When you think of the oil and gas industry, you aren’t just thinking about well drilling or even the products created through the process of refinement. Oil and gas is a massive industry that requires many steps from the location of prospective wells to the end products consumers use. In simple terms, however, the oil and gas industry can be split up into three basic stages, giving you a clear picture of what happens throughout the process.

Upstream

The first stage of well drilling is to determine where oil and gas is present and the best ways to extract it from the ground. This segment makes up the largest percentage of the industry because it involves both the exploration of prospective well sites, as well as the production stages of the process. During this part of oil and gas production, both horizontal well drilling and directional drilling may be used to check areas for the presence of oil and gas and to create productive wells. This is where many of the latest developments often occur and where much of the money can be made.

Midstream

After oil and gas exploration, drilling and production comes the midstream phase of the process. This stage in the game deals with the transportation of the oil and gas to the refineries and beyond. This includes pipelines, rail, trucking, tanker and barge. It can also include the storage of the oil and gas as it passes from one stage to the next. What makes this sector different than the other two is it includes elements of both to join the two together.

Downstream

Finally, the downstream stage of well drilling refers to the refinement of crude oil, along with the purification of natural gas. This is often the last step in the process before the products are delivered to the consumer. In addition to the refining and purification processes, the downstream process also includes marketing and distribution of the end products, putting them into the hands of the people who need them.

Because the oil and gas industry is so large, it only makes sense it would be separated into several stages to make it easier for investors to understand. Upstream, midstream and downstream processes may not be common terms most people understand, but once you do, you will gain an inside look into what goes on beyond the oil drilling.

If you’ve been thinking of investing in oil and gas, contact us. Hill Country Exploration has a large portfolio of oil and gas interests we are eager to share.