Oil: A Beginner's Guide - Vaclav Smil

Amazon link

"There is no author whose books I look forward to more than Vaclav Smil." — Bill Gates

In March, Science (link to piece) ran a long piece on Vaclav Smil, describing him as a visionary (but quiet: not at the forefront of the public's attention) thinker on energy who can count Bill Gates as one of his ardent followers. So when I saw this book in the airport I had to pick it up, and all the better that it was a recently revised 2nd edition (2017). This revision comes at the perfect time, as the global energy paradigm certainly has changed since 2008: the shale oil revolution, in particular, has resulted in an energy independent US. Additionally, Smil has plenty to say on the so-called 'Green Revolution,' namely, that oil will be here to stay because energy transitions are always length and complex processes.

Despite being termed 'A Beginner's Guide,' Smil compresses and contextualizes the complex history and importance of oil/liquid fuels into 200 pages/60000 words by getting straight to the point/numbers — no flowery narrative to be found here. Summarizing some of the thought threads I found pertinent:

Broad picture:

  • This is what the average barrel of crude produces

  • The global reserve/production (R/P) ratio for crude oil is as high as it's ever been: >50; this implies that we at least have 50y worth of reserves at current consumption/production levels — this is astonishing considering the 24x in oil production 1950-2017

  • 2/3 of world's refined products are used in transportation

  • In 2015, 93% of all energy used by road vehicles, trains, ships, and planes came from crude oil

  • Taxes collected on liquid fuels by the G7 > annual oil revenue of OPEC

  • Commercial viability of oil is determined by (1) a rich source rock, (2) a permeable reservoir rock, and (3) a tight trap that seals the liquid in place

  • Oil distribution is highly asymmetric: supergiants (each >5 billion barrels) represent 50% of all conventional crude oil; meanwhile the Persian Gulf region contains > 50% of all supergiants

    • Oil production/well is also asymmetric: 2012 global average is 70b/well, vs OPEC 2015 700b/well average, and Saudi 2,900b/well

    • Nationwide cost averages: $10/b for Saudi/Iran, $25/b for US/Canada, and $45/b for North Sea

  • Oil's energy density is 2x common steam coals, 2.5x of air-dry wood

  • Oil's higher hydrogen/carbon ration means combustion generates 20-25% less CO2 per unit energy than coal

Peak oil:

  • Despite repeated calls that oil production has 'peaked,' AKA Hubbert's Peak (that US production would peak between 1993-2000), which was given credence because he accurately predicted US oil production between 1970-80, new drilling techniques, i.e. fracking, have changed the paradigm

  • Peak oil depends on accurate forecasting of demand, which depends on the speed of green tech emergence, and production, which depends on oil industry tech... decidedly unknowable

Natural gas:

  • Natural gas is a petrochemical feedstock, but can also replace gasoline in passenger cars directly as CNG (compressed), or indirectly by generating electricity for electric cars via highly efficient gas turbines; the only use cases it cannot replace are flying/maritime transport/long-distance land

  • It is the least polluting fossil fuel and R/P for natural gas is also >50; conventional reserves are concentrated in Iran (18%), Russia (17%), Qatar (13%), and Turkmenistan (10%); Middle East (40%)

  • Estimated Ultimate Recovery of natural gas at 85% of crude oil equivalent, with undiscovered but technically recoverable resources estimated to be as large as existing reserves of conventional gas


  • In 2000, 23,000 wells produced <2% of US crude oil, in 2015 there were 300,000 fracked wells supplying 51% of the country's oil production

  • It's still illegal in NY state due to environmental/health concerns, link


  • US gasoline consumption is 41% of the global total, EU 13%, China 10%

  • US gasoline demand may have peaked thanks to increasing vehicle efficiency: in 2016 it was 0.1% above the previous record set in 2007, while 2025 EPA stickers will require 43mpg for small vehicles and 37 for light trucks; for context: average performance for US small vehicles was 20mpg in 2000, 21.5 in 2010, and 24.8 in 2015

  • In 2015, commercial aviation consumed jet fuel equivalent to 12% of the total gasoline consumed by road vehicles

  • Pipelines have the lowest cost of transporting crude oil on land, ~$4/b for Alberta-TX vs. $15 via rail

History of oil exploration:

  • Ancient China operated percussion wells in the Han dynasty (200 BC) to extract natural gas in Sichuan

  • First rotary drill used in 1895 in Texas

  • Howard Hughes invented rotary cone drills in 1901

  • Schlumberger invented electric well logging in 1911, the single biggest advance in oil exploration

  • Halliburton started his oil-well cementing company in 1922

  • Horizontal wells were first drilled in 1929, as of early 2017 the longest producing well was drilled by Rosneft with a horizontal reach of 12000m

How oil is formed:

Dominant theory of oil's origin: gradual transformation of ancient dead organic matter; Russian-Ukranian school of thought: hydrocarbons formed under high pressure and temperatures deep in the Earth 

  • The organic matter that forms the basis of most hydrocarbons come from the Mesozoic era (when mammals/birds/flowering plants first appeared); this organic matter was degraded by thermophilic bacteria at temperatures up to 80C

  • In general, the process required high photosynthetic productivity with high rates of undisturbed accumulation

  • ~1000x more ancient biomass is needed to transfer a unit of carbon from organic matter to crude oil than to coal: 1L of gasoline represents some 25000kg of marine biomass