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02 September 2016

Upstream, Midstream, Downstream.

What are the differences?

In the oil and gas industry, there are various sectors which may be conveniently be described as upstream, midstream, and downstream. 

"Upstream" refers to the exploration and production of oil.

"Midstream" refers to the transporting, processing, and storing of oil.

"Downstream" refers to the manufacturing, refining, petro-chemicals, marketing, and retailing of oil.

This is how the upstream river looks like.



The Metaphor of the River

It's a series of processes which is like a river flowing down a mountain. Imagine the river, long and magnificent. Somewhere at the top, it bubbles up from the ground, a little spring. Its little stream flows from the top of the mountain, and snakes its way between rocks and trees, where it accumulates in between stones. The stream somehow flattens out somewhere in the middle of the mountain, and it flows off a cliff to form a roaring waterfall. The waterfall ends up in a serene lake, where it flows, in a meandering way, to the sea.


Upstream

At the top of the mountain, the water is moving slowly. Here, there is a group of men, up to their waist in water, peering at the riverbed, looking for bits and pieces of shiny things that can be harvested for sale. They are like the men who explore the sea for oil. When they seize upon a shiny thing, they fish it out, and keep it in their basket. When the day become dark, they go home, to fashion the shiny things into things that can be sold. 

This is like the exploration and production stage, where engineers have to search for oil on land, in the depths of the ocean. Sometimes they drill duds, and there is no oil. At other times, they strike oil. And that's when they start the whole process. But it's statistics, and they have to be prepared for the duds that come along.

Life on oil rigs can be boring, yet privileged. I've heard my friends telling me about the oil rigs having chefs and all sorts of games. But no Internet. And you're stuck offshore for weeks on end.

Midstream

The river flows halfway down the water, and it has slowed down. It's now a rapid river, where water moves quickly. A man jumping into the waters might be caught up in its currents, and dragged below the surface. If he survives, he'll have to beware of the cliff, where the river is headed. It's a roaring waterfall, and heart-stopping drop, twenty meters high, or more. Those who know the river are careful.

This is like the midstream phase. It's where the oil is transported from the rigs to the factories that will add value to the oil through refining and addition of various chemicals. The crude oil is processed. It is stored. When the orders come in, it is sent out, through various distribution networks, to the buyers.

At this stage, the product is not yet ready for the consumer market yet. It's only being sold to other businesses, so that the other businesses can do what they want with the product. But just like the rapids, it's speeding up.

Downstream

The water falls down, down, down, a height of twenty meters. It ends in a big, frothy splash, in the water. Any person falling down the waterfall would get churned and turned around in the water for a few times. Those who survive will be able to swim, slowly, to the riverside. The river starts again. It flows, slowly, and in an ever-widening swathe, to the sea.

This is like the downstream phase. It's where the factories take the crude oil and refine it. Additives are put into the finished product. Lorries are filled with the stuff, and it's sent to petrol stations. Some of the stuff is packed into plastic bottles. It's finally ready for the mass market.

Some images about the whole process.

Here are some images which describe the whole process. Most of them would qualify as infographics, although, it could be better.

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Which sector is your preference? 

Thanks for reading.

Here are some other pieces from me.

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