Petroleum Accounting: Principles, Procedures & Issues, 6th edition

Book Preface

The word petroleum refers to the hydrocarbon compounds of crude oil and natural gas that are found in underground rock formations. Reservoirs are generally thousands of feet below the surface and are made up of the remains of small marine plants and animals that lived millions of years ago. Petroleum may also seep to the earth’s surface along fault lines and cracks in rocks where it pools as tar, asphalt, or bitumen. Its name is derived from the Latin terms petra (rock) and oleum (oil). In current usage, petroleum refers to both crude oil and natural gas.

Human use of petroleum is as old as recorded history. Ancient cultures used sticky crude oil to bind objects and repel water. Five thousand years ago, the Sumerians used asphalt to inlay mosaics in walls and floors. Mesopotamians used bitumen to line water canals, seal joints in wooden boats, and build roads. Chariots were greased with pitch by Egyptians, who also placed coatings of asphalt on mummies. The Chinese were the first to discover underground deposits of oil and gas, and even transported those hydrocarbons in bamboo pipelines.

Modern uses of petroleum and its byproducts include:

• Transportation fuels including gasoline, diesel fuel, jet fuel, and compressed natural gas (CNG)
• Heating fuels such as propane, heating oil, and natural gas
• Electric generation fuels such as natural gas and fuel oil
• Manufactured products such as plastics and building materials