Oil and gas is a multi-million dollar, international industry which began many years back. Oil has been relevant in some capacity for thousands of years, such as lamps. Lamps began to lose its relevance as soon as safe electricity was discovered. This initially had an impact on oil but it soon restored its importance as other industries and machinery were sustained using forms of oil and gas.
The earliest known oil wells were drilled in China in 347AD. The modern history of the oil and gas industry started in 1847, with a discovery made by Scottish chemist James Young. He observed natural petroleum seepage in the Riddings coal mine, and from this seepage distilled both a light thin oil suitable for lamps and a thicker oil suitable for lubrication.
After these discovery, James Young further experimented with coal and was able to distil a number of liquids including an early form of petroleum. He formed a partnership with geologist Edward William Binney in 1850 after he patented the oils and paraffin wax, which was also distilled from coal. The partners formed the first truly commercial oil refinery and oil-works in the world, manufacturing oil and paraffin wax from locally mined coal.
At about the same time as Young, Canadian geologist Abraham Pineo Gesner, in 1846, refined a liquid from coal, oil shale and bitumen that was cheaper and burned more cleanly than other oils. He went on to name the liquid ‘kerosene’ and founded the Kerosene Gaslight Company in 1850, using the oil to light the streets of Halifax and later the US.
From these initial discoveries, new businesses were created. Polish engineer Ignacy Łukasiewicz improved Gesner’s method to more easily distil kerosene and petroleum in 1852, opening the first ‘rock oil’ mine in Bóbrka, Poland in 1854.
The first modern oil well in America was drilled by Edwin Drake in Titusville, Pennsylvania in 1859. The discovery of petroleum in Titusville led to the Pennsylvania ‘oil rush’, making oil one of the most valuable commodities in America.
It was in the late 18th and 19th century that major oil companies that still dominate the oil and gas industry today were created. Most worthy of mention is John D. Rockefeller. He founded the Standard Oil Company in 1865, becoming the world’s first oil baron. The company quickly became the most profitable in Ohio, controlling about 90% of America’s refining capacity and several of its gathering systems and pipelines. The company was dissolved by the U.S. government in 1911into several companies, one of which is ExxonMobil, the world’s ninth largest company by revenue today.
In Russia, the Rothschild family commissioned oil tankers from British trader Marcus Samuel to expand their oil operations and reach more overseas customers. Samuel’s first vessel, the Murex, became the first oil tanker to pass through the Suez Canal connecting the Mediterranean Sea to the Red Sea. The Murex became the flagship vessel of Shell Transport and Trading, which eventually merged with Royal Dutch Petroleum to become Royal Dutch Shell. Today, Royal Dutch Shell is the fifth largest company in the world and one of six oil and gas supermajors.
The discovery of oil in Masjed Soleyman, Iran by William Knox D’Arcy led to the incorporation of the Anglo-Persian Oil Company (APOC) in 1907. The British Government purchased 51% of the company to provide the Navy with oil during World War I in 1914. In 1954, APOC became British Petroleum, known today as BP, which is currently the sixth largest oil and gas company in the world.
The oil market influence was on oil consuming nations but in the late 20th century, it shifted to oil producing nations.
Iran, Iraq, Kuwait, Venezuela and Saudi Arabia formed the Organization of the Petroleum Exporting Countries (OPEC) in 1960 in response to multinationals in the ‘Seven Sisters’ including Esso and Mobil – now ExxonMobil – Shell and BP, which operated from oil-consuming countries. OPEC now has 15 member countries, accounting for approximately 44% of global oil production and 81.5% of the world’s oil reserves.
The oil and gas industry is still thriving today despite competition from renewable sources of energy, albeit in a more volatile state than ever due to world events.