The term “logistics” has become more and more popular to define the process whereby goods move from the point of manufacturing and production to the point of sale and consumption. UPS® and FedEx® are no longer just in the package shipping business. They now provide a full range of services, from receiving parcels to transporting them via truck, rail and plane, to storing them in warehouses and ultimately, distributing them to their final destinations. All the while, they are tracking packages throughout the entire process, which can also be done by their customers.
The delivery system for energy commodities is no different, as products—either from the wellhead, plant, or refinery—are transported using various methods, stored, and ultimately distributed to places of final consumption. As we explore the ways and methods in which energy commodities are delivered to market, you will see this same basic theme consistently applied.
Additionally, we will learn the “value chain” for energy commodities. That is, what are the costs and revenues along this delivery path?
This graphic illustrates the various steps in the "wellhead-to-burnertip" logistical path for oil and natural gas:aggregation (gathering), the "cleaning" of the raw stream and production of valuable natural gas liquids (NGLs) and, the steps for getting crude oil and natural gas from the wells all the way to market. As you can see, there is processing of natural gas or refining of crude, the transportation and storage and, finally, the distribution and retail delivery to the various end-users. As you will see, each step along this "path" will have some costs associated with it and most will represent an opportunity for generating revenue. These will add to the total profit that can be derived from the initial wellhead production.
At the successful completion of this lesson, students should be able to:
This lesson will take us one week to complete. There are a number of required activities in this module. The chart below provides an overview of the activities for this lesson. For assignment details, refer to the location noted.
All assignments will be due Sunday, 11:59 p.m. Eastern Time.
REQUIREMENT | LOCATION | SUBMITTING YOUR WORK |
---|---|---|
Reading Assignment: Crude Oil Refining Process |
Lesson6 Reading Assignment page |
No submission |
Mini-lecture: Crude Oil | Mini-Lecture: Crude Oil page | No submission |
Mini-lecture: Crude Oil Refining | Mini-Lecture: Crude Oil Refining page | No submission |
Lesson 6 Activity 1 | Lesson 6 Activity page | Submit through Canvas Discussion |
Lesson 6 Quiz | Summary and Final tasks page | Submit through Canvas |
Fundamental Factors | Lesson 6 Activity Page | Submit through Canvas |
If you have any questions, please post them to our General Course Questions discussion forum (not e-mail), located under Modules in Canvas. The TA and I will check that discussion forum daily to respond. While you are there, feel free to post your own responses if you, too, are able to help out a classmate.
The refining of crude oil is a complex process. In preparation for this topic, please complete the reading assignment below. My lecture will closely follow the steps in refining as outlined here.
Crude Oil Refining Process
Go to HowStuffWorks: "How Oil Refining Works" [2] and read pages 1 through 6 in preparation for the mini-lecture on Crude Oil Refining. As you read the sections, keep these questions in mind:
The following mini-lecture traces the flow of crude oil from the wellhead to the refinery using various forms of transportation. We also discuss the two global standards for crude oil, West Texas Intermediate, and Brent North Sea. The major supply/demand districts in the US are presented, as well as supply and demand statistics.
While watching the Mini-Lecture, keep in mind the following key points and questions:
The following mini-lecture presents each phase of the crude oil refining process and the various products that are extracted from each barrel of oil.
While watching the Mini-Lecture, keep in mind the following key points and questions:
You will be graded on the quality of your responses. This question is worth up to 20 points on the EBF 301 grading scale; each question is worth up to 10 points.
The Fundamental Factors activity is due as usual this week, at 11:59 pm on Sunday, and is worth 30 points on the EBF 301 grading scale. Please refer to the Fundamental Factors Instructions [3] for additional information and grading rubric.
Petroleum Products Activity: Submit your work as a word processed document to the Petroleum Products Activity on Canvas.
Fundamental Factors: Submit your work as a single word processed document to the Lesson 6 Fundamental Factors Activity in Canvas.
Log onto Canvas and complete the lesson quiz
You have reached the end of this lesson Double-check the list of requirements on the first page of this lesson to make sure you have completed all of the activities listed there before beginning the next lesson.
Links
[1] https://www.e-education.psu.edu/
[2] http://science.howstuffworks.com/environmental/energy/oil-refining3.htm
[3] https://www.e-education.psu.edu/ebf301/680