Since the subject comes up often I thought I’d start an official Origin of Petroleum thread. The following explanation covers the topic quite well. Please keep in mind that it is relatively mickey-mouse (and somewhat sloppy) but represents a nice basic background discussion; definitely prerequisite reading to more detailed arguments on the subject..
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ORIGIN OF PETROLEUM
There are two basic schools of thought surrounding the formation of petroleum deep within the earth’s strata. There is the more widely accepted organic theory and the not so popular inorganic theory.
Inorganic Theories
Deep seated terrestrial hypothesis
From as early as 1877, Dmitri Mendele'ev, a Russian who developed the periodic table,
postulated an inorganic origin when it became apparent that there were widespread deposits of petroleum throughout the world. He reasoned that metallic carbides deep within Earth reacted with water at high temperatures to form acetylene (C2H2). This acetylene condensed to form heavier hydrocarbons. This reaction can be easily performed under laboratory conditions.
This theory was modified by Berthelot in 1860 and by Mendele'ev in 1902. Their theory was that the mantle of the earth contained iron carbide which would react with percolating water to form methane:
FeC2 + 2H2O = CH4 + FeO2
The problem with this theory is the lack of evidence for the existence of iron carbide in the mantle. These theories are referred to as the deep-seated terrestrial hypothesis.
Extraterrestrial hypothesis.
In 1890, Sokoloff proposed a cosmic origin for petroleum. His theory was that hydrocarbons precipitated as rain from original nebular matter from which the solar system was formed. The hydrocarbons were then ejected from earth's interior onto surface rocks.
Interest in this inorganic theory heightened in the 20th Century as a result of two discoveries: The existence of carbonaceous chondrites (meteorites) and the discovery that atmospheres containing methane exists for some celestial bodies such as Saturn, Titan, Jupiter. The only known source for methane would be through inorganic reactions.
It has been postulated that the original atmosphere of earth contained methane, ammonia, hydrogen and water vapor which could result is the creation of an oily, waxy surface layer that may have been host to a variety of developing prebiotic compounds including the precursors of life as a result of photochemical reactions (due to UV radiation).
The discovery (Mueller, 1963) of a type of meteorite called carbonaceous chondrites, also led to a renewed interest in an inorganic mechanism for creating organic compounds. Chondritic meteorites contain greater than 6% organic matter (not graphite) and traces of various hydrocarbons including amino acids.
The chief support of an inorganic origin is that the hydrocarbons methane, ethane, acetylene, and benzene have repeatedly been made from inorganic sources. For example, congealed magma has been found on the Kola Peninsula in Russia (Petersil'ye, 1962) containing gaseous and liquid hydrocarbons (90% methane, traces of ethane, propane,
isobutane). Paraffinic hydrocarbons have also been found in other igneous rocks (Evans, Morton, and Cooper, 1964).
Problems with inorganic hypotheses.
Firstly, there is no direct evidence that will show whether the source of the organic material in the chondritic meteorites is the result of a truly inorganic origin or was in an original parent material which was organically created. Similar reasoning applies to other celestial bodies.
Secondly, there is no field evidence that inorganic processes have occurred in nature, yet there is mounting evidence for an organic origin.
And thirdly, there should be large amounts of hydrocarbons emitted from volcanoes,congealed magma, and other igneous rocks if an inorganic origin is the primary methodology for the creation of hydrocarbons. Gaseous hydrocarbons have been recorded (White and Waring, 1963) emanating from volcanoes, with methane (CH4) the most common. Volumes are generally less than 1%, but as high as 15% have been
recorded. But the large pools are absent from igneous rocks. Where commercial accumulations do occur, they are in igneous rocks that have intruded into or are overlain by sedimentary materials; in other words, the hydrocarbons probably formed in the sedimentary sequence and migrated into the igneous material (more on this later when we discuss traps).
Conclusion: There are unquestioned instances of indigenous magmatic oil, but the occurrences are rare and the volumes of accumulated oil (pools) are low. Other problematic issues: Commercial accumulations are restricted to sedimentary basins, petroleum seeps and accumulations are absent from igneous and metamorphic rocks, and gas chromatography can fingerprint the organic matter in shales to that found in the adjacent pool. Thus current theory holds that most petroleum is formed by the thermal maturation of organic matter - An Organic Origin generated the vast reserves (pools) of oil and gas.
Organic Theory:
There are a number of compelling reasons that support an organic development hypothesis.
First and foremost, is the carbon-hydrogen-organic matter connection. Carbon and Hydrogen are the primary constituents of organic material, both plant and animal. Moreover, carbon, hydrogen, and hydrocarbons are continually produced by the life processes of plants and animals. A major breakthrough occurred when it was discovered that hydrocarbons and related compounds occur in many living organisms and are deposited in the sediments with little or no change.
Second were observations dealing with the chemical characteristics of petroleum reservoirs. Nitrogen and porphyrins (chlorophyll derivatives in plants, blood derivatives in animals) are found in all organic matter; they are also found in many petroleums.
Presence of porphyrins also mean that anaerobic conditions must have developed early in the formation process because porphyrins are easily and rapidly oxidized and decompose under aerobic conditions. Additionally, low Oxygen content also implies a reducing environment. Thus there is a high probability that petroleum originates within an anaerobic and reducing environment.
Third were observations dealing with the physical characteristics. Nearly all petroleum occurs in sediments that are primarily of marine origin. Petroleum contained in nonmarine sediments probably migrated into these areas from marine source materials located nearby. Furthermore, temperatures in the deeper petroleum reservoirs seldom exceed 300oF (141oC) . But temperatures never exceeded 392oF (200oC) where porphyrins are present because they are destroyed above this temperature. Therefore the origin of petroleum is most likely a low-temperature phenomenon.
Finally, time requirements may be less than 1MM years; this is based on more recent oil discoveries in Pliocene sediments.
However, physical conditions on the Earth may have been different in the geologic past and therefore it may have taken considerably more time to develop liquid petroleum.
Organic Hypothesis - Summary.
The organic theory became the accepted theory about the turn of the century as the oil and gas industry began to fully develop and geologists were exploring for new deposits. Simply stated, the organic theory holds that the carbon and hydrogen necessary for the formation of oil and gas were derived from early marine life forms living on the Earth during the geologic past -- primarily marine plankton. Although plankton are microscopic, the ocean contains so many of them that over 95% of living matter in the ocean is plankton. The Sun's energy provides energy for all living things including plankton and other forms of marine life (Fig. 1 & 1A).
As these early life forms died, their remains were captured by the processes of erosion and sedimentation (Fig 2).
Successive layers of organic-rich mud and silt covered preceding layers of organic rich sediments and over time created layers on the sea floor rich in the fossil remains of previous life (Fig. 3).
Thermal maturation processes (decay, heat, pressure) slowly converted the organic matter into oil and gas. Add additional geologic time (millions of years) and the organic rich sediments were converted into layers of rocks. Add more geologic time and the layers were deformed, buckled, broken, and uplifted; the liquid petroleum flowed upward through porous rock until it became trapped and could flow no further forming the oil and gas reservoirs that we explore for at present (Fig. 4).
But the chemistry of the hydrocarbons found in the end product (oil, gas) differ somewhat from those we find in living things. Thus changes, transformation, take place between the deposition of the organic remains and the creation of the end product. The basic formula for the creation of petroleum (oil, gas) is:
Petroleum End Product = ([Raw Material + Accumulation + Transformation + Migration]
+ Geologic Time)
Petroleum, according to the organic theory, is the product of altered organic material derived from the microscopic plant and animal life, which are carried in great volumes by streams and rivers to lakes or the sea, where they are deposited under deltaic, lacustrine and marine conditions with finely divided clastic sediments.
These environments produce their own microscopic plant and animal life, which are deposited with the organic materials introduced by the streams and rivers. As deposition of the organic material takes place in these environments, burial and protection by clay and silt accompany it. This prevents decomposition of the organic material and allows it to accumulate.
Conversion of the organic material is called catagenesis. It is assisted by pressure caused by burial, temperature and thermal alteration and degradation. These factors result from depth, some bacterial action in a closed nonoxidising chemical system, radioactivity and catalysis. Temperature, as thermogenic activity, appears to be the most important criterion, with assistance other factors as applicable. Accumulation of organic and clastic material on a sea or lake bottom is accompanied by bacterial action. If there is abundant oxygen, aerobic bacteria act upon the organic matter and destroy it.
Plant and animal remains contain abundant carbon and hydrogen, which are fundamental elements in petroleum. Shale and some carbonates contain organic material that bears hydrocarbons of types similar to those in petroleum. These rocks are not reservoir rocks and could be considered ultimately to be source beds. The hydrocarbons are of the same type as those found in living plants and animals and consist of asphalt, kerogen and liquid forms. The best source rocks are considered to be organically rich, black-coloured shales, deposited in a non-oxidising, quiet marine environment.
Generation of crude oil
Figure 5 – Organic composition in shales
Organic material in shale averages approximately one (1) percent of the shale rock volume. Clay mineral constituents comprise the remaining 99 percent.
Kerogen is an insoluble, high molecular weight, polymeric compound which comprises about 90 percent of the organic material in shale. The remaining 10 percent comprises bitumens of varying composition, which, according to some researchers, is thermally altered kerogen. As alteration occurs, kerogen is developed by the increasing temperature in the closed system.
Temperature increases with depth. Normal heat flow within the earth’s crust produces an average geothermal gradient of approximately 1.5 oF for each 100 feet of depth. Maturation studies on various crude oil types indicate that temperatures required to produce oil occur between the depth of approximately 5,000 feet and 20,000 feet under average heat-flow conditions.
Pressure, like temperature, is a function of depth and increases 1 psi for each foot of depth. Pressure is caused by the weight of the sedimentary overburden.
Bacterial action is important in the conversion of organic material to petroleum at shallow depths. It is involved in the process of breaking down the original material into hydrocarbon compounds, which eventually become biogenic gas.
Kerogen is a primary factor in forming bitumens that increase and migrate to accumulate as crude oil. Thermal conversion of kerogen to bitumen is the important process of crude oil formation. Thermal alteration increases the carbon content of the migratable hydrocarbons, which leaves the unmigratable kerogen components behind.
Maturation of kerogen is a function of increased burial and temperature and is accompanied by chemical changes. As kerogen thermally matures and increases in carbon content, it changes from an immature light greenish-yellow color to an overmature black, which is representative of a higher coal rank.
Generation of Natural Gas
Natural gas comprises biogenic gas and thermogenic gas with differences contingent upon conditions of origin.
Biogenic gas forms at low temperatures at overburden depths of less than 3,000 feet under anaerobic or conditions associated with high rates of marine sediment accumulation. Oxygen in the sediments is consumed or eliminated early. And before reduction of sulfates in the system. Methane, the most common of natural gas constituents, forms after the sulfates are eliminated by hydrogen reduction of carbon dioxide. Anaerobic oxidation of carbon dioxide produces methane. Current estimates suggest that approximately 20 percent of the world’s known natural gas is biogenic.
Thermogenic gas forms at significantly higher temperatures and overburden pressures. It contains methane and significantly larger amounts of heavier hydrocarbons than biogenic gas. As time and temperature increase, progressively lighter hydrocarbons form as wet gas and condensate in the latter stages of thermogenesis.
SOURCE: Copy n’ Paste from here http://www.scribd.com/doc/15920120/Origin-of-Petroleum; no info on title, author or date. The intro talks about $60 oil so it can't be that old.












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, I don't see why not as it has been experimentally verified:

