{
  "slug": "oil-gas",
  "name": "Oil and gas",
  "sector": "mining",
  "summary": "The oil and gas value chain connects reservoirs to usable fuels and feedstocks. Extraction, transport, processing, and refining have distinct assets, revenue models, and exposure to commodity prices.",
  "scope": "Covers upstream production and its connections to midstream transport/processing and downstream refining. It does not treat an oil producer, pipeline, and refinery as the same business. U.S. EIA sources explain physical processes; commercial and regulatory arrangements vary internationally.",
  "aliases": [
    "Petroleum",
    "Natural gas",
    "Oil production",
    "Hydrocarbons"
  ],
  "segments": [
    {
      "name": "Upstream",
      "description": "Explores, develops, and produces reservoirs. Geological performance, well decline, lifting costs, and realized commodity prices shape returns."
    },
    {
      "name": "Midstream",
      "description": "Gathers, processes, stores, and transports hydrocarbons. Contracts may emphasize fees, volumes, capacity reservations, or commodity exposure."
    },
    {
      "name": "Downstream",
      "description": "Refines crude into fuels and feedstocks, blends products, and distributes them. Refinery configuration affects which crude qualities and products it can handle."
    }
  ],
  "flow": [
    {
      "name": "Develop and produce",
      "description": "Assess a reservoir and drill and operate wells. Separate produced fluids and manage associated water and gases."
    },
    {
      "name": "Treat and gather",
      "description": "Bring gas and liquids to transport specifications. Gas processing can remove water and unwanted compounds and separate natural gas liquids."
    },
    {
      "name": "Transport and transform",
      "description": "Move crude, gas, and products through appropriate infrastructure. Refineries separate, convert, and treat crude fractions."
    },
    {
      "name": "Store and deliver",
      "description": "Blend and store finished products, then deliver to industrial users, fuel distribution, power plants, or other customers."
    }
  ],
  "economics": {
    "revenueUnit": "Upstream barrels or energy units sold; midstream contracted services; downstream products sold relative to crude and processing costs.",
    "payers": "Refiners, commodity traders, utilities, chemical producers, distributors, and other industrial buyers purchase different outputs along the chain.",
    "costs": [
      {
        "name": "Resource development and operation",
        "explanation": "Exploration, drilling, completion, maintenance, lifting, water handling, and eventual decommissioning affect upstream lifecycle cost."
      },
      {
        "name": "Transport and transformation",
        "explanation": "Pipelines, storage, compression, refinery energy, catalysts, maintenance, and quality treatment create additional costs between reservoir and customer."
      }
    ],
    "capital": "Wells, platforms, pipelines, processing plants, and refineries commit capital over different time horizons. Geological success does not guarantee economical transport or processing access.",
    "workingCapital": "Inventory, commodity-price movements, customer settlement, and trading or hedging arrangements affect liquidity. A short-run cash operating margin excludes the cost of replacing declining production.",
    "mechanism": "The same price change affects segments differently. Higher crude prices may support a producer but raise a refinery’s feedstock cost. A refinery’s outcome depends on the value of its product slate relative to the crude and conversion costs, not crude price alone."
  },
  "operations": {
    "activities": [
      "Reservoir and well management",
      "Integrity maintenance, gathering, and processing",
      "Refinery planning, blending, and product logistics"
    ],
    "assets": [
      "Wells, production facilities, and pipelines",
      "Gas plants, storage tanks, and refineries"
    ],
    "roles": [
      "Reservoir and production engineers",
      "Process operators, integrity engineers, and schedulers"
    ],
    "records": [
      "Production and allocation measurements",
      "Inspection, maintenance, custody-transfer, and product-quality records"
    ],
    "software": [
      "Reservoir and production modeling",
      "Process control, integrity management, and trading/logistics systems"
    ],
    "metrics": [
      {
        "name": "Realized price",
        "definition": "Actual sales revenue per unit on a stated quality and location basis.",
        "why": "Can differ from a headline benchmark because of transport, quality, and contract terms."
      },
      {
        "name": "Production decline",
        "definition": "Change in output over time for a defined producing asset.",
        "why": "Shows how much new investment may be needed to sustain output."
      },
      {
        "name": "Refining margin",
        "definition": "Value of a specified product basket less relevant feedstock cost, with conversion costs stated separately.",
        "why": "Measures a different economic exposure from upstream production."
      }
    ]
  },
  "structure": [
    "Hydrocarbons are not perfectly interchangeable. Crude density and sulfur content affect refinery processing and product output; natural gas must meet transport specifications. Physical infrastructure and quality differences create price differences between locations and products.",
    "Supply response has several clocks. Existing wells can respond operationally, but developing a field or expanding infrastructure takes longer. A low cost of operating an existing asset is not the same as a low full-cycle cost of creating the next one."
  ],
  "risks": [
    {
      "risk": "Commodity downturn",
      "mechanism": "Lower realized prices reduce cash available for debt, maintenance, and replacement investment."
    },
    {
      "risk": "Integrity or process incident",
      "mechanism": "Leaks, equipment failure, or loss of containment can harm people and the environment and interrupt operation."
    },
    {
      "risk": "Infrastructure bottleneck",
      "mechanism": "Limited pipeline or processing access can constrain production or widen the discount to a benchmark price."
    }
  ],
  "dependencies": {
    "upstream": [
      {
        "slug": "steel",
        "label": "Steel",
        "relationship": "Supplies pipe, casing, vessels, and other engineered equipment."
      },
      {
        "slug": "consulting",
        "label": "Consulting and technical services",
        "relationship": "Provides specialist engineering and advisory capabilities alongside internal teams."
      }
    ],
    "downstream": [
      {
        "slug": "electric-utilities",
        "label": "Electric utilities",
        "relationship": "Use natural gas and other fuels in relevant generation fleets."
      },
      {
        "slug": "trucking",
        "label": "Trucking",
        "relationship": "Consumes refined transport fuels."
      },
      {
        "slug": "commercial-farming",
        "label": "Commercial farming",
        "relationship": "Uses fuels and inputs connected to hydrocarbon feedstocks."
      }
    ],
    "substitutes": [
      {
        "label": "Electrification and alternative fuels",
        "relationship": "Can replace selected fuel uses when equipment, infrastructure, cost, and performance permit; chemical feedstock uses require separate analysis."
      }
    ]
  },
  "workedExample": {
    "title": "Operating cash margin versus project return",
    "assumptions": [
      "Illustrative producer sells 1,000 barrels per day at a realized $70 per barrel.",
      "Lifting and stated field operating costs are $25 per barrel; transport is $5."
    ],
    "calculation": [
      "Daily revenue: 1,000 × $70 = $70,000.",
      "After stated costs: 1,000 × ($70 − $25 − $5) = $40,000 per day."
    ],
    "takeaway": "The $40,000 is not net profit or project return: development capital, royalties, overhead, tax, financing, and abandonment costs are omitted."
  },
  "scenario": {
    "change": "A regional gas pipeline becomes constrained.",
    "effects": [
      "Production may exceed the amount that can reach buyers.",
      "Local prices can weaken relative to unconstrained markets and some production may be curtailed.",
      "Additional drilling alone does not solve the transport bottleneck; economics depend on infrastructure access and timing."
    ],
    "watch": [
      "Local price differentials",
      "Available transport capacity",
      "Curtailment and realized volumes"
    ]
  },
  "misconceptions": [
    {
      "claim": "All oil and gas companies benefit when crude prices rise.",
      "correction": "Producers, refiners, transporters, and end users have different exposures; contracts and hedges can change them further."
    }
  ],
  "sources": [
    {
      "id": "eia-production",
      "title": "Oil and petroleum products explained: Where our oil comes from",
      "organization": "U.S. Energy Information Administration",
      "url": "https://www.eia.gov/energyexplained/oil-and-petroleum-products/where-our-oil-comes-from.php",
      "supports": "Oil production and resource geography; no current production rankings are reproduced."
    },
    {
      "id": "eia-gas",
      "title": "Natural gas explained",
      "organization": "U.S. Energy Information Administration",
      "url": "https://www.eia.gov/energyexplained/natural-gas/",
      "supports": "Wellhead gas, impurities, processing, and natural gas liquids."
    },
    {
      "id": "eia-refining",
      "title": "Refining crude oil: The refining process",
      "organization": "U.S. Energy Information Administration",
      "url": "https://www.eia.gov/energyexplained/oil-and-petroleum-products/refining-crude-oil-the-refining-process.php",
      "supports": "Separation, conversion, treatment, storage, and delivery of refined products."
    },
    {
      "id": "eia-crude-quality",
      "title": "Refining crude oil: Inputs and outputs",
      "organization": "U.S. Energy Information Administration",
      "url": "https://www.eia.gov/energyexplained/oil-and-petroleum-products/refining-crude-oil-inputs-and-outputs.php",
      "supports": "Crude density, sulfur, processing requirements, and refinery inputs and outputs."
    }
  ],
  "evidence": {
    "scope": [
      "eia-production",
      "eia-refining"
    ],
    "flow": [
      "eia-gas",
      "eia-refining"
    ],
    "economics": [
      "eia-crude-quality",
      "eia-refining"
    ],
    "operations": [
      "eia-gas",
      "eia-refining"
    ],
    "structure": [
      "eia-crude-quality"
    ],
    "risks": [
      "eia-production",
      "eia-gas"
    ]
  },
  "relatedConcepts": [
    "capital-intensity",
    "operating-leverage",
    "working-capital",
    "pricing-power"
  ],
  "classification": [],
  "editorialNote": "Process descriptions draw on the cited primary sources. Business-model interpretation is editorial synthesis; worked-example figures are illustrative assumptions, not industry benchmarks. Regulation and commercial arrangements vary by jurisdiction.",
  "companies": {
    "selectionNote": "Illustrative businesses covering oil and gas production, integrated refining and marketing, and midstream transportation across several regions. This is not a ranking by revenue or reserves; the companies perform different roles in the hydrocarbon supply chain.",
    "verifiedOn": "2026-10-26",
    "entries": [
      {
        "name": "Aramco",
        "kind": "Company group",
        "segment": "Integrated oil and gas",
        "description": "Produces oil and gas and operates an integrated downstream business. Its model connects resource development and production with refining, chemicals, and routes to domestic and international customers.",
        "url": "https://www.aramco.com/en/investors"
      },
      {
        "name": "bp",
        "kind": "Company group",
        "segment": "Production and refining",
        "description": "Produces oil and natural gas and operates refineries and fuel businesses. Its US operations connect onshore and offshore production with processing crude into transportation fuels.",
        "url": "https://www.bp.com/en_us/united-states/home/who-we-are/what-we-do.html"
      },
      {
        "name": "Chevron",
        "kind": "Company group",
        "segment": "Integrated petroleum operations",
        "description": "Produces oil and natural gas and operates refining and marketing businesses. Its supply and trading organization connects production, transport, refinery feedstocks, and delivery to customers.",
        "url": "https://www.chevron.com/what-we-do/energy/supply-and-trading"
      },
      {
        "name": "Enbridge",
        "kind": "Company group",
        "segment": "Pipelines and midstream",
        "description": "Operates liquids pipelines, natural-gas transmission, storage, and related energy infrastructure. Its business connects producing regions with processing facilities and customers through long-lived transportation assets.",
        "url": "https://www.enbridge.com/reports/annual-letter-to-shareholders-2026/about-us"
      },
      {
        "name": "Eni",
        "kind": "Company group",
        "segment": "Exploration and integrated energy",
        "description": "Explores for and produces oil and gas, with businesses across the energy chain. Its UAE activities include offshore concessions and refining interests, linking upstream and downstream investment.",
        "url": "https://www.eni.com/en-IT/actions/global-activities/united-arab-emirates.html"
      },
      {
        "name": "Equinor",
        "kind": "Company",
        "segment": "Offshore oil and gas",
        "description": "Develops and produces oil and gas, with Norway central to its operations. Its offshore activities connect field development, production facilities, and delivery into international energy markets.",
        "url": "https://www.equinor.com/where-we-are/norway"
      },
      {
        "name": "ExxonMobil",
        "kind": "Company group",
        "segment": "Production, fuels, and chemicals",
        "description": "Combines oil and natural-gas production with fuels, lubricants, and chemical businesses. Its operating structure links resource development with the manufacturing and sale of energy-related products.",
        "url": "https://corporate.exxonmobil.com/who-we-are/our-global-organization/business-divisions"
      },
      {
        "name": "Petrobras",
        "kind": "Company",
        "segment": "Production and refining",
        "description": "Explores for and produces oil and gas and operates refining, transport, and marketing businesses. Its integrated activities connect Brazilian hydrocarbon production with refineries and product customers.",
        "url": "https://petrobras.com.br/en/quem-somos/perfil"
      },
      {
        "name": "Shell",
        "kind": "Company group",
        "segment": "Oil, gas, and downstream products",
        "description": "Operates oil and gas production, gas infrastructure, refining, chemicals, and trading businesses. Its activities connect hydrocarbon resources with processing plants, logistics, and different customer markets.",
        "url": "https://www.shell.com/what-we-do"
      },
      {
        "name": "TotalEnergies",
        "kind": "Company group",
        "segment": "Integrated energy production",
        "description": "Produces and markets oil, natural gas, and other energy products. Its integrated portfolio connects hydrocarbon production with customer markets while also participating in electricity and renewable energy.",
        "url": "https://totalenergies.com/company/identity/totalenergies-at-a-glance"
      }
    ]
  },
  "published": "2026-10-26",
  "canonical": "https://industrywiki.org/industry/oil-gas/"
}