Upstream, midstream, and downstream oil and gas explained

Three segments, one physical chain

The oil and gas industry is usually described in three segments. Upstream covers finding and producing crude oil and natural gas. Midstream covers moving, processing, and storing those raw streams. Downstream covers turning them into finished products and selling those products to customers. The labels are simple, but they describe a single physical chain in which a molecule leaves a reservoir, passes through gathering lines, processing plants, transmission pipelines, storage, and terminals, and eventually reaches a refinery, chemical plant, power station, export dock, or end user.

The segments matter because they behave differently. Upstream economics are driven by geology, drilling and completion costs, decline rates, and commodity prices. Midstream economics are shaped by throughput, contracts, tariffs, and capacity utilization. Downstream economics depend on the spread between feedstock costs and product prices, on plant reliability, and on access to markets. A company that looks similar on a stock screener can have a very different risk profile depending on which of these it actually does.

Upstream: exploration and production

Upstream companies, often called exploration and production or E&P companies, acquire acreage, evaluate the subsurface, drill and complete wells, and operate producing fields. EIA describes U.S. dry natural gas production of about 36.35 trillion cubic feet in 2022, which gives a sense of the scale of the activity that sits at the start of the chain. Upstream output is not a finished product: it is a wellhead stream of crude oil, natural gas, and natural gas liquids that has to be gathered, separated, and transported before anyone can use it.

Company examples in BTU Graph show how varied upstream portfolios are. ConocoPhillips explores for and produces crude oil, bitumen, natural gas, natural gas liquids, and LNG-linked resources across several operating regions. Devon Energy develops oil, gas, and NGL resources across major U.S. onshore basins, including the Delaware, Marcellus, Rockies, Anadarko, and Eagle Ford regions. EOG Resources produces crude oil, NGLs, and natural gas across U.S. resource plays and also manages gathering, processing, and marketing activities adjacent to the wellhead. That last point is common: many producers reach into the next segment to secure takeaway and pricing.

Midstream: gathering, processing, transport, and storage

Midstream is the connective tissue. According to EIA, wellhead gas flows through gathering pipelines to processing plants where contaminants and hydrocarbon gas liquids are removed, leaving dry gas suitable for transmission. Interstate, intrastate, and other transmission pipelines then move that gas toward local distribution systems, storage, industrial users, power plants, and export facilities. Crude oil and refined products have parallel networks of pipelines, terminals, tanks, rail, and marine assets.

Kinder Morgan operates pipelines and storage for natural gas, crude oil, refined products, carbon dioxide, and renewable fuels, together with liquids and dry-bulk terminals. Williams gathers, processes, stores, and transports natural gas, with its Transco system linking supply areas to customers along the Eastern Seaboard and Gulf Coast. Enterprise Products Partners operates gas processing, NGL fractionation, crude oil, products, and petrochemical infrastructure, with marine terminals linking U.S. production to domestic and export demand. None of these companies is primarily paid for the commodity price itself; their role is defined by capacity, connectivity, and contracts. BTU Graph's separate guide to midstream companies goes deeper into those business models.

Downstream: refining, fuels, and marketing

Downstream begins where crude oil becomes products. EIA describes refining as three broad steps: separation in distillation units by boiling point, conversion that cracks heavier molecules into lighter and more valuable ones, and treatment and blending to meet product specifications. EIA counted 130 operable petroleum refineries in the United States as of January 1, 2026. Downstream companies also run terminals, wholesale and branded marketing, and increasingly renewable-fuel production.

Marathon Petroleum combines refining with product marketing, renewable fuels, logistics, and its relationship with the MPLX midstream partnership. Phillips 66 spans refining, midstream, chemicals, marketing, renewable fuels, and a commercial organization that supplies feedstocks and trades around its assets. Valero manufactures conventional and lower-carbon transportation fuels through refineries, ethanol plants, and renewable diesel and sustainable aviation fuel activities. These profiles show that "downstream" frequently includes midstream assets, which is why the segment label alone is not enough to understand a company.

Where the segments blur, and how to read a company

Integration is the norm rather than the exception. Producers build or contract gathering systems to protect takeaway. Midstream companies own processing plants and export terminals whose value depends on upstream drilling. Refiners own pipelines, terminals, and trading desks. A practical way to read any company is to ask what it owns, what it operates, what it sells, and what it is paid for. A pipeline owner paid a tariff, a producer paid a commodity price less differentials, and a refiner paid a crack spread are exposed to the same molecules in very different ways.

The handoffs between segments are where data and contracts matter most. Volumes are measured at receipt and delivery points, prices are set at specific hubs, and quality, timing, and location differentials convert a benchmark into a realized value. Teams that model the chain should keep those handoffs explicit: which hub price applies, which unit and currency, which timestamp, and which contract. Benchmark crude, natural gas, and product prices are a common input across all three segments; Oil Price API, which publishes BTU Graph, provides those series as structured data, while each company's own systems remain responsible for contracts and operations.

Use the company profiles linked below to inspect each organization's dated evidence, and the sector hubs to see who else operates in each segment. Companies are listed alphabetically. Inclusion in BTU Graph is not an endorsement or a ranking, and public evidence will not capture every private contract, joint venture, or asset sale. Confirm current portfolios with company filings before relying on them for an investment or commercial decision.