Upstream, Midstream, and Downstream Oil and Gas Industries

The oil and gas industry is a vast ocean of challenges and stages that must be taken starting from the very first step of studying a piece of land or ocean to determine its capability and probability of holding suitable amounts of hydrocarbons (exploration) all the way until it reaches your car’s fuel tank (the consumer). Which is why the entire industry had to be broken down into three main sectors in a chronological manner: Upstream, Midstream, and Downstream.

i) The Upstream Industry

Being the beginning of any oil/gas prospect, the upstream industry is both the most important and most hazardous. It primarily focuses on the exploration and production phases, making it the very first building blocks for any subsequent stage to come.

This industry is the very complex and deserves very careful thought and planning as it is truly a high-risk, high-reward prospect. It begins with the exploration of the areas and determining their susceptibility to hold hydrocarbons, drilling exploratory wells, and subsequently drilling and operating the most practical wells and managing them to produce the recovered oil and gas to the surface.

However, each of these steps are massive fields of their own and can in turn be broken down to require separate career paths and many different job roles. Exploration, for example, comprises many methods of surveying different types of terrain and surfaces (exploration of marine areas is significantly different from that of land areas), the following step would be finding a way to utilize and lease the land with all the legal and governmental restrictions this may entail.

ii) The Midstream Industry

As the oil and gas industry grew more complex, the need to transport (sometimes temporarily storing) the crude product of the upstream site to the downstream facility resulted in distinguishing both fields by a third important middle step. The midstream industry is important, as it is responsible for the careful handling and shipping of the produced oil or gas to the facilities responsible for turning it into usable products for the consumer.

The most famous methods of transportation of crude hydrocarbon products are:

  • Marine vessels
  • Pipelines
  • Railway lines

Careful planning and designing of the method the oil or gas is transported from the producing well to the processing plants (refineries) must be carried out as it this can play a major role in time and cost management. The wrong method of transportation can result in severe impacts on the product quality and the environment.

iii) The Downstream Industry

The downstream industry is critical as it delivers the final product to the markets and consumers. It mainly includes the crude oil processing plants or refineries, which distribute the finished products to the market or third party marketing companies. A fierce competition often arises among these product-processing facilities as each is concerned with delivering the best possible quality (and economically lucrative) products like vehicle gasoline, diesel, jet fuel, heating fuel, asphalt, lubes… etc.

Bottom line

As previously mentioned, the petroleum industry is huge and complex. It may be broken down into three main sub-sectors, but the boundaries between these industries is blurry and almost impossible to distinguish. Some major companies merge the downstream facilities into the upstream or downstream sectors, while others break each of them into smaller processes.

It is important to remember that every single process within the petroleum industry is critical and requires deep thought and careful planning. They pose various safety, environmental, and economic risks that must be addressed with extreme caution and dedication.

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