The downstream in the Oil & Gas industry has nothing to do with water. Instead, it’s filled with familiar businesses: local gas stations, the off-shore oil refinery off in the distance, and the seller of kerosene. Even the plastic found in hearing aids is a part of this sector. 

We cover today how these products and more are part of the Downstream, three challenges currently faced by companies in it, and the technologies that may be the solutions. 

Diving Deep Into O&G Downstream Sector

The massive oil and gas (O&G) industry is usually divided into three broad sectors. The Upstream, also called Exploration and Production (E&P) sector, covers the discovery of new reserves of crude oil and natural gas. The Midstream sector deals with the transport of those raw resources to refineries and similar plants for rendering to saleable products. 

The third is called the Downstream. This sector is that portion responsible for the refinement, distribution, and retail sale of petroleum products. 

Companies involved strictly in the Downstream sector are called “Independent” while those in all three are called Integrated. Both can be found running:

  • oil refineries
  • petrochemical plants
  • petroleum products distributors
  • natural gas distribution companies

Downstream Products and Services 

The oil refineries in the Downstream process crude oil and other raw materials such as ethanol into the following, more higher-valued refined products like: 

  • Naphtha
  • Gasoline
  • Kerosene
  • Jet fuel
  • Diesel
  • Fuel oil
  • Waxes
  • Asphalt
  • Lubricants

The list becomes even more impressive when including other, less familiar products:

  • Synthetic rubber 
  • Plastics like those found in artificial limbs and hearing aids
  • Fertilizers
  • Pesticides
  • Flame-retardant products like clothing used by firefighters 

Just about anything that is manufactured has some connection to oil and natural gas. This makes the Downstream industry the most visible portion of the oil and gas industry. 

Marketing, in the form of wholesale and retail distribution to business, industry, government, and the public, is also a big part of the Downstream. Unsurprisingly, gas stations get the bulk of gasoline and diesel products for consumer consumption. This is followed by sales to factories, power plants, and other transportation-related industries. 

Natural gas sales are primarily sold to industrial companies, power companies, and residential and commercial heating providers.

Three Challenges Faced in the Downstream Sector 

As the most visible and readily identifiable sector of O&G, the Downstream has had challenges from multiple fronts. Three include: 

Environmental Hazards

Distribution by various downstream petroleum activities can be heavily reliant on fossil fuels. An example includes diesel-powered trucks transporting gasoline and diesel to gas stations. This results in more greenhouse gasses like carbon dioxide, sulfur oxides (SOx) and nitrogen oxides (NOx) into the atmosphere. The gas stations themselves can also emit volatile organic compounds. 

Environmentalists will point to the occasional releases of hazardous materials such as solvents or groundwater contamination from production in the refineries as an issue with the Downstream.

Marketing Same Products 

Many products offered in the Downstream are more or less the same. Companies, then, have to become creative to sell their products to increasingly knowledgeable and sophisticated buyers. Free services like maps, car washes, and even dinnerware by retail gasoline stations; credit cards by oil companies; and radio, billboard, and television ads are examples of tactics used in the past to garner attention. 

Hazardous Work Conditions

The Oil and Gas industry in general is one of the most high-risk work environments. This is being worsened in the Downstream as it faces enormous pressure to cut costs and increase productivity. This could potentially increase risks for workers like during turnarounds. 

Case in point: A turnaround, also sometimes referred to as a TAR, is when the refinery or plant is shut down. Reasons vary from preventative care of equipment, general corrective repair of faults, strip-downs, complete replacement and overhaul, to maintenance. This can be a dangerous time as visibility can be poor and potential for hazardous gas releases is high with many personnel working in difficult-to-monitor confined spaces. 

Other safety challenges in the Downstream include proper training and onboarding for contractors in the plants, tracking and access control for on-site personnel, breathing air supply and management, confined space and high angle emergency rescues, and perimeter monitoring and community protection.

Technology Providing Solutions to O&G Downstream 

Independents in the Downstream and Integrated oil and gas companies are turning to various means to deal with the challenges of the industry. For the ones above, solutions being explored include: 

  • To minimize the release of greenhouse gasses and other emissions, technologies like cloud computing are being explored by oil and gas companies. Cloud computing, coupled with  advances in artificial intelligence, for example, allow plants and refineries to detect and prevent things like natural gas flare ups and leaks, both of which create huge amounts of carbon emissions. 
  • Many oil and gas companies are trying to find ways to appeal to customers who spend a lot of time on-line. In this digital age, being flexible to customers’ digital needs, providing channel choices, and making interactions simple, consistent, and convenient is becoming more critical. Many are turning to social media and related digital platforms like electronic billboards and kiosks to promote various energy initiatives and address more negative industry news. 
  • Industrial computers, with features ranging from shock-resistant hard disks to Ingress Protection (IP) against dust and liquids, can help improve worker on-site safety with their ruggedness and reliability. Staff won’t risk life and limb to protect, for example, their “delicate” PC, trusting their rugged PCs instead to withstand the hard bumps that come with the environment. This goes as well with industrial mini PCs with small form factors to fit – and function – in whatever nook and cranny they need to be in.   

Closing Comment

The Downstream is the third major sector of the three-part Oil & Gas industry. Companies in the sector like oil refineries are responsible for the refining, distributing, and retail of petroleum products like gasoline, diesel, and natural gas. This includes products made from them like plastics. 

The Downstream, as the most visible part of the O&G industry, faces several challenges both from the public to market forces. Contact an expert at Cybernet if your company works in the Downstream, is Independent or Integrated, and is looking at how industrial computers can help address those challenges.

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