E&P is the acronym of Exploration and Production in the oil and gas industry.
E&P is also the synonymous of Upstream
E&P or Exploration and Production or Upstream refer in the same way to all the oil and gas activities from the search of potential reserves to the first transformation of the crude oil or natural gas into refined products or hydrocarbon derivatives.
The main Exploration and Production operations may be described as following:
– Drill exploratory wells to check the validity of geologists calculations
– Perform tests to evaluate the potential reserves of the discoveries
– Describe the reservoir in term of pressure, temperature, permeability, rocks and sands, connection with other fields
– Define the most efficient way to extract the oil and gas and associated gas liquids and solids
– Estimate the different levels of recoverable reserves and at which cost, especially if it needs enhanced oil recovery (EOR)
Within the oil and gas and petrochemical industry the Exploration and Production is the most critical as it concentrates the biggest capital expenditure, more than $500 billion per year, and involve immediately the strategic interests of the companies and countries.
In addition to be capital intensive, the Exploration and Production carries on a lot of risks related to the uncertainty of the discoveries at the exploration level and hazards during the development and production phases.
The companies have to go always deeper or in harsher environment to find new fields, increasing those risks.
In front of these challenges, the international oil companies (IOCs) such as the ExxonMobil, Chevron, BP, Shell, ConocoPhillips or Total tend to concentrate their means on the Exploration and Production in order to pay the licenses to get access to the resources and to develop the new technologies required to extract them economically.
In opposite way the National Oil Companies (NOCs) want to take advantage of their resources to develop an integrated Upstream–Downstream business model where the E&P activity is to provide low costs feedstock to produce added value hydrocarbon products along their petrochemical activities.
With this set up if the oil and gas prices come down the losses in revenues from the crude oil and natural gas export are partly compensated by the better margins on the petrochemical side.
If the oil and gas prices go up, they always keep the opportunity to direct their capacities where it provides the best margin between export and local transformation.
According to Dun&Bradstreet, the US oil and gas Exploration and Production business involves approximately 5000 companies and accumulates about $290 billion of revenues per year.
This number includes the companies operating exclusively in the Exploration and Production such as Anadarko Petroleum or Apache and the revenues in Exploration and Production of the integrated companies such as ExxonMobil, BP or Shell.