The Impact of Crude Oil Extraction and Production

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Table of Contents

Introduction
Societal issues tied to production, distribution, and use of crude oil
According to NORA Gas and Extraction Council
Economic issues regarding the use of crude oil
Environmental issues regarding extraction and production of oil
Conclusion
Works Cited

Introduction

Crude oil is one of the major essential raw products widely used. Its byproducts such as jet fuel, petrol, diesel, bitumen, liquefied petroleum gas, and plastics are extensively used worldwide. Various sectors including agriculture, transportation, and homes rely on crude oil. But is the extraction and production of crude oil entirely clean? And what are the issues that arise due to the mining of this material? This memo explores the impact of crude oil extraction and production from a social, economical, and environmental point of view.

Socially, the impact of crude oil extraction has been determined by looking at the worker’s health and safety issues and how accidents and fatalities are avoided. The cost of setting up drilling plants and the average price per barrel plus the labor cost have been discussed. Despite the fluctuating prices of crude oil, it is still one of the major global commodities and it is expected that its demand will not die soon.

Societal issues tied to production, distribution, and use of crude oil

Primary locations where crude oil is mined

Classification of crude oil is based on three factors.

The mining location.
The American Petroleum Institute gravity
The Sulfur content.

In the United States of America, West Texas leads in crude oil mining and production. Other areas include Louisiana, Oklahoma, and Illinois. Areas outside America include Saudi Arabia in the Arabian Peninsula, Brent in the East Shetland Basin, Russia, and China.

Jobs and safety of workers

The oil and gas industry employs many workers in the various stages of production and distribution of the products. High Beam Business states:

In 2001, total employment in the industry was 27,666. Although the total number of establishments decreased, employment was on the upswing. By 2007, employment had reached 44,846, according to the U.S. Census Bureau. About 63 percent of employees in the industry were production workers. (High Beam Business 1).

From the statistics, a big population is employed in this industry thus their safety is paramount. Some of the occupational hazards encountered during the production of oil include:

Explosions in the oil wells result in fires that may cause the deaths of workers.
Exposure to chemicals such as benzene or naturally occurring radioactive materials that are can be inhaled and may cause chronic and respiratory diseases and cancer, especially in oil refineries.
Noise and vibration resulting from the drilling process may harm the workers physically.
Stress and strain may cause the workers to be psychologically affected or cause bone and muscle disorders.
Accidents due to falling of sharp objects.

According to NORA Gas and Extraction Council

During 2003-2008, 648 oil and gas extraction workers were fatally injured on the job, resulting in an occupational fatality rate of 29.1 deaths per 100,000 workers – eight times higher than the rate for all U.S. workers. Nearly half of all fatal events in the oil and gas extraction industry resulted from highway crashes (29%) and workers struck by objects and equipment (20%). (NORA Gas and Extraction Council 3).

To lessen and avoid such hazards, safety practices have to be administered. Both employers and workers are responsible for ensuring the health and safety procedures adhere to the core. Some of the safety practices employed in the industry include:

Increasing the implementation of industrial work practices such as wearing personal protective clothing.
Companies have come up with work methodologies that assist in enhancing the user capabilities in handling equipment and ensuring the specifications of the tools and equipment are up to standard.
Companies have adopted the Management Systems Standards (ISO 9001 for quality and ISO 14001 for the environment) to ensure there is good incorporation of occupational health and safety systems and quality and environment systems.
Frequent education and training of personnel on the ways of handling new equipment.
Coming up with pre-vocational safety training that helps in reducing fatalities.
Companies use surveillance in the identification of technologies and control that aid in reducing accidents.

The government has also set up various acts such as the Factories Act and Mines act that regulate the working conditions of workers in terms of their safety, health, and welfare. Inspectors are sent to factories regularly to carry out surveys on various aspects that touch on the workers’ safety and health, in addition to carrying out training.

The NORA Oil and Gas Extraction Council was also set up by the government to look into the causes of fatalities in the oil and gas industry and come up with solutions on how the fatalities may be reduced. This shows the government’s commitment to ensuring the health and welfare of its citizens is secured.

Economic issues regarding the use of crude oil

Types of equipment and labor used in extraction and production of oil

To extract and process crude oil, different types of equipment and or machinery are used. These are:

oil derricks
drilling tools
well logging and surveying tools
Machinery for refining the oil

Many of this equipment and machinery are locally available in industries that manufacture such. Some of this equipment is assembled in the factories that manufacture them while others are assembled at the site.

According to High Beam Business (30), about 60% of oil extraction in the USA is done offshore in deep water wells. The advancement in technology is the main reason for this. Companies are also striving in improving efficiency and these call for the use of modern and well-designed drills which do not come at a cheap cost. To process crude oil, a refinery is needed. Setting up and running a large refinery costs billions of dollars.

Various categories of people are involved in the whole process of extraction, processing, and distribution. In the surveying and identification of reservoirs as well as determination of the type of drilling method and eventually the extraction of the oil, petroleum engineers, geologists, and consultants/ specialists work hand in hand (Sloan Career Cornerstone Center 1). This implies that the type of labor needed for the extraction and production of crude oil is not cheap since the majority of people involved are highly qualified. According to Sloan Career Cornerstone Center, Petroleum Engineers earn an average of $62,236 /year as their starting salary (5).

Comparison of cost of crude oil to natural gas

The cost of crude oil is not constant. It is dependent on factors such as:

political and economic conditions such as the U.S versus Iraq war,
weather,
speculation
Supply/demand factors

The September 11 attack caused a slump in the economy which affected the oil industry. The attack carried out by the US on Iraq led to an increment in the cost of crude oil to $40 per barrel. Despite these factors, the price of oil has steadily been on the rise. According to High Beam Business (16), the oil prices rose to an all-time high of $126.06 per barrel in May 2008 then fell again.

Currently, the prices of crude oil have been on a downward trend due to the weather (“New York sees a huge drop in Oil and Gas prices” 1).

Comparing oil with natural gas, it is found that the prices of natural gas are almost always lower than those of crude oil. The low price of natural gas is attributed to weather and inventories. Despite the downward trend of the prices of crude oil, it is still one of the world’s major commodities and its demand and supply is not going to reduce.

Environmental issues regarding extraction and production of oil

The extraction of crude oil involves drilling into wells. These wells are normally located onshore and offshore. Mining of oil and its waste disposal requires use of large chunks of land and this causes environmental pollution. Some of the major issues that arise due to crude oil extraction are:

Land waste and marine pollution

Vast areas of land are normally required for drilling of wells. These are located in low density areas or far away from people. The ecosystem of an area where the drilling takes place is usually disturbed due to construction of access roads to the wells. These ecosystems include rainforests, oceans or seas). In addition, pipelines are constructed for transportation of the products and these too pollute the ecosystem.

During shipment, oil spillage sometimes occurs and these pollute the waters where marine life thrives which eventually results in the destruction of the marine life (Idea Connection Limited, 3). Furthermore, when oil extraction is done offshore, there are higher chances of complete destruction of marine life. In 2010 at Deepwater Horizon in Louisiana, an offshore drilling rig, an explosion occurred. Eleven people passed away and there was a lot of spillage into the ocean which caused harm to aquatic life. When such incidences happen, the tourism industry also gets affected.

Toxic wastes

During oil extraction and its subsequent processing, toxic wastes and acid rain are generated. The acid rain infiltrates the various masses of water such as lakes and rivers killing fish, plants and wildlife. Acid rain also causes damage to buildings.

Air pollution

Atmospheric emissions occur during the process of oil production. The gaseous products emitted include: sulfur dioxide, hydrogen chloride, nitrogen oxide and carbonaceous particles. The level of concentration of these products in the atmosphere causes air pollution.

Greenhouse emissions and ozone depletion

Production of crude oil causes carbon dioxide emissions which causes global warming. Burning of oil and gasoline results in the release of CO₂ which locks in heat making planet Earth hot causing changes in the climate. Moreover, the exhaust emissions from vehicles cause ozone depletion.

Production of flammable materials

Most of the by-products of crude oil such as petrol and liquefied petroleum gas are highly combustible. If not handled carefully, these by-products easily explode causing damage to the environment and injuries or even death. Other byproducts of crude oil such as plastics are not degradable and cannot be recycled hence pollute the environment if no proper disposal is done.

Conclusion

Crude oil is an essential material in our lives. During the process of its extraction and drilling, great care must be taken to avoid possible injuries. Emphasis should be put on the safety and health of workers so that no life is lost. Moreover, our environment should be protected at all costs to minimize the effects of the emissions on our health.

Works Cited

High Beam Business. “Industry Report”. Oil and Gas Field Machinery and Equipment. Gale Group Inc. 2011. Web.

Idea Connection Limited. Environmental Impacts of Oil Extraction. n.d. Web. 2011.

“New York sees a huge drop in Oil and Gas prices.” Industry Leaders Magazine. Industry Leaders Magazine, 2011. Web.

NORA Oil and Gas Extraction Council. Occupational Safety and Health Research and Practice in the U.S. Oil and Gas Extraction Industry. 2011. Web.

Sloan Career Cornerstone Center. Petroleum Engineering Overview. n.d. Web. 2011.

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