If you are thinking of investing in oil, this article aims to give you some background information before making an investment decision. It looks at how the quality of crude oil is determined and explains the different types of crude oil.
How is the quality of crude oil determined?
Not all crude oils are equivalent; they vary considerably in quality depending on where they occur. The most significant differences are in their sulphur content, weight and acidity.
Sulphur content:
Low-quality crude oils are heavy oils with a high sulphur content, while high-quality crude oils are light oils with low sulphur content. There is a considerable price difference between them.
Low sulphur crudes are known as sweet, while high sulphur crudes are known as sour, as that is how early oil prospectors considered they tasted. High sulphur oils are less desirable as:
- They are more polluting and have a higher global warming index
- They are more expensive to refine as they are more corrosive
- Their high sulphur content means they contain up to 3% less of valuable hydrocarbons
Weight:
The heaviness of crude oil is stated in terms of its API gravity; in scientific terms an inverse function of its specific gravity (SG), which is its density compared to water.
The formula is API = (141.5/SG) -131.5 which was devised so that most petroleum liquids have an API that falls between 10 and 70.
Acidity:
The third quality factor is acidity, measured as total acid content and expressed as total acid number (TAN). The TAN quantity of potassium hydroxide (KOH) in milligrams needed to neutralise one gram of oil. Crude oils with high TAN values are more corrosive and thus more difficult and expensive to refine. Most refineries can process them only by blending them with low TAN crudes.
The different types of crude oil
Oil is categorised using a classification system created by the American Petroleum Institute (API) and measured in terms of its heaviness (or gravity). There are four categories of crude oil:
- Light crude oils have APIs greater than 31.1
- Medium crude oils have APIs between 22.3 and 31.1
- Heavy oils have APIs between 10 and 22.3
- Extra heavy crude oils have APIs less than 10
Light crude oils are the most expensive as they contain a higher fraction of the more volatile (lighter) hydrocarbons and a lower wax content. They also produce the highest yield of petrol and diesel fuels.
Oil and gas industry
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