What is Upstream Oil and Gas: Key Trends, Training, and the Future of the Industry

What is upstream oil and gas? What is the future of the energy sector? How can you attract and retain talent with comprehensive learning and development? We’ll answer all these questions and more in this comprehensive guide to the upstream oil and gas industry.

What is Upstream Oil and Gas?

The oil and gas industry is broken up into multiple sectors: upstream, midstream, and downstream. Each of these sectors is responsible for a different part of the market, each with different training needs and challenges.

In this blog, we’re focusing just on the upstream industry.

Upstream is in the business of oil and gas exploration and production (E&P). This includes finding the crude oil and natural gas deposits and the activities in the field, including drilling and mining oil sands.

Oil and Gas Exploration

This part of the upstream market is exactly what it sounds like. It’s all about finding potential sites for drilling and extracting natural gas and/or crude oil.

There are numerous methods that are used to locate ideal sites:

1. Geophysical Surveys: Using electrical currents, searching for gravitational and magnetic anomalies, density variations, and more.
2. Remote Sensing: Using aerial photography and satellite imagery to locate subtle variations in the earth’s surface that can be helpful for locating drilling sites.
3. Wildcat Wells: Wells drilled in a new area without much other information. Because these wells are drilled based on intuition, only about 10% of them strike oil and gas.

Oil and Gas Extraction

Drilling for oil and natural gas is complex. There are numerous methods for drilling and types of wells.

There are five types of drilling:

1. Cable Drilling
2. Directional Drilling
3. Electro-Drilling
4. Rotary Drilling
5. Dual-Wall Reverse-Circulation Drilling

And three general categories of wells:

1. Wells that only produce oil
2. Wells that only produce natural gas
3. Wells that produce both oil and natural gas

Top Trends in the Upstream Oil and Gas Industry

The upstream oil and gas market is experiencing many trends—some challenges and others huge opportunities for the industry. Let’s review three of the most pressing trends:

Labor Shortages

Although the oil and gas sector is set to grow 7.66% in the next decade, extraction jobs are expected to shrink –13.66%. Even with a smaller workforce, and increasing focus on clean energy and fuel, extraction output is expected to increase nearly 40% in the next ten years.

But with less labor and increasing demand and output, this can put a strain on the existing workforce. Oil and gas is already considered a high-risk industry, making an emphasis on safety and operational excellence even more important.

And with upstream oil and gas experiencing the highest levels of attrition in the industry, employers will need to stay on top of retention and hiring strategies to keep pace.

Decarbonization and New Regulations

Governments and national oil companies are in a tricky situation. With aggressive sustainability goals to mitigate environmental impact, many companies are having to invest more in measurement, monitoring, and mitigation efforts to offset their carbon impact.

“It will be extremely hard for mainstream operators to sanction projects without emission mitigation plans…We won’t see the industry spending more on gas than oil this year, but it’s clear that gas remains investible and will play an important role for upstream companies moving forward.”

— Fraser McKay, Head of Upstream Analysis at Wood Mackenzie

Upstream companies are also having to shift their investment more towards natural gas than oil based on shifting investments and priorities due to new regulations.

Digital Revolution

Embracing new technology is both a solution to many industry challenges but also a challenge in and of itself. To remain competitive, upstream oil and gas companies must embrace digital solutions to create more efficiencies through automation, make their operations more reliable, and improve their ability to reduce costs and carbon emissions.

“Over the past decade, advances in data analytics, artificial intelligence (AI), and the Industrial Internet of Things (IoT) have helped players in many sectors to optimize complex processes; track down elusive sources of loss and inefficiency; and respond more effectively to volatility, shocks, and disruptions.”

— McKinsey & Company

The Future of the Oil and Gas Industry

“The coming decade will likely be a defining one for the global energy system.” — McKinsey & Company

The oil and gas industry is at a crossroads, navigating a complex, global landscape that is rapidly changing and forced to evolve.

From disruptions in the global supply chain and economic turbulence to the transformative impact of digital technologies, the imperative of sustainability, persistent safety concerns, and a competitive labor market, these challenges underscore the need for proactive strategies and innovative solutions.

But all the challenges we’ll review in this guide stem from the shift in the energy landscape. Fossil fuels are still the main source of energy…for now. Geopolitics and new legislation have made demand for renewable energy grow rapidly. As a result, strict sustainability targets are shifting market demand for greener energy sources, and this sector will have to respond.

Training and Safety Solutions for Upstream Oil and Gas Companies

In response to the multifaceted challenges facing the Oil and Gas industry, organizations are adopting innovative solutions and strategies to mitigate risks, enhance operational efficiency, and drive sustainable growth. Here are some key solutions to address the primary challenges confronting the industry.

EHS Management for Upstream Companies

Vector EHS Management brings all your organization’s EHS activities, tasks, and reports into one easy-to-use solution that helps you gain visibility into the data and trends needed to shift from a reactive to a proactive safety culture. Our platform includes:

• Incidents, claims, and easy OSHA recordkeeping
• Inspections and observations
• Dashboards, metrics, and reports to track safety KPIs and goals
• Risk management

Learning Management to Build Talent

A comprehensive Learning Management System (LMS) that’s equipped with advanced measurement and competency assessment capabilities can help you effectively manage and track training initiatives.

Vector Solutions’ LMS enables you to:

• Monitor learner progress, track completion rates, and identify skills gaps.
• Leverage built-in reporting and analytics tools to gain actionable insights into training effectiveness, identify areas for improvement, and make data-driven decisions to optimize training outcomes.
• Use competency assessments to evaluate learner proficiency and ensure alignment with organizational goals and industry standards.

Training Needs for the Upstream Oil and Gas Workforce

Based on the nature of upstream work, workers in this industry need to train on a variety of topics, but especially safety and hazardous materials.

Analysis of Vector Solutions’ upstream oil and gas customers shows that the top utilized upstream courses include:

1. Safety Microlearning Courses: Everything from the safe use of cellphones to back safety and avoiding fatigue, microlearning is a great option for field-based workers who don’t have a lot of time to take training.
2. Emergency Action Plans: In high-risk industries like oil and gas, emergency action plans can save lives. This course reviews what these plans are and who is responsible for developing them.
3. Bloodborne Pathogens: This course helps upstream employees reduce their chance of exposure to bloodborne pathogens.
4. Hazard Communication GHS: This course provides an overview of key HazCom issues and how to stay safe when handling hazardous chemicals.
5. Lockout/Tagout: Vector offers Lockout Tagout courses for both affected and authorized employees.
6. Incident Investigation: This course provides investigation techniques to properly document safety incidents to stay compliant and prevent future incidents.
7. Industrial Housekeeping: Poor housekeeping creates additional hazards in the workplace. This course covers the benefits of keeping a clean, organized work environment.
8. Environmental Safety: Top courses include SPCC Inspections and Spill Prevention, Control, and Countermeasures.

Ready to learn more about how you can improve safety and training for your upstream workforce? Request a demo today to speak with a member of our team.