As we’ve discovered oil together, we have learned about this energy commodity’s history of exploration, production, and growing global importance. Please enjoy part 3 of this series, focused on the era of oil geopolitics.
The history of oil can be divided into three parts:
- Prehistory to 1815: Era Of Small-Scale Use
- 1816 to 1938: Era Of Excavation
- 1939 to Present: Era Of Geopolitics
1939 to Present: Era Of Geopolitics
With oil as lubricant for international conflict, this era has seen national and ideological agendas pushed forward over the energy policies of industrialized nations, including China, Russia, The United States, Saudi Arabia, and Venezuela, to name but a few. Tech innovations during this era led to oil becoming an indispensable commodity and geopolitical hot-button, with the U.S. military currently the largest institutional consumer of oil in the world. In the era of oil geopolitics, those with the ability to exert their influence to gain control of oil resources don’t question right vs. wrong. Rather, they consider energy independence vs. sovereignty weakness.
Note on U.S. energy geopolitics: “The renaissance in U.S. oil and gas production over the past decade has been nothing short of remarkable. Technological advances unlocked new resources and brought about significant changes in global energy markets. Although growing U.S. oil production has changed the balance of power in oil markets, the U.S. industry is not structured to use its production toward geopolitical ends. Unlike the national oil companies of OPEC, the U.S. industry is made up of dozens of companies that make individual investment and production decisions based on their own costs, financial positions, and appetites for risk.”
- 1939-1945: World War II. Control of oil supply from Baku and Middle East played a huge role securing victory for the allies.
- 1947: Significant oil fields discovered in Alberta, Canada.
- 1948: Ghawar Field discovered in Saudi Arabia, brought into production in early 1951.
- 1949: The first commercial application of hydraulic fracturing took place near Duncan, Oklahoma.
- 1950’s: The first offshore wells were off the coast of Louisiana. Beginning in the 1950s, numerous shifts occurred that transferred control over oil and gas production and pricing from “Big Oil” and oil-consuming countries to oil-producing countries.
- 1951: Iran nationalized its oil industry then controlled by the Anglo-Iranian Oil Company (now BP), and Iranian oil was subjected to an international embargo. Robert Banks and fellow research chemist Paul Hogan discover two new types of plastic, called crystalline polypropylene and high-density polyethylene (HDPE), while working for Phillips Petroleum.
- 1956: “Peak oil” concept from geoscientist M. King Hubbert.
- 1960: OPEC was established with five founding members: Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- 1967: Great Canadian Oil Sands Ltd (later Suncor) began production of tar sands north of Fort McMurray, Alberta, Canada. Starts of the Biafran War, also known as the Nigerian Civil War (1967–1970).
- c.1970: “Seven Sisters” was a common term for the seven multinational oil companies of the “Consortium for Iran” cartel, which dominated the global petroleum industry from the mid-1940s to the mid-1970s. Alluding to the seven mythological Pleiades sisters fathered by the titan Atlas, the business usage was popularized in the 1950s by businessman Enrico Mattei, then-head of the Italian state oil company Eni. Prior to the 1973 oil crisis, the Seven Sisters controlled around 85% of the world’s petroleum reserves.The “Seven Sisters” industry group consisted of:
- Anglo-Iranian Oil Company (now BP)
- Gulf Oil (later part of Chevron)
- Royal Dutch Shell
- Standard Oil Company of California (SoCal, now Chevron)
- Standard Oil Company of New Jersey (Esso, later Exxon)
- Standard Oil Company of New York (Socony, later Mobil, now part of ExxonMobil)
- Texaco (later merged into Chevron)
- 1973: the Arab members of OPEC announced that they would cut oil production and not ship oil to United States, Europe, and Japan as punishment for supporting Israel.
- 1975: President Gerald Ford established the Strategic Petroleum Reserve. Venezuelan oil industry nationalized.
- 1977: Alaska oil pipeline completed.
- 1979: Ayatollah Khomeini took control of Iran after the Iranian Revolution, forcing the Shah of Iran to flee the country. For the second time in six years, the price of crude oil spiked and gas lines formed at the pump.
- 1970s oil crisis was followed by 1980s oil glut.
- 1978: The Amoco Cadiz oil spill.
- 1979: The Atlantic Empress oil spill. The Ixtoc 1 oil spill.
- 1980: Iran–Iraq War (1980–1988).
- 1983: The Castillo de Bellver oil spill. The incidents at the Nowruz Oil Field.
- 1984: Iraq began the Tanker War in 1984 by attacking Iranian oil facilities and vessels trading with Iran.
- 1989: Exxon Valdez oil spill.
- 1990: Gulf War (1990–1991).
- 1991: Iraq invaded neighboring Kuwait over disputes about Iraqi war debts, Kuwaiti oil overproduction, Iraqi claims that Kuwait was rightfully a part of Iraq and probably a desire to seize Kuwait’s oil reserves. Iraqi’s dump hundreds of millions of oil into the Persian Gulf in an attempt to deter coalition forces from pursuing their attack.
- 1992: Iraqi no-fly zones conflicts (1992–2003). The Mingbulak (or Fergana Valley) oil spill.
- 1994: The Kolva River oil spill.
- 1997: Mitchell Energy performed the first slickwater frack. This method substantially lowered the cost of hydraulically fracturing wells, leading to a boom in North American oil and gas production.
- 2003: Iraq War (2003–2011).
- 2004: Conflict in the Niger Delta.
- 2006: just 10 oil fields accounted for 29.9% of the world’s estimated proven reserves and 20.4% of the world’s production.
- 2007: Hugo Chavez’s decision in 2007 to abandon production agreements and other forms of collaboration with IOCs in Venezuela tightened control of PDVSA’s (The National Oil Company of Venezuela) production and access to reserves by the government.
- 2009: Transocean’s Deepwater Horizon hit a depth of 10,683 meters, making it the deepest well in the world. The record was short-lived, as the Deepwater Horizon blew up just over six months later.
- 2010: The Deepwater Horizon oil spill – 4.2 million barrels of oil into the Gulf of Mexico.
- 2012: Heglig Crisis, South Sudan–Sudan border conflict.
- 2015: Russian military intervention in the Syrian Civil War. The countries with the world’s largest reserves of crude oil were Venezuela, Saudi Arabia, and Canada. In order of highest to lowest revenue, the five largest oil and gas companies were: Saudi Aramco, Sinopec, China National Petroleum Corporation, PetroChina, and Exxon Mobil. 2015 was the worst year for oil discoveries since 1952.
- 2016: Global oil discoveries fell to a record low in 2016 as companies continued to cut spending and conventional oil projects sanctioned were at the lowest level in more than 70 years, according to the International Energy Agency. Oil discoveries declined to 2.4 billion barrels in 2016, compared with an average of 9 billion barrels per year over the past 15 years. Meanwhile, the volume of conventional resources sanctioned for development last year fell to 4.7 billion barrels, 30% lower than the previous year as the number of projects that received a final investment decision dropped to the lowest level since the 1940s. In 2016, only 13% of all conventional resources sanctioned were offshore, compared with more than 40% on average between 2000 and 2015. In the North Sea, for instance, oil investments fell to less than USD 25 billion in 2016, about half the level of 2014.
- 2017: Latin America dominated 2017 in terms of discovery size, holding six of the top ten wells. Two significant discoveries were made in Mexico, both holding between one and two billion barrels of oil equivalent in place. In South East Asia there were 18 discoveries recorded during 2017 with the largest, in excess of 100 MMboe, in Indonesia and Myanmar. The largest Middle East discovery reported during 2017 came from Lukoil’s Eridu 1 new-field wildcat drilled onshore in the Mesopotamian Basin of southern Iraq.
- 2018: Global oil discoveries see remarkable recovery in 2018. ExxonMobil’s string oil discoveries continue in Stabroek block with three major oil discoveries reported in 2018 – Ranger, Pacora and Longtail, which together could hold almost 1 billion barrels of oil or more. These finds followed previous major discoveries on the block at Liza, Payara, Snoek and Turbot. The United States reported oil discoveries at Ballymore and Dover prospects in the Norphlet play in deepwater Gulf of Mexico. America’s oil and gas reserves doubled with massive new Permian discovery. The top 5 countries in order of discovered volumes in 2018 were: Guyana, Russia, United States, Cyprus, Oman. In 2018, Bahrain made its biggest oil discovery in history.
- 2019: Venezuela Civil War
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