Upstream and downstream in oil and gas from A to ZDec 7, 2019
You may know enough details about the upstream, but there is less knowledge when it comes to the downstream segment of the petroleum industry.
Every industry has its own sections and manufacturing system.
When it comes to a huge industry like oilfields, every single detail about its sectors whether its small or big mat.
So before answering the most frequently asked questions about these two sectors, let us first know the definitions, the history, and the very first beginning of each sector.
- The Upstream segment
- The history of the upstream stage
- The stages of the upstream
- What is the upstream pressure design?
- The downstream segment
- The distribution in the downstream
- What is the value chain in upstream and downstream?
- How upstream and downstream affect the environment?
- How to avoid environmental pollution?
- Upstream and downstream oil and gas companies
- Marketing for upstream and downstream in the oil and gas industry
- The conclusion
The Upstream segment
The word upstream means the opposite direction where a stream comes up near to the source.
This is the definition of the word, but we are going to define the expression itself which is that every sector in any industry is being set up according to the business’s structure and the organized functions.
The upstream sector is one of the three main sectors in the oil and gas industry which are the upstream, midstream and downstream.
When it comes to business, the upstream sector is known as the sector of exploration and production.
The upstream stage is all around the wells and where you can locate them, how far and how deep you need to drill for them, and it is also about how to design and manage them.
The history of the upstream stage
The early start of this stage was in 1860 in Italy, when it was the drilling for the first oil well.
In Milan, Europe’s biggest gas field was found and marked the starting point of the oil and gas industry in Italy and
the whole of Europe.
The stages of the upstream
Every sector requires some organized and well-studied stages and movements for the process.
The upstream sector requires three stages to perform its role.
They are exploration, drilling, and production.
So let me shed some light on those steps one by one.
This is where it all starts.
The explorations search for the wells trying to locate them.
They also determined to figure out the best ways to have access to those wells.
This stage also involves deciding the drilling would be onshore or offshore.
And this point leads us directly to the second stage.
What is drilling?
Actually, this is one of the most common and frequently asked questions when it comes to this industry.
Drilling is a tool or a specific machine that is specially designed with rotating cutting parts in order to make wells.
In other words, drilling is a sort of an activity in which a hole is being bored using the rotating cutting machine in order to facilitate the access to the geologic sources in which the oil and gas are sorted in them.
And as it was mentioned that there are two kinds of drilling,
the onshore and the offshore drilling.
Onshore drilling: means drilling holes under the earth’s surface.
Offshore drilling: means drilling holes under the water.
And both types of drilling have their advantages and we use them to extract the oil and gas from underground to the surface.
So deciding whether you want to go along with the onshore or offshore requires good research on the benefits of each type, and later you will be able to take a decision on which type is good for your company, or you will just put yourself in a win-win situation and be a mid-shore company which will the benefits of both types.
The drilling takes us to the third stage which is also considered as the second section of the whole upstream sector.
Understanding this stage is the main key to your business’s success.
In this stage, you must focus on creating the real product, by extracting oil and gas from the liquid.
What is the upstream pressure design?
If you are an expert then the answer to this question must have been similar to you.
But for someone who is new to this field, you have to know that the pressure in the upstream in the oil and gas sector includes those main processing lines, those vapor spaces found in the tanks, and last but not least those lines
which supports fuel.
Handling this mission of managing and controlling the pressure of upstream is a huge part of the strategy of the
The downstream segment
After knowing the definition of the upstream, it becomes so much easier to figure what does the downstream means.
As a definition, in general, it means the same way or the same direction the stream comes up.
But if we are going to mention the expression itself in this field, then it means the size of the petroleum industry which is responsible for the refining and distribution of the products.
The downstream industry supports producing so many products such as gasoline, diesel, plastic, and etc.
Like the upstream sector, the downstream industry has sections and stages to complete its process too.
They are the distribution, the selling outlets, and production plants.
The distribution in the downstream
Distribution means getting the products from the company and transfer it to the consumers through the selling outlets.
By 2019 you must ask yourself a very important question which is, will technology help in this stage?
You can easily predict the answer which is going to be absolutely yes.
Technology can make you easily know the exhaustion at customers’ places.
You will be able to set up a better strategy for your delivering plan.
What is the value chain in upstream and downstream?
In order to grow in this industry, you have to know the value of every sector in it.
The upstream value is all about your suppliers and their products.
And it also gives due care about environmental performance.
This helps you to find the perfect opportunities to add more value to you and your suppliers, in addition to reducing the risks in the market.
Caring about your product design will improve the upstream value chain.
This is all about what happens after the products leave your company.
Yes, the actual work ends at this moment, but your social work starts.
Every business faces some challenges at any stage of the process, but the most important challenge and risk that you have to avoid or find a solution for it is the greenwash.
How upstream and downstream affect the environment?
It is a well-known fact that the oil and gas industry has a major impact on the environment.
This industry affects the environment in several aspects and that is what we are going to discuss.
1- The Air impact
In the stages of exploration and production which are included in the upstream stages, the air would be deeply affected because of the drilling and the equipment which are being used to prepare the land.
Some of the vapors generated by the drilling operations are reacting with the atmosphere producing acid rain which is very dangerous to human health.
When it comes to natural gas processing, there is less impact on the air.
But there are some factories which are responsible for the natural gas processing contain some poisonous flammable gases and the substances emitted from these operation processes cause air pollution.
2- Water pollution
Upstream and downstream in oil and gas also affect the water quality.
This happens in many unpredictable ways.
Like the mud which was a result of the drilling operation around the site could cause some pollution to the body water.
And it is very important to manage this in order not to waste a very important layer that is able to prevent seeping the mud to the body water.
Producing water which a result of the well’s water and still contain some of the crude oil and natural gas, there are some chemicals which are being used in order to separate this water from the crude oil and gas, and that may cause some issues for human health.
And let us not forget about the most and the essential part of the water pollution which is the oil spill.
It usually happens during the transportation stage due to a leakage from the pipe.
3- The social impact
This kind of affection is all about understanding the social and the job opportunities which can be easily get affected by the activities happening in this essential stage.
How to avoid environmental pollution?
Each problem and challenge has got the solutions which are designed especially for it.
Some policies must be set up in order to reduce pollution.
You have to do some research on every kind of pollution which is caused by the oil and gas industry, to know the amount of the damage, you must measure the leak which is happening in order to find the perfect solutions.
Here comes the main game maker of any industry, which is the technology.
Technology makes everything much easier, it helps you to collect more data, to set more well-studied plans in order to develop the industry.
Last but not least you have to make sure that your factory is a little bit far from the city and the places which are crowded with people in order to provide safety for them when it comes to air and water.
Upstream and downstream oil and gas companies
The companies in this field are divided into three different categories which refer to the three sectors of the industry.
The upstream, the midstream, and the downstream.
Some companies tend to combine two kinds or maybe three of the sectors.
The upstream sector is managed by the companies which are doing all the identifying, producing raw materials,
and the extracting operation.
On the other side, we have the downstream sector which is managed by those companies which have direct communication with the consumers because it is more about distribution and selling the products.
And the world’s most famous oil companies are located in the USA, according to US Energy Information Association,
The U.S. alone consumed an average of 20.5 million barrels of petroleum a day in 2018. This amounts to around 7.5 billion barrels over the year and approximately 22% of total world petroleum consumption
Marketing for upstream and downstream in the oil and gas industry
Like any other business, the upstream and downstream in oil and gas companies need to market their brand and the products.
To have a marketing department in your company is a very important step towards your business success.
Marketing is the only department that is responsible for your business’s image in front of consumers.
Also, it has the responsibility of two main missions and they are branding and your products’ quality.
But when it is about marketing the most essential two sectors of the oil and gas industry,
it is a little bit different from marketing for the whole industry itself.
Marketing for the oil and gas industry
Branding: your brand is the only way that makes you familiar to people.
And the role of marketing is making sure that your brand will be represented in a suitable way for your business
and for your company.
The products’ quality: your products are what you offer to your consumers.
And the high-quality products are part and parcel of your company’s image.
So the marketing role in this part is advising the researchers and whoever is responsible for the products of what
the consumers actually need and expect from your brand.
Marketing for upstream and downstream sectors
Yes, they are two different sectors with completely different activities, but they are equally important when it comes to marketing.
Upstream: simply, it is responsible for setting up plans and well-studied strategies to offer a long-term market for the company.
Also, it is responsible for predicting the image of the market and what it has to offer for your company and what your consumers will want from your brand to the next level.
So your marketing team has to keep it up with the latest news and trends about the industry.
Downstream: it is all about the sales and the after-sales services.
Every simple idea your sales team comes up with it will absolutely benefit the downstream strategy.
Your team must focus on the campaigns and the surveys, to know what people actually think about your brand
and how to develop it.
Upstream and downstream are the main two sectors and the body of the oil and gas industry.
Upstream in oil and gas is also known for the exploration and production sector and it contains three essential activities which they are the exploration, drilling, and production.
The downstream is all about the products you get after extracting oil and gas.
The value chain in the upstream is more about the suppliers and environmental performance.
But the downstream value is about your products.
You have to know that upstream and downstream have an effect on the environment is so many aspects but also, there are so many solutions to avoid this problem.
Companies in this field are various and different, but some companies work in these two sectors together.
Marketing for the upstream and downstream is a part of marketing for your business and company.
Last but not least, the oil and gas industry is a big and important matter that requires being updated about every single detail in the market and needs you to count every single move or step you are taking in order to keep yourself in the industry’s race.