Hello, I'm Sam Shelton with back at Energy 101, and today we're talking about petroleum versus oil. This is an important topic that hopefully will help clarify a lot of issues, that you run into, in reading articles in the media and listening to television and etc. Because these two words, too many times, are used interchangeably. And the general public generally use, thinks they are synonymous, petroleum and oil. Well, just here's a perfect example. This one actually came out of the energy information agency, the DOE. But, this one was, it was kind of was a news blurb that came out, not too long ago that talked about US petroleum, doesn't say oil, it says petroleum. Production, surpassing Saudi Arabia and Russia. And I'm going to go through this whole chart that, but it goes from 2008 on the bottom, out to 2013, which is obviously an estimate, because when I'm recording this, it's not the end of 2013. The bottom part is petroleum, and then we have natural gas, on top of that. And the three bars that we see in for each one. one, two, three. The first one is, United States. The second one is Russia. And this third one is Saudi Arabia. So, and the black is petroleum. But notice, it doesn't say oil, it says petroleum. And so, we were producing less oil than Russia and Saudi Arabia, back in 2008. You move it to 2012, which is by the way, is where, is the time period for the data that I'm showing you throughout this course, because it was completed during 2013, before the 2013 data was available. But you look over here and you see, we're producing about the same as Russia. You the, here's the US, here's Russia and here's Saudi Arabia. Saudi Arabia still producing more. They're producing about 11.5 but that's petroleum. And we're, we're going to see, going to see what the difference is, between petroleum and oil here, in just a minute. But it's very key, that you pick, that you pay attention, to what is the, when they're talking about petroleum, and when they're talking about oil. so, the question, the question, the question you might ask is, is petroleum and oil the same? And the quick answer is, no. You cannot use those terms interchangeably, except maybe in rare instances. oil, so what is petroleum? We know what oil is, we've talked about oil. And defined it, and, and talked about how much we, we produce, and etc., etc. But we haven't talked about petroleum. So let's, let's find out today, what we're talking about, with petroleum. What is petroleum? Well petroleum is the, is oil combined with natural gas liquids, which we don't, I haven't covered what it is, but will here, in just a minute, and biomass fuels, which right now, those are liquid fuels, which right now, is essentially all corn ethanol. Corn, ethanol made from corn. We are, as I think I've mentioned before, beginning to trying to develop ethanol production capability, from cellulose. That's like wheat straw and corn stover. Corn stalks and wood and wood chips and, and red wood residue and etc. But petroleum is the combined, the number for all three of those, put in barrels of oil. So that obviously, petroleum includes more than just oil. So what is natural gas liquids, because that's the big one. Ethanol we'll see, is a, is a small one, but natural gas liquids, we're producing about 2, 2.5 million barrels a day of that, and producing about 6.5 million barrels of oil, for 2012. Well, it's a, natural gas liquids are a byproduct of natural gas production, at a well site. And it's, it's made up of ethane, propane, butane, and pentane. Now, you probably know what propane is, you generally barbecue it, in your grill, from a tank of propane fuel, that you buy at the hardware store or somewhere, and get refilled. Butane is, is also similar to propane. We use it in lighters and things. It's a little lower pressure to maintain, it's liquid in nature. But we're, we use those and kind of understand those. Ethane and pentane is primarily used in the chemical industry, to make different things. For instance plastics, polyethelene, for instance. So the, the all, but why do all these come out, with natural gas? Because at atmospheric pressure, all of these things, ethane, propane, butane and pentane, are gases, at atmospheric pressure. But at the well head, they pressurize them and when you pressurize the mixture, the ethanes, propanes, butanes, and pentanes condense out, they become liquid. And it's easy then to separate them from natural gas, by merely compressing them. Which they compress it to put in pipelines anyway, so it's not an extra step, it's just part of the compression process, to get it ready to put it in the pipeline. And when they do so, these natural gas liquids, as we call it NGLs, natural gas liquids, as I've stated up top here, you see that term used quite a bit, is a stand for natural gas liquids. So what are ethanes, propanes, butanes, isobutanes, and pentanes? Well, if you were interested, there's the chemical formula, for you chemical minded people. Notice that, butane and isobutane got the same formula, but this is an isomer of butane, and we won't get into the chemistry of that, because this isn't a chemistry class. But it, for those interested, that's what all, that' s a chemical formula for all those other liquids that, at high pressure they're liquids. And by the way, when you get propane in a tank it's at high pressure, and that keeps it a liquid. And notice that, when you open the valve, and let it come out, the atmospheric pressure, it's a gas, it's not a liquid. so, what are the characteristics of natural gas liquids, is come out, comes out of the ground, in a natural state gas is [INAUDIBLE], as I've already mentioned. It the mixture's compressed, to separate the NGLs. And natural gas will, natural gas will not liquefy, by pressurization. It will never liquefy at, by pressurization, unless you cool it, but at atmospheric temperature, natural gas will not liquefy, with the pressure. In order for natural gas to liquefy, you must cool it to minus 260 degrees Fahrenheit. And, when you see when you see liquefied natural gas and that, we're beginning to talk, that's what you have to do, to export it across the ocean. You actually cool it and refrigerate it, to minus 260 degrees Fahrenheit, which is an energy consuming process of its own. So, natural gas is completely different in the fact that, it will not liquefy or pressure at atmospheric temperature, whereas these NGLs, do liquefy. So, here's what the production rates look like has looked like, in the trend from 1982, when we produced about 1.5 million barrels per day. And now we're producing almost 2.5 million barrels, per day. We did in 2012. And the reason for that is that, we're producing more natural gas, starting back about 2008, and you get the natural gas liquids, with the production of natural gas. So if you produce more natural gas, you'll produce more natural gas liquids. So that, that's why they've increased, and they've become a notice we said that in 2012, we produced about 6.5 million barrels of oil of oil. So, 6.5, well we're already producing 2.5 million barrels a day per day, of petrol, of NGLs. So, it's a significant number, when you add them together, when you add natural gas liquids to oil, it obviously makes petroleum a much bigger number, than just oil. And so, we want to look at the appropriateness of that or whether that's meaningful or not. This looks at the combination of, of the, whereas the last slide only looked at natural gas liquids, this looks at the oil production, from 1982 to 2012. It looks at the light gray, or light blue, which is the natural gas liquids. And then, the other thing that you noticed in my definition, of what natural gas liquids were is that the, the bowel mass or corn ethanol, that's the yellow. And so, here's, here's the corn ethanol right here and here's the NGLs right there. And this is the ethanol, and this is the oil. And so you can see, it's getting to be a, a significant percentage of the oil, that we are per, of the petroleum, that we're producing. Because it's a significant percentage of the oil we're producing. So that's what natural gas liquids are, and those are the, are the trends. But, here's how the natural gas liquids are used. This is, these are national averages for the makeup of Natural Gas Liquids. They're about 40% ethane, as we've see here. About 40% ethane, about 30% I like to round off. I'm not going to get into arguments, about whether this is a 28, a 30, a 42, a 40, a 38, or a 45. That's not meaningful for our discussion here. The, the points that we want to make. Butane's about 10% and isobutane's about another 10, so that's 20%, you add the butanes together, is about 20% butanes, and then about 14%, pentanes. And what are they used for? Well, ethane is used for plastics. Polyethylene bags, plastic bags is made from ethylene and ethane. Propane is of noted here, it's used in home heating some, rather then natural gas, for natural gas is not available, it's more expensive. Therefore, if you have natural gas, you're going to use it. But if you don't have it, then it's you use the propane a lot. Used in grills, as I've already mentioned and liquefied petroleum gas. Even some, there are some cars, have run on it, that seems to be diminishing. The butanes are used, again, in the chemical industry for synthetic rubber, lighter fluid, and liquefied petroleum gas, for cooking and cigarette lighters and things. isobutane, chemicals in gu-, is used in gasoline refinery to adjust the octane number, and to get the blend, that they want. And about 15% butanes, which again, is used in some gasoline production. And of course, in, in by which means, that's used some for transportation. So, that's the utilization of the natural gas liquids. So, in order to adding them together to, and the meaning for that to mean anything, oil and natural gas liquids, should be the same, well are they the same? Well, if, to be lumped together, they'll only, it's only appropriate, if they displace each other. And you can use them, interchangeably. Well, that's just not the case, particularly on a one to one basis. Now, some of them can, are used, some of the natural gas liquids are used, in the chemical industry. And where the, so they don't have to use natural gas or oil. So it, it may replace some oil. But the general estimate that, I think it's about the, as good as I have seen, or, or can figure out for myself, is that one barrel of natural gas liquid, displaces probably, about 1 3rd of a barrel of oil. It's in that vicinity. I, I think it's less than a half, and probably more than 20%. But and you can debate it in between that. But I really think that, it's, misleading to add the natural gas liquids and the ethanol to, particularly add natural gas liquids, let's just stay with that. To, oil, and talk about it as a whole, and put out news releases, based on that summation, because it can draw you to misleading conclusions. But if you look at the back, at the liquid petroleum imports, rather than oil imports, we've been looking at oil imports before. This the first time, we even talked about petroleum. You can see that, it looks like it go, it, it has gone down significantly since 2008, we started producing more natural gas. And that's prime, one thing we have produced, produced more oil self to the drop. But we've also produced more NGLs and that's helped the drop also. So but regardless, we're still producing importing about 50% of the petroleum, if you want to talk about that way. Which I, I never like to use the term petroleum because it's very confusing. Talk about oil, or talk about natural gas or talk about natural gas liquids. But don't, don't combine them. From a transportation fuel viewpoint, here's the pie chart that shows what we, which is which, transportation is the primary need for oil. And oil of course, is used to produce gasoline, it's used to produce diesel. Now ethanol does replace, displace oil, almost on a one to one basis, but not quite, as you'll see just in a minute, because it doesn't have the same BT value, per gallon or barrel, that oil does. But the other, small, small sliver here. Is a grey sliver, and you probably can't even make it out. Its got 0% here, but is actually about 0.4%, it's rounded off. It's below a half, and the software rounded it off to zero, but it's about 0.5%, call it. And that, that's different, than natural gas liquids. Ethanol does produce, displace oil to a major extent, on an almost a one to one basis, or a lot more so, than natural gas liquids. So, that, that covers, what we wanted to say about natural gas liquids. And next time, we'll look at ethanol, since that's the other element that's in petroleum, that's, it's added oil. So, let's look at the ethanol production and where's it's coming from, and what those trends are. See you next time, thank you.
