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Workings of the Oil Industry

With the rising use of machinery running on oil-based fuels, oil has become one of the largest sectors in the global economy. It also supports the economy of countries in the middle east and others like Australia. The value of this industry has been increasing over the years in the case of the Australian economy. It is a very complex industry with a lot of complex processes and unique metrics that can overwhelm a new investor. The knowledge of the industry and the product is necessary to step into it. It is also vital to know processes that are important to specific areas like pipe relining in Sydney. Pipelines make up a network for both commercial and household transportation of oil in Australia.


Hydrocarbons are the basic building blocks that make up crude oil and natural gas. These are formed when plant and animal remains are compressed under different types of rocks like sandstone and limestone. These rocks are also plant and animal remains that have accumulated over time under bodies of water. As different levels of these rocks are formed, other remains get trapped between the layers. This organic matter undergoes compression at specific temperatures and eventually transforms into oil and gas. All this happens deep in the earth’s crust. As the oil and gas being formed is less dense than water they escape through the pores in the sedimentary rocks and get trapped under cap rocks. These make up the gas reservoirs and are nearer to the earth’s surface.

The oil and gas are extracted from the reservoirs by drilling. A well can be constructed after drilling to pump the oil up to the surface. Operations are closed down on wells that are not commercially viable. These wells are called dry holes.

Categorisation of the Industry

The oil and gas industry is divided into three segments based on their functions and limitations. These are upstream, midstream, and downstream.

Drilling and servicing are two other facets of the oil industry that are not directly dependent on the oil for their revenue. E&P companies often avoid doing the drilling and outsource it to companies that specialise in it. The maintenance of these oil wells is another important task which is undertaken by service companies. There are fixed payment scales for such companies based on the amount of work.

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