Oil, gas and coal: how they form, are found, moved and priced: How fossil fuels form

1.1 Crude oil is a varied mixture of hydrocarbons, graded by density and sulfur

Crude oil is not a single substance. It is a mixture of thousands of compounds, most of them hydrocarbons, molecules made only of carbon and hydrogen. Some are straight or branched chains (alkanes), some are rings (cycloalkanes), and some are the flat, stable rings called aromatics. Mixed in are smaller amounts of compounds containing sulfur, nitrogen and oxygen, and traces of metals such as nickel and vanadium.

Because the mix differs from field to field, crudes vary a great deal. Light crudes flow like thin oil and contain many small molecules that refine easily into gasoline and diesel. Heavy crudes are thick and contain large molecules that need more processing. The industry measures this with the API gravity scale, on which higher numbers mean lighter oil. Sulfur content is the other key grade. Low-sulfur crude is called sweet; high-sulfur crude is sour, and it needs extra treatment to make fuels that meet modern rules.

These differences matter commercially. A light sweet crude such as the North Sea Brent blend or US West Texas Intermediate commands a higher price than a heavy sour crude from Venezuela or parts of the Middle East, because a refinery can turn it into valuable products with less equipment and energy. Refineries are built for particular crude diets, so a sudden loss of one grade cannot always be replaced by any other.

On average a kilogram of crude holds about 42 MJ of energy, and a standard barrel of 159 litres about 6 GJ. That high, consistent energy content, in a liquid that can be pumped, is the starting point of oil's dominance.

• Smil, Oil: A Beginner's Guide (2008) · via Smil Mastery Course, M6 'What oil is and how it formed'
• Smil, Energy in Nature and Society: General Energetics of Complex Systems (2008) · via Smil Mastery Course, M6 'What oil is and how it formed'
• Reliance Industries. Refining & Marketing (company web page). · web

1.2 Oil and gas were cooked from plankton in a narrow temperature window

Despite the popular picture of dinosaurs, most oil comes from algae and other plankton of ancient seas. When they died, most were eaten or decayed. In some places, though, the sea floor was poor in oxygen, so their remains settled into mud without being fully broken down. Over time this organic-rich mud became a fine-grained source rock, and the organic matter in it turned into a waxy solid called kerogen.

As more sediment piled on top, the source rock was buried deeper and grew hotter. At roughly 65 to 150 degrees C, usually at depths of about 2 to 4 kilometres, the long molecules of kerogen crack into the smaller ones of liquid oil. This range is called the oil window. Deeper and hotter still, the molecules break further into gas, mostly methane. Too shallow and cool, and the kerogen never matures at all.

Oil and gas are lighter than the water filling the pores of rock, so once formed they migrate upwards through cracks and porous layers. If nothing stops them they reach the surface as seeps and degrade. Commercial deposits exist only where the fluids moved into a porous, permeable reservoir rock, such as sandstone or limestone, and were then stopped by an impermeable cap rock. Common traps are domed folds called anticlines, faults that seal a layer, and salt domes.

The whole chain is extremely wasteful. Smil estimates that on average about 10,000 units of carbon in the original buried biomass were needed for one unit of carbon in oil that reaches the market.

• Smil, Oil: A Beginner's Guide (2008) · via Smil Mastery Course, M6 'What oil is and how it formed'
• Smil, Natural Gas: Fuel for the 21st Century (2015) · via Smil Mastery Course, M6 'What oil is and how it formed'

1.3 Coal comes from land plants, and its rank sets its value

Coal has a different origin. It formed from land plants, mainly the trees, ferns and giant horsetails of vast swamp forests, with the largest deposits laid down around 300 million years ago. Waterlogged swamps were low in oxygen, so dead plants piled up as peat rather than rotting away. Buried under later sediments, the peat was compressed and heated, losing water, hydrogen and oxygen and becoming steadily richer in carbon.

Geologists and traders describe this progression as rank. Peat is the first stage. Lignite, or brown coal, is soft and wet; the IPCC's default value is about 12 MJ per kilogram. It is usually burned in power stations beside the mine because it is not worth transporting. Sub-bituminous and bituminous coals are harder, with defaults of about 19 and 26 MJ per kilogram; bituminous grades make up most of the coal traded internationally. Anthracite, the highest rank, is mostly carbon and burns with little smoke, though as mined it holds no more energy per kilogram than good bituminous coal.

For markets the most important division is by use. Thermal coal, sometimes called steam coal, is burned for heat, mostly to raise steam in power stations and industry. Coking coal, or metallurgical coal, is a bituminous coal with the special property of softening and then re-solidifying into strong, porous coke when heated without air. It is essential for blast-furnace steelmaking and sells at a premium. India has large reserves of thermal coal, much of it high in ash, but imports most of the coking coal its steel mills need.

Natural gas is the third fuel in the family. Some forms alongside oil, some from deeper, hotter source rocks, and some, known as coal-bed methane, is held within coal seams.

• Smil, Energy in Nature and Society: General Energetics of Complex Systems (2008) · via Smil Mastery Course, M6 'What oil is and how it formed'
• Smil, Energy Transitions: History, Requirements, Prospects (2010; 2nd ed. 2017) · via Smil Mastery Course, M6 'Shale gas, coal and the fossil future'
• IPCC (2006). 2006 IPCC Guidelines for National Greenhouse Gas Inventories, Vol. 2 Energy, Ch. 1, Tables 1.2 and 1.4. · web
• Ministry of Coal, Government of India (2019). Ash content in the coal, Lok Sabha unstarred question 677, 26 June 2019. · web

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Check your understanding

What does 'sweet' mean when describing a crude oil?

What is the oil window?

Why does a steel mill pay more for coking coal than a power plant pays for thermal coal?