Introduction to Oil and Gas: Part 2

It is quite amusing to me that the most popular topic in social media today is “oil price hike“. Almost every Whatsapp group that I am part of talks about the RON97 gasoline MYR0.07 price increase! The ups and downs of fuel prices in Malaysia should not surprise us because many elements contribute to the volatility, not only in my home country but also globally. In short, the upward trend is not so surprising because of the geopolitical events around us.

Yesterday, I wrote a little bit about the oil and gas industry (please see PART 1 here). As an introduction, the blog entry yesterday should set up a good foundation to where we are heading next. What had really happened to the world of energy almost 150 years ago, and why it has boomed so rapidly until today? Even when the experts in energy matter are panicking to search for alternative resources, the world has yet to surrender their hopes in finding for more oil reserves soon. Why?

Gasoline Prices
Gasoline prices movement are depending on various factors. Prices in developed countries are not comparable to the prices in Malaysia due to the mechanics of social well-being that are not comparable. In Malaysia, gasoline prices should be regulated by a government-appointed agency reporting directly under the parliament (where the consumers can have their say the most). This is because Malaysia is an oil producing country, and also a developing nation. (Image Source: – Multimedia)

As we are now hearing more promising news about renewable energy and its fantastic potential on the demand side, where super automakers such as Tesla and Mercedes have announced their wonder products, men are still far-far away from landing on the planet Mars! What I mean is that we are not really thinking thoroughly about what is going to happen next! Neither Biofuel nor petrochemicals can be avoided at all costs! It is because, our life is not all about energy, and we depend on petrochemicals sector too as much as we depend on gas and fuels for power! We also should be thinking about the replacement of jet fuels if we want to think about the future, and flying with solar power is not a funny experiment, but it can be a classic example of overthinking of a solution.

Introduction to Oil and Gas can be as simple as getting to know about the process of producing naphtha, gasoline, jet fuels, lubricants, liquified natural gas, and some other petrochemical products. But, I am not keen to write about the process as it would be too technical. I think the best way to understand about oil and gas industry is by looking at three main categories. Oil, gas and petrochemicals!

In Oil, you just have to remember a few basic concept. The first is where we can get the material, or how to get the oil? The second, you must understand the legal aspect of getting to the resources, the same as when you go fishing (because you can’t if you do not have the license to fish!). But, in “fishing” at least you can still catch (the fish) quietly at a very remote area where nobody sees you fishing. But in oil exploration, you won’t be able to explore and drill for oil or gas without the permission from the owner of the land.

Interestingly, most lands are not privately owned by the persons, but by the governments! The third, which is probably the most crucial aspect of the oil industry is about processing and refining the crude oil that you have found, drilled and stored. There you go, the first few steps in the oil industry. Even just the oil industry, you could already see a whole lot of business potentials where loads of other small and medium enterprises can make their revenue (by collaborating with the oil and gas companies).

Maybach and Model S
The comparison of Mercedes Maybach Vision 6 concept car against Tesla’s Model S!

Almost similar to oil, the gas industry requires a slightly different approach because gas comes typically together after the discovery of oil fields. So, some of the steps like legal matters and exploration are already covered by the oil. However, gas needs more attention to logistics and storages as it will require specific technical processes before it can be consumed and delivered to consumers. Therefore, gas would have to expect more technical advancement in equipment. That is why gas is found later than oil if you learn about the oil and gas history.

Then, finally – petrochemicals that come as a critical complementary to both oil and gas, because during the process of refining and storing both oil and gas, scientists found out that other materials can be derived from these resources just after you have added some heating, water and air into it. With just a little bit of tweaking here and there, scientist found out that these chemicals that were found after some “accidental” processes, can be used to produce specific products in our modern era, and hence improving our lifestyle or quality of life!

Coming altogether, it is good to wrap up the second part (of Introduction to Oil and Gas) write-up today by giving you an example of a man who wanted to escape the chaotic city life, and so he chooses to go to Alaska and live there in a forest during a very sunny summer holiday. There, he decided to quit using a mobile phone, any gasses or fuels for heating and cooking, and also stop using any mode of transportation, so he chooses to walk instead.

Imagine you as that man, walking towards the deepest and broadest forest ever, where you know that you do not bring anything else that can be considered as oily and gassy. But wait, how about your clothes? How about your backpack? How about your food containers? How about your shoes and your glasses if you wear them still?

That is the expectation setting for Part 3, where we learn about survival without oil, gas and petrochemicals! Till then!