées avec soin, en évitant toute pollution accidentelle. In any case, well heads are closed and consolidated with concrete according to strict international rules

2.5. Transportation of oil and gas The largest quantities of oil and gas discovered are to be found in developing countries, far from the major consumers. These producer countries easily meet their own needs and export the greater part of their production. On the other hand, developed countries, major energy consumers, are not self-sufficient in oil and gas, far from it: they are therefore hydrocarbon importers. Even in developed countries that are also major producers, such as the United States, the production zones are often far from the centres where crude and gas is required. As a result, for several decades now, enormous quantities of oil and gas have been transported all over the world by sea and on land.

2.5.1. Oil transport Whether the oil transport from the production sites towards the refineries is done by sea or land, the main question is that of safety and of respect to the environment. At sea, maximum precautions must be taken to prevent black tides as well as voluntary pollutions; the wastes in the sea from the cleaning residues from the vessels which must be severely opposed. On the ground, the state of the pipelines must be surveyed and worn materials must be replaced. The large quantities of transported oil are not always used immediately. This also counts for part of the products which come from refineries, these being called the finished products. So, safe storage sites must be foreseen for the oil products. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.5.1.1. Transportation by maritime means Annual quantities of oil transported by sea are enormous. Almost 38000 oil tankers navigate the seas and oceans, transporting this fabulous liquid energy source from the points of extraction to the points of consumption. The enormous majority of hydrocarbons transported reach their destination. For example, in the period 2000/2004, according to the accident statistics of ITOPF (International Tanker Owners Pollution Federation) almost 99.99998% of oil transported arrived at its destination without problem. The organisation of maritime transport of oil is complex and many companies and skills are involved in a voyage (building and maintaining the boat, inspecting it regularly, choosing the crew, deciding the route to be taken …).. Countries have responsibility for organising safety and security regulations worldwide and above all for ensuring their respect by all involved. These regulations, which can appear complicated, formalise many decisions taken tly at an international level for the well-being and safety of everyone. Figure 56: The Iranian tanker Iran Dena The quantities of oil transported by petrol tankers are enormous: between 1.5 and 1.9 billion tons annually for the last 20 years. Going back further into the past, comparable figures were 500 million tons in 1960 and 100 million tons in 1935. Expressed in tons, oil represents between one third and one half of total marine commerce worldwide, depending on the year. Oil-carrying ships, more commonly known as tankers, have a whole range of different capacities. They are classified according to their transport capacity measured in tons of crude.

Figure 57: Map showing principal movements of oil worldwide in 2003 ( in millions of tonnes) The capacity of the total petroleum fleet is around 280 million tons. The main routes for the transport of crude oil leave from the Middle East towards Europe and the United States via the Cape of Good Hope to the south of Africa, or via the Suez Canal if the ship is not too big. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Other routes exist in the direction of the Far East (Japan, China, South Korea) via the Malacca straight (between Sumatra and Malaysia). A large tanker takes between 15 days and a month, from the time it is loaded in the Middle East, to deliver its crude oil in Europe. For the transport of refined products, other routes exist, generally shorter, either within European waters or further afield for trade between Europe and the United States or Europe and Asia … Transport costs fluctuate considerably according to supply and demand and the time of the year. Who owns these giants of the seas? How is maritime transport organised? It is the question that always comes up when an accident occur, or ways of avoiding them are discussed. In discussing maritime transport, a distinction must be made between the owner of the ship on the one hand and the owner of the petroleum cargo on the other. The two are rarely the same. In the past, most oil companies owned maritime transport subsidiaries. But today, apart from one or two exceptions, tankers no longer belong to the oil companies. They are only owners of the cargoes, for organisational reasons. After the 1973 oil crisis, certain oil companies lost control of the management of hydrocarbon reserves to the national companies of the producer countries. This meant that, at the same time, they lost the possibility of planning transportation as they wanted. They have therefore delegated maritime transport to specialist companies who are more flexible in their organisation. As far as transportation safety goes, the owner of the tanker is not the only person responsible. The country where the ship is ed must also the condition of the boat and the procedures on board and many countries undertake those duties very seriously. However, certain countries make available registration of vessels for very low costs in of taxes; on the other hand they do not ensure serious technical controls. These countries are consequently accused of making available “flags of convenience”. The individual or company who provides the vessel (who is often also the owner) has the responsibility of correctly equipping it and of ensuring its safety and security. That individual or company must therefore have the vessel inspected and certified regularly. The certification is carried out by an organisation of vessel classification, which issues “an authorisation to sail”. And finally, the same person or company providing the vessel has the responsibility of choosing the crew and ensuring its competence and motivation. How does an oil company go about finding a vessel for the transportation of a cargo of hydrocarbons? Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Oil companies with a transportation requirement, make a preliminary list of vessels available at the dates that are suitable and then choose one particular vessel. They that it meets their criteria in of construction, management and training of the crew, etc. In general, the characteristics of a vessel, its state of maintenance, the quality of its services, are periodically checked during inspections carried out by specialists mandated by the oil companies. The information gathered during these inspections is recorded in large shared computerised databases such as the SIRE (Ship Inspection Report Exchange), set up in 1993. Between April 2004 and April 2005, the SIRE ed 10 000 reports concerning the inspection of 4000 vessels. According to the information obtained about the vessel, the oil company decides whether to use it or not. Each company therefore uses its own criteria to refuse vessels that it considers unreliable. For example, it can exclude a vessel because of its age, the classification organisation involved, the training of the crew or unfavourable inspection reports. 2.5.1.2. Transportation by land The petroleum industry has chosen to favour maritime transport for its products, for reasons of greater flexibility. Overland transport by pipelines nevertheless remains important, in particular in vast countries such as Russia. It is also necessary to bring oil, destined for transport by ship, to a port. Finally, in the industrialised countries, there are major pipeline networks transporting crude to refineries situated inland and also handling the finished products coming out of the refineries and destined for major centres of consumption. Oil pipelines are large diameter tubes that can transport enormous quantities of oil, up to several tens of millions of tons per year. The oil circulates by means of pressure maintained by pumping stations located every 60 to 100 km. The oil travels in the pipelines at speeds of around 2m/sec (7km/h).

Figure 58: Pipeline on land.

As for maritime transport, safety and security are important elements for pipelines. But normally there are no serious oil spillages. In fact, as soon as the pipeline is damaged by accident or sabotage, pumping is stopped and pollution remains limited. But things become more serious if the state of the pipelines is not kept constantly under surveillance. Oil is always corrosive to a greater or lesser extent, because it contains acidic gases (CO2, H2S). The pipes deteriorate from the inside and if they are not changed in time, they finish by leaking. This problem exists for example in certain areas in Siberia. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Figure 59 : Oil pipelines and projects (1)

Figure 60: Gas pipelines and projects (2) Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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The construction of major pipelines crossing several countries requires intense negotiation. Behind these negotiations are questions of the geopolitics of energy requirements … and geopolitical questions in general. For example, what will happen with the new oil reserves in Central Asia, around the Caspian Sea? Will the new oil pipeline take oil to the East, to China, ensuring a reliable supply to that country which is an everincreasing of energy; or to the southeast, across Afghanistan and Pakistan; towards the southwest, across Iran, the most economic route; or to the northwest, to Russia which would therefore be able to retain control over the final destinations?

2.5.1.3. Le stockage du pétrole The crude oil that arrives at its destination is not always immediately treated in a refinery. In addition, the developed countries have realised for a long time now the strategic importance of oil. They are committed to holding stocks of petroleum products (crude and finished products) equivalent to 3 months of import quantities. These commitments have been incumbent on of the European Union since 1968. Depending on the country, the strategic stocks are managed by state or private organisations (or both). In , the objective of the organisation responsible for petroleum stocks is to ensure that each region has available 10 days consumption of petrol and 15 days of diesel and heating fuel. Petroleum products are stocked in tanks of varying size that can often be buried underground. In there are 50 or so storage centres for liquid products. The main concern of the managers of these centres is safety and security. Fire safety certainly; but also prevention of the risk of pollution of land areas and water tables in the case of a leak. There are regular inspections of the condition of the tanks and their resistance to corrosion.

2.5.2. Le transport du gaz Overall, the problems of transport and of storage of gas are the same as for oil. Producer and consumer countries are far apart and gas has to be taken from one to the other. But in detail, things are quite different. Overland or underwater transport by gas pipeline is preferred.

Figure 61: Map showing principal movements of gas worldwide in 2003 (in millions of cubic meters).

Unlike oil, the gas is in a gaseous Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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state at normal pressures and temperatures. This means that, for the same quantity of energy, it occupies a volume 600 times greater than that of oil. Therefore, there is no question of chartering vessels to transport gas in its gaseous state. That would cost … 600 times too much! The most usual method of transportation is therefore by gas pipelines. There are underwater gas pipelines, such as those which link Norwegian gas fields to European terminals or those linking North Africa to Sicily. And of course, overland gas pipelines like those that bring Russian gas to the European Union. These gas pipelines are not visible: for reasons of safety and security they are buried underground. The compressed gas circulates at high speed in a gas pipeline, with the aid of compression plants positioned at regular intervals along the network. But in certain cases the construction of gas pipelines is technically impossible or too expensive, for example to bring Nigerian gas to Europe, or to take gas from Qatar to Japan. To resolve this problem, a method of maritime transport based on the liquefaction of the gas (LNG, liquified natural gas) has been introduced.

Figure 62 : The LNG chain Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Figure 63: View of the Gasandes gas pipeline, a 460 km-long pipeline linking the Argentinian network to Santiago in Chili across the Andean mountain range. 2.5.2.1. Gas storage in tanks Gas consumption is not regular throughout the year. In , for example, seasonal variations go from 1 in summer to 8 in winter. Storage of gas is therefore essential to enable matching of supply and demand. The most obvious method is that of storage in liquid form in giant tanks. But there is something better! The gas can be stored in natural underground reservoirs, as if one created an artificial gas deposit. Storage capacities are enormous, measured in billions of m³. And there is no need to refrigerate the gas to liquefy it. Suitable geological sites must possess good reservoir and cap rock conditions and be located at a sufficiently shallow depth (around 500m), so that injection of the gas is not too expensive in energy . Such ideal sites are not numerous In today there are 10 or so in operation. The most important is that of Chemery, in the Loir-et-Cher (capacity 7 billion m³).

Figure 64: An aerial view of the LNG plant of Bontang, with its storage tanks and loading quays for methane tankers.


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2.6. Oil trading Trading means doing business. The term petroleum trading describes the financial operations associated with commerce in hydrocarbon cargoes. The organisation of this business is complex. All the major oil companies have trading subsidiaries. Their main objective is to ensure a regular supply of crude oil to their refineries, to meet the oil supply demands of the processing plant at any one time.

Figure 65: Crude oil trading floor in Geneva (Switzerland).

The traders’ role The traders’ role is to purchase the oil that is necessary in of quality and quantity a little time in advance. But if we talk about selling, we automatically talk also about buying. A skilful trader can quite possibly buy a cargo of oil at a rather low price to quickly resell it at a profit, if others need the cargo more than he does and are ready to pay the price. So, it is not rare for a cargo of oil to change ownership during transport, sometimes several times: destined initially for the United States, it is purchased during transport by a refiner in Rotterdam in the Netherlands and finally finishes up at the Fossur-Mer refinery, which had a more pressing need for it. The trader also handles negotiations for the finished products produced by the refineries. And of course, if the company doesn’t need it for its own refineries, he handles the sale of crude oil that it owns. Traders buy and sell cargoes on a real market, organised on a worldwide basis; dealing in quantities of oil which exist physically and which are due to be transported shortly or are even already in transport. These markets are called spotmarkets. Figure 66: Traders responsible for essence and naphtha operations on the trading floor in Geneva (Switzerland). Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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So, the trader buys crude to supply a refinery that is going to transform it into petroleum products required by the consumer. Between the date of purchase of the crude and delivery to the consumer of the refinery production from this cargo, several months could have elapsed. And during that period, the crude price could have varied: if it has increased, there is no problem. But if it has gone down, the selling price of the refinery products has also dropped: result, our trader has lost money on the refinery products manufactured from an expensive crude and sold cheaply as a result of a drop in oil prices. To provide protection against this risk, a financial mechanism exists, called “covering”. This operation takes place on a special market called the futures market. The trading operation can generate significant profits. That is the reason for the existence of trading companies independent of the petroleum industry and whose aims are solely financial. These companies operate a little on the spot markets, but above all on the futures markets.

2.7. Oil and gas refining The petrol or diesel that we put in the tank of our car, the domestic heating oil that we burn for heating in the winter, the cylinder of gas which contributes to the delicious dishes we prepare, and all the chemical products that play a part in our everyday lives… they all come from oil. But we never use crude oil directly. Why is that? Why aren’t there motors and boilers that run on crude oil? The reason is very simple: crude oil is an unstable mixture of several hydrocarbons, in varying quantities according to the density of the product, and there is not just one crude oil, but a multitude of different crudes. In fact, each oil field has its own history and its own particular composition of different hydrocarbons. Some, black and viscous, contain many heavy molecules. Others, brown and freer flowing, are lighter. They contain more or less dissolved gas. And all of them contain varying proportions of sulphuric or acid products, very corrosive for metals. Of course, a universal motor adapted to each and every fuel doesn’t exist, nor does a boiler that is resistant to very aggressive corrosive action.

Figure 67: The refinery at Anvers (Belgium).

That is why the crude oils must be purified and transformed into products having an almost constant composition, well adapted to their use. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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These transformations are carried out in refineries. Nevertheless, the oil coming into the refineries is not the same oil as the one which came out of the wells. The oil has already been “cleaned” by eliminating water, acid gases, and so on … even before shipping But the overriding objective of a refiner is to respond to the demand for petroleum products. Today, the development of road and air transport has accelerated, and the demand for light products has soared. At the same time, we burn a lot fewer heavy products to produce electricity or for heating. Worldwide demand is for about 40% light products (automotive fuels), 40% middle range products (boiler fuel, diesel) and 20% heavy products. The only crude oil corresponding more or less to these proportions is the light crude from the Algerian Sahara. But the majority of crudes extracted in the world contain more heavy products. Figure 68: Extra-heavy oil. Refineries composed uniquely of a single distillation tower, as in the past, are therefore no longer sufficient. Other production plant is necessary in order to transform (we also say to convert) the heavy products into light products. Several refining techniques exist to do this. It is because of the costs of transformation that the heavy crude oils are less expensive than the light oils. This need to adapt refineries to the demand for petroleum products also explains the location of refineries throughout the world [link to focus: Where are the refineries situated?. A lot of them are in the developed countries, the very large consumers, even in those that do not have any oil! By constructing refineries on their own territory, they guarantee for themselves an independent refining policy.

Figure 69: The crude oil refinery at Feyzin ().


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2.7.1. Oil refinery: instructions for use How do we treat crude oil, this mixture of molecules ranging from the lightest to the heaviest? We are going to heat it, make it evaporate progressively. For example when we heat the bottom of a saucepan of water, first small bubbles appear before we reach 100°C: this is gas dissolved in the water that is beginning to escape. Then, at 100°C, the water boils vigorously and evaporates completely. On the bottom of the pan, we find whitish residues of salts, which must be heated to a very high temperature if they are to vaporise. For crude oil, the principles are the same. The crude that arrives in a refinery is going to undergo a series of operations, to finish up with products that we, or industrial s, need in our daily life. There are three main types of operations: Separation, to obtain the different types of products from the heaviest to the lightest, Transformation (or conversion), to modify the natural proportions of each type of product in order to respond to consumer demand, Upgrading, to eliminate undesirable compounds and modify the characteristics of certain products to make them compatible with the norms. Separation is accomplished by fractional distillation. The crude oil is injected at the base of a 60 m high tower, called a topping unit or an atmospheric distillation column (because the pressure used is close to atmospheric pressure). There, it is heated to 350/400°C. Most of it evaporates and begins to rise inside the column. All that is left at the bottom of the tower are the heavy products, the residues. As the vapour rises, its temperature goes down. The heaviest fractions of these vapours are going to condense into liquids, which can be recovered on trays situated at different levels in the column. And so on, until the top of the column where the temperature is 150°C. There we recover the final vapours that have not been condensed: the petroleum gases. This principle allows recovery of 10 or so different types of products, from bitumens to gas, which are called the petrol cuts or fractions.

Figure 70: Column of an atmospheric distillation plant in the Provence refinery at La Mède ().


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But the heavy residues of this first distillation have in fact retained a significant portion of average density products. So they are subjected to a second, more vigorous distillation, this time under vacuum. Diesel is recovered at the top of the vacuum distillation column, and fuel oils at the bottom. Conversion: Market demand is for large quantities of light products, but the separation has given significant proportions of heavy fractions. However, we don’t have to stop there; the heavy molecules can be broken down into small pieces! The major operation to convert heavy products to light products is called catalytic cracking. It is carried out at high temperature: 500°C, in the presence of a catalyser (that is to say a substance which encourages chemical reactions without participating directly in them). This treatment is very drastic: more than ¾ of the heavy fractions are transformed into gas, petrol and diesel. The result is even more efficient if hydrogen is added (hydrogen cracking), or if the procedures of carbon extraction are introduced into the process (deep conversion). In fact, all heavy fractions can be transformed into light ones, but a price has to be paid. Deep conversion operations are large consumers of energy.

Figure 71: Catalytic cracking plant with fluidised catalyst in the Donges refinery (). Upgrading: the products from the distillation and conversion operations must be stripped of molecules, in particular sulphur, that are corrosive or harmful to the environment,

The desulphurisation of diesel is undertaken at 370°C, under a pressure of 60 bars and in the presence of hydrogen. The sulphur atoms leave the hydrocarbons and bond with the hydrogen to produce hydrogen sulphide, H 2S. This latter product will then be treated to isolate the sulphur, resulting in those large yellow heaps that one sees in certain refinery yards (today sulphur is stocked in tanks maintained at a temperature sufficient to keep it in a liquid state)..

Figure 72: The desulphurisation plant in the Anvers refinery.


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The European norms concerning sulphur emission into the atmosphere are very severe. They have become even more so since the 1 st of January 2005: the refiners will have several years to bring their plants into conformity, that is to say, to rethink and redesign their desulphurisation units to lower even further the sulphur content of fuels. Moreover, certain products, such as petrol, cannot be used directly in automobile engines because of their self-igniting properties (when your engine goes “boom”). They have an octane rating that is too low. The octane rating measures the tendency of petrol to avoid self-ignition.

Figure 73: Alkylation plant at the La Mède refinery ().

The nearer it is to 100, the better it is! The numbers 95 and 98 at the petrol pump represent the octane rating. Modern automobile engines, with a very high compression ratio, need petrol with a high octane rating. The main operation that enables the octane rating to be increased is called catalytic reforming. The petrol goes through four successive reactors. 500°C, 10 bars of pressure and platinum as a catalyst. Those are the conditions necessary so that we find a good product at the pump! Other methods also lead to an improvement in the octane rating (alkylation, production of the ethers MTBE (methyl tertiary butyl ether) and ETBE (ethyl tertiary butyl ether), which have excellent anti-self-ignition properties.) There is another upgrading procedure, applied in this case to butane or propane gas and to kerosene. This is the sweetening process. The products are washed in soda to rid them of mercaptans, nauseating and corrosive sulphuric products (a mercaptan R-S-H is an alcohol where the sulphur atom has taken the place of the oxygen atom). All these operations must be carried out in conditions of the utmost security.


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Figure 74: Refining


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2.7.2. Refined oil products

Figure 75: The refining process, from crude oil to the final product. Basically, things are simple: Butane and propane gas, in the form of LPG (liquid petroleum gas), are going to be used for domestic requirements and in gas-fuelled vehicles; Petrol and diesel will be used as automobile fuels; Naphtha goes off to a petrochemical complex, where it undergoes amazing transformations; Kerosene will be consumed as aviation fuel; Diesel fuel will make our diesel car engines work; Domestic fuels will be used to keep us warm in the winter; Oils will be the base for all lubricants; Bitumen products will seal the roads. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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But, for certain products that he is going to offer customers, the refiner will upgrade the fractions even further, beyond the processes of conversion and upgrading already discussed. He will carry out judicious blending of different products to arrive at a finished product of quality, respecting environmental norms. For example, for petrol, he will be able to mix petrol from direct distillation and catalytic reforming, and add ETBE and certain additives that are beneficial for engine-life and performance. Each petroleum company selling petrol, jealously guards the secrets of these substances!


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2.8. Petrochemistry From chewing gum to training shoes, and lipstick to throwaway bags, oil is everywhere in our daily life (although, fortunately, not in original sticky and nauseating form). They result from the miraculous transformation achieved by the alchemists of modern times: the petroleum chemists.

Figure 76: CD-ROM case in polyethylene.

Petroleum chemistry and plastic products in particular are sometimes criticised, but without the colours (pigments and paints), which enliven our favourite objects like our CDs and DVDs, our snowboarding anorak … we would live almost in black and white! Indeed, the products [link to focus: The products derived from oil] resulting from the chemistry of oil (petroleum chemistry) are numerous and varied. They contribute to our comfort, our pleasure and our safety. For all those who were born after 1960, these products are so much part of everyday life that one cannot imagine being without them. Nevertheless, their appearance in our daily life is really very recent. Old people will be able to tell you: they were young children and adolescents without knowing polyester sportswear, Nike, Adidas and Reebok training shoes, plastic bags which are so practical, and even the outer casings of mobiles, scooters, televisions and computers. Incredible? The facts are there: in 1950, the consumer products resulting from petroleum chemistry attained only 3 million tons worldwide, of which half were plastic products. In the year 2000, 192 million tons were produced of which 140 million tons were plastics.

Figure 77: Example of derived products from the petrochemical industry: soles of sports shoes. Why did these products arrive so late on the market when the era of the massive use of oil started at the beginning of the 20 th century? Around the 1930’s, the petrol, diesel and kerosene produced in enormous quantities by refineries had guaranteed outlets: all types of vehicles. But the refiners found themselves with unimaginable quantities of a product, naphtha (also called heavy petrol), which was unsaleable and unstockable because it was inflammable and polluting. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Naphtha is the distillation cut which comes after kerosene and before petrol. Researchers thought about this apparently insurmountable problem and found the solution. Thanks to the astonishing chemical versatility of the polymerisation reaction, naphtha is today the origin of the majority of products derived from oil. Figure 78: Usine Arkéma de Balan () qui fabrique les grands plastiques de notre quotidien.

How do we get from this liquid to all the “plastics” that we call polymers, synthetic fibres, detergents, etc.? We use petrochemical techniques the principle of which is called steam cracking.

Figure 79 : Petrochimistry Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.8.1. Polymerization The outer case of a mobile, a CD case, a polyester football jersey, sunglasses or the bumper of a scooter, they’re all solid! What do we do to get from naphtha, this heavy petrol, without any doubt at all a liquid, to all these products, generally solid and so varied? By the magic of a chemical reaction called polymerisation! What does it consist of? Certain molecules of hydrocarbons, the monomers, are capable, under special conditions of temperature and pressure and in the presence of catalysers (compounds encouraging the triggering of a reaction), to together into a unique giant molecule, the polymer. Polymers, enormous heavy molecules, have very different physical properties from their monomers. They can be very hard and shock-resistant, or on the contrary, soft and pleasant to the touch. Some resist heat very well, others are virtually biodegradable. They can be rigid or conversely very elastic. Look at Lycra, present in so many clothes … how could we manage without its marvellous elasticity? In fact the monomers form a chain of which the characteristic property is to be rigid or very soft according to the nature of the links. Over time, researchers and industrial companies have selected the most interesting polymers to manufacture the products we find around us. Research into new and ever more effective polymers continues, thanks to the infinite richness of organic chemistry which continually presents us with new surprises

Figure 80: The polymerization reaction The polymerization reaction modifies the chemical nature of compounds by inducing the molecules of monomers to unite in long chains of molecules called polymers, in the presence of a catalyser. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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2.8.2. Petrochemical engineering The polymerisation reaction is applied in particular to the petrochemical bases. The main petrochemical bases are: naphtha, diesel, and butane. These petrochemical bases are treated in chemical plants in units called steam crackers. The aim is to break down the molecules under the action of heat in the presence of steam to obtain the following basic products: Alcenes (olefins): ethylene, propylene and butadiene (ethene, propene, butene); Aromatic hydrocarbons (cyclic unsaturated hydrocarbons): benzene, toluene, xylene; Synthesised gas, a mixture of hydrogen and carbon monoxide, CO, produced by the partial oxidation of methane from natural gas

Figure 81: Schematic representation of steam cracking. In general steam crackers are situated on the sites of large refineries: indeed they use products resulting from the refining operation. The technique of steam cracking is a close cousin to the techniques used in the refining process. Once our polymers are manufactured, there is still a lot to do! In fact they often take the form of granules or powders. They must be transformed to give them shape, texture, colour and the properties that we expect from them: resistance to shocks, heat and wear, Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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rigidity, flexibility or elasticity, and also pleasantness to the touch … To this end, they will undergo a series of treatments: heating, fusion, moulding, adding of other products … but there we are leaving the petrochemical framework and entering that of the plastics industry, the textile industry and the cosmetics industry!

Figure 82: View of a steam cracker at the refinery at Feyzin () This steam cracker, belonging to the petrochemical activity in the refinery at Feyzin () is used for the production of the main intermediaries in chemical synthesis by the pyrolisis of petrol at more than 820°c, in the presence of steam.

Figure 83: View of the aromatic essence extraction plant (Feyzin, ).


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2.9. Oil logistics and supply Each person, in the home and with his or her motor vehicle (scooter, car), is a of petroleum products. Between the refinery, where heating oil, diesel, petrol and gas are produced, and the end , there is a distribution network that is responsible for getting these products to their final destination. Making available to each person the right product, at the right time, at the right place and at the lowest cost and in optimum conditions of safety and security, is the objective of petroleum logistics.

Figure 84: Diagram of the petroleum logistics chain.

In all countries, the logistics operation comprises the same stages. The aim is to ensure that all the products are permanently available to meet the needs of all s: private individuals, road s, industrial plants, public services … The supply, storage, transport and delivery of products must also take place under the best possible conditions of safety, security and respect for the environment.

Figure 85: Aerial view of the Gennevilliers depot ().


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2.9.1. Oil fuel depots Whatever the country, petroleum refineries are never very numerous. Some countries do not even have any. In any case, taking the petroleum products directly from the refinery to the customer would be too complicated: it would require large numbers of road tankers covering enormous distances. The products therefore transit by intermediary storage centres, which are responsible for supplying a region: these are the petroleum depots. These depots are also necessary for another reason: to meet possible interruptions in the supply chain, for example a halt in the supply of crude oil to the refinery or a drop in the output of finished products. In fact, the operators of the petroleum distribution network in many countries, including , are responsible for maintaining stocks equivalent to 3 months of consumption, quantities known as strategic stocks. The petroleum products are taken from the refineries to the depots by bulk transport methods: pipelines, trains of tanker wagons, river/canal barges, boats. Depot capacities are very variable, on average between 10 000 and 300 000 m3. The principal products stored are heating oil, petrol and diesel, as well as special diesel fuels used by farmers and fishermen, and aviation fuel

Figure 86: Simplified cross section of an oil tank. A petroleum depot consists of 10 to 30 steel tanks. A tank can be as large as 60 000 m3. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Each depot has 3 to 12 loading bays for the road tankers that will deliver the products to different consumers. In , there are 60 or so main depots, belonging to the major petroleum operators. They supply filling stations and numerous secondary depots run by independent retailers. The road tankers used transport 10 to 30 tons of one or several products (in the latter case, the tankers are divided into compartments). The products are regularly inspected throughout the whole distribution chain, from the refinery to the end , to guarantee the maintenance of product quality and the absence of contamination by mixing. In , the petroleum operators must meet the demands imposed by a steady reduction in the number of depots: more than 300 depots of more than 400 m3 were closed between 1973 and 2001.

Figure 87: A hydrocarbon storage tank at the petroleum depot in le mans, with fire extinguishing system in the foreground

2.9.2. A priority issue: security Petroleum products are dangerous, being subject to risks of fire, explosion and pollution. The safety and security of depots and the distribution chain is therefore an absolute priority. In Europe, regulations are very strict. Like refineries, petroleum depots are classified under “Seveso II” and are therefore very regularly inspected by the appropriate istrative departments. A depot is equipped with numerous safety systems, particularly at the level of each storage tank: Safety valves and, for tanks containing volatile products, floating screens which restrict the dispersion of hydrocarbon fumes;

Figure 88: Shot of the loading of a Total road tanker at the sprl petroleum depot at Hauconcourt ().


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Alarms and automatic stopcocks in case of leaks in a pipeline; Fire-fighting installations, both fixed (automatic spray systems, water curtains) and mobile (water cannons), with sufficient reserves of water and foam products (emulsifiers), to extinguish any possible fire.

Fire-fighting drills take place once a month and there are annual simulation exercises with firemen.

Figure 89: The different types of installation in the petroleum depot Respect of the environment is also ensured. Each depot possesses the following installations: A recovery unit for fumes emitted on tanker loading bays, in order to protect air quality; Holding basins to recover surface water runoff, and separator-decantation systems to decontaminate them; Leak-proof and easy to inspect retaining dikes around tanks and pipelines, to ensure protection of surrounding soils from product seepage; Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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A waste collection system (oily rags, mud from the bottom of tanks), the waste being subsequently incinerated by specialist companies. And finally, safety and security of the final distribution operation is not neglected. Delivery tanker drivers must have a special licence for the transport of hydrocarbons. Tankers and equipment are inspected regularly. Similarly, the petroleum companies inspect the systems at the points of delivery, even if they don’t own them.

Figure 90: Loading of fuel in a depot and recovery of fumes in a storage tank.


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2.10. Consumption of petroleum products For most people, the biggest act of consumption of petroleum products is filling up the fuel tank of the car. But drivers are not the only s of these products! They are consumed: In transport: all fuels, not only for private cars (petrol or LPG), but also for transport company trucks, planes operated by airlines, diesel locomotives for the railways, etc. ; In the home: heating oil, LPG or town gas, supplied in bottles, tanks or by the gas distribution network, for heating and daily requirements such as cooking; In industry: industrial boilers, thermal electricity power stations operating with gas or fuel oil, industries using the non-fuel products from refineries that are known as speciality products; In the petrochemical industry: naphtha and gas for petrochemical processing to supply raw materials for the manufacture of plastics, textiles, etc.; In the public works sector: the main product used is bitumen for all road surfaces from local roads to motorways and on to aircraft runways; In agriculture: for tractors or other agricultural machines, greenhouse heating and drying.

The distribution network These products have to be delivered to all the s. How is this done? A very dense distribution network exists. The major s, industrial plants, are supplied directly from the refineries by rail (tanker wagons), by river and canal barges or even by pipelines carrying finished products. Figure 91: A night view of the relais de Chanterennes on the a10 motorway at Brie-Saint-Forge ().


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2.10.1. The different types of fuel oils What are the different types of fuel? It is only necessary to think of the different types of vehicles: cars, trucks, and planes. For land-based vehicles, two main types of motor are in use: the petrol engine and the diesel engine. They are quite old now, since they were invented in the 19 th century. Both work on the same principle: that of explosion. They are internal combustion engines. A mixture of air and fuel introduced into a cylinder catches fire and produces combustion gases. These gases move a piston in the cylinder. The energy of the piston moving linearly is converted by a crankshaft into a rotating movement that takes the drive to the vehicle wheels. So what is the main difference between the two types of motor? The ignition of the air/fuel mixture in a petrol engine is caused by external means, by an electric spark provided by the spark plugs. Ignition in diesel engines on the other hand is automatic: the high pressures and resulting high temperatures in the cylinder are sufficient to cause spontaneous ignition. The first explosion motor (1806) worked with hydrogen and the very first diesel motor (1892) with coal powder! Things have changed a lot since then. Petrol engines work on 95- or 98-octane petrol and diesel engines, as their name implies, use diesel fuel. Both 95and 98-octane petrol is lead-free; a major advance as far as environmental protection is concerned. Until the end of the 20th century, the best anti-knocking agent known for petrol was tetraethyl lead, (C2H5) 4 – Pb. At that time, lead was used to obtain a higher octane and to serve as a lubricant for the valves. However a major problem gradually came to light: enormous quantities of lead oxide, a very toxic metal, were being discharged into the atmosphere! Petroleum company research scientists and refiners have been able to adapt to the new environmental requirements, producing lead-free petrol by using other anti-knocking molecules without danger for the environment and compatible with modern engines. The figures 95 and 98 stand for two octane indices, which measure the anti-knocking capacities of a fuel. The closer the octane index to 100, the better it is.

Figure 92: Cutaway view of a petrol engine.


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Fuels adapted to the engines Today the majority of cars use petrol, but diesel cars are becoming more and more common: the fuel is less expensive, consumption is lower, and performance is very close to that of petrol engines. 43% of the total fleet of light private vehicles in use diesel engines (compared to 33% in 1999, and 60% forecast in 2010). For all vehicles taken together, the diesel engine market will be four times that for petrol by 2010. Other automobile fuels exist but for the moment are little used. Enormous progress has been made from the point of view of consumption and thus of energy savings. A small car uses approximately 5 l for every 100 km and a big car 10 l for the same distance, that is almost half that of 40 years ago. Formula 1 cars on the other hand have remained very greedy: almost 100 l for 100km! That is the price to be paid for this extraordinary “test bed”, which enables savings at the end of the day in production series of vehicles. Heavy goods vehicles and diesel locomotives both work on diesel fuel. Fuel for planes is of two types: kerosene (very close to diesel) for large turbine and turbo jet commercial aircraft and aviation petrol (avgas) for light planes with piston engines. Don’t forget that also “our” helicopters work on this type of fuel. Aviation petrol necessitates a very high-octane index (maximum index 100). It is leaded petrol, one of the last to be still in use.

2.10.2. Quality of service The best place to form a judgement about the quality of service of a petroleum products supplier is the filling station (often indeed called a service station). All car s go there regularly. On the roads in , we can see: Stations operating under the names of the oil companies (about 15 000 in in 2002), Supermarket hypermarket stations (around 4500 in 2002), Motorway stations (343 in 2002), where petrol is more expensive, but which are open 24 hours a day, and which often provide special services (toilets, babychanging facilities, games areas, picnic spots, tyre inflation, a small supermarket with regional products, communications corner …). In 2001, the supermarket chains made their appearance on motorways: some will soon go as far as opening premises the size of a classic supermarket. Do your shopping on the motorway on your way home from a weekend away!


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In service stations off the motorway, the oil companies devote a lot of attention to their s in of quality of service. There you can find: accessories for the car, washing and vacuuming units and a small shop for food and drinks and for the purchase of regional products. Figure 93: Shot of an employee at the Total service station at LaChapelle-sur-Erdre ().

In their service stations, safety remains an absolute priority for the companies. For example, the pump nozzle that dives into the tank of your car to fill it with petrol is equipped with a system, which extracts the petrol or diesel fumes and returns them to the fuel storage tanks. That is a way of reducing fire risks! The underground storage tank consists of a doublewalled construction and is equipped with a leak detector.

Figure 94: Schéma d'une station-service. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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For many years, the service stations belonging to oil companies have had to meet competition from the supermarket filling stations. Unfair competition? Anyway it’s not illegal. But for supermarkets, the sale of petrol is not a major factor in their turnover. They can allow themselves to make very little profit, even none at all, on fuel: they will make up for it inside the supermarket. It’s the opposite for a stand-alone filling station, where the sale of fuel represents in most cases the major part of the activity. The petrol companies cannot lower their prices below a minimum at which the filling station is no longer profitable, that is to say that it becomes impossible to finance the installations of the station and the salaries of its employees. The companies therefore put all their efforts into another aspect: that of fuel quality, with additives, products, which improve fuel performance. Each company has its own and their secrets are well kept. These additives ensure better engine cleanliness, an improved yield, a longer life, less fumes and petrol odours that are more pleasant.

Figure 95: Petrol and diesel additives. The lubrifiers prevent the seizing of the injection pumps The cold-weather additive prevents the crystallization of the paraffins and permits the use of gas oil during a very cold season The corrosion inhibitor serves to protect the motor parts from eventual rust or corrosion The foam inhibitor permits a quick and complete filling of the reservoirs without overflowing The anti-oxydizers guarantee the storage stability and prevent the formation of sediments in the vessels and reservoirs The anti-emulsifier eliminates the eventual risks linked to the accidental introduction of water in the fuels The detergents and co-detergents serve to maintain or restore the cleanliness of the injection systems The pro-cetane facilitates the spontaneous combustion of the gas oil The odour enhancer brings a nice, immediate and durable smell Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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One French oil company has completely revised its commercial policy. It has opened filling stations under a discount brand – where service is reduced to a minimum – aimed at competing directly with supermarkets. And the company is aiming specifically at certain s (road haulage companies, s in rural areas) by setting up service stations meeting their specific requirements. And the result: for the first time, in 2004, the market share of the supermarkets in fuel distribution fell, reaching 55% as against 57% earlier.

Figure 96: Filling the fuel tank of a car in a Total service station near Lançon de Provence.

2.10.3. Prices of crude oil fuels and the rate of the oil barrel The price of crude oil is very variable. Why? Political disturbances and more recently the globalisation of petroleum commerce have made prices very sensitive to all news, good or bad, and sometimes without any discrimination. This sensitivity of crude prices is even more important for the finished products coming out of the refineries, such as petrol and diesel. But the price that you pay at the pump is a lot higher than the cost price of the products. Why this difference? It results from the fiscal policy in the consumer country. For the three major European countries (, , Great Britain), the average level of taxes levied on petroleum products represents three quarters of the selling price of the product. More exactly, one euro worth of petrol represents today in 2005 on average: 23.5 cents of crude production cost and taxation in the producer country, 1.5 cents of crude transport cost, 3 cents of crude refining cost, 2 cents of distribution cost for the petrol, 70 cents of petroleum taxation levied by the state. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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In the United States, the tax on petroleum products is only one quarter of the selling price. That is why petrol is a lot less expensive there than in Europe. Unfortunately, cheap petrol does not incite consumers to make energy savings! The taxes on petroleum products represent between 10 and 20% of the budgets of the three major European countries.

Table 9: Cost elements for motor vehicle fuels in Europe, from the oilfield to the pump (order of magnitude in 2002-2003, //Great Britain)


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2.11. The major actors in the hydrocarbon world There are numerous actors in the world of oil and gas. The best-known are, of course, the major oil companies and OPEC. But they are not the only ones. A myriad of companies, organisations and consultants all play a part in the “hydrocarbon universe”: National companies, which, in many countries, manage oil production and defend national interests in the hydrocarbon sector; Companies specialising in gas distribution, such as Gaz de ; National agencies & government departments with responsibility for energy matters (in the DGEMP, the Department of Energy and Raw Materials; in the United States the DOE, the Department of Energy); International organisations, such as OPEC (the Organisation of Petroleum Exporting Countries), OAPEC (the Organisation of Arab Petroleum Exporting Countries) or the IEA (the International Energy Agency); Small independent oil companies, which take over oil fields near the end of their useful lives, or develop fields that have been abandoned by the major companies. Examples are Maurel et Prom in , and many small independent companies in the United States; Companies operating in the oil sector as suppliers of services to oil companies, mainly for exploration and production. Among the best known: Schlumberger (logging), Halliburton, Geophysique, Geoservices (mud logging), Transocean, Sedco, Forex These companies are involved in specific technical areas (geophysical surveying and analysis, drilling, depth imaging, production equipment ), supplying oil companies with personnel and equipment that the latter do not own or employ themselves (for cost control reasons). The world of the petroleum services industry is vast and linked closely to exploration and production activities throughout the world; Research institutes, which are often training centres too. The best known in is the IFP (Institut Franais du Ptrole, or the French Oil Institute); Independent consultants and other organisations or individuals who offer consultancy & design services and technical audits to the oil companies.


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2.11.1. The institutions and other organisations OPEC OPEC (the Organisation of Petroleum Exporting Countries) was founded in 1960 by Iraq, Venezuela, Saudi Arabia, Kuwait and Iran. At the beginning, the main objective of this organisation was to redress the split of income between the oil producing countries and the oil companies, in favour of the former. Conscious of the interests of its , the organisation has become an important stabilising element for petroleum prices since the 1990’s and continues to play this role today. It is also, without any doubt, the first organisation to have demonstrated wisdom in the management of the petroleum resources of the planet. OPEC works on the principle of limiting oil production by means of the allocation of quotas (authorised maximum quantities) to each of its according to their reserves. These quotas are adjusted, at regular or extraordinary conferences, to take of the state of the world economy and its requirements. Up until today, at least when the quotas are respected by its , this system has allowed OPEC to fix a range for oil prices and thus to maintain price stability. This stability is, of course, beneficial for the whole world. But since 2004, OPEC production has been working at almost full capacity and the possibilities of increasing production further, (what is called excess capacity), have become very limited. As a result, OPEC has virtually lost its ability to control prices, which have tended to soar since 2004. In 2005, OPEC consisted of 11 : 7 Arab states: Saudi Arabia, Iraq, the United Arab Emirates (UAE), Kuwait, Libya, Qatar and Algeria; 1 non-Arab, Middle-Eastern country: Iran; 1 South-American country: Venezuela; 1 African country from south of the Sahara: Nigeria; 1 Asian country: Indonesia.

The International Energy Agency (IEA) OPEC is an organisation of producer countries. The IEA, on the other hand, is an association of consumer countries. In 2005, it has 26 , all of which are industrialised countries and major hydrocarbon consumers. It is an intergovernmental organisation for the co-ordination of energy polices.


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The IEA works towards security of energy supplies, economic growth and environmental protection. In addition, governments of the member countries have undertaken to implement t measures to deal with emergency situations concerning petroleum supplies. They have also undertaken to pool information. The IEA keeps a sharp eye on the evolution of oil markets, and also plays a more and more important role in the protection of the environment. In a completely new and unexpected step, the IEA made a report public on the 28th of April 2005, in which it recommended consumer countries to take preparatory steps to limit their oil consumption. It even gave examples of measures that could be introduced in this direction: Reduction of the maximum speed on motorways to 90 km/h; Creation of special lanes on roads to encourage car sharing schemes; Reduction of prices, or free travel, on public transport; Vehicles to be used on alternate days during certain periods; Reduction of the working week; Incentives to work from home (telecommuting) in order to limit travel for professional purposes. The IEA is an autonomous unit within the Organisation for Economic Co-operation and Development (the OECD). It was created in 1974, at the initiative of the United States, as a reaction, both to the OPEC offensive when petroleum prices rocketed at the end of 1973, and to the use of oil as an economic arm by Arab countries. With regards to the Kyoto protocol, the IEA seeks to establish common ground and compromise solutions between signatories and non-signatories (the United States and Australia) of the protocol.

2.11.2. World oil companies The best-known oil companies are powerful groups, with a very high turnover, placing them among the leading world companies. They are the majors, large international public companies, and the national companies, over 50%, and very often 100%, state-controlled. There are also many independent companies of average or small size. The most important among them are permanently at the mercy of being taken over by one of the majors as part of the tendency towards mergers that has been prevalent in the petroleum sector for the last 20 years.


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2.11.2.1. Major oil companies Today, the principal international oil companies, those known as the majors, are five in number: Exxon/Mobil: American, formed by the merger of Exxon and Mobil; BP: British, the result of a merger between BP and Amoco; Shell: Anglo-Dutch; Total: French, the result of a merger between Elf, Fina and Total; Chevron/Texaco: American, resulting from the merger of Chevron and Texaco. The following table gives an idea of their size (2003 figures): Company

Sales figure

Profit after tax

Investments in exploration /production

SHELL

269

8,1

12,5

EXXON /MOBIL

247

21,5

12

BP

233

6

9,7

CHEVRON / TEXACO

120

7,2

5,7

TOTAL

118

7,9

6

Table 10: The principal international oil companies in billions of US $ (figures 2003)

History of the majors. The two oldest of the major oil companies were created at the end of the 19th century: the American, Standard Oil belonging to Rockefeller, and the Anglo-Dutch, Royal Dutch Shell. In 1911, the power of Standard Oil was such that the American congress voted the famous antitrust law aimed at breaking it up into three “bits”: Standard Oil of New Jersey (the future Exxon), Standard Oil of New York (the future Mobil), and Standard Oil of California (Socal). All three would become part of a group later called the 7 sisters: Exxon, Socal (later to become Chevron), Mobil, Texaco, Gulf, BP (the heir of AIOC, the Anglo-Iranian Oil Company), and Shell. To these 7 sisters, is traditionally added the French CFP (Compagnie Française des Pétroles, the future Total) to designate the original 8 majors of the petroleum industry.


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Very rapidly, the American majors invested abroad, attracted by the enormous profits generated by low-cost oil (Middle East), sold at the same price as Venezuelan or Texan crude that was more expensive to produce. In July 1928, BP, Shell, Exxon, Mobil and the CFP signed the “Red Line Agreements”. This was an agreement to pool their prospecting facilities and to share by mutual agreement the oil resources discovered or to be discovered in the old provinces of the defunct Ottoman empire, that is to say from Palestine to the North of Iraq, including the whole of the Arabian Peninsula. In this way, powerful consortiums were formed, which would later be nationalised: IPC (Iraq oil Company), ADPC (Abu Dhabi oil Company), QPC (Qatar oil Company), KOC (Kuwait Oil Company) and ARAMCO (Arabian American Oil Company of Saudi Arabia). In the 1950’s, the producer countries share of petroleum revenues increased significantly, but the profits of the majors were almost unaffected, thanks to fiscal advantages granted by their governments. Between 1958 and 1972, the profits of the 7 sisters progressed steadily from US$ 1.6 to US$ 4.5 billion, whereas the price per barrel dropped gradually. In 1973, those profits jumped to US$ 8 billion. Just after the petrol crisis, thanks to the vertiginous increase in prices, the 7 sisters made some US$ 17.5 billion in profits in 1974, from their production in the OPEC countries! The two decades following the turning point of the first petrol crisis are marked for the oil companies by income levels forced upwards by price increases and, at the same time, downwards by the continued increase in the producer states share of petroleum revenues. The progressive abandonment of the system of concessions resulted in large losses of money for the majors, compensated for, overall, by the increase in the barrel price and the development of trading activities (trading of crude and petroleum products). Thus, in 1985, the five American majors ed for 1/7 of the total profits of the Fortune 500 (a classification by Fortune, the economic magazine, of the leading 500 American companies in of income), that is to say about as much as before the 1974 petrol crisis. The 1980’s and 1990’s saw the introduction of a significant new parameter: the major rise in exploration and production costs, compensated to some extent by the size of the fields discovered. This rise was reflected in a significant increase in cost of “new” barrels of oil. As zones potentially very rich in oil became rarer: competition for them was exacerbated and the states involved took advantage of the situation (all’s fair in love and war!) to obtain “bonuses” of several hundreds of millions of dollars at the time of the allocation of permits. Consequently, a lot of the small and medium sized oil companies were taken over, since they lacked sufficient available capital to finance the renewal of their reserves by exploration that had become very costly.


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As for the largest companies, the majors, a wave of “mega mergers” initiated in 1984 (the merger of Gulf and Chevron) and culminating at the end of the 1990’s, caused an upheaval in the petroleum sector, giving birth to 5 giants: Exxon/Mobil (Standard Oil came back!), Royal Dutch Shell (the only one that did not merge with another company), BP/Amoco (today BP), Chevron/Texaco and TotalFinaElf (today Total). The oil companies continue to earn large profits. This money could be used in part to finance energy re-conversion in developed countries. The European companies have received the message: BP with solar energy, the new world leader in photovoltaic production; Shell with the biomass, solar and wind energy, whose declared objective was to hold a 10% market share in renewable energies in 2005; Total with the design and marketing of photovoltaic systems and investments in other renewable energies (wind, wave energy …).

2.11.2.2. National oil and gas companies Many of the major oil and gas producing countries possess their own national company, charged with the responsibility of defending the petroleum interests of the country. In many cases, in particular in the OPEC countries, the national company has the exclusivity, or virtually so, of petroleum production in the country: Country OPEP

Society

The state’s share of the society

Algeria

Sonatrach

100%

Saudi Arabia

Aramco

100%


ADCO/DPC

60 % / 100 %

Indonesia

Pertamina

100%

Iran

NIOC

100%

Iraq

INOC

100%

Kuwait

KPC

100%

Libya

NOC

100%

Nigeria

NNPC

100%

Qatar

QGPC

100%

Venezuela

PDVSA

100%

Table 11: National oil and gas companies Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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In the non-OPEC countries, all types of arrangements exist in the oil sector, from the national state company, which is the sole owner and operator of oil resources (for example PEMEX in Mexico), to countries where the main production activities are delegated to the major foreign companies within the framework of production sharing contracts or, more rarely today, of concessions (Gabon, Cameroon …). In most of the rich countries, oil production is entirely in the hands of the private sector (for example the United States).


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2.12. Production and consumption statistics of oil and gas 2.12.1. Oil The major oil consumer countries in 2003 were the following: Country

Consumption 2004 103 b/d

Variation of the consumption / 10 years

Consumption per inhabitant (barrels/year)

United States

20 731

17%

25,4

Canada

2 294

30%

25,9

Mexico

1 970

2%

6,7

Brazil

2 140

28%

4,2

Venezuela

560

27%

7,7

2 650

–8%

11,7

1 977

6%

11,9

Italy

1 881

1%

11,8

England

1 827

0%

11,2

Spain

1 573

41%

13,3

Holland

947

24%

21,2

Turkey

683

26%

3,4

Belgium

641

26%

22,5

Russia

2 770

– 13 %

7,1

Saudi Arabia

1 845

43%

27,4

Iran

1 510

34%

7,9

Egypt

590

32%

2,9

South Africa

502

22%

3,9

Japan

5 353

–4%

15,3

China

6 400

102%

1,8

India

2 450

73%

0,8

South Korea

2 149

17%

16,4

Indonesia

1 200

54%

2

Taiwan

965

46%

14,9

Australia

877

12%

15,8

Malaysia

515

36%

7,4

Table 12: The major oil consumer countries in 2004 It comes as no surprise, that the principal consumer countries are the developed countries in North America, Europe and Asia. The champions of oil consumption: the United States. With a little less than 5% of total world population, they consume a quarter of all the oil produced each year. And their consumption is not slowing down: +16 % in the 10 years from 1993 to 2003, approximately the world average. Among the developed countries, we have, on the one hand, the high-consumption-perinhabitant countries (the United States, Canada, the Netherlands and Belgium) and on the other hand the countries with more reasonable consumption habits, like the major Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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European countries, where each inhabitant consumes on average half as much oil as in the high per inhabitant consumption countries. In Asia, consumption is rocketing. China has almost doubled its consumption in the last 10 years and will certainly not stop there. During the same period, the total consumption of the Asia/Pacific zone has overtaken that of the North American zone, with an increase of 39% on average over the 10-year period. Asia has become the new oil giant. But who can blame these developing countries for wanting to offer their populations the same comforts as those experienced by the populations of the rich countries? Even more so, because on average, a Chinese person consumes 15 times less oil than an American and an Indian 30 times less! The major oil producing countries in 2004 were the following: Country

Production 2004** 103 b/d

Variation of the production / 10 years

Maxi. Year of production

United States

7 228

-19%

1970

Mexico

3 825

26%

On the increase

Canada

3 056

37%

On the increase

Venezuela*

2 737

-1%

1997

Brazil

1 539

220%

2003

Argentina

797

13%

1998

Columbia

533

18%

On the increase

Ecuador

530

45%

On the increase

Norway

3 189

15%

2000

England

2 017

-22%

1999

Russia

9 261

44%

On the increase

Kazakstan

1 221

288%

On the increase

Saudi Arabia*

10 411

12%

On the increase

Iran*

4 106

11%

On the increase


2 757

13%

On the increase

Iraq*

2 027

-31%

1989

Kuwait*

2 506

17%

On the increase

Oman

757

-7%

2000

Qatar*

1 033

87%

2003

Nigeria*

2 329

21%

On the increase

Libya*

1 583

10%

On the increase

Algeria*

1 969

39%

On the increase

Angola

1 052

77%

On the increase

Egypt

708

-34%

1996

China

3 485

19%

On the increase

Indonesia*

1 169

-27%

1996

Malaysia

835

17%

On the increase

India

811

16%

On the increase

Table 13: The major oil producing countries in 2004 * Member countries of OPEC (Organisation of Petroleum Exporting Countries) ** y compris les condensats extraits du gaz naturel Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Until now, it has been possible for the increase in oil consumption to be compensated by an equivalent increase in production, even if certain tensions are starting to appear, as indicated by the increase in crude prices in 2004/2005. The countries which have made the biggest efforts in of production over the last 10 years have not been those belonging to OPEC (the Organisation of Petroleum Exporting Countries), which, with 80% of world reserves, produced only 37% of the oil extracted world-wide in 2003. Overall, OPEC production has even slightly decreased. There are two main reasons for this: In 1982, following a very violent reaction to the oil crisis, crude prices decreased substantially. That same year, OPEC decided to introduce its quota policy: that is to say, to allocate to each of its crude production volumes that could not be exceeded; the aim being to control extraction and hence prices and thus to preserve reserves for future generations. Overall, this policy has worked efficiently. It has allowed OPEC to dig less into its reserves than the non-OPEC countries, whilst ensuring relative price stability. Some OPEC countries possess very large reserves, in particular those on the Arabian Peninsula together with Iraq, but their production capacities have changed very little over the last 20 years. Increasing capacity would require very heavy investment, which, for the moment, has not been undertaken. As a result, for most of these countries, their maximum production year was at the end of the 1990’s. Conversely, exploration and development of new fields has significantly progressed in several non-OPEC zones (around the Caspian Sea, in the Atlantic deeps of Brazil and Angola, …). Other countries, whether of OPEC (Indonesia) or not (the United States, Norway, United Kingdom, Egypt), have seen their production levels drop over the last 10 years or even since the end of the 1990’s. For them, it is a case of declining reserves: these countries have probably already attained their production peak (1970 in the United States, 1996 in Indonesia and in Egypt, 1999 in the United Kingdom and 2000 in Norway) and will never be able to exceed it in the future. Their production levels will gradually decrease in the coming years. These countries have without any doubt attained their local Hubbert Peak.


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2.12.2. Gas The major gas consumers in 2004 were the following: Country

Consumption 2004 (Gm3)

United States

635

Canada

96

Mexico

50

Argentina

38

England

98

101

Italy

81

Holland

51

45

Russia

454

Ukraine

86

Uzbekistan

50

Iran

86

Saudi Arabia

66


40

Egypt

31

Japan

84

Indonesia

37

China

38

Malaysia

33

Thailand

30

Table 14: The major gas consumers in 2004 As for oil, the major gas consumers are the developed countries, as well as a number of developing countries that possess a significant production capacity and a large population (Iran, Egypt, Uzbekistan …). Gas consumption is increasing steadily each year, even more rapidly than oil since it progressed by 24% over the 10 years from 1993 to 2003.

The main gas producing countries in 2004 were the following: Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Country

Production (billions of m3/year)

United States

531

Canada

184

Mexico

41

Argentina

45

Trinidad-and-Tobago

28

Venezuela

27

England

96

Holland

86

Norway

83

Russia

634

Turkmenistan

59

Uzbekistan

60

Iran

84

Saudi Arabia

66


46

Qatar

39

Algeria

80

Egypt

33

China

41

Indonesia

75

Malaysia

62

Australia

37

India

28

Pakistan

27

Table 15: The main gas producing countries in 2004 As is the case for oil, the Middle East possesses major gas reserves (41% of world reserves). On the other hand, its production remains limited (10% of world production). The major consuming countries of North America and Europe are drawing on their own reserves, partly because the transport of gas is proportionally more expensive than that of oil. It is therefore less interesting to bring gas from distant locations.


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2.13. The future of oil and gas The future scenario for oil and gas can be developed from the statistics of world reserves.

2.13.1. Oil Let us first take a look at the figures for oil reserves by country and by region as at the 1st of January 2005. The figure for reserves, expressed in number of years equivalent, is calculated by dividing total reserves by the 2004 production level. Throughout we are talking of proven reserves only. Country

Reserves (billions of barrels)

Years of reserves

United States

21,4

11

Mexico

14,6

12

Canada

5

6

Venezuela*

77,2

82

Brazil

10,6

20

Ecuador

4,6

24

Norway

8,5

8

England

4,5

7

Russia

60

19

Kazakstan

9

24

Azerbaijan

7

62

Saudi Arabia*

261,9

79

Iran*

125,8

86

Iraq*

115

157

Kuwait*

102

118


97,8

108

Qatar*

15,2

53

Oman

5,5

20

Libya*

39

71

Nigeria*

35

41

Algeria*

11,8

19

Angola

5,4

14

China

18,3

14

India

5,4

22

Indonesia*

4,7

12

Table 16: Oil reserves by country and by region as at the 1st of January 2005 * Member countries of OPEC (Organisation of Petroleum Exporting Countries) Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Thus it can be seen that several Middle Eastern countries, all of OPEC, together hold 2/3 of worldwide oil reserves, with a special mention for Saudi Arabia which alone possesses ¼ of these world reserves. OPEC in total holds 80% of world reserves, whereas, at the moment, it only produces a little less than 40% of the oil consumed throughout the world. Naturally this translates into a very high number of years equivalent, often exceeding 100 years. Logical conclusion: the Middle East, already a strategic zone for oil production, is going to become more and more so as years go by. Total oil reserves today represent 40 years or so of consumption. But this has been the case for several decades. That means that, until now, the oil consumed has been replaced by new reserves (exploration discoveries, improvements in recovery from existing fields, increases in oil prices making development of expensive oil fields more economic). At the beginning of the 21 st century, we are at a turning point. Exploration and discovery of new fields is not capable by itself of renewing reserves. Even if we can still count on improvement in recovery rates, oil will be exhausted several decades from now. But before this point of total exhaustion, the threat of shortages in the immediate future hangs over us, that is to say in the next 5 years for the pessimists and the next 25 years for the more optimistic: supply will no longer be capable of responding to an everincreasing demand: we will have attained the Hubbert Peak for oil. The “post-oil” era, therefore, should be of concern to us, even today. Of immediate importance is the rapid development of replacement sources of energy allowing the oil that remains to be reserved for “noble” uses (the manufacture of plastics, synthetic fibres …) and above all the achievement of very significant energy savings, particularly in the major consumer countries.


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2.13.2. Gas Gas reserves as at the 1st of January 2004: Country

Reserves (billions of m3)

N° of years of reserves

United States

5 452

10

Canada

1 603

9

Argentina

605

13

Bolivia

680

68

Trinidad and Tobago

733

26

Venezuela

4 276

158

Holland

1 756

20

Norway

2 085

25

England

589

6

Russia

47 578

75

Ukraine

1 121

59

Azerbaijan

850

170

Kazakstan

1 841

88

Turkmenistan

2 011

34

Uzbekistan

1 875

31

Iran

26 621

317

Iraq

3 115

> 1000

Kuwait

1 572

157

Oman

829

49

Qatar

25 771

661

Saudi Arabia

6 655

101


6 007

131

Algeria

4 545

57

Egypt

1 657

50

Libya

1 473

184

Nigeria

4 984

227

Australia

821

22

China

1 510

37

India

854

31

Indonesia

2 557

34

Malaysia

2 124

34

Pakistan

760

28

Table 17: Gas reserves as of the 1st of January 2004 Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Gas is a little more evenly spread throughout the world than oil. However, the Middle East and the CIE group of countries (Community of Independent States, set up following the dismemberment of the USSR) together hold almost three quarters of world reserves. At the same time, the domestic reserves of the United States and China have been reduced to several years of production. As for oil, a major bout of geostrategic fisticuffs is in preparation for access to gas reserves! There are 65 years of world reserves, based on 2003 demand – the same thing as saying that the problem of the future of gas is the same as that of oil, but with a lag of twenty years of so. This lag applies not only to the exhaustion of reserves, but also to the Hubbert Peak for gas that is expected to arrive 15 - 20 years after that of oil. Gas therefore provides us with breathing space that must be used in the best way possible to prepare for the “posthydrocarbon” era.


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3. TOTAL Presentation Total is a multinational energy company committed to leveraging innovation and initiative to provide a sustainable response to humankind’s energy requirements. The fourth largest publicly-traded integrated oil and gas company* and a world-class chemicals manufacturer, Total operates in more than 130 countries and has over 95, 000 employees. In addition to conducting our business according to the highest standards of professional behavior, we maintain an ongoing commitment to transparency, dialogue and respect for others. We are strategically dedicated to meeting the challenges faced by all our businesses when developing natural resources, protecting the environment, integrating our operations into host country cultures, and dialoguing with civil society.

3.1. Total at a Glance (2005 figures) A global multi-energy provider World’s fourth-largest integrated listed oil and gas company Largest market capitalization on the Paris Bourse and the eurozone: €130.5 billion at December 31, 2004 95, 000 employees (1) Operations in more than 130 countries Exploration and production operations in 41 countries Producer in 29 countries More than 500,000 shareholders 2005 sales: €143.2 billion Total’s operations span the entire oil and gas chain, from exploration, development and production to midstream gas, refining and marketing, and crude oil and petroleum product trading and shipping. Total is also a world-class chemicals producer, as well as having interests in coal mines, cogeneration and power generation. In addition, Total is helping to secure the future of energy through its commitment to developing renewable energies, such as wind, solar and photovoltaic power. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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A leader in each of the core businesses: 2005 key indicators Exploration & Production: Production: 2.49 million barrels of oil equivalent per day Reserves: 11.1 billion barrels of oil equivalent as of December 31, 2005*** Refining & Marketing: No. 1 European Refiner-Marketer and No. 1 in Africa Refining capacity: approximately 2.7 million barrels per day Retail network: nearly 17,000 service stations Sales: approximately 3.9 million barrels per day Brands: TOTAL, Elf, Elan, AS 24 Chemicals: Total is one of the world’s largest integrated producers and a European or global leader in each of our markets - Petrochemicals and Fertilizers, Specialties. Predominantly European (75%), held in particular by investors from (33%), the United Kingdom, , Switzerland and Belgium. Strong shareholder base in North America. Institutional shareholders (87%), employees (4%) and other individual shareholders (9%). Total S.A. is a French société anonyme (limited company) created in March 1924. Total is listed on the CAC 40, Dow Jones Stoxx 50, Dow Jones Euro Stoxx 50 and Dow Jones Global Titans 50 indices and the FTSE4Good, DJSI World, DJ STOXX SI, FTSE ISS CGI and ASPI Sustainable Development and Governance indices. Senior Management, as of February 14, 2007: Chairman of the Board: Thierry Desmarest Chief Executive Officer: Christophe de Margerie .


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3.2. Promoting Progress and the Future of Energy The technical skills and expertise of our 95, 000 employees are our most important competitive advantage. United by a shared culture, these exploration, production, refining, marketing and chemicals specialists have made Total a sound, resilient enterprise, focused on our core businesses and enjoying unmatched growth opportunities. Growing Production to Keep Pace with Energy Demand Total is the world’s fourth-largest oil and gas producer, with production of 2.49 million barrels of oil equivalent a day and proved reserves of 11.1 billion barrels of oil equivalent in 2005. Our portfolio of assets is evenly distributed among the world’s leading petroleum provinces. We are also a world leader in gas production and marketing and in power generation. Moreover, we are actively preparing for the future by investigating renewable energies such as wind power and photovoltaics (solar power).

3.3. Customer-Focused Brands With almost 17,000 service stations worldwide, Total is the market leader in western Europe and in Africa. We also have a strong presence in the Mediterranean Basin and are moving into growth markets in Southeast Asia. Our marketing operations leverage not only TOTAL our flagship brand, whose solid reputation is based on quality service and local presence, but also our strategically positioned Elf and Elan brands. Total is dedicated to setting the benchmark not only for business and financial performance, but also for compliance with the most demanding standards of corporate social responsibility. Accordingly, we are continuing to develop a proactive ethical process to the ability of all internal and external stakeholders to express our values.


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3.4. Total’s values Total is home to widely diverse identities and cultures that share our core values: Professionalism. Respect for employees. Ongoing concern with safety and environmental protection. Contributing to the development of host communities. Our values and principles are set out in the Code of Conduct, which underpins our ethical process. The Code formally recognizes our commitment to uphold the principles of the 1948 Universal Declaration of Human Rights, the fundamental conventions of the International Labour Organization, the OECD Guidelines for Multinational Enterprises and the principles of the United Nations Global Compact.

3.5. Implementing a Proactive Ethical Process Within the Group, the Ethics Committee is actively implementing a proactive ethical process built around employee awareness and assessment of our ethical performance. Awareness: Publicizing and promoting the Code of Conduct’s values and principles inside and outside the Group and ensuring they are understood and applied. The Ethics Seminar initiative was launched in early February 2003 to familiarize employees worldwide with our values and our ethical vision of business. Convened in and abroad, the seminars gather several hundreds of Group employees every year. In addition, to highlight our values and principles outside the Group, we routinely require our business partners, subcontractors and suppliers to establish their own codes of conduct, if they have not already done so, and to respect ours. Assessing ethical performance. In close cooperation with UK-based GoodCorporation, we developed a grid of 84 evidence points to monitor and assess the application of our Code of Conduct in all our units, plants and subsidiaries. The resultant "ethical profile" of audited units is based on input from stakeholders, including employees, shareholders, customers, suppliers and subcontractors, industrial partners and host communities, who can also consult it. Profiling is performed by GoodCorporation consultants in partnership with leading audit firms, which is a guarantee of independence and efficiency.


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The Ethics Committee also acts in an advisory capacity, assisting employees in resolving ethical problems encountered in the course of their work. All requests are confidential and can be made outside the normal chain of management.

3.6. Corporate Social Responsibility As a global leader in the energy and chemicals industries, Total is fully aware of its corporate social responsibility, which is assumed through an assertive sustainable development process, based on constructive dialogue, discussion and direct application of our ethical values. Proactive policies are in place in the areas of safety, environmental stewardship, preparing for the future of energy, human resources management, and open dialogue with civil society stakeholders. The fourth Corporate Social Responsibility Report, Sharing our Energies, published at the same time as the 2005 Annual Report, discusses our corporate social responsibility initiatives. The CSR Report will be updated annually.

3.7. Strategy Our goal is to continue to pursue our strategy of profitable growth, under which our business continues to expand while respecting the environment and taking into the interests of present and future generations. The Company’s strategy is: grow its hydrocarbon exploration and production activities throughout the world, and reinforce its position as one of the global leaders in the natural gas and LNG markets; develop and adapt its refining system and consolidate its position in the marketing segment in Europe, while expanding its positions in the Mediterranean basin, African and Asian markets; rationalize and develop its chemicals portfolio by giving priority to improving profitability and to creating a new decentralized entity encoming the Vinyl Products, Industrial Chemicals and Performance Products activities. This entity, named Arkema, was officially created on October 1, 2004 and became a standalone entity on May 18, 2006 following the Company’s shareholders vote on the proposed spin-off on May 12, 2006, thereby allowing the Group to focus its Chemicals activities on petrochemicals (base chemicals and polymers) and specialty chemicals.


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3.7.1. Upstream Strategy The Upstream business encomes oil and natural gas exploration, development and production, along with our coal, gas and power operations. Exploration and Production has activities in 41 countries with production in 29 of these countries. Our main production regions are the North Sea, Africa and the Middle East, followed by Southeast Asia and North and South America.

Figure 97 : Liquids and gas production by region (kboe/d)

Total has been active in the downstream segment of the gas chain for 60 years (mainly in production). We are also a leader in the gas market, with strong positions in liquefied natural gas (LNG) and fast-growing operations in gas distribution and power generation from combined cycle gas plants and renewable energies in Europe, the Middle East and Latin America.

Figure 98 : Liquid and gas reserves (Mboe)

3.7.2. Downstream Strategy

The Downstream segment conducts Total's refining, marketing, trading and shipping activities. . Figure 99 : Refined product sales (kb/d) including Trading

Figure 100 : Refining capacity (kb/d)) Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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3.7.3. Chemical segment The Chemicals segment is organized into the Base Chemicals sector, regrouping petrochemicals and fertilizers and the Specialties sector, which includes the Group's rubber processing, resins, adhesives and electroplating activities. Figure 101 : 2005 Sales by sector

The business is a preferred partner to a broad array of industries, with products covering markets as diverse as automobiles and transportation, packaging, construction, sports and leisure, health and beauty care, water treatment, paper, electronics and agriculture.

Figure 102 : Résultat opérationnel net ajusté 2005

3.7.4. Shareholder Base The Group has approximately 520,000 shareholders, of whom 75% are European, primarily from (33%), the United Kingdom and Belgium. There is also a growing number of German, Dutch, Swiss and Irish shareholders. Figure 103 : Shareholder base by region

In addition, the Group has a strong shareholder base in North America.

Figure 104 : Shareholder base


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3.7.5. A global group with European roots At end-2005, Total had 112,877 employees across its consolidated companies *. Historically, Total is a European company -at end 2005, about 79,000 employees worked in Europe- but our geographic expansion has stepped up significantly in the last 15 years in Latin America, Africa, The Middle East and Asia. We now operate in more than 130 countries.

Figure 105 : Headcount by region

Figure 106 : Répartition des effectifs par zone géographique

3.8. Focusing on broader employee diversity In 2003, a global diversity process was launched to provide a corporate framework for actions already being implemented in the businesses. The process is primarily designed to increase the percentage of non-French nationals and women hired and their numbers in the ranks of senior management. Its other aim is to promote greater mobility of women and local managers between jobs and countries.


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3.9. Group Organization 3.9.1. The Executive Committee and the Management Committee The Executive Committee (COMEX) is the primary decision-making body, implementing the Company's strategy defined by the Board of Directors and authorizing related investments. This committee is made up of: Christophe de Margerie, Chairman (Chief Executive Officer of Total) François Cornélis, Vice-Chairman (President of Chemicals) Michel Bénézit, President of Refining & Marketing Robert Castaigne, Chief Financial Officer Yves-Louis Darricarrère, President of Exploration & Production Jean-Jacques Guilbaud, President of Human Resources and Corporate Communications Bruno Weymuller, President of Strategy & Risk Assessment The Management Committee (CODIR) facilitates coordination between the various units of the Company, monitors the results of the operational Divisions and reviews the activity reports of the functional Divisions.The committee includes, in addition to the of the COMEX, 22 Executive Officers from the different functional and operational Divisions. Holding - Patrick de la Chevardière, Jean-Pierre Cordier, Yves-Marie Dalibard, Peter Herbel, Jean-Marc Jaubert, Jean-Michel Gires, Ian Howat, Jean-François Minster. Upstream - Philippe Boisseau, Jean-Marie Masset, Charles Mattenet, Patrick Pouyanné, Jean Privey. Downstream - Alain Champeaux, Alain Grémillet, François Groh, Jean-Jacques Mosconi, Eric de Menten, André Tricoire. Chemicals - Pierre-Christian Clout, Françoise Leroy, Hugues Woestelandt. ** COMEX and CODIR composition at February 20, 2007


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Exploration & Production Miscellaneous Courses Introduction to the World of Oil & Gas

Figure 107 : Organization Chart

3.9.2. Mission of the Board of Directors The mission of the Board of Directors is to determine the strategic vision for the Group and supervise the implementation of this vision. With the exception of the powers and authority expressly reserved for shareholders and within the limits of the company’s stated purpose, the Board may address any issue related to the operation of the Company and make any decision concerning the matters falling within its purview. Within this framework, the Board: appoints the corporate officers responsible for managing the Company and supervises their management; defines Total’s strategy; Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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discusses and debates major transactions under consideration by the Group, according to the criteria determined by the Board; receives information on any significant event pertaining to the operations of the Company; oversees the quality of the information supplied to shareholders and the financial markets through the financial statements that it approves and the Registration Document, or when major transactions are conducted; calls and sets the agenda of Shareholders' Meetings; prepares a list each year of the Directors it deems to be independent under generally accepted corporate governance criteria; and performs audits and inspections as it may deem appropriate. Specifically, with the assistance of its specialized committees, it ensures the following: proper delegation of powers and authority within the Company as well as proper exercise of the respective powers and responsibilities of the Company’s governing bodies; that no person has the power to bind the Company without proper supervision and control; the proper functioning of the organizations responsible for internal control and the satisfactory execution by the external auditors of their missions; and the proper functioning of the committees that it has created. The Board of Directors meets at least four times a year and whenever circumstances so require.

3.10. Total, A Multicultural, Richly Diverse Group Today’s Total was created by two successive mergers - first of Total and Belgium’s PetroFina to create TotalFina, then of TotalFina and Elf Aquitaine to create TotalFinaElf. As such, the Group, renamed Total in May 2003, is the proud heir to a prestigious oil and gas legacy dating back to the 1920s. The new Total is a vibrant blend of the cultures and expertise of all three companies, whose vast technological and human capital is being leveraged to maintain its position as a top-tier global energy supplier.


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3.11. Total history 1920-1939: promising beginnings... 1923: Raymond Poincarré, President of the Counsel of the Third Republic, charges Ernest Mercier with the task of creating the CFP. Figure 108 : Raymond Poincarré, President of the Counsel of the Third Republic 1924: The French Oil Company is created (CFP: Compagnie française des Petroleums)

Figure 109 : Ernest Mercier: 1st President of the CFP from 1924 to 1940

1927: First discovery of a producing reservoir close to Kirkuk in Iraq by the Iraq Petroleum Company (IPC). The CFP is one of the first shareholders. Figure 110 : The first eruption at Baba Gurgur

1929: First quotation of CFP shares on the Paris stock exchange. The French Refining Company (CFR: Compagnie française de raffinage) is created by the CFP with the participation of the State and several independent French distribution societies; amongst them « Desmarais Frères », « Lille Bonnières-Colombes » and the « Société française des Carburants ». The CFR is authorized by the State to refine 25 % of the distribution societies’ demands.

1930: Second convention between the French State and the CFP.

1933: Inauguration of the first CFP refinery at Gonfreville, close to Le Havre. Starting with 900 000 tons of crude oil per year, the production capacity of the refinery in Normandy reaches 15, 9 millions of tons. Today, this refinery is one of the most important in the Group.


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1935: Inauguration of the refinery in Provence. This second refinery of the Group, at Mede close to Martigues, has grown at the pace of the oil market. Its annual production capacity has, since then, evolved from 400 000 tons of crude oil at start-up, to 6, 20 millions of tons today.

1936: Exploration begins in Abu Dhabi.

1937: The Emile Miguet is commissioned. This tanker, weighing 21 500 tons, the largest tanker in the world at the time, was exploited by the Naval Petroleum Company, a subsidiary of the CFP. Figure 111 : The Emile Miguet tanker

1939: The Iraq Petroleum Company (IPC) develops its activities in Abu Dhabi. Today, it’s in this country that the presence of Total in the Middle East is the strongest and the most diverse.

1940-1959: A brand is born 1947: The French oil distribution Company in Africa (CFDPA: Compagnie française de distribution des pétroles en Afrique) is created. This society was the first distribution subsidiary of the Group. In 1991 this society becomes Total Overseas.

Figure 112 : A CFDPA pump in the 1950s

14 July 1954: The Total brand is launched. With this brand, the CFP starts its conquest of new distribution markets in other countries such as Europe, English speaking, African countries and Australia. The French Petroleum Company of Canada is created; later called Total Oil (North America) in 1970.


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1954: First logo Figure 113 : 1st Total logo

Figure 114 : Sully Relay, at Nogent le Rotrou, in 1955

Figure 115 : General de Gaulle visiting Hassi Messaoud

1960-1979: exploration, discoveries and production... 1960: First TOTAL stations in Great Britain. The network corporation gives birth to Total Oil Great Britain (TOGB).

1962: Umm Shaïf is put into production in Abu Dhabi. This start-up constitutes the Group’s first offshore field start-up. Birth of the TOTALGAS brand. This subsidiary, specialized in the distribution of liquefied petroleum gas (LPG), is today represented in 30 countries across the world.

1968: The first production-sharing contract is signed in Indonesia (in Borneo). The research efforts bring forth the permit of the Mahakam and the discoveries at Bekapaï (1972) and Handil (1974). Numerous others will follow. Total Chemicals is created in view of broadening CFP activities, particularly in the petrochemical sector. Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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1970: Total Petroleum is created, North America, TOP(NA). The trade centre of this subsidiary is found in Denver, Colorado. TOP(NA) will exploit 4 refineries and a network of over 2 200 gas stations in the United States.

1971: The Frigg gas reservoir, in the North Sea, is discovered. This reservoir was put into production in 1977. Total Oil Marine is the operator of the transport system and of the Saint-Fergus terminal. ATO Chemicals, ATO Plastics and ATO Packing are created. ATO (Aquitaine Total Organico) extends the CFP’s chemical activities to plastics, polystyrenes, PVC and Rilsan.

1973: Quotation of CFP shares on the London Stock Exchange.

1974: Abu Al Bukoosh (ABK) is put into production. Total (75 %) is the field operator, the first in the Gulf to be entrusted to a French society. ABK is a display of the expertise of the Group in the region. Figure 116 : ABK The refining capacities are reinforced. The start-up of the refineries at Flanders in , and of the refineries in Vlissingen in Holland brings Total’s world refining capacity to 69 millions of tons. Hutchinson-Mapa s the Group: The major share in the Hutchinson-Mapa capital constitutes the most important stage of the Group’s diversification. The subsidiary will be 100 % fused with Total in 1991.

Figure 117 : Hutchinson Research Centre at Montargis


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1975: The Alwyn field, in the North Sea (British part), is discovered. More than 20 years after the discovery, and 10 years after the field was put into production, new methods have permitted to raise and equivalent of 300 millions of barrels of oil, the first reserves of the zone.

1977: The Frigg gas reservoir is put into production.

1978: Exploration of the offshore basin at Tierra del Fuego, in Argentina, begins. Twenty years later the exploration continues in this zone, with, in particular, offset drilling. The AS3 well, with a horizontal displacement close to 8 000 meters is one of the longest ever made in the world.

1980-1999: the expansion 1980: Chloé Chemicals is created. The acquisition by ATO Chemicals of the petrochemical assets from Rhône-Poulenc, especially in the production of chlorine, gives birth to Chloé Chemicals.

1982: Drilling in the deep Mediterranean through 1 714 m of water: the record at the time. Pioneers in drilling at great depths, with the "dynamic positioning" vessels, Total will drill several exploration wells in the deep offshore of Gabon (at a water level comprised between 1 000 and 3 000 meters) in 2000 and 2001.

1983: Participation in ATO’s and Chloé Chemicals’ activities is discontinued. The restructuration brought on by public powers drives the CFP to disengage from chemicals and to cease their activities with ATO Chemicals and Chloé.

1987: The development of the Hidra field is launched; the first to have been developed by Total in Argentina. Today, the Group is the first foreign producer of oil and gas in this country.

1988: Acquisition of CSX Oil & Gas, in the United States.


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1989: Spontex takeover. Hutchinson’s share, of 34 %, in the Spontex group permits the Group to expand the diversification that had already been formed with Hutchinson Mapa.

1990: Acquisition of the chemical assets from the Orkem specialties. The ink, adhesive, resin and paint subsidiaries at Orkem the industrial rubber industry and the consumer products from Hutchinson to form a large "Specialty Chemicals” at the heart of Total.

1991: Capital rises and Total shares are introduced to the New York Stock Exchange. The Cusiana oil field in Columbia is discovered. This field is one of the most important ones discovered in the world in the last few years. Its production, added to that of the neighbouring field in Cupiagua, reaches close to 460 000 b/y towards the end of 1998. The Peciko oil field, Indonesia is discovered. The "Premier" stations’ concept is launched. Figure 118 : “Premier” stations’ concept This concept modernizes and equalizes the design of the Total gas stations everywhere in the world. This strengthens Total’s position on the market.

1992: Division of the nominal by 4 (split) of the Total shares. The French government reduces its direct share in Total from 31, 7 % to 5, and 4 %.

1993: The capital reserved for Cogema, the « Société générale » and the « Lyonnaise des eaux » rises. 10, 8 % acquisition of interests in the capital of Cogema. Sale of uranium assets in Cogema.

The Bongkot gas field in Thailand is put into production.


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Beginning with the third development phase, the capacity of the installations has been brought to 3, 5 to 5, 5 billions of m3 per year. In 1998, Bongkot produced about a third of the gas needs in Thailand

1994: Total capital opened to the Group’s employees. The Dunbar (England) and Cusiana (Columbia) fields are put into production. Figure 119 : Dunbar Field, North Sea (British part)

1995: Total leads the gas liquefaction project in Yemen. Development contract for the offshore tanker fields in Sirri A and E in Iran. Paint activities are increased. The fusion with Euridep, a subsidiary specialized in paints, belonging to the British Kalon society of which Total becomes the major shareholder, is formed. Kalon occupies the second position on the decorative paints market in Europe.

1996: The State sells 4 % of their Total shares; bringing their acquisition of interests to 0, 97 %. Production-sharing contract for the Tin Fouye Tabankort (Algeria) field development. Start-up of the refinery at Dalia in China. This refinery, with a capacity of 100 000 b/y is the first in China to associate a foreign partner. Several important acquisitions for Hutchinson. The acquisitions of Fayette Tubular Products, National Stillman in the United States, Vincke in Spain and Cesari in Brazil permit Hutchinson to develop their markets and to the globalization of their client’s production fields.

1997: The South Pars field (Iran) development contract is signed. Total (40 %) is the operator of this gas field, one of the largest in the world. TOP(NA) assets are discontinued The discontinuance of the TOP(NA) assets in the Ultramar Diamonds Shamrock society marks Total’s retreat from refining and distribution activities in the United States.


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1998: The Sincor project, Venezuela, is launched (Total 47 %) The project focused on the exploitation of the extra-heavy oils in Venezuela.

1999: Total and PetroFina are fused. The Group takes the name « TotalFina ».

2000-2003: the beginning of a new era 2000: TotalFina and Elf Aquitaine are fused Birth of TotalFinaElf, 4th oil traders in the world. Goal: create a world leader in oil trade, a more expanded, solid, competitive Group, capable of competing with the giants of the sector. Figure 120 : Thierry Desmarest, President and general Manager of the Group since 1995

2003: TotalFinaElf becomes Total. With these two fusions accomplished, the Group proves their willingness to respond effectively by their innovation and their actions for the energy needs of man. Figure 121 : TOTAL logo


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3.12. Logo history Total is the name of the Group. It pertains to a global approach and engagement. It has the same meaning and an identical pronunciation in numerous languages around the world. Total is also the name of our major brand. Created in 1954, it has become a well-known name which inspires trust amongst our public and clientele. The network modernization has been achieved. Total has evolved towards a more modern, powerful and dynamic brand.

The evolution of the logo: 1953: The superiors from the French Refining Company (Compagnie Française de Raffinage) lodge a new brand, called "Total", with the clerk of the commercial court in Paris.

1954: The 14th of July is chosen to launch the “Super Carburant Total” brand: the first Total logos underline its national vocation. Figure 122 : TOTAL logo 1954 The name, inscribed in red on white, is inserted between two blue triangles. Commercial activities develop: products sponsored by the Total brand are launched on various markets.

1955: On the dispensing units, a logotype represents this tricoloured symbolism: This is the famous red flame in a blue circle on a white background. Figure 123 : TOTAL logo 1955

1963: The blue / white / red logo adopts a less hostile form, baptized the “soap bar". Figure 124 : TOTAL logo 1963


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1970: Still tricoloured, the logotype is redrawn, with more emphasis on stability and solidity (larger characters, horizontal position) and reference to recent conquests (diagonals are abandoned). Figure 125 : TOTAL logo 1970

1982: New block-brand, enlarging the old connotation which is very patriotic: it symbolizes a synthesis between power - red vigorous and powerful typography, dynamics - diagonal bands and sympathy - warm orange. Figure 126 : TOTAL logo 1982

1991: In June the name of the commercial brand becomes the Group’s name which is known in the more than 80 countries where they operate.

1992: Without a change of spirit, the block-brand is rejuvenated by more nervous letters. The inside of the lettering is simple rand more dynamic: no more roundings. The horizontals are lighter and the space between the letters has been reduced. The bands are thinner: the logo is less closed and more legible. The colours are clearer. Figure 127 : TOTAL logo 1992

2003: In May of 2003, the Group adopts a new visual identity and a new logo, due to the two successive fusions with PetroFina and Elf Aquitaine. Figure 128 : TOTAL logo 2003


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4. YOUR SUBSIDIARY


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5. GLOSSAIRE


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6. FIGURES Figure 1 : Energy through the ages .....................................................................................5 Figure 2 : Nuclear energy ....................................................................................................7 Figure 3: View of the Eurostar. ............................................................................................9 Figure 4: Changes in world consumption (in % Mtoe) .......................................................10 Figure 5: World oil consumption 2004 ...............................................................................12 Figure 6: World oil production 2004 ...................................................................................12 Figure 7: World gas reserves in 2004 (Gm³ / year)............................................................14 Figure 8: Gas consumption in 2004 (Gm³ /year)................................................................15 Figure 9: Gas production in 2004 (Gm³ /year) ...................................................................15 Figure 10 : Coal .................................................................................................................17 Figure 11: World oil reserves on 01.01.2005 .....................................................................18 Figure 12: Electricity production from hydroelectric sources in 2004 (billions of kWh).......22 Figure 13 : Renewable energy sources .............................................................................25 Figure 14: The Hubbert peak .............................................................................................35 Figure 15 : Genesis of the Universe ..................................................................................46 Figure 16 : Plate tectonics .................................................................................................47 Figure 17: Scale of geological time....................................................................................48 Figure 18: Derrick in the setting sun (Italy). .......................................................................50 Figure 19 : The formation of a deposit ...............................................................................51 Figure 20 : Molecular structures of saturated hydrocarbons - CnHn+2 ................................53 Figure 21 : Molecular structure of branched saturated hydrocarbons................................53 Figure 22 : Molecular structure of an aromatic hydrocarbon CnHn .....................................54 Figure 23: The extra-heavy oil of Athabasca .....................................................................57 Figure 24 : The oil and gas chain.......................................................................................58 Figure 25: An anticlinal trap ...............................................................................................59 Figure 26: Salt dome trap.. ................................................................................................59 Figure 27: Fault trap. .........................................................................................................59 Figure 28: A view of the installations and petroleum equipment at Prudhoe Bay, in the National petroleum reserve of Alaska. ........................................................................61 Figure 29: Map showing sedimentary basins worldwide. ...................................................61 Figure 30: Map of the continental shelf ..............................................................................62 Figure 31: Map showing oil and gas regions worldwide.....................................................62 Figure 32: Map showing exploration and extraction in the North Sea................................63 Figure 33 : Seismic analysis on land and at sea................................................................64 Figure 34: View of the vibrator trucks at the time of a seismic operation, in the Kharyaga field in Arctic Russia. ..................................................................................................65 Figure 35: View of a geophone and a collection box at the time of a seismic operation. ...65 Figure 36: Workers in the marshes during a seismic data acquisition campaign (Gabon). 66 Figure 37 : Computerised 3D model of a natural gas reservoir..........................................66 Figure 38: Seismic acquisition at sea, in the Palanca oilfield (Angola). .............................66 Figure 39: view of the geovision (in 3d) room in the CSTJF ..............................................67 Figure 40: Meeting concerning the logs (geological sections) of the Peciko p13 oil at Balikpapan (Indonesia). ..............................................................................................68 Figure 41: A senior gelologist and the head of the geosciences department for activities on the oil field of al Khalij, at Doha, in Qatar....................................................................68 Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Figure 42 : Drilling..............................................................................................................69 Figure 43 : Proven reserves...............................................................................................70 Figure 44: Drilling site at Yariapo (Bolivia). .......................................................................71 Figure 45: Drilling site at Yariapo (Bolivia), after end of drilling..........................................72 Figure 46: The drill bit has very hard steel teeth or inserts. ...............................................72 Figure 47: Operators working on a drilling derrick on the Raissa, in the Mahakam delta (Indonesia)..................................................................................................................73 Figure 48: View of the scanner in the core-sample library at the Centre Scientifique et Technique Jean Feger in Pau (). .....................................................................74 Figure 49: Geologist working in the core-sample library of the Centre Scientifique et Technique Jean Feger in Pau () ......................................................................75 Figure 50: Overview of the PUQ (Production Utilities and Quarters) platform and of the Elgin-Franklin offshore platform during a storm (Scotland).........................................76 Figure 51: Principle of oil extraction in ocean deeps..........................................................78 Figure 52 : The various recovery mechanisms ..................................................................79 Figure 53: Dismantling the North East Frigg platform (Norway).........................................81 Figure 54: Drilling site at Yariapo (Bolivia). ........................................................................81 Figure 55: Drilling site at Yariapo (Bolivia), after end of drilling..........................................82 Figure 56: The Iranian tanker Iran Dena ............................................................................83 Figure 57: Map showing principal movements of oil worldwide in 2003 ( in millions of tonnes)........................................................................................................................83 Figure 58: Pipeline on land. ...............................................................................................85 Figure 59 : Oil pipelines and projects (1) ...........................................................................86 Figure 60: Gas pipelines and projects (2) ..........................................................................86 Figure 61: Map showing principal movements of gas worldwide in 2003 (in millions of cubic meters). ......................................................................................................................87 Figure 62 : The LNG chain.................................................................................................88 Figure 63: View of the Gasandes gas pipeline, a 460 km-long pipeline linking the Argentinian network to Santiago in Chili across the Andean mountain range.............89 Figure 64: An aerial view of the LNG plant of Bontang, with its storage tanks and loading quays for methane tankers. ........................................................................................89 Figure 65: Crude oil trading floor in Geneva (Switzerland). ...............................................90 Figure 66: Traders responsible for essence and naphtha operations on the trading floor in Geneva (Switzerland). ................................................................................................90 Figure 67: The refinery at Anvers (Belgium). .....................................................................91 Figure 68: Extra-heavy oil. .................................................................................................92 Figure 69: The crude oil refinery at Feyzin (). .........................................................92 Figure 70: Column of an atmospheric distillation plant in the Provence refinery at La Mède (). .....................................................................................................................93 Figure 71: Catalytic cracking plant with fluidised catalyst in the Donges refinery (). ...................................................................................................................................94 Figure 72: The desulphurisation plant in the Anvers refinery. ............................................94 Figure 73: Alkylation plant at the La Mède refinery (). ............................................95 Figure 74: Refining ............................................................................................................96 Figure 75: The refining process, from crude oil to the final product. ..................................97 Figure 76: CD-ROM case in polyethylene..........................................................................99 Figure 77: Example of derived products from the petrochemical industry: soles of sports shoes. .........................................................................................................................99 Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Figure 78: Usine Arkéma de Balan () qui fabrique les grands plastiques de notre quotidien. ..................................................................................................................100 Figure 79 : Petrochimistry ................................................................................................100 Figure 80: The polymerization reaction............................................................................101 Figure 81: Schematic representation of steam cracking. .................................................102 Figure 82: View of a steam cracker at the refinery at Feyzin ().............................103 Figure 83: View of the aromatic essence extraction plant (Feyzin, ).....................103 Figure 84: Diagram of the petroleum logistics chain. .......................................................104 Figure 85: Aerial view of the Gennevilliers depot (). .............................................104 Figure 86: Simplified cross section of an oil tank. ............................................................105 Figure 87: A hydrocarbon storage tank at the petroleum depot in le mans, with fire extinguishing system in the foreground ....................................................................106 Figure 88: Shot of the loading of a Total road tanker at the sprl petroleum depot at Hauconcourt ()...............................................................................................106 Figure 89: The different types of installation in the petroleum depot................................107 Figure 90: Loading of fuel in a depot and recovery of fumes in a storage tank................108 Figure 91: A night view of the relais de Chanterennes on the a10 motorway at Brie-SaintForge ()..........................................................................................................109 Figure 92: Cutaway view of a petrol engine. ....................................................................110 Figure 93: Shot of an employee at the Total service station at La-Chapelle-sur-Erdre (). ...................................................................................................................112 Figure 94: Schéma d'une station-service.........................................................................112 Figure 95: Petrol and diesel additives. .............................................................................113 Figure 96: Filling the fuel tank of a car in a Total service station near Lançon de Provence. .................................................................................................................................114 Figure 97 : Liquids and gas production by region (kboe/d) ..............................................137 Figure 98 : Liquid and gas reserves (Mboe) ....................................................................137 Figure 99 : Refined product sales (kb/d) including Trading..............................................137 Figure 100 : Refining capacity (kb/d)) ..............................................................................137 Figure 101 : 2005 Sales by sector ...................................................................................138 Figure 102 : Résultat opérationnel net ajusté 2005 .........................................................138 Figure 103 : Shareholder base by region.........................................................................138 Figure 104 : Shareholder base ........................................................................................138 Figure 105 : Headcount by region....................................................................................139 Figure 106 : Répartition des effectifs par zone géographique..........................................139 Figure 107 : Organization Chart.......................................................................................141 Figure 108 : Raymond Poincarré, President of the Counsel of the Third Republic ..........143 Figure 109 : Ernest Mercier: 1st President of the CFP from 1924 to 1940 ......................143 Figure 110 : The first eruption at Baba Gurgur ................................................................143 Figure 111 : The Emile Miguet tanker ..............................................................................144 Figure 112 : A CFDPA pump in the 1950s.......................................................................144 Figure 113 : 1st Total logo ...............................................................................................145 Figure 114 : Sully Relay, at Nogent le Rotrou, in 1955 ....................................................145 Figure 115 : General de Gaulle visiting Hassi Messaoud ................................................145 Figure 116 : ABK .............................................................................................................146 Figure 117 : Hutchinson Research Centre at Montargis ..................................................146 Figure 118 : “Premier” stations’ concept ..........................................................................148 Figure 119 : Dunbar Field, North Sea (British part)..........................................................149 Training Manual EXP-PR-DI040-EN Last Revision: 12/06/2007

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Figure 120 : Thierry Desmarest, President and general Manager of the Group since 1995 .................................................................................................................................150 Figure 121 : TOTAL logo .................................................................................................150 Figure 122 : TOTAL logo 1954 ........................................................................................151 Figure 123 : TOTAL logo 1955 ........................................................................................151 Figure 124 : TOTAL logo 1963 ........................................................................................151 Figure 125 : TOTAL logo 1970 ........................................................................................152 Figure 126 : TOTAL logo 1982 ........................................................................................152 Figure 127 : TOTAL logo 1992 ........................................................................................152 Figure 128 : TOTAL logo 2003 ........................................................................................152


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7. TABLES Table 1: World fossil energy consumption in the world – Oil..............................................11 Table 2: World fossil energy consumption in the world – Natural gas................................14 Table 3: Consumption of coal (high-carbon coals + lignite) in millions of tons 2004 ..........16 Table 4: Proven reserves...................................................................................................19 Table 5: Electricity production from geothermal, solar, wind, wood and biomass sources in 2004 (milliards de kWh) ..............................................................................................22 Table 6: Production of electricity from renewable energy sources excluding hydroelectricity 2004............................................................................................................................23 Table 7: Electricity production from nuclear sources in 2003 (billions of kWh). .................26 Table 8: Energy forecasts for the world as a whole, taken from the WETO report (World Energy, Technology and Climate Policy Outlook) established by the European Commission in 2003 ...................................................................................................31 Table 9: Cost elements for motor vehicle fuels in Europe, from the oilfield to the pump (order of magnitude in 2002-2003, //Great Britain) .........................115 Table 10: The principal international oil companies in billions of US $ (figures 2003) .....119 Table 11: National oil and gas companies .......................................................................121 Table 12: The major oil consumer countries in 2004 .......................................................123 Table 13: The major oil producing countries in 2004 .......................................................124 Table 14: The major gas consumers in 2004...................................................................126 Table 15: The main gas producing countries in 2004 ......................................................127 Table 16: Oil reserves by country and by region as at the 1st of January 2005...............128 Table 17: Gas reserves as of the 1st of January 2004 ....................................................130


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