According to energy company news, in a world driven by energy and technology, integrated energy companies are particularly important to our lifestyles and the way we do business. An integrated energy company is one that focuses on all options regarding the production, refinement, distribution, and exploration of oil and gas. Importantly, all these options speak to different aspects of industry operations, and it is the high-entry costs relating to many of these gas and oil industry operations, that has resulted in many of the world’s largest oil and gas companies being integrated operationally.
Oil and gas operations are categorized into one of three categories. These categories are upstream, midstream, and downstream activities. These three categories function as follows:
1. Upstream activities
– Upstream activities include all operational activities related to exploration and production endeavors
2. Midstream activities
– Midstream activities focuses on the storage and transportation of oil and gas
3. Downstream activities
– Downstream activities are operational activities that speak to refinement and marketing activities
Integrated oil and gas energy companies often divide their operations into two major categories of activities – upstream and downstream.
Benefits and challenges Faced By Integrated Oil and Gas Companies
Unsurprisingly, each operational category mentioned above requires its own specialization and dedicated resources to manage the processes. As such, there are an standalone operators and companies in the industry that are able to focus its business activities. On the other hand, due to the integrated nature of their operations, integrated companies may struggle with potentially lowered market valuation due to the not being able to eliminate competing resource allocations. Still, they benefit from profit counterbalance when there are unfavorable market conditions in one of their operational areas.
From the latest energy news, an integrated energy company does not need to determine their total profitability by volatile prices within the market. By having both upstream and downstream operations, the business of an integrated oil and gas company can experience expanded profits. For example, diminished profitability from declining crude oil prices may result in the opposite for integrated companies thanks to lower input costs from utilizing their refinement operations instead. Using the same example, an independent oil and gas company that one has one mode of operations, on the other hand, will be negatively affected by the decreased profitability of crude oil production.
Major Players in the Integrated Energy Companies Market
Some of the world’s largest oil and gas companies are, in fact, integrated in their operations. Such companies include Exxon Mobile and Chevron Corporation. Perhaps some of the benefits of integration mentioned above are responsible for their notable successes.
