In Oil & Gas what is upstream and downstream?
Upstream and downstream: They're terms commonly used in the oil & gas industry but do you know what they refers to? Simply put, upstream works include the exploration and production of crude oil and natural gas, whilst downstream refers to the processes applied after extraction through to it being delivered to the customer in whatever format required.
Upstream: Exploration involves multiple activities, from acquiring land rights to conducting geological surveys, and digging exploratory wells to look for reserves of oil and gas. It is a high-risk activity for organisations, as it is very expensive and those costs are only truly recouped if the exploration is successful.
Production covers the extraction of the natural resource from the ground. This covers drilling wells (either onshore of offshore), or fracking. The next steps in the processes of refining oil and natural gasses are referred to as midstream works.
Upstream works, unsurprisingly, rely heavily on technology and electronics. Modern exploration relies on surveys conducted using sophisticated electronic equipment, which will likely inform AI and computer-based models of the area, before exploration wells are dug. Production, too, has become increasingly automated and computerised, as mechanical drilling and fracking equipment has become more advanced, autonomous, and efficient. All of these electronics, of course, mean that there is a heavy reliance on cabling to keep upstream works functioning.
Downstream: These processes are the final step in the path that oil and gas take from being in the ground to being in the hands of consumers. They are preceded by upstream and midstream works, which cover the extraction and transportation of crude oil and natural gas to refineries.
The first step in downstream works, therefore, is refining. Crude oil is refined using fractional distillation into a variety of products, including gasoline, naphtha, kerosene, and diesel oil. Fractional distillation works because these different products all have different boiling points. The crude oil is heated in the bottom of the distillation chamber until all the components turn into gases, which rise up the chamber. As they rise up the chamber, they cool, and apparatus is placed to capture the different products as they condense from a vapour into a liquid.
Processing natural gas is a much more complex process, involving multiple chemical reactions to create various end products including ethane, propane, and butane. Once both products have been refined and processed respectively, they are then packaged in various ways and delivered to consumers. This may be petroleum being transported to petrol stations, where consumers then fill their cars, or butane being bottled for use in camping stoves.
You also occasionally hear reference to Midstream works or field processing - these processes come between upstream and downstream processes in the production of oil and gas products. Once upstream works have been completed – the exploration and extraction of the raw materials from the ground – midstream works cover the initial processing, storage, and transportation of the materials to sites for further refining.
These processing works take the raw oil – which is a mixture of oil, natural gas, and natural gas liquids – and separate these components out, a process which also results in water being produced. The water is either recycled or disposed of, while the natural gas and oil are stored.
These materials are then stored in preparation for transportation to refineries where the crude oil and natural gas can be refined into a variety of products which are then sold to consumers. This is a complex process, involving multiple supply chains and transportation methods including pipelines, tankers, barges and trucks.
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