The Prize: The Epic Quest for Oil, Money, and Power

by Daniel Yergin

Upstream, Downstream, All Around the Stream All of the oil world is divided into three. The “upstream” comprises exploration and production. The “midstream” are the tankers and pipelines that carry crude oil to refineries. The “downstream” includes refining, marketing, and distribution, right down to the corner gasoline station or convenience store. A company that includes together significant upstream and downstream activities is said to be “integrated.” By generally accepted theory, crude oil is the residue of organic waste—primarily microscopic plankton floating in seas, and also land plants—that accumulated at the bottom of oceans, lakes, and coastal areas. Over millions of years, this organic matter, rich in carbon and hydrogen atoms, was collected beneath succeeding levels of sediments. Pressure and underground heat “cooked” the plant matter, converting it into hydrocarbons—oil and natural gas. The tiny droplets of oil liquid migrated through small pores and fractures in the rocks until they were trapped in permeable rocks, sealed by shale rocks on top and heavier salt water at the bottom. Typically, in such a reservoir, the lightest gas fills the pores of the reservoir rock as a “gas cap” above the oil. When the drill bit penetrates the reservoir, the lower pressure inside the bit allows the oil fluid to flow into the well bore and then to the surface as a flowing well. “Gushers”—or “oil fountains” as they were called in Russia—resulted from failure (or, at the time...