How the Oil and Gas Industry Works

oil and gas workersThe oil and gas industry is an important part of any country’s economy. Without it, other industries will not function the way they do right now. The industry is also divided into three main sectors.

Read on to learn more about them:

1. Upstream – Exploration and Production

Before effective oil and gas marketing can be done, companies must find these two resources. In the exploration phase, an oil and gas company will need to:

  • Use various means such as geological surveys to look for potential deposits
  • Obtain permission or a lease or buy the site if it’s a private property. Even if it is public property, the company still needs to obtain permission from the local authorities.
  • Conduct drilling operations to confirm the existence of the deposits

Meanwhile, in the production phase, the company needs to:

  • Devote the manpower and time to drill and extract the resources
  • Construct storage tanks for the resources while awaiting shipment
  • Prepare plug and abandonment plans for wells that can no longer produce

Upstream is the most difficult of the three sectors. The company can spend millions of dollars in exploration without finding any natural deposits. Governments also impose strict rules and regulations on the industry. Even political upheavals can undermine the company’s ability to extract oil and gas resources.

2. Midstream – Transportation from Production to Refineries

This the middle phase and some of its activities overlap with the upstream and downstream sectors. Primarily, this is the part where the resources are transported from the production facility to the refineries. The main transportation system consists of pipelines that can extend to the refineries and purification plants. This is also where the resources are sold on a wholesale basis.

3. Downstream – Refining to Finished Products

This is the final phase where the resources are refined or purified. Afterward, the products are transported to distributors or retailers, such as gasoline stations. Refining crude oil can yield a variety of products, such gasoline, diesel, kerosene, LPG, and jet fuel.

Companies in every sector of oil and gas industry must invest in the right marketing strategy to ensure a steady stream of income. They should find a reliable provider of marketing services.