Upstream &
Downstream
The Petro Industry
By Heather Schmidt
MBA 2017 candidate
Heather is from New York and has spent the past 10
years working in the fashion and luxury world (H&M, Elie
Saab, TAG Heuer, Hublot, YSL and More). She is a lover
of travel, desserts and watches and has used her skills to
sell dreams and aspirations. She is a natural connector;
facilitating and nurturing a wide-ranging network of
contacts in all aspects of the business world.
When Saudi Arabia starts cutting their cushy public benefits, you know trouble is a brewing. That
trouble comes in the form of oil – the centrepiece to the once booming Middle Eastern economy.
Oil prices, once peaking at $110/barrel, are now down to around $40/barrel, which has coincided
with falling gas prices. Consumers are enjoying a driver’s lifestyle on the cheap. While it’s great for
road trips, this ultimately isn’t a great thing for the overall economy in the long run. Producers are
less likely to invest in exploration and drilling, meaning fewer US jobs in the industry. The US has
even now entered the market as a major producer, extracting oil from shale at unprecedented rates.
Russia too is contributing huge quantities to the market. The simmering tension between the Saudi
and Iranian contingents has prevented any significant cuts from being made at OPEC meetings.
This, in combination with the US and Russian contributions, is literally flooding the market with more
oil than consumers actually need. Producers are withholding investment in expensive exploration
projects, cutting huge numbers of jobs, and even declaring bankruptcy to avoid sinking money into
wells that might not even pay for themselves.
All in all, this news means the time is right to pursue new skills in new sectors, as five former oil and
gas employees discovered when they came to Sydney to pursue full-time MBAs. They all spent long
hours in highly-regulated, dangerous, and exciting streams on the industry, with offshore overboard
drills in shark-filled seas, fire-alarms with live sprinklers everywhere, and even camels wandering
around the well sites.
‘Upstream’, ‘midstream’ and ‘downstream’, We are lucky to have classmates amongst us who
have worked in each of these three areas of petroleum production. ‘Upstream’ literally means
bringing oil and gas out of the earth - the searching, drilling, and extraction of crude oil and natural
gas. ‘Midstream’ refers to the transportation, storage and wholesaling of natural gas and crude.
‘Downstream” refers to the refining, processing and distribution of petrochemicals. Starting from
the literal bottom, our AGSM classmates Cody Aaron, Jeff MacGuidwin and Munib Dar worked as
engineers in the upstream side of the business. Cody spent his time in Western Australia working
for Woodside Energy as a petroleum and reservoir engineer. He spent time both in the office coming
up with complex algorithms for projecting liquefied natural gas production and on ocean platforms
performing tests to optimize output. His work helped drive decisions on projects that deliver 1% of
Australia’s GDP annually.
10
AGSM