Like the human body, the oil and gas industry is a whole comprised of many moving parts. Each part has its own function, but that function is useless without the other working parts. For the oil and gas industry, the main parts are referred to as sectors, and there are three: upstream, midstream and downstream. The flow of oil and natural gas begins its journey to you where any river would begin – upstream.
The function of the upstream sector
Before you can fill your car or truck with fuel, oil and natural gas need to be found and extracted from the Earth. This is the primary function of the upstream sector. A large majority of the companies that make up the upstream sector are independent producers. These independents have taken upon themselves to:
- Search for potential crude oil and natural gas fields
- Obtain leases and permissions
- Conduct necessary surveys
- Drill exploratory wells
- Construct and operate the wells that ultimately bring the crude oil and natural gas to the surface
As of late, independents focus mostly on the finding and recovering of natural gas rather than crude oil. There are roughly 9,000 independent producers in America. They can be family-run businesses or publically traded companies. In general, the businesses are small, just 12 people on average. But don’t let the small size fool you. These 9,000 companies provide employment for around 4 million people in the U.S.
These 4 million workers are part of what is known as oilfield services. They are the men and women who actually get out there and do what needs to be done. They find the wells, conduct the surveys, build and operate the rigs, and build the infrastructure that delivers the oil and natural to the next sector. Without them, the oil industry would have nothing, not even a hole in the ground. But, likewise, without the oil industry, those 4 million individuals would not have jobs. Both are part of the same body, working together to keep it functioning.
Employment is not the only area where independent producers make their mark. They are responsible for providing us with 54% of our crude oil and a whopping 85% of our natural gas. Plus, because of these resources, they produce 4% of the Gross Domestic Product, which is the total value of the goods produced and services provided in the entire country.
The independent producers that start the flow of oil and natural gas take on a great burden of risk. Wells are unpredictable, and no matter how great a survey system is, there is just no way of truly knowing what is under the ground in any given spot without taking the time and expense of digging down and finding out. Because of this risk, the upstream sector is the fastest moving sector, and they are generally the first to embrace any new technology that makes their jobs easier and the results more predictable.
Everything made with and because of oil and natural gas starts with the upstream sector, including independent producers and the immense workforce of oilfield services.
