Paul Favret Talks About Upstream, Midstream, and Downstream in Oil and Gas Operations
Petroleum falls into the fossil fuel category as it is a product of naturally decaying prehistoric animal and plant matter. This substance is made up of hundreds of hydrocarbons molecules that can be harvested in two forms, liquid and vapor. Liquid here implies to crude oil, while vapor refers to natural gas. The harvesting process itself is divided into three major divisions, which are upstream, midstream and downstream. Paul Favret has worked in the oil and gas industry for years, and particularly specializes in upstream operations.
Upstream is a term meant for operations in the industry that are associated with the exploration and production of natural gas and oil. Upstream companies search for reservoirs of raw materials and work on extracting them. These businesses typically deal with the initial production stages, including drilling and bringing gas and oil to the surface. Upstream companies are often called E&P businesses as they are focused on exploration and production. This segment is characterized by its technologically intensive nature, high risks, extended duration and high investment capital. A lot of statement line items and cash flow of the upstream companies are linked directly to oil and gas production.
Conversely, the midstream segment is largely focused on the activities that have to be carried out to transport and store natural gas and oil. It is the responsibility of midstream companies to move extracted oil and gas to refineries so that they can be processed. The infrastructure needed to transport these resources over long distances comes under the midstream segment, including retail tank cars, transcontinental tankers, tank trucks, and pumping stations. Midstream companies are generally characterized by shipping, transporting and storing raw materials and pipelines, and tend to have high regulation but low capital risk.
The ultimate segment of the oil and gas industry is downstream. They basically are refineries or the companies responsible for refining oil and gas and eventually turning them into a variety of finished products that are needed by people, like heating oil, jet fuel, asphalt and gasoline. Oil and gas comprising of long-chain hydrocarbons are utilized to develop certain less obvious, but important products like plastics, preservatives, containers and rubbers.
Upstream, midstream, and downstream are extremely crucial to oil and gas operations. These three parts are related to one another, and underline the location of an oil and gas business in the supply chain. The oil and gas industry is one of the biggest sectors on a global scale in terms of dollar value. Oil is extremely important to the economic framework of the world, especially in leading countries where oil is sourced.
The oil and gas industry, on the whole, has been responsible for employing numerous people across the planet, Paul Favret being one of them. Previously, he was the CEO of Source Energy Partners, a Denver-based E & P firm focused on high-impact resource opportunities in Colombia (now LaLuna Resources), Europe, and the United States.