297
з історії

132
учня

72
для 11 классу

244
відкореговано


Вашій увазі

415
кейсів
Останнє оновлення:
24.01.2017


Case-lesson “The struggle for life and oil”
Case-lesson “The struggle for life and oil”

Category: Fundamentals of entrepreneurship

Level (grade): 11

Subject: Current understanding of effective use of resources in contrast to resource economics

Objective: Explore the uniqueness of oil as natural and economic resource, as well as chemical raw materials for the production of various items; modern oil refining technologies. Understand economic pricing mechanisms and prospects.

What information is waiting for me here?

  • What is produced from oil and why is it so demanded?
  • What is oil in terms of chemistry?
  • Which oil refining and oil transportation techniques exist?
  • How is the price for oil formed? What are its types?
  • What fundamental and practical knowledge will I need?
  • What is the energy crisis and how to overcome it?
6 scans of the subjects, phenomena and practices:
Introduction

Oil is one of the most essential and most contradictory Earth's natural resources. It is the raw material for many vital for mankind products, the “blood” of the economy. And, at the same time, it is also a source of environmental problems.

The dynamics of oil prices is reeling global economy; it is the bone of contention for corporations and entire states, triggering the energy crises mechanism. Oil is a source of tough economic fight and its desirable prize.

In the few past decades, the price of oil used to increase from 10 to 120 dollars per barrel, and now it is reducing almost to the original value. Why is that so? Many important products are made of oil: fuel of various types, plastics, medicine, alcohols, fabric, films and many more.

 

So why is the world reeling? Because the volumes of extraction, transportation and prices are regulated artificially and politically, and therefore market mechanisms and self-regulation process are barely applied. All of these makes issues connected with oil only more pressing.
Chemistry

So what is oil in terms of chemistry? Oil is the composition of hydrocarbons, sulfur, oxygen and nitrogen compounds, it is a flammable substance. Oil color varies within fulvous brown shades: from dirty yellow to dark brown, almost black. Sometimes it is purely black, rarely – light yellow-green or even colorless. There is also saturated green oil. It has the odor that also varies from light and pleasant to heavy and nasty. Oil’s color and scent are largely affected by the presence of nitrogen- sulfur- and oxygen-containing components, which are concentrated in lubricating oil and oil residue. The majority of pure oil hydrocarbons are devoid of odor and color:

 

What are its components? First of all, alkanes in different states of aggregation:

• Gaseous paraffin hydrocarbons, from methane to butane including, are present in oil in dissolved state and are released in the form of associated gases when oil reaches the surface.

• Liquid paraffin hydrocarbons, from heptane to pentadecane including, form the basis of the liquid part of oil.

• Solid paraffin hydrocarbons (from hexadecane), which are dissolved in oil and can be released from it.

 

Naphthenic hydrocarbons are other components of oil. Naphthenes combine cycloparaffinic compounds: mono- and polycyclic. Carbon atoms are joined in a simple single bond into cyclic structures that often contain a frame of five or six carbon atoms.

Typically, oil can contain up to 80% cycloparaffins. Naphthenes have higher melting and boiling point than methane hydrocarbons with the same number of carbon atoms.

 

The content of aromatic hydrocarbons, which have higher boiling point than naphthenic hydrocarbon components, in oil can reach up to 35%. This class of compounds is particularly poor in hydrogen and owns a higher thermal stability. Aromatic hydrocarbons in oil are mono- and polycyclic compounds.

 

A characteristic component of oil is asphalt-resinous substances. Asphaltenes are dark brown or black solids. At 250-300°C they move to plastic state, foam, and at higher temperatures they decompose to form coke and gas.

Typically, asphaltenes form strong associates among themselves, composed of 4-5 molecules. Average elemental composition of asphaltenes (% of weight) is the following: carbon – 80 - 84%, hydrogen – 7.5 - 8.5%, sulfur – 4.6 - 8.3%, oxygen – up to 6%, nitrogen – 0.4 -1% and other elements and metals (iron, nickel, cobalt, sodium, magnesium, vanadium, etc.).

 

Oil’s organic acids are presented by a number of substances of different structure. Oil acids are mainly a mixture of aliphatic and naphthenic acids. The derivative mono-cyclic alkanes, which are called naphthenic acids, are the bulk of oil acids. Their contents in oil range from traces to 3% (the largest amount in the middle fraction). Most of naphthenic acids are derivatives of prevailing cyclopentane, and cyclohexane. In some cases, organic acids with aromatic ring in the molecule can be detected in oil. In the heavy fractions acids derived from hydrocarbon hybrids are contained.

 

This wide list of substances makes it possible to obtain a variety of products resulting from oil refining.

Question:


Think about the impact of the properties of individual components that can affect the properties of oil.

Technology

Technologies related to oil are, above all, technologies of oil extraction and refining.

Oil extraction technologies.

Oil is extracted through various methods. The method choice depends on the oilfield features and its profitability:

 

Schematically oil extraction by means of gas lift can be described as the following: gas (e.g., carbon), which displaces oil from the reservoir, is supplied under pressure. Oil that has been embossed is extracted with the traditional installation of compressor type.

 

Method of extraction choice also depends on the pressure in the oil reservoir

 

With consistent use of all three methods of oil extraction, the extraction coefficient is minimum 40%, maximum – 60%. Oil is not forced out completely. Therefore, it can be classified as a conditionally renewable resource. It is important at this stage of technology development. In future we should expect the emergence of such technical means that will allow to extract oil remains in a fairly economical way.

Oil refining technologies.

Oil refining technologies primarily depend on what product has to be obtained in the end:

 

Successive stages of processing yield different products depending on process conditions (temperature, pressure, hardware design):

 

The most common processes are rectification, cracking і reforming.

Rectification is a process of decomposition of multicomponent mixtures by means of weight and heat transfer between the vapor and liquid, moving in opposite directions. Cracking is a high-temperature process of oil refining in order to obtain product with lower molecular weight. It proceeds with the rupture of C-C bonds. It can be catalytic or thermal. Reforming is a process of obtaining high-quality gasoline and aromatic hydrocarbons. Molecules do not split; they are converted. 3-4 reactors with temperatures of up to 350ºC 520ºC are applied, as well as catalysts:platinum, rhenium, iridium, germanium. The 90-95 octane gasoline is received.

 

Question:


What oil products have you encountered and where?

Geography

Oil is a natural resource. Its geography consists of:

a) proved reserves (oilfields);

b) extraction and export of oil;

c) oil imports.

These three components form the entire “cycle” of oil in nature, industry and economy.

The largest oil reserves – 17.9% of the world's – are in Saudi Arabia. Oil reserves in this country are represented by more than 262.6 billion barrels. Venezuela is the second country in the world's largest oil reserves. The volume of its reserves is about 211.2 billion barrels (14.4% of the global reserves).

The distribution of oil reserves in the world is the following:

 

One of the promising areas of oil extraction that is still developing is shelf oil extraction. Shelf oil fields are spread across the globe.

 

For extraction of oil from offshore oilfields one of the important aspects is the right to development – ownership of the oilfield by a particular state. Sometimes shelves (and offshore oil stocks) are subjected to enormous wrestling.

Shelf is a leveled part of an underwater edge of a continent, adjacent to the land and characterized by a common geological structure. The shelf’s borders are sea or ocean shore and so-called “brow” (sharp bend in the surface of the seabed – the transition to the continental slope). Total area of shelves is about 32 million square kilometers.

Leading countries in extraction of oil and their share in world oil production:

 

Naturally, the leading countries in the extraction of oil are also the key oil exporting countries. Oil is the world's strategic energy resource. The exporters generally depend on oil importers. And the importers are constantly depending on the suppliers and world oil prices. Each country strives to have its own oilfields, or at least to be a reliable supplier. Some use their geographical location, thereby reducing the tariff for a raw material during its transit through their domestic territory. In general, every single state endeavours to benefit from the conditions that already exist.

Which countries buy oil (import) and which of the importers are the leaders?

According to the source topglobus.ru/sravnenie-stran-po-neft-import the places are divided as follows:

 

Some countries appear both in the lists of oil exporters and importers. Frequently it is explained not only by policy of individual companies, but also by regulations on the oil industry at state level. In addition, there are also international regulations on export-import of oil.

The Organization of the Petroleum Exporting Countries (OPEC) is the international intergovernmental organization founded by oil producing countries to stabilize oil prices. 12 countries are the members of OPEC: Iran, Iraq, Kuwait, Saudi Arabia, Venezuela, Qatar, Libya, the United Arab Emirates, Algeria, Nigeria, Ecuador and Angola. The headquarters are located in Vienna.

Oil reserves of the member countries are currently 1 199.71 billion barrels. OPEC member countries control about 2/3 of world oil reserves. They account for approximately 35% of the global production or half of the world's oil exports.

OPEC member countries:

 

OPEC unites the countries that often have conflicting interests. Saudi Arabia and other countries of the Arabian Peninsula belong to the sparsely populated, but possess huge oil reserves, large investments from abroad. For other OPEC member countries, such as Nigeria and Venezuela, high population and low living standards are characteristic. These most poor countries implement expensive economic development programs and have huge debts. They are forced to extract and sell large amounts of oil, especially if the price of crude oil goes down.

Although OPEC countries are successfully agreeing on quotas on oil production, there are no control mechanisms and regulation of their abidance within OPEC. This is why quotas are frequently not respected. Sometimes some countries are subjected to an embargo (ban) on the production and sale of oil for political reasons. For example, such embargo on Iran had been active since 1974 because of Iran’s nuclear program. Once the nuclear issue was resolved in early 2016, the embargo was removed, and the country regained the opportunity to sell huge amounts of oil and reduce world oil prices to an even greater extent.

Infrastructure

For oil’s “export-import” processes transportation is vital. It is a bridge not only between countries but also between oilfields and refineries, between refineries and consumers.

The first type of transportation is transportation via tankers or tanks by rail.

Tankers are sea or river cargo vessels for oil and oil products bulk transportation. Capacity is from 10 thousand to 500 thousand tons. There are general purpose tankers and supertankers. Supertankers exceed the sizes of other types of ships:

 

The biggest supertanker in the world is Knock Nevis.

The second type of transportation is oil pipelines of the main or industrial type.

 

The oil pipeline system is not only a thousand kilometer branching of pipes of large or small section. It also includes:

• Pipeline with a close fitting valve.

• Corrosion protection.

• Construction of technological connection.

• Means of controls and mechanics of pipes.

• Transmission lines for control of the close fitting valve.

• Fire protection equipment.

• Tanks for oil storage.

• Barns for emergency release of oil.

• Buildings of the service operation.

• Pumping stations.

• Oil and oil products heating stations.

According to the source iv-g.livejournal.com/853361.html a map of oil pipelines looks like this:

 

Both of the transportation methods form a single global oil transport system.

Economy

So, how is the price of oil formed? The price for a barrel of oil (158.988 liters) represents the price for North Marine oil brand Brent, US WTI oil or Dubai Crude oil. The types of oil have been “made up” to facilitate export. These are the “marker” types. They are usually determined by an oilfield:

 

The cost of oil consists of:

• Expenses on the exploration and development of oilfields.

• Production costs, rents and taxes.

• Transportation costs.

• For offshore fields the process of creation of oil platforms and machinery are taken into account.

 

The processes of mutual regulation occur between the “Extraction” – “Price” – “Export” – “Infrastructure” – “Import” – “Refining” components. From time to time phenomena such as energy crisis appear as a result of the imbalance in this chain due to economic, natural or political causes.

In recent years, the world has been watching the price of oil gradually decrease from 120 to 30-20 dollars per barrel. Many people question why the price of gasoline isn’t decreasing in the same proportion.

The answer lies in a nonlinear dependence, caused by several reasons:

a) transportation of fuel doesn’t depend on its cost in direct proportion: 100 tons have been transported in one case, and 100 tons in another – the price remains almost the same;

б) processing of fuel, logistics and management at a refinery stays almost the same.

This is called conditionally fixed costs and semi-variable costs. The first ones do not depend on oil prices: for instance, the salary of a plant’s manager. The latter, though, depend. For example, expenses on geological reconnaissance and extraction.

Curiously, even at $10 per barrel, oil is profitable to extract and sell! This means that its profitability and margin of safety are quite high. The reasons can be found in the relatively low cost, and also in the fact that traditionally oil is sold under futures contracts, which means long in advance.

It happens that oil is extracted with high expenses but is sold for the price below its cost – 10-20-30 dollars, because stopping the production would cost even more. Besides, the calculations involve not only gasoline, as a final product, but also agriculture, chemicals, textiles, construction materials, machinery, etc.

The structure of the price per liter of gasoline.

Price of fuel consists of three parts: its cost, the fiscal component and profits. The correlation between these blocks is the following: approximately 30% is the cost of a product, half of the price goes to the treasury, and 20% is the total income of all stages of the product’s progress “from the well to a gun”.

Taxes include: taxation of mining operations, rents, excise duty, income tax and other deductions.

The cost includes the expenses on extraction, transportation, refining and storage at intermediate tank farms, maintenance of gas stations and other costs associated with direct and indirect expenses, which accompany the entire production cycle “from the well to a gun”.

Of course, the cost of refining or transportation may differ significantly for each individual plant, region or country.

The cost of the product is rather hidden, opaque number, classified as a “trade secret”. However, the oil market analysts estimate it at about 30% in the price of a liter of fuel.

The profit is approximately 20-25%. At first glance it is unreasonably high. But given that this number is “distributed” throughout the production chain – extraction, refining, storage, resale and actual implementation in gas stations, it can be real.

 

Profit is 0.2 dollars.

Taxes are 0.5 dollars.

Total cost of 1 liter of gasoline is 1.0 dollar.

The structure of this price:

 

Whatever the price of oil, historical experience of energy crisis forces to seek alternative sources of raw materials and energy that could replace oil, or at least reduce its monopoly role.

Ecology

 

Environmental impacts of oil spills are difficult to calculate. This is because the oil pollution violates many natural processes and relations, changes the living conditions of all species of living organisms, besides, it is accumulated in biomass.

 

Both oil extraction and transportation significantly affect the environment, and, above all, water, atmosphere and lithosphere. One of the major air pollutants in oil extraction sphere is associated gas, which along with fractions of light hydrocarbons contains hydrogen sulfide. Millions of cubic meters of associated gas have been being burned for decades at flare institutions, what has led to the formation of hundreds of thousands of tons of nitrogen oxide, carbon monoxide, sulfur dioxide and products of incomplete combustion of hydrocarbons. The whole process of production, transportation and refining of oil is closely “tied” to the fight between economic needs and environmental expediency. This is another argument in favor of finding more environmentally friendly technologies for oil refining or alternative sources of energy and raw materials.

Task:


Find information on one of the recent cases of oil spill and prepare a small presentation or message on this topic.

Lesson’s summary:

Name

The contents

1

The results of the case-lesson can be complemented with findings of students:

 

2

What three websites helped find important information?

3

To help student and couch:

4

Where can you get information for the case?

http://edufuture.biz/

5

Location of the lesson:

Case lesson takes place in the classroom. Carrying classes at the museum, park, library...

6

Contest:

Teams of boys and girls.

The score is:….

Tasks for them:

  1. What petroleum products do you know? How are they obtained?

What chemical elements that are included into oil’s composition do you know? (The team that gives more correct answers wins)

7

Homework

Conduct a mini-study: find information about one of the oilfields; write its characteristics, using the acquired knowledge. Prepare an answer or a presentation based on the results of the study.

8

Duration:

90 minutes(double lesson).  

9

The possibility to conduct the lesson with a student-understudy: 

possible

10

The acquired knowledge and competence:

Knowledge about the chemical composition of oil andphysicochemical bases of oil refining.

Knowledge about methods of oil extraction.

Knowledge about economical aspects, connected with oil.

11

Tags:

Oil, paraffin, naphthenic, aromatic hydrocarbons, asphalt-resinous substances, organic acids, oil well, oil mine, gas lift, rectification, cracking, reforming, oil pipeline, tanker, export, import, oil types, barrel, energy crisis.

12

Authors:

Hrabovska Larisa L.

13

Participated in the case upgrading:

 

 


The End

«Знання завжди повинні бути свіжими!»

Цікаві факти

Протягом життя у людини виділяється така кількість слини, що нею можна заповнити два басейни середньго розміру.

Знайшли помилку? Виділіть текст та натисніть Ctrl + Enter, ми будемо Вам дуже вдячні!

Знайшли помилку? Виділіть текст та натисніть Ctrl + Enter, ми будемо Вам дуже вдячні!