A previous post about comparative gasoline prices inspired me to write a post on where oil comes from and how difficult it really is to get oil out of the ground and to the consumer. It’s quite an involved process that I don’t believe a lot of people really appreciate. After I better understood the entire process, I had a new appreciation for the thesis of energy prices being too low just because of the sheer difficulty to get this stuff out of the ground. Now, this is just a broad overview of the process; please understand that there are a lot of specifics that I am leaving out.
I also want all readers to note that I am writing about countries where all of the country’s oil is not nationalized (for example Saudi Arabia, Iran, Venezuela, Mexico). For an independent oil company to exploit oil in these countries, very special agreements between the independent company and the national oil company must be reached.
Exploration & Seismic
First you have to find the oil. Continue reading “A Day in the Life of an Oil Well”