The oil and gas (O&G) industry is one of the biggest industries in the energy market. The O&G industry is generally categorized into three segments—namely, “upstream,” “midstream,” and “downstream” based on the operation stage in the supply chain.
While “upstream” extract oil and natural gas from the ground, “midstream” moves them safely, and “downstream” provides fuel oils and finished petroleum products.
Oil and natural gas producers make natural resources like oil and natural gas accessible and usable for heating buildings, propelling vehicles, producing electricity, providing industrial feedstock, and much more.
Furthermore, the O&G industry is among the largest sectors in terms of dollar value. Capital-intensive and complex processes drive the day-to-day operations of oil and gas companies that are highly regulated at multiple levels to ensure regulatory and safety compliance.
Many large oil companies act as “integrated” companies that combine the three stages, i.e., upstream operations with midstream and downstream operations.
Keep reading to learn more about the oil and gas segments in detail.
What is Upstream Oil and Gas?
The upstream sector includes exploration, drilling, and production of crude oil and natural gas.
Upstream success relies on extensive seismic, logging, and drilling technologies.
The upstream segment presents new business and project opportunities for oil service firms that provide services such as geological surveying, drilling, fluid hauling, and non-destructive testing.
An upstream company uses a variety of oil and gas equipment, including drilling rig equipment (bits, mud pumps, etc.) and production equipment (control valves, heater treaters, free water knockouts (FWKOs), separators, etc.).
The upstream activity tasks focus on holistic well management (locating, designing, constructing, operating, and managing) to deliver the maximum ROI (return on investment) with minimum operational footprint.
Exploration and production (E&P) constitute the upstream processes of locating and extracting crude oil and natural gas reserves.
The core stages of E&P include:
What is Midstream Oil and Gas?
A ship carrying oil in bulk is called an “oil tanker” whose carrying capacity is measured in deadweight tons (DWT).
The midstream processes natural gas, natural gas liquids (NGLs), and sulfur. As a key component of the midstream activities, fractionation plants are responsible for removing NGLs from the produced oil and gas stream and fractionating processed liquids into various products (butane, ethane, propane, and LPG).
Some midstream operations demonstrate functions related to upstream and downstream sectors. For example, the midstream sector may have natural gas processing plants to purify raw natural gas, remove elemental sulfur, and produce natural gas liquids (finished end products).
Companies engaged in oil and gas operations may need access to midstream assets. Some independent midstream companies provide services to access midstream assets, such as fluid compressors, fractionating and dehydration tanks, gas storage facilities, LPG (liquefied petroleum gas) and LNG (liquefied natural gas) storage plants, oil pipelines, etc.
In the United States, oil and gas movement via interstate pipelines is regulated by some policies.
An organization such as the Federal Energy Regulatory Commission (FERC) helps strengthen the regulatory environment by formulating policies in the midstream phase of the oil and gas industry.
A midstream company’s main processes consist of:
Upstream vs. Downstream Oil and Gas Industry
Upstream Oil & Gas Industry
Blackridge Research & Consulting – Global Oil & Gas Market Report