With any discussion revolving around the oil and natural gas business, three terms–upstream, midstream, and downstream–are commonly used. The meaning behind these terms runs parallel with oil production’s timeline and process, as they define the three sectors of the oil and gas industry.
Phoenix Capital Group Holdings, LLC offers services to help mineral rights owners understand their opportunities in both retaining and cashing out of their ownership positions. Here, Phoenix Capital Group explores oil production’s timeline and process, including upstream, midstream, and downstream.
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Introduction
The oil and gas industry is a crucial player in the current global economy and encompasses expedition and research, drilling, refining/cultivating, transportation, and storage. Pre-drilling activities are the most expensive and time-consuming part of the oil production process and often take more than six months. This process includes surveys, obtaining land and mineral rights, permits, approvals, water and electricity, infrastructure development like roads, and more.
What Are Upstream Businesses?
Upstream activities are those that involve exploration or production. Geological and geophysical operations like surveying potential oil sites and developing the reserve into a gas or oil field are examples of upstream businesses. Essentially, finding the oil or gas, getting permission to access it, and removing it from the ground are all upstream business activities.
Upstream activities are the things you typically think of when you think of the oil industry: men and women out on the oil field working and producing a product, along with everything that goes along with this aspect of the industry.
Examples Of Upstream Activities
Examples of upstream activities include surveying, drilling, collecting permissions from landowners to ensure it is okay to access the area, signing contracts, and even plugging and leaving inactive wells included within the scope of upstream activities. Anything that involves locating, preparing, or extracting oil is included here.
What Are Midstream Businesses?
As a connecting stream for the upstream and downstream functions, midstream businesses work on things like transporting the oil or gas via pipeline networks, rails, trucks, tankers, barges, or other means. Entities like pipeline transport companies, trucking and hauling companies, shipping companies, terminal developers and operators, and other similar businesses are all included, along with dispatchers and secondary workers.
Examples Of Midstream Activities
Midstream activities include transportation means, such as the previously mentioned tankers, barges, and trucks, along with storage tanks and other companies that work to preserve the oil or gas until it is ready to be sent to downstream businesses for use.
What Are Downstream Businesses?
Downstream businesses are oil refiners, sellers, and retailers. Refinery companies are the most well-known examples, but people who sell or market the oil are also part of downstream businesses.
Examples Of Downstream Activities
Oil refineries, natural gas processing plants, petrochemical companies, energy trading and marketing companies, retailers, electricity distributors, utility providers, and manufacturers of hydrocarbon byproducts all perform downstream activities. If it has a hand in the final stages of refining or marketing, it is a downstream business operation.
There are many facets to the oil production timeline, all of which play a unique role. Working as a well-oiled machine, so to speak, all of the moving parts and different players come together to ensure that oil is found, accessed, refined, and delivered to retailers.
About Phoenix Capital Group Holdings, LLC
Phoenix Capital Group offers services to help mineral rights owners understand their opportunities in both retaining and cashing out of their ownership positions. Phoenix Capital Group also provides opportunities for people to partner with and invest alongside the Company. Their focus is on educating, serving, and guiding their clients with integrity and humility.
If you would like to better understand your options from a friendly industry professional, give them a call at (213) 316-8720.
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