Upstream vs Downstream Oil and Gas Operations

Upstream Production

Upstream vs. Downstream Oil and Gas Operations

When you think of the oil and gas industry, do you picture companies that search for deposits, drill wells, and pull these resources from the ground? These companies all fall under the category of “upstream” oil and gas. Industry professionals also refer to these as Exploration and Production (or E&P) operations.

We can define upstream as the companies, equipment, and processes used in the exploration, drilling, and production of crude oil or natural gas.

  • Exploration involves obtaining land and mineral leases from land owners. It also includes conducting geological and geophysical surveys to explore for and find underground reservoirs of oil and gas.
  • Drilling is creating the hole in the ground that will be used as an oil and/or gas well. Rig contractors and service companies typically carry out this process.
  • Production operations recover and process oil and gas to remove water, sand, and other impurities that may exist.

We can define downstream as the companies, equipment, and processes used to refine, distribute, manufacture, and retail crude oil or natural gas.

  • Refining further process and purifies oil and gas for market.
  • Distribution transports these energy sources all over the world.
  • Manufacturing operations use oil and gas to create thousands of products, including asphalt, plastics, rubber, pharmaceuticals, lubricants, and much more.
  • Retail operations market and sell the final products to end users.

The category in between these two is midstream. In the oil and gas industry, midstream refers to the companies, equipment, and processes that gather, transport, and store crude oil, natural gas.

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