The petroleum industry is the lifeblood of our modern world, producing the electricity that charges your cell phone, the gas that heats your stove, and the fuel that powers your car’s engine.

It’s also equally important to our country’s economic development, its job creation efforts, its global competitiveness, and its energy independence. But the industry is only as good as its supply chain is, which is precisely why it’s important that we maintain it as well as we can.

To do that, one must know how it all works. They have to understand all the various systems involved, how they come together, what their duties are, what produces what and where it’s sent to, and who its end users are.

If that all sounds complicated, it is.

To help, we have put together a diagram explaining, in simple terms, how this supply chain works – and all the interesting twists and turns it takes before arriving at its intended destination: the energy consumer!

In short, here’s how it goes:

  1. Discovery

It all begins with a “treasure hunt” deep inside the earth, only there isn’t a treasure map with an X marking the spot where petroleum can be found. Instead, we have to find it ourselves. That duty normally falls upon geologists.

They do this through a variety of methods, like seismology, and technologies, such as satellite images, gravity meters that detect small changes in the earth’s gravitational field, and magnetometers that examine if any changes – large or small – have occurred in the planet’s magnetic field.

A general rule of thumb is that if there are any changes detected by the technologies and methods listed above, there are potentially undiscovered oil reserves that have yet to be tapped.


  1. Production

After geologists mark the spot and petroleum companies give it their thumbs-up following a series of tests, it’s time to see if everyone is right and if there’s actually energy to be found.

And there is really only one way to do this: by drilling.

But drilling, formally called hydrocarbon exploration, is a high-risk and costly investment that requires five must-haves in order to be successful:

  • Source rock
  • Migration
  • Trap
  • Seal rock
  • Reservoir

It also requires designing and constructing safe, reliable equipment that safeguards the environment and keeps its surrounding groundwater free from contamination. The oil and natural gas industry already has this type of equipment – and it uses it every day.


  1. Transportation

After energy is drilled, extracted, and recovered from underground reserves, all of which happens on land and at sea, it’s transported from large, short-term storage staging areas in crude form to an assortment of refineries, where it begins its transformation into the energy or products we use daily.

There are four common ways to transport energy. They are:

  • Trains
  • Trucks
  • Ships
  • Pipelines


  1. Refining

Refineries are where resources are altered the most. Using chemical separation and reaction processes, crude oil is transformed into useable, commonly used products like gasoline, diesel and jet fuel, and manufacturing feedstock that is later used to make medical equipment, plastics, refined gases, lubricants, and organic chemicals. Refineries also convert petroleum into energy that keeps power plants operational.

Significant quantities also continue traveling, later becoming fuel stored in terminals close to transportation hubs across the country.


  1. Delivery

And at those terminals, a last processing occurs. This is when ethanol and additives are infused into the final product that is later delivered via truck, ship, or delivery lines to their last stop, normally your local airport, gas station or any place else that uses petroleum to power its systems.