Understanding How The Oil and Gas Industry Works

Upstream vs downstream

We all know that the production of oil and gas is a huge global industry. Wars have been fought for rights to it, markets have crashed because of the cost of it, and American’s can feel the effects in their pocketbook every time they go to the gas pump. What many people don’t know, however, is how the process of finding, shipping, and refining oil and gas really works. Here’s a quick breakdown of the three major components of the petroleum industry:

1. Upstream Oil and Gas– The United States currently ranks 3rd in the world in crude oil production, coming in only behind Saudi Arabia and Russia. Crude oil production starts with the upstream oil and gas work. You can think of the upstream part of the oil and gas process as the exploration and production phase. This exploration can include drilling initial wells, and then drilling and operating larger wells that actually bring the oil and gas to the surface. What happens when it gets to the surface? Just keep reading to find out.

2. Midstream Oil And Gas – Midstream oil and gas, probably not surprisingly, is the link between the upstream and downstream components of the oil industry. Some believe that this is the most important part of the process because it involves the actual processing, storing, and transporting of the product. With 200,000 miles of oil and refined product pipelines in the United States today you can surely understand how crucial it is to have proper organization during the midstream oil and gas process.

3. Downstream Oil and gas – As you probably guessed, the downstream part of the oil and gas process is the last step. Downstream involves refining, processing, and purifying raw natural gas and eventually marketing and distributing the products to the public. So, put simply, the downstream part of the process handles the ins and outs of getting the product to your local gas station.

The United States produced about 8.7 million barrels of crude oil per day in 2014. With those kinds of numbers it’s not hard to explain why the upstream, midstream, and downstream oil and gas processes need to exist. Without them the industry would fall quickly into chaos. No part of the process could exist without the other and surely if one part failed it would greatly affect the other 2 sections. Oil and gas industry trends may change, but the three part process of getting oil from the ground and available to the public is here to stay.