Water, energy and environment

How oil is formed

Crude oil is a naturally occurring liquid that is found in rock reservoirs underground. It forms over millions of years from the remains of plants and animals that sank to the bottom of oceans and lakes. The remains were covered by layers of sediment and the pressure from this sediment and the heat from the earth’s crust transformed the remains to oil. 
 
Crude oil is a fossil fuel which is refined to make petroleum. Fossil fuels are non-renewable sources of energy as they cannot be replenished over short periods of time. 

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Types of crude oil

Crude oil can be as thick as black tar (or vegemite) or as thin as water. Crude oil can also be classified based on its contents. If it contains small amounts of sulphur is called ‘sweet’ or if it contains a large amount of sulphur is called ‘sour’. Australian crude oils are sweet.

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Extracting and refining crude oil

Oil reservoirs can be found inland (onshore) or under the sea bed (offshore).

Wells are drilled into the oil reservoirs that are thousands of metres deep. The pressure in the reservoir can force the oil to the surface naturally or the oil may need to be pumped to the surface.
 
The extracted oil is transported to oil refineries where it is processed into refined petroleum products such as petrol, diesel, kerosene and heating oil. Most plastics are also products of crude oil.

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Oil in South Australia

The Cooper and Eromanga basins in the north east of South Australia are the state’s largest oil producers.

Regulation of oil exploration and production in South Australia

In South Australia a licence to explore for oil (petroleum) must be obtained before any exploration activity can begin.

Further approvals need to be obtained before any production activities can begin. Approvals are also needed before constructing and operating a pipeline to transfer the oil from the wellhead to a refinery. 

Information about the application process

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