A Simple Guide to Oil and Gas Production

What is Oil and Gas Production?

Oil and gas production is the general process of manufacturing oil and natural gas from wells and turning them into the final petroleum products that consumers can use. Oil and gas production includes systematic steps starting from the site exploration, to actual extraction, and even up to the distribution of the products to businesses and the general public.

Due to its role in the center of various industries like transportation, manufacturing, chemicals, and energy, the oil and gas industry has solidified its place as one of the largest and most influential sectors of the global economy.

Importance

Efficient oil and gas production is important because it keeps energy supplies stable and helps control prices. However, like all commodity-based industries, it's highly sensitive to geopolitical developments and supply-demand balances.

For instance, according to the US Energy Information Administration, the global oil production growth in 2025 has outpaced demand growth, contributing to downward pressure on crude prices. Following this, Brent crude oil has averaged about $64 per barrel in late 2025. With these findings, it’s predicted that prices may fall even more in 2026 as global inventories continue to grow. Since oil is necessary for other various industries, other prices may also follow.

This goes to show how important oil and gas production is to global economic stability. The demand for steady product and sufficient supply makes the market balanced, which then goes to benefit consumers, industries, and national economies. Overall, the oil and gas production industry is one of the most important pillars of the global economy, as it has relations to almost every aspect of people’s everyday living.

Process of Oil and Gas Production

The process of oil and gas production is divided into three major stages namely:

• upstream;

• midstream; and

• downstream.

Each stage is regulated and laws can vary per locality or state. There are also international agreements that have to be observed and complied with. The stages of oil and gas production are the following:

Stage 1: Upstream

This stage refers to the primary process of the oil and gas production that includes exploration, drilling, and extraction.

• Exploration: The step where geologists and other industry experts search for rock formations or areas where oil and gas are commonly found. After a site is selected, it will be prepared and developed for the actual production process.

• Drilling: This step requires the use of specialized drilling equipment to safely penetrate rock layers and gain access to the resources. Oil and gas sites are commonly drilled vertically, but newer technologies offer various advantages such as time-saving opportunities, lesser operating costs, and reduced negative environmental impact.

• Extraction: This step is the process of extracting conventional oil and natural gas from underground reservoirs and wells through pumps, natural pressure, or other recovery methods. This is also the step where fracking and recycling of fracking fluid is done.

Stage 2: Midstream

As the secondary stage, midstream refers to the processing, storing, and transportation of oil and gas products. The steps include:

• Processing: This step is where oil and natural gas are separated. After, they are transferred to gas processing plants where unnecessary products and nonhydrocarbon gases are removed.

• Storing: The step involves storing raw oil and gas in underground facilities like depleted reservoirs, while crude oil, refined products, and finished oil goods are generally kept in above-ground tanks. The proper storage of the products is essential to keep up with the domestic and international demand, and prevent discrepancies in inventories.

• Transportation: This step refers to the movement of oil and gas from getting extracted and brought to the processing plants, transferred to companies and businesses, and finally sent to the general public or primary consumers. Unrefined oil is typically transported via tankers and pipelines, while final petroleum products travel to the market through trucks, railroad cars, tankers, and more pipelines.

Stage 3: Downstream

Downstream is the third stage and final process of refining and distribution of petroleum products. This stage is divided into two steps, namely:

• Refining: This step is the process of oil refining where oil and natural gas is converted into finished petroleum products that can be used for various reasons such as transportation and electricity fuels, asphalt and road oils, kerosene, or as raw materials for making plastic and synthetic materials.

• Distribution: This is the final step where the finished petroleum products are transported and distributed to businesses, government agencies, and to the general public composed of industrial consumers, electrical providers, and heating of residential and commercial establishments, among others.

Production Equipment

The oil and gas production is complex and involves multiple processes that are then broken down into smaller steps. This type of industry propels businesses to have their own roles in the various stages of the production process. A significant number of oil and gas production equipment is used to ensure an efficient procedure from start to end. Some of the primary industry equipment and assets include:

• Drilling rigs: Drill wells into the ground using rigs to access oil and gas reserves.

• Storage tanks: Stow oil and gas securely in tanks during various stages of production.

• Pumping units: Lift oil from wells when natural reservoir pressure is insufficient.

• Refinery units: Refine crude oil in specialized refineries to produce products that differ based on demand.

• Liquefied Natural Gas (LNG) plants: Liquefy natural gas to enable its transport and long-term storage.

• Separators: Separate oil, gas, water, and sand during extraction using separator systems.

Key Production Technologies

Aside from machinery, the oil and gas industry has also seen the benefits that utilizing new technologies can offer to ensure efficiency and maintain safety in production. Some of these advanced technologies include the use of:

• Internet of Things (IoT) sensors for real-time monitoring: Detect process deviations, anomalies, and hazards, and trigger alerts for timely response using sensors .

• Analytics and dashboards: Analyze inspection and sensor data, uncover root causes, and forecast trends for proactive maintenance and safer operations

• Integrations: Centralize data from multiple systems into one view, improving visibility across production operations and enabling faster decisions.

• Lone worker solutions: Support in-app connectivity and check-ins to help monitor oil and gas worker safety during remote or hazardous tasks.