Oil & Gas Supply Chain | Oil and Gas

As a company we train and facilitate training around business acumen all over the world, for all types of companies. And one of the biggest industries that we serve often is the oil and gas industry. And it's a vast industry but I want to take a minute and break it up a little bit into the three phases of the supply chain of oil and gas. And those three phases are upstream, midstream, and downstream. Each of them has unique business characteristics as well financial characteristics.

Let's talk about upstream. Upstream is often referred to as E&P or exploration and production. And it's exactly as it sounds - it's the exploration and the finding of oil and gas and it's the production of it. Now the exploration of it is very complicated, expensive process of data analysis, geological analysis, characterization and finding out where the oil is, and exactly how big it is, and all of this work that has to be done it can take years. And once a reserve is proven then there's the production of the the systems. The well itself to be able to produce this oil or gas depending on the the reserve you're talking about. So exploration: finding oil and gas. Production: setting up the well and now actually extracting it out. That's kind of the upstream portion of the industry.

The midstream portion of the industry is the moving of the oil and gas. Whether it be shipping, whether it be rail car, you have to store it in different locations. So it's the storage, it's the transportation, and the processing of it is really part of the midstream part of this ecosystem.

And then in the end you have to take all of these oil and gas and you refine it into the final products. This is the refining it to diesel fuel, jet fuel, or the gas that we buy in a gas station. Whether it be 88 or 91 or 93 octane all of that is part of the system of the downstream portion of the industry. Also downstream is what we mostly associate with the oil and gas industry. And that's the gas station! That's the gas station that we go to what's referred to as retail. Now those are three different pieces of that supply chain but all three of these have their own unique financial, strategic and business characteristics.


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