
As we have already seen, we use lots of crude oil. So to prevent it from running out we look for more crude oil. We can go around drilling holes but it is an expensive operation and so we only drill if we think there is a good chance of finding crude oil. Even then dry holes are not uncommon. There needs to be a certain set of circumstances for us to find trapped crude oil. Of course, oil and natural gas are finite resources so we will run out eventually.

Source Rock
When the zooplankton and phytoplankton died and fell to the ocean floor, sediment helped bury the organic material. Over the maturation process, the sediment is transformed into rock and we use the term source rock for this material. Finding it is a good sign that oil might be nearby. Within this rock, we can find microfossils, and along with biomarkers, it is good evidence that oil was created from organic material. The source rock indicates where the oil was when the kerogen to bitumen to crude oil transformation occurred the crude can escape the source rock. So now the challenge is to find where it might have gone.
Structural Trap
The crude oil and natural gas can travel through porous rocks. If there is nothing to stop it, then the crude oil will reach the surface and eventually degrade (recall the oil spill page - one approach to cleaning up an oil spill is to do nothing - it is a natural material and there are natural processes to destroy it, although this approach does not work well if the spill is large or close to sensitive areas!) We call these locations where we find crude oil (or natural gas) at the surface seeps. A seep is a good indication of crude oil underground. However, often the material at the surface has lost the light ends (compounds with low volatility) and are not very valuable. Thus, we need to find structural traps where impervious layers prevent the crude from progressing any further. Examples of structural traps are: salt domes (the SPR is kept in large salt caverns "drilled" with water to dissolve the salt), faults, and anticline folds.
Reservoir
A structural trap does not do us any good unless there is a porous rock that can hold lots of crude oil. The idea that we drill down into "lakes" of crude oil is a fallacy - we drill into a porous rock and the pressure of the crude oil and associated natural gas pushes the oil out of the ground.
This PDF file provides very good information about how crude oil is found and the technologies that are utilized to find and extract the crude oil. Ensure you look it over.
One thing you'll become familiar with is the use of seismology in the search for crude oil and natural gas. Below is a movie captured from a software program called the "Seismic Duck", which, via an animated sequence, shows how seismic waves are used to detect oil sources deep in the ground. If you've ever seen ultrasound technology at work, a similar principle is at work. Please watch the following (:44) video.
Click for transcript.
[Animation opens with a duck sitting on top of the earth's crust. Under the crust is a thick layer of sediment. Then there are three natural gas and oil deposits. As the animation goes on, sound waves are shown to emit from the duck and detect where the oil and natural gas is located. Once found, it is drilled into.] Dr. Mathews: When we talk about seismic waves what we are doing is setting off an explosion, or actually an air can, we don't tend to use many explosives. And it is the sound waves that propagate through the sedimentary rock, and they bounce back. And by having a whole multitude of sensors we can determine a good picture of what underlies the ground. And once we do that we have a good idea about where the structural tracks are. We can go ahead and drill down. Now in this situation, there is a porous rock shown containing water, which is the blue line. So we are going to drill down to extract the crude oil and the natural gas. You don't extract all the natural gas because it is helping push the crude oil out. And of course, at the same time, we are also getting water as well. [Animation ends]