Paul Favret Discusses What is Meant by Upstream in the Oil and Gas Industry

Paul Favret

Upstream is a term used to refer to the stages of operations in the oil and gas industry that involve exploration and production. Oil and gas companies are broadly divided into three segments, upstream, midstream, and downstream.

Paul Favret further underlines that today a number of large oil companies even follow an integrated approach where they combine upstream activities with midstream and downstream operations. The latter two stages take place after the production phase through to the point of sale.

Paul Favret offers an overview of the upstream stage of the oil and gas industry

The upstream sector of the oil and gas industry includes all the steps involved, from the preliminary exploration to the extraction of the resource. Upstream companies are likely to be involved in each of the steps linked to this phase of the life cycle of the oil and gas industry. Some of them, however, might only be involved in part of the upstream sector.

Exploration and production (E&P) is another name for the upstream sector. This name is representative of what occurs in this stage of development of an oil or natural gas asset. The E&P segment is the very first portion of the oil and gas production process. Companies within this segment largely focus on locating and extracting commodities from the earth. The exploration stage involves the search for hydrocarbons, which basically are the key components of petroleum and natural gas. Land surveys are carried out in order to identify the regions that are likely to be most promising. The entire goal of doing so is to locate particular minerals underground for estimating the amount of oil and gas reserves prior to drilling. Geologists commonly study rock formations and layers of sediment within the soil in order to identify whether or not oil or natural gas is present.

As per Paul Favret, the upstream process can involve seismology that uses substantial vibrations as a result of explosives or machinery in order to create seismic waves. The manner in which the seismic waves interact with a reservoir containing oil and gas plays an important role in identifying the location of the reservoir. The drilling process can start off after it has been determined that there appears to be reserves beneath the ground.

Oil and gas exploration is an integral part of the upstream stage. Petroleum exploration requires many sophisticated techniques, and the technologies associated with the process are also advancing at a rapid pace. Typically, the exploration begins in an area that has a high potential to hold a resource, ideally due to the local geology and known petroleum deposits nearby. Further exploration is completed to delineate a resource in a high-potential region. The geophysical and geochemical analysis is carried out by making use of techniques including induced polarization (IP) surveys, drilling and assaying, electrical currents, and more. When it comes to the exploration stage, the goal is to locate and estimate the potential of a resource. In case a region shows potential to host a resource, exploratory wells are drilled for testing the resource.