Oil and gas are the two key industries as far as the energy industry is concerned. They both play a key role in building the global economy. The processes and mechanisms for producing or distributing natural gas and oil are rather complex and capital-intensive. They need state-of-the-art technology, the costs of which can run very high. Investing in oil and gas stocks is always a good idea. You can utilize the Oil profit trading software if you are really specific about investing in oil shares. Go through the öl Profit plattform 2021 blog to learn about oil profit trading and also the automated process. Upstream segment of this industry includes exploration activities. These include making geographical surveys, getting land rights, production activities like offshore drilling and onshore drilling.
Natural gas can be found in associated forms where it is produced with oil or in non-associated reservoirs. Gas may be dry, like methane, or wet, which must be treated for removing the hydrocarbons. This process boosts producer revenues as they can sell the products removed in the process.
Oil and gas exploration and production includes the methods which are used for identifying potential sites where oil or gas drilling and extraction can be carried out. In older times, explorers would depend upon signs such as natural oil seeps. Now technological advancements have made these processes far more efficient. Geological surveys are done through different methods like use of seismic images in offshore explorations and subsoil testing in onshore exploration.
Costs of exploration are high and the process is laden with risks. It involves mainly use of corporate funds. Even costs of any unsuccessful exploration may be very steep. But, if the site is successful and it is possible to extract natural gas and oil, costs can be recovered. Technology can impact costs; for instance, hydraulic fracturing advancements have made it possible for the US geological Survey to boost it reserve estimates in Marcellus Shale by almost 40%. Besides fracking, existing infrastructure can also impact costs.
Oil and natural gas production involves a huge amount of capital for obvious reasons. You will need highly skilled workers and costly equipment. When sites are identified through exploration, specialized drilling firms are brought in by the oil and natural gas companies. Smart technologies allow tracking of data and this helps to improve drilling efficiency. Real-time data helps to enhance well performance.
This shows why gas and oil exploration and production is necessary. It is the early stages in energy production and involves searching for and extracting gas and oil. The exploration and production firms identify and extract raw materials that are later used by the energy sectors. These companies however will neither produce nor refine energy; they will only find and take out raw materials which are then shipped to oil and gas companies that are involved in production.
So, the oil and gas industry can be broken into 3 segments, namely, upstream, downstream, and midstream. Upstream refers to E&P or exploration and production companies where reservoirs are identified and oil and gas wells are drilled. Midstream companies transport the materials from wells to the refinery while downstream companies will refine and produce finished products. So, without oil and gas exploration and development, the finished products cannot be obtained from downstream companies. Drilling companies make contracts with E&P firms for extraction of natural gas and oil.