Oil Well

Written by Tara Peris
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The oil well is in some respects only a small part of oil investing. Although the success of the industry is clearly predicated on our ability to identify and access crude oil, there is a great deal more to the industry. As crude oil in its natural form is not of much use, it must proceed through any number of steps before it is ready for use by the public.

Within the oil well industry, considerable attention is given to topics like exploratory drilling. This makes sense given that there is widespread concern about limited oil supplies and one must find the fuel in order to profit from it. However, once extracted from the oil well, there are numerous steps the oil must proceed through, from transportation to refinement and marketing. Understanding these steps is key to a successful investment.

After the Oil Well: The Refinement Process

Perhaps the most relevant stage is reflected in the refinement process. Because crude oil is of little use in its natural form, it must undergo a refinement process that readies it for public consumption. The first step of this process involves crude distillation. During this stage, the crude oil is put into a distiller after going through a heat exchanger. The job of the distiller column is to separate substances such as diesel gas, kerosene, and other substance residues.

Following this initial distillation process, these substances are each subject to further distillation cuts. The oil continues through several stages of cleaning so that it can be readied for production. This is only the beginning as transportation, production, and marketing are each their own very complicated processes.


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