Files on the oil and gas industry as a market for steel provide information on the nature of the industry, its competitive structure, its worldwide capital investments, their effect on the steel market, petroleum company financial analyses, world oil-country-tubular-goods (OCTG) mills, the OCTG market, U.S. statistical data on OCTG, world OCTG shipments, oil and the environment, and steel for offshore drilling in the Gulf of Mexico.
Analysis: Underscoring industrial interdependence, a steadily increasing U.S. automobile population in the 1920’s pushed gasoline demand and crude oil production to record levels. The gasoline that fueled the auto industry’s success required increased crude oil production and advances in the cracking process first introduced in 1913 by Standard Oil of Indiana, which had doubled the yield of gasoline from crude to 20%. During the 1920’s, oil output rose from 440 million to one billion barrels, and with gasoline yields improving to more than 40%, gasoline production increased to 435 million barrels.
By about 1925, exploratory drilling already had been carried out at most U.S. locations with surface indications of possible oil or with favorable domed land formations, like the one that led to the famed 1901 strike at Spindle Top in Texas . Thereafter, the science of geology, once spurned by many oil companies, came into wider use, along with the first portable seismographs, to help locate domes in the sub-strata.
More recently, to meet the world’s growing oil and gas needs, oil explorers and geologists have been locating new reservoirs by using three-dimensional seismic technology teamed with powerful computers to turn voluminous sonic and acoustic measurements into sophisticated maps and high-resolution images, affording them detailed views of geological formations many miles below the earth’s surface, whether land or sea. While Spindle Top’s oil was a thousand feet down, today’s wells are commonly drilled to 15 thousand feet or more. Even at increasing depths, however, new technology promises to improve the success rate of exploratory wells from 30% to some 50% in the years ahead.
The deeper the exploratory or production well to be drilled, the more steel is needed in the form of drill pipe, oil-well casing, and tubing. A well 15 thousand feet deep requires about 55 tons of OCTG, with additional steel plates and structural shapes needed to build a drilling platform and a 15-story drilling rig. But this is just the beginning. Substantial quantities of steel also are needed to collect the crude oil or natural gas, to build and maintain refinery capacity, to move the gas, oil, and refined oil products by pipeline to distant markets, and to construct storage and distribution facilities.
In a continuing effort to reduce drilling costs and maximize production from new and established reservoirs, the oil and gas industry has been adopting a number of innovative drilling technologies. These have included the horizontal production well, which laterally penetrates a reservoir and circumvents the need to drill additional vertical wells; the multilateral well, which is drilled from an established well, which is then closed off; and the designer well, drilled with precise targeting and often redirected to tap multiple pockets of oil within a given reservoir. Although these innovations can reduce the steel consumed in drilling, the oil and gas industry would be unable to function without steel, as would the automobile industry that makes cars and trucks so dependent on oil and gasoline.