Oil and Gas Industry

The oil industry consists of finding, producing, and delivering oil to the end consumer in the desired form – gasoline / kerosene / aviation fuel / naphtha / lubes etc.  The industry is capital-intensive as it takes huge funds to find the raw materials, produce, and distribute the various oil products.

Classification of Oil Industry:

The oil business is divided into two categories: upstream, and downstream. The upstream refers to the grassroots of the oil business, the process of exploring for oil and extracting it. The downstream refers to refining of the oil to subsequent products and the commercial side of the business, in terms of sales and marketing of these products.

Upstream Process:

Upstream activities are closer to the source, and "downstream" activities, such as refining and marketing, are closer to the consumer. The entire operational/business process in the oil industry can be classified as:

1. Area identification
2. Geological/seismic surveys
3. Reservoir data [collection, analysis, mapping ]
4. Drilling processes
5. Transportation
6. Storage [Silos, terminals, tanks]
7. Refining
8. Post production.

Downstream Business Processes:

Petroleum downstream business processes are more closely related to standard manufacturing and distribution industries or networks.  

1. Oil company traders acquire crude oil (purchase feed stocks),
2. Refineries process the feedstock into refined products (manufacturing),
3. Pipelines, barges and vessels transport the product to terminals (primary distribution) and
4. Tanker trucks transport the product to service stations (secondary distribution).

Service stations sell the fuel to consumers.
Practical Facts in Oil and Gas Industry

Oil and gas are two of the most heavily traded commodities in  the world, and transporting them is always a critical business action because of their value.

1- An Oil tanker may carry 2 Million Barrels or more of crude oil worth USD 80 million.

2- Using massive marine tankers, barges, and pipelines, midstream and primary supply traders and schedulers move huge bulk quantities of oil and gas every day.

 

3- Crude oil and natural gas are moved from production fields to refineries and refined products from refineries to storage terminals.

4- Oil shipments can last many weeks and involve hundreds of thousands – even millions – of barrels of oil products. 
 

5-  A lot of partners and activities are involved in successfully coordinating a voyage which means  all bulk movements, regardless of mode of transport.

6- Each shipment requires detailed planning and scheduling. This involves loadings, multiple unloadings, shared resources, and multiple trades.

7- The schedulers should be aware of the current activity and status of each voyage.

8- The long lead times, the duration of movements, and the huge money involved requires flexibility to make changes at any stage.

9- SAP developed SAP TSW [Trader’s and Scheduler’s Workbench] to enable the high level of flexibility