Upstream, midstream, downstream: what the words mean

The industry describes itself in three segments, named for the direction the product flows. Upstream finds and produces oil and gas. Midstream gathers, processes, transports, and stores it. Downstream refines it, turns it into fuels and materials, and sells them. Most of the businesses we write about live in the first two.

Upstream

Exploration and production: the operators who own leases and wells, and the service companies that drill, complete, and maintain them. This is where the pad is. Drilling contractors, frac fleets, wireline, water, trucking, and rentals are all upstream service businesses.

Midstream

Gathering lines take production from the pad to processing plants, which separate gas, liquids, and impurities. Transmission pipelines move gas and crude across regions. Storage, compression, and terminals sit along the way. Pipeline construction, hydrostatic testing, pigging, nitrogen services, and inspection are midstream service businesses, though they also work on facilities in the other two segments.

Downstream

Refineries, petrochemical plants, and the distribution of finished products: fuels, lubricants, and the feedstocks for plastics and chemicals. The turnarounds that keep these plants running are a large market for testing, nitrogen, and specialty services.

The segments are convenient labels, not walls. A service company that started on the pad often ends up working in all three, because the same skills, pressure, flow, and inspection, are needed everywhere.