Explaining the Midstream and Downstream Sections in the Oil and Gas Industry Production Chain

The Midstream sector of the oil and gas industry is primarily about the transportation of the crude and raw products from where the site where they are extracted to the refineries.  Midstream is sometimes paired together with either the Upstream or Downstream sectors.

The transportation of natural gas and raw oil is a process that is highly technical.  It involves the compression of fluids.  In order to be able to transport the fluids from drilling sites, it needs to be under necessary pressures.  Transportation can be via pipelines and in tankers.

Midstream Sector Responsibilities:

Tanker Sea Commercial Oil Ship Nautical Vessel

Transportation from drilling sites:  The transportation of natural gas and raw oil products, via pipeline or tanker.

Treating raw materials:  Removing all impurities such as hydrogen sulphide of water vapour.

By removing the impurities and compressing the fluid helps to maximize the amounts that can be transported and therefore also the efficiency and profits of companies.  This is a very important aspect in the oil and gas sector of the industry.

Once the oil and natural gas have been transported through the midstream section, there are some more processes and transformation it must undergo before it can be sold.

Downstream at the refinery:

Final Processing:  The crude oil is processed into finished products, for instance, lubricants, synthetic rubber, fertilizers, plastics, asphalt, pesticides, heating oil, and pharmaceuticals.  This is also where crude oil is converted into forms that are usable in everyday life, like, gasoline, jet fuel, diesel, propane and even antifreeze.

Distribution of the final product:  Distributing the products to their final destination in the market.

Marketing:  Downstream is also the place where companies and customers meet and where supply meets demand.  To make sure everyone knows what products are carried and available, marketing these products comes into play.

Retail outlets like gas stations, is part of the downstream section.  The efficiency of the other sections can have an influence on the price of products.