Upstream & What You Should Know About It

Before diving into what “upstream” is, it’s important to highlight that the chain of operation in the oil and gas industry includes various processes such as exploration, extraction, transportation, storage, refining, and distribution. These processes are commonly grouped into three main stages: upstream, midstream, and downstream.

What is Upstream?

Upstream is one of the stages in the oil and gas industry operations that involve the exploration, drilling, and production of oil and natural gas. This phase includes searching for potential deposits of crude oil and natural gas — both underground and submarine — drilling exploratory wells, and subsequently drilling and exploiting wells that carry crude oil or natural gas to the surface.

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Upstream Activities

Several activities are included in the upstream stage. Let’s look at them in greater depth. 

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Exploration

The exploration process is the first process in the upstream stage and entails the acquisition of land and mineral leases from the owners of the area. Additionally, geological and geophysical studies are done to determine suitable areas for oil and gas extraction.

Drilling

The drilling process, as its name suggests, deals with drilling a well to extract oil and gas. Given that there is always uncertainty regarding the results of previous geological and geophysical studies, many companies choose to drill an exploratory well to ensure that the area is viable. Rig contractors and service companies in the oil and gas sector usually perform this task.

Production

At the production stage, various processes facilitate the extraction and proper management of oil and gas wells throughout the entire upstream stage. Among them are:

1. Recovering raw materials through the primary, secondary, or tertiary method — also known as enhanced oil recovery (EOR).
2. Cleaning raw materials through the filtration process to eliminate impurities such as water, sand, and more.
3. Plugging and abandonment, which takes place when a well is determined to no longer be economically viable.

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The upstream stage remains one of the most important aspects of the oil and gas industry, as it encompasses the process of oil and gas extraction. Though time-consuming and expensive, it is both necessary and ultimately profitable for those involved.