Garima GayatriUpstream Supply Chain: A basic introduction
The petroleum industry is a competitive one and needs to be supported with sophisticated technology. Rapid advancements in technology have changed the face of petroleum science. With massive evolution, today it is possible to identify and define targeting of fields. Innovation and technology mark the exploration and production of the oil and gas industry. It has ushered in a revolution in the way the oil and gas reserves are identified, developed and produced. However, more research and development is the sine qua non.
The processes or operations involved in the oil & gas industry can be categorised into three sections: upstream, midstream and downstream. The firms that deal with upstream are primarily involved in the exploration and stages in the initial production of oil and gas. Most of the oil companies are referred to as ‘integrated’ as they merge the upstream activities and functions with the operations of the midstream and downstream. These operations begin with the production phase and stay through to the commencement of sales.
From the prefatory exploration until the extraction of the resource, the upstream segment of the oil and gas industry is comprised of all the steps. The companies dealing with upstream have a choice to either get involved in all the steps of the phase or they can partially participate in the upstream sector. The ‘exploration and production’ sector is another name for the upstream sector and is, in fact, more representative of what takes place in this phase of development of oil and gas.
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An important component of the upstream sector is exploration of oil and gas. Highly urbane techniques are essentially required for petroleum exploration. It is wonderful that the technology for petroleum exploration and production is increasingly improving. Usually, an area with high resource potential makes the beginning of exploration possible. This is due to the local geology and presence of petroleum deposits in nearby areas. The idea is to identify and approximate the prospective of a resource in the exploration phase. If an area reflects the capability to host a resource, the drilling of exploratory wells begins to try out the resource. Test drilling is a crucial component of the exploration phase in the oil and gas sector. With the success of the exploratory well, follows the construction of wells and extraction of the resource. Upstream companies are also involved in the operation of the wells that bring oil and gas to the surface.
The relevance of upstream lies in the fact that it determines production and supply which further affects the prices in the downstream sector. With the technological milestones, it has become possible to minimise upon the time and money employed in the drilling and exploration and production of oil and gas.
The upstream technology is also extremely important for increasing the overall production from the existing oil wells. It is the upstream sector where the companies direct their attention and energy for growth and development. Moreover, it is commendable that the transformed nature and composition of the upstream oil and gas operators have significantly brought down the cost of production.
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Today, some of the best minds are working in the global oil sector. Some of the major companies driving the upstream sector are – Saudi Aramco, Sinopec Group, Petro China, Kuwait Petroleum Corporation and Royal Dutch Shell. These core companies along with other stalwarts are efficiently handling the exploration and production of petroleum.
The Bulletin of OPEC (Oct.2016) reflects that the oil and gas industry is facing myriad challenges.
These challenges in the Upstream Supply Chain are:
- Uncertainty prevailing in the global economy
- Excessive speculation needs to be managed
- Geopolitical constraints
- Investment
- Technology for smooth exploration and production
- Environmental concerns
One of the challenges mentioned is the technology for smooth exploration and production. Hence, it is important to bring together all the stakeholders on one platform to develop comprehensive approaches to handle complex issues which continue to remain challenging. And Energy Dais does provide that platform wherein people from around the world, stakeholders of the Oil and Gas industry and innovative solution providers can collaborate and help develop a progressive business environment.
The global economy is experiencing rapid growth which has made room for greater outputs. Hence, the demand for oil production and transportation is advancing. Amidst this backdrop, the upstream technology assumes great significance.
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