Drilling oil & selling fuels

When Ummu Auni Afif shared some photos of the exchange and network room of the telecommunications company where she works, I viewed them with the interest of someone who read engineering (but didn’t really practice much of the technical stuffs learnt). Here’s a brief sharing of the industry I’m in, as promised to her.

The oil and gas industry is broadly divided into upstream and downstream. Upstream is the ‘getting the oil from under the ground’ part, from searching for potential area, designing and building the oil rigs, and the drilling operation itself. Once the oil out of the ground, it will go to a refinery, which is already downstream – ‘getting the oil to consumers’ part. Then the refined products will be shipped to terminals (or sometimes direct to customers) and then distributed to consumers from there. We’re more familiar with fuels being sold via retail stations since we pump petrol into our cars, but I sit in the commercial sector – my department sells fuels for use in boilers and other equipments in factories, transport companies, fishing boat, agriculture trucks and machineries, logging tractors etc.

The fuels price is dependent on published market rates, and in the case of Malaysia, we refer to Mean of Platts Singapore (have to subscribe to see the published numbers). In Malaysia, the price for certain sectors is regulated by the government using the Automatic Pricing Mechanism (APM). The difference between the pump price and the market price (simplistically put, there's actually a formula to this) will be paid to the oil companies by the Ministry of Finances. Other than the retail stations, the other sector that receives government subsidies are fisheries, transport companies that meet certain criterias and express boats (ferries in Sabah & Sarawak). There are quotas tied to each companies or organizations just as there are quota for diesel at each petrol stations, as a government measure to prevent subsidized diesel being (illegally) used in the commercial sector. The ministry who monitors this is MDTCA – Ministry of Domestic Trade and Consumer Affairs.

Now on to a current issue, most of us would already be aware of the recent oil spill (major leak!) on April 10, almost two months ago. Taken from here:

An explosion on the BP operated Deepwater Horizon oil rig killed eleven crew members on April 20, 2010, sparking the greatest environmental disaster in United States history. Current estimates put the amount of oil being discharged from the broken well at above 1,050,000 US gallons per day! There are over 400 different species of animals living in the area affected by the spill. 248 sea turtles and 33 dolphins have been found dead within the spill area.

More on Reuters here.

Here’s a photo to illustrate an example of the impact to the environment, taken from here.
A bird covered in oil flails in the surf at East Grand Terre Island along the Louisiana coast Thursday, June 3, 2010. (AP Photo/Charlie Riedel)

BP share prices has dropped dramatically, some staffs have left, they are spending billions to rectify as well as to pay fines, and their public image has been tarnished. But the other oil majors are feeling the impact too. They try to help BP clean up the mess as much as is reasonable. They will be watched by the authorities and the public more closely. At the ground level, we are constantly reminded to put safety first in whatever we do. I hope such disaster (or any accident for that matter, big or small) will not happen again.