STRUCTURE
Upstream
The upstream sector is where oil and natural gas are found and extracted – both land and offshore. Activities take place near the source of oil deposits, predominantly involving exploration, discovery and production.
Exploration, Discovery and Production
Oil deposits can be found on land or under the ocean floor. Seismic exploration is used to locate areas under the dense, impermeable rock where oil deposits are likely to be found. In seismic exploration, reflected sound waves produce images of geological formations beneath the earth’s surface. Seismic reflections are timed, giving an estimate of the depth of any deposits.
When a deposit is found, a well is drilled and the oil is pumped up to the surface and then transported via tanker or pipeline to a refinery or storage.
Crude oil is the naturally occurring rock oil which accumulates in underground oil fields. Crude oils are classified by their density (heavy or light) and sulfur content (sweet or sour). Around 20% are sweet grades, 60% are light to medium sour grades and the remaining 20% consist of heavy grades.
Midstream
Marine midstream storage and transportation activities link upstream production to downstream processes.
Shipping
Tankers and pipelines are the two main modes of oil transportation. Tanker transportation is generally more viable for inter-regional trades – whilst pipeline is a better option for intra-regional and transcontinental trades. Crude tankers are used for the deep sea transportation of unrefined oil from producing countries to refineries. They range in size from 55,000 DWT to around 500,000 DWT.
Shuttle tankers are specially designed for offshore loading and transport to onshore storage facilities and refineries.
Downstream
Before it can be used, crude oil must be refined. This is the process by which crude is transformed into gasoline, diesel, kerosene, motor oil, tar and other refined products. The refined oil products are then either stored or transported to market.
Storage and Refining
Refining begins with simple distillation, followed by additional processes to minimize the production of heavier and lower value products (e.g. residual fuel oil) in favor of lighter, higher value products such as gasoline. Heavy crudes are more difficult to process compared to light crudes. High sulfur crudes require additional processing to meet regulatory specifications for products.
Terminal storage and compressor stations are also part of refinery systems. Stocks are held by consumers as well as producers, with levels varying from country to country. Stocks generally follow a seasonal pattern and are typically drawn down in winter and rebuilt in the spring.
Distribution via Shipping
Refined petroleum products are distributed to market via pipeline or product tanker. Product tankers are highly versatile ships which can carry a variety of refined oil products. Unlike crude tankers, the interiors of product tankers are coated to protect against corrosion to ensure cargo purity and to facilitate tank cleaning.
Upstream
The upstream sector is where oil and natural gas are found and extracted – both land and offshore. Activities take place near the source of oil deposits, predominantly involving exploration, discovery and production.
Exploration, Discovery and Production
Oil deposits can be found on land or under the ocean floor. Seismic exploration is used to locate areas under the dense, impermeable rock where oil deposits are likely to be found. In seismic exploration, reflected sound waves produce images of geological formations beneath the earth’s surface. Seismic reflections are timed, giving an estimate of the depth of any deposits.
When a deposit is found, a well is drilled and the oil is pumped up to the surface and then transported via tanker or pipeline to a refinery or storage.
Crude oil is the naturally occurring rock oil which accumulates in underground oil fields. Crude oils are classified by their density (heavy or light) and sulfur content (sweet or sour). Around 20% are sweet grades, 60% are light to medium sour grades and the remaining 20% consist of heavy grades.
Midstream
Marine midstream storage and transportation activities link upstream production to downstream processes.
Shipping
Tankers and pipelines are the two main modes of oil transportation. Tanker transportation is generally more viable for inter-regional trades – whilst pipeline is a better option for intra-regional and transcontinental trades. Crude tankers are used for the deep sea transportation of unrefined oil from producing countries to refineries. They range in size from 55,000 DWT to around 500,000 DWT.
Shuttle tankers are specially designed for offshore loading and transport to onshore storage facilities and refineries.
Downstream
Before it can be used, crude oil must be refined. This is the process by which crude is transformed into gasoline, diesel, kerosene, motor oil, tar and other refined products. The refined oil products are then either stored or transported to market.
Storage and Refining
Refining begins with simple distillation, followed by additional processes to minimize the production of heavier and lower value products (e.g. residual fuel oil) in favor of lighter, higher value products such as gasoline. Heavy crudes are more difficult to process compared to light crudes. High sulfur crudes require additional processing to meet regulatory specifications for products.
Terminal storage and compressor stations are also part of refinery systems. Stocks are held by consumers as well as producers, with levels varying from country to country. Stocks generally follow a seasonal pattern and are typically drawn down in winter and rebuilt in the spring.
Distribution via Shipping
Refined petroleum products are distributed to market via pipeline or product tanker. Product tankers are highly versatile ships which can carry a variety of refined oil products. Unlike crude tankers, the interiors of product tankers are coated to protect against corrosion to ensure cargo purity and to facilitate tank cleaning.
