Petroleum Engineering Essay Example | Topics and Well Written Essays - 1000 words

Petroleum Engineering - Essay Example In simple terms, the task of engineers is to provide a link between ideas and physical reality (Lyons& Gary 12). Petroleum falls in the category of minerals used by people or humanity for many years. For a couple of decades ago, people used materials or minerals where they referred to them by different names such as oil from rocks, shining water, and sweat of devil. Some of the names have been in place for several years such as naphtha and petros (Lyons& Gary 17). In Greek, Petros stands for rock while in Roman it means oil or petroleum. For many years, surface springs and tar pits have been the only source of oil or petroleum. However, this argument has not been reliable because most people look for petrol beneath the earth’s surface. For instance, during 1859, Drake Edwin struck oil after drilling 69 feet (Lyons& Gary 22). On August 27, the year 1859, United States of America marked the origin of Petroleum and Oil industry (Lyons& Gary 24). Despite the fact that few people h ad participated in commercial sale of oil, Drake was instrumental in proving that production of oil could occur in large scale. Analysis of crude oil shows that the composition of crude oil takes has carbon, hydrogen, oxygen, nitrogen, and sulphur. Carbon and hydrogen forms a big percentage in terms of composition of crude oil than nitrogen and oxygen. In terms of products, crude oil has the following products: hydrocarbon gas, petroleum ether, gasoline, kerosene, light gas, heavy gas and reside. All these products have different uses. For example, hydrocarbon gas finds its use as a natural gas while petroleum ether is a cleaner or solvent (Lyons& Gary 32). Petroleum occurs in rocks that are of three types, namely sedimentary, metamorphic, and igneous rocks. The classification is these rocks are according to origin as shown below. Igneous rocks originate from cooling and solidification process of magma in molten state. Magna results from the interior of the earth following eruption process. These rocks form almost 95% of the earth’s crust. They have a crystalline and hard structure with voids or pore spaces. This category of rocks consists of basalt, granite, serpentines, and andesite (Lyons& Gary 34). Sedimentary rocks forms the second classification of rocks used to produce petroleum. These rocks emanate from deposition of both inorganic and organic matter. Deposition of animal and plant fossils alongside igneous rock occurs in layers or strata. Sedimentary rocks fall further into three types, namely chemical, organic, and clastic sediments. Formation of clastic sediments is through deposition after a series of breakdown and transport. Clastic sediments mostly include breccias, sandstone, sands, gravels, siltstone, and marble. The second type of sedimentary rock is the chemical sediment that has mineral salts such as sulfate and chlorides. Lastly, the formation of organic sediments is through compaction process by wind, ice, snow, or rain (Lyons& Gary 39). Metamorphic rocks forms the last category of rocks that results from tectonic process in an environment that has elevated temperature and pressure. This environment changes the structure and composition of sedimentary and igneous rocks to form metamorphic rocks. These types include shales, marble, and quartzites (Lyons& Gary 40). Two groups of theories explain the actual occurrence

Interest Rates an Exchange Rate Essay Example | Topics and Well Written Essays - 1250 words

Interest Rates an Exchange Rate - Essay Example The government raised interest rates to increase the demand for pound in the international market, this increase in demand was anticipated to make the pound stronger against other major currencies, however a speculative attack by investors led to the loss of funds, the government lost and some investors gained huge profits on that day. This model depict that there is a relationship between the prevailing interest rates and the exchange rate, using historical data a country can use the data to estimate an appropriate model that will help in forecasting future values. The model depicts that a rise in interest rate will lead to a rise in the value of the currency, when interest rates fall then the value of the currency declines, the following diagram shows the relationship between the two variables: From the above diagram it is evident that an increase in the interest rates will lead to an increase in the value of the currency, however a decline in interest rates will lead to a decline in the value of the currency. However the assumption of this model is that there are no speculative attacks and that the exchange rate depends on the demand and supply of the currency. The relationship between the exchange rate and the interest rates can be demonstrated using two currencies from countries with different interest rates, we take hypothetical values and countries to demonstrate this and we choose country A and country B, for country a the interest rate is 4% and for country B the interest rate is 6%, those who have their funds deposited in country A will earn 4% for their investment, however it is more profitable to invest the funds or deposit the amount in country B due to high interest rates and therefore higher earning. For this reason therefore investors will move their fund from country A to country B, investors from country A will exchange their money to get country B currencies, as a result of this the demand for country B currency will rise and therefore will the value of the currency. Therefore higher interest rates will encourage investors to invest in country B, if country B was to increase the interest rates from 5% to 10% then the higher will be the demand for their currency. British forecast: The exchange of the pound in 1992 was determined by the market demand and supply, in September the British government experienced a decline in the demand for their currency, many investors started selling the pound to acquire other currencies, as a result of this demand declined and therefore the pound lost value against other currencies. The government had a role to play to resolve the crisis and this was done by increasing interests rates as described by the above model, the prevailing interest rates at the time was 10% and the government increased the interest rates to 12%, however despite this effort the investors still sold the pound to hold other currencies. Realizing this problem the government on the same day announced an increase in interest rates to 15%, this was the second attempt to resolve the problem, however it was unfortunate that investors kept on selling the pound and purchasing other currencies, as a result of this the value of the pound declined and this resulted into a decline in the value of the