What Is Upstream, Midstream and Downstream in Oil and Gas?

Understanding core industry fundamentals is imperative in understanding US oil and gas investment. There are a lot of opportunities when it comes to investing in oil and gas. With more experience, you become a smarter investor with a higher net worth portfolio. The easiest way to understand the sector is to learn about the supply chain.

Within the petroleum industry, the supply chain is broken down into three segments: upstream, midstream and downstream. Essentially, these activities take the exploration of crude oil all the way through to the retailing of the crude oil by-products to the final consumer.

Upstream

Upstream activities are those tasks leading up to the extraction of the crude oil from beneath the Earth’s surface. Within this segment of the supply chain, land studies and geological surveys are completed, land leases and government permits are obtained and the engineering, procurement and construction (EPC) of the oil rigs are in place. Upstream activities ensure the drilling project is ready to begin.

Midstream

Midstream activities continue with the transportation of the oil barrels and the marketing and wholesaling of the crude oil.

Downstream

Finally, the downstream activities take the crude oil and turn the petroleum into useable products for various end users. Some of the major activities include the refining of the crude oil to various by-products (i.e. petro gas, butane, asphalt oil, etc.), transporting the by-products to retailers and marketing the finished products to the end consumer.

The sector overall is highly regulated and an established flowing industry. Jumping on board with US oil and gas investment diversifies your portfolio, which can lead to much higher returns in the end.

If you’ve been thinking about US oil and gas investment for your portfolio, visit the Crude Funders website for more information.

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