Book Review: Oil 101

Oil 101, by Morgan Downey, is without a doubt the most detailed and comprehensive book I have ever read on the oil industry. In fact, I am not aware that another book like this even exists. This is not an opinion piece, nor is it a peak oil book. It is a collection of factual information covering all aspects of the industry. From oil in the ground to product in the tanks (and everything in between) - this book contains everything you could ever want to know about the industry. I like to think I know quite a bit about different areas of the industry, but I still managed to learn a lot from this book.

Oil 101 by Morgan Downey

It doesn't matter if you are a complete novice or already know quite a bit about the industry; there is something for everyone in this book. Downey displays a deep understanding across all sectors of the industry. For instance, if I didn't know better I would have guessed that the refining chapter was written by someone who had spent an entire career in the refining industry. The only books on refining that I have read that were more comprehensive were those written specifically as technical guides for running a refinery. Other areas are covered in similar detail.

There is no aspect of the industry left uncovered. The book starts with a brief history of oil, and then dives into fundamentals like assays, chemistry, exploration and production, refining, transport, storage, and reserves. There is a separate section on the oil markets that really gets into layers of the onion that I didn't even know existed. One thing this section did for me was disabuse me of any notion that I ever want to trade oil futures (unless of course I have someone like Morgan Downey advising me).

The material in the book has already generated a number of essay ideas for me, as I learned a lot of new information. A few examples:

  • There are 500,000 producing oil wells in the U.S., 80% of which produce 10 bpd or less. Still, this accounts for 20% of U.S. production.
  • There are 1600 retail stations selling compressed natural gas (CNG) in the U.S., which is in the same range as the number of stations selling E85.
  • 20% of new transit buses in the U.S. run on CNG.
  • There is an actively traded freight forward market, in which you can purchase tanker routes (e.g., Ras Tanura to Yokohama)
  • Valero, the largest U.S. refiner, is not a member of the API.

One of the things that surprised me is that I didn't spot more factual errors in the book. After all, this book is primarily a collection of a great many facts. With so many facts listed, I expected to find quite a few errors. I did not, although I did find a couple.

On page 194, Downey writes that the RVP of ethanol is 19 psi and is much more volatile than conventional gasoline. Actually, the RVP of ethanol is 2.3 psi. However, when blended with gasoline, ethanol behaves as if it had a much higher RVP. The reason for this is that ethanol is slightly polar, and doesn't mix ideally with nonpolar gasoline. This means that ethanol does raise the RVP of gasoline when it is blended, contrary to what would be expected for a nonpolar blending component with a 2.3 psi RVP. So one could argue that when you are doing blending calculations the "effective RVP" of ethanol in gasoline is much higher than gasoline - but the true RVP is quite a bit lower.

In that same section Downey shows a table (Table 9-10) that states that the nationwide RVP for winter gasoline is 11.5 psi. However, in places where winter temperatures are quite cold, the allowed winter RVP is as high as 15 psi. (Since atmospheric pressure is about 14.7 psi, that means that your winter gasoline can boil if kept until summer). I covered some of these issues in Refining 101: Winter Gasoline.

There are a couple of other items to note. First, the book is not referenced, which meant I was often left wondering about the source of a specific fact. (Presently, this involves me e-mailing Morgan and asking for a source). Second, while the book is almost exclusively just factual information, there were a couple of occasions in which Downey injected his opinion. One instance occurs on page 277, where he is discussing oil shale, and writes that it is "a clear net waste of energy." Another case occurs on page 317 where he writes "the so called hydrogen economy is mere hype..." While I happen to agree with him on both counts (at least the way things presently stand), these were instances where he departed from the agnostic style employed throughout the rest of the book.

Others Agree

As I write this, there are 17 reader reviews of this book at Amazon. All 17 gave the book 5 Stars, which is pretty impressive. These reviews are a testament to the wealth of information in the book. Dave Summers (Heading Out) reviewed the book here a couple of months ago, and wrote that this book would be one of the select few to occupy a spot on his desk "because it has a vast reservoir of the small, but invaluable, snippets that provide that useful addenda that help in understanding a story."

Last month David Henson, President of Choren USA, came to visit me in Dallas and I happened to have the book sitting on my kitchen table. David picked it up several times, and finally said in his charming Australian accent "This is really great stuff! I have to pick up a copy." I told him that I hadn't read it yet, but in the three weeks since then I managed to finish it (I read when I fly, and over the 3 weeks I have flown a lot). To this date I have never known of David to be wrong on an issue pertaining to energy, and found his assessment of the book to be spot on as usual.


To conclude, if you want to understand the oil industry, Oil 101 will tell you what you need to know. In fact, "Oil 101" will be my stock answer from now on for anyone who wants to learn more - whether you know nothing or already feel like you are well-informed. Likewise if you want a very good reference book that deals with even the most esoteric information (e.g., like the differences in various grades of asphalt, or the differences between hydraulic fracturing and thermal recovery). In fact, I would even strongly recommend the book to anyone who had just gone to work for the oil industry and wanted a detailed understanding of how the entire oil supply chain works.

I too have read the book, and agree that it is very good. The book has an amazing amount of information about a broad range of subjects, from petroleum history, to refining, to finance. The book has a good index, and is well organized, so it works as a reference, even if you don't have time to read every chapter.

I had the opportunity to meet Downey at the EIA meeting. I asked him how he had managed to pull together so much information from so many sources. He said he had worked for five years on the project, reading everything he could, and asking experts in different areas. After he had finished with a draft of the book, he had various experts review chapters in their areas. He also had ordinary readers who knew nothing about oil review the book, to see if it was understandable. In total, he said there were about 50 people who read all or parts of the book before it was finished.

The care he put into the book shows in the finished product, IMO.

It works as a reference book but contains no references itself (according to R2)? Is this true?

The book contains a bibliography at the end, but there are no actual references in the book. In other words, specific facts are not referenced. I asked Morgan about this, and he said that much of the time there were simply no good references for the information.

I have it too, a great book on this topic.

(Click book cover image below to purchase at Amazon)

Thanks for the review, just bought a copy.

Hi Robert

I suspect many TOD readers would like to know whether Oil 101 casts light on the issue of Peak Oil. Does it digest/analyze/incorporate the more recent (and more sobering) data from IEA? Does it allude to seminal Peak Oil books like Twilight in the Desert?

He includes tables of the OPEC reserves revisions, US production including peak, and the backdated discoveries vs. consumption chart we all are familiar with from ASPO. He covers Hubbert's legacy and describes the situation with global reserves using a novel term: Trust But Don't Verify. But all in all this takes up less of the book than the section describing semisubmersibles. It's a very dry and informative read altogether. A similar book, the Nontechnical guide to petroleum geology , exploration , drilling , and production, perhaps has the advantage over Morgan's book as regards geology, but covers far less ground - and I don't think anyone without a burning interest in these things would consider spending $50 for it.

and I don't think anyone without a burning interest in these things would consider spending $50 for it.

You should have bought it from and saved 18 bucks.

Price: $32.17 & this item ships for FREE with Super Saver Shipping.

Back atcha Ron:

Price: $55.20 & this item ships for FREE with Super Saver Shipping. Details
You Save: $13.80 (20%)

Amazon must use a random walk algorithm for their prices if they swing that wide in a day. I did shop around for a bargain, using AddALL book search and price comparison to see who had the best deal; all sellers were ca. my price. I don't mind, though, it was worth the money.

EDIT: Which book are we talking about? Morgan's is around $32, the Nontechnical Guide is around $50.

The book is not about peak oil, but it talks about peak oil (several pages) and makes a point of countering all of the common arguments against peak oil, in its chapter on reserves.

In the reserves chapter, Downey mentions that one of the arguments against oil production peaking is that many believe that discoveries increase when oil prices rise. He points out that this is not true, based on the ASPO backdated discovery graph. He also points out that they also haven't risen as the result of improved technology.

The chapter lists the following reserve methods:

1.The infinite reserves approach - (Always enough to meet demand, whatever it is - IEA given as example)

2. The macro approach - USGS approach - "useful for a very general and highly inaccurate sense of how much oil is undiscovered"

3.Field-by_field method - IHS /CERA- "incredibly difficult to be accurate as there are so may variables and a lack of honest data"

4.Decline curve analysis approach - Mentions Hubbert - Points out the indications are only accurate within a 10 to 15 year range

5. Trust but don't verify approach - explains that BP Statistical Review, Oil and Gas Joural, and World Oil use this approach. Section goes on to discuss probable OPEC reserve overstatement, and gives table of phony increases.

In the decline curves section, Downey says:

"Although available global discovery data is not precise, there is a general acceptance that global discoveries of crude oil peaked and began a steady decline in the early 1960s despite advances in technology (Fig.14-2 ASPO graph). If depletion occurs globally at the same rate as it did in the lower US then world production should peak between 2005 and 2015."

There is also a graph showing US oil production, with an arrow when Hubbert made his prediction and another arrow when production actually peaked.

The book doesn't say anything about other things to read about peak oil - Twilight in the Desert or other.

The trust but don't verify approach was described in 1996 by the late L.F. (Buz) Ivanhoe. See the first issue of the Hubbert Center Newsletter. Saddam Hussein (or his spokesperson) was among those trusted.

Robert, Thanks for the great review. I will have to save up to get a copy.

On a slightly mmore "me centric" note, does he get into the area of propane in the book? Propane prices for home heating just seem to go all over the place and inventory levels don't always seem to make much sense sometimes either.
I do wish someone would do a really good post on the topic of propane.
Cost, uses, transportation, prices, future price prediction, future availability etc....
For many of us living in the country without natural gas available and seeing the big difference in price per 100,000 BTU between propane and natural gas it would be a big help in trying to plan for the future.

Propane is fractionated or distilled from natural gas. Most natural gas is 95+ percent methane (C1- 1 carbon atom). The longer the carbon chain the less present in NG.


Also, the longer the carbon chain the lower pressure at which it will stay liquid at a given pressure.

Some gas has more "liquids" as the heavier molecules are called. I believe I read that some shale gases were rich in liquids, meaning that propane supplies should increase in the future. Perhaps someone in the shale gas business can verify?

These liquids can also be produced from oil and the economics change with oil prices. I also remember a brief period when NG was in tight supply and gas liquids separation plants were shut down to get volume in the pipelines.

The volatility of NG prices has been extreme with cold winters in 2000 and hurricanes of later years. I got tired of NG gas price spikes and equipped my new house with a heat pump with gas back up; however I live in a mild climate. I would have gone to a geothermal heat pump had I lived further north. The main reason I have any NG is because of the water heater, but it would have been cheaper to go all electric, both on an installed cost and operating basis.

Extra storage that would allow one to not refuel in a cold winter may be the best solution if you want to avoid the price spikes.

On a slightly mmore "me centric" note, does he get into the area of propane in the book?

I am in Europe just now, and don't have the book with me. But my recollection is that he had a fair amount on all of the gases produced as byproducts from oil refining. Thus, methane, ethane, propane, and butane all got some attention. He mentioned the fact that propylene is an important raw material that is produced from propane. But without the book here, I can't remember whether he devotes 2 paragraphs or 2 pages to propane.

"One of the things that surprised me is that I didn't spot more factual errors in the book."

I'm halfway through the book and so far it is a good read, with the exception of one glaring error in the first couple of pages, where Downey asserts that the world's petroleum industry began with the first well in 1859 in Pennsylvania. It wasn't even the first well in North America, which was at Oil Springs, Ontario, in 1858.

Other than that, it is a good book if somewhat American-centric.