Upstream, Midstream, Downstream? Test Your Knowledge - Oil & Gas Industry

Technologies move quickly in the area of seismic and geophysical surveys. New data acquisition techniques such as wide azimuth (WAZ) and multi-azimuth (MAZ) allow data of higher quality to be gathered, with more possibilities for processing into 3D and 4D interpretations. Geophysical surveys are a part of the upstream sector.

As companies prepare to drill, there are a number of steps that must be incorporated in the project in order to have a successful outcome and manage risk. The well planning process involves well design, the procurement of the appropriate type and capacity rig, and the preparation and execution of drilling contracts. These activities are a part of the upstream sector.

Drilling for oil and gas involves much more than vertical wells. Horizontal wells are often used, and it is important to be able to measure and monitor the progress of drilling. Techniques are used for guiding the drill bit, and the art and science of horizontal drilling requires careful geosteering. Wells are often drilled from a single pad which minimizes environmental impact. This is a part of upstream activities.

After a discovery well has been completed, it is necessary to develop the field. Field development is accomplished by drilling and completing wells on adjacent and adjoining leases that cover the reservoir, and also by hooking up and commissioning lines and equipment used to take the production from the wellhead to separating and conditioning equipment, and eventually to tanks for storage. These are upstream activities.

Preparing the drill rig for operations, and then making sure that all the elements are in place for successful drilling operations requires engineers and technical workers to review the plans for rigging up, installing the right kind of circulating system, installing and checking blowout prevention systems, selecting drill bits, and securing drill pipe from a reputable provider. It is also important to design the drilling fluid system in order to transport cuttings, avoid blowouts, and to avoid formation damage. These steps are part of the upstream processes.

Formation evaluation can occur during the drilling of the well by examining cuttings and monitoring the mud gas. Well logging takes place after the well has been drilled and it is performed in order to get an idea of the characteristics of the formations that have been penetrated. Petrophysical evaluation means bringing together many types of logs along with core and sample data. Wells are cored, and the core data evaluated when it is important to know as much as possible about the rock properties of the formations that have been drilled through. All these activities are upstream.

Wells are completed after drilling has occurred and there are one or more productive oil or gas productive formations. The first step is to do a "run pipe" which is set production casing and to do a cement job. Then the next step is to "perf" the wells to allow the fluids and gas to flow into the production pipe. It is often necessary to stimulate the well through adding acids to dissolve calcium-rich barriers and increase the size of conduits. There may also be hydraulic fracturing if the rock is brittle and strong enough to have fractures which can be propped open by particles (sand or ceramic) to allow gas and liquids to flow. These activities are upstream.

Retail outlets can include gas stations, convenience stores, and auto parts stores (oil and grease). Wholesale and commercial outlets are usually larger in scale and the products are loaded into tanker trucks or semis (in the case of packaged products). These activities are downstream.

Petroleum products such as lubrication oils, greases, transmission oils, and other specialty products are often blended and packaged in the same location. They take place in the downstream sector.

Once the wells are completed and production begins, it is important to monitor the production carefully. Reservoir pressure drops can affect production and it might be necessary to install a pumping unit. It's also important to make sure that there are no buildups of paraffin and corrosion which can also reduce well performance. Careful monitoring of production and pressures can help model a decline curve and assist in developing a plan for enhance oil recovery when economically feasible. These are upstream activities.

A pipeline pig is a maintenance tool that looks like a bullet-shaped cylinder which is introduced through the pig trap. It moves through the pipeline and as it does so, it both moves debris such as paraffin and also gathers data on corrosion and cracks in the line. It is in pipelines used in the midstream transportation of oil and gas.

Oil tankers are used to transport crude oil from one location to another. They are classified by weight, as well as the type of product they carry. They are often used to store oil offshore. They are a part of the midstream segment of the oil and gas industry.

The petrochemical industry creates a number of different petrochemicals that are used in the production of other chemicals. It also produces the chemicals used as feedstock for plastics. These are downstream activities.

Before any drilling can take place, it is necessary to obtain oil and gas leases if privately owned, or a concession, in the case of a foreign government. Joint operating agreements are often signed after leases or concessions are obtained. The JOAs govern the way that companies work together to drill and explore for oil and gas. They are in the upstream sector.

Both cracking and coking take place in a refinery. Cracking refers to breaking down long-chain molecules (cracking them) into smaller molecules, which makes it possible to create "light" products such as LNG and gasoline. Coking occurs at the end of the refining process and it refers to taking residual products and turning them into high-value products that can be sold. They are both in the downstream sector.

Processing oil and gas into different products generally takes place during the refining process. Sometimes, however, there are special plants that do further mixing and blending (oil and grease plants). All are considered to be a part of the downstream sector of the process.

Hydraulic fracturing is one part of well stimulation. It involves pumping frac fluid (often cross-linked polymers) and proppants (spherical sand or ceramic grains) under great pressure in order to increase the fracture density and open up conduits for the flow of gas, oil, and liquids. Hydraulic fracturing has been used for more than 40 years in vertical wells. Recently, attention has been turned to the practice of hydraulic fracturing by stages in horizontal wells which are often more than a mile long. Hydraulic fracturing is an upstream activity.

Gas gathering takes place when production from several leases or individual wells in a unit flow to a central part to then be treated and compressed so that the product can enter a pipeline. It is an important part of midstream operations.

Liquified natural gas (LNG) consists mainly of methane (CH4) which has been converted to liquid form so that it is easier to store and to transport. There are a number of processes associated with the conversion of gas to liquid and back to gaseous form. They are part of the midstream sector of the industry.

The contract to sell oil and gas production are negotiated and signed after the well has been completed, which occurs at the end of the upstream segment of activities. However, much of the ongoing business after the well is in production takes place in conjunction with oil and gas transportation, which is a part of the mid-stream sector. So, the marketing and trading of crude oil (and the contracts) would take place midstream.