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Four Stages of Exploration and Production in the Oil and Gas Industry

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Scott Sink serves as a senior executive vice president at McGriff, Seibels & Williams, Inc., a leading insurance brokerage firm in Birmingham, Alabama. At McGriff, Scott Sink oversees the firm's Energy & Marine division, which offers specialty risk mitigation and energy brokerage services to a wide range of energy firms that include over 70 E&P corporations.

E&P refers to an exploration and production company, which deals with the location and production of oil and gas. Also known as the upstream sector of the energy industry, E&P consists of four stages that begin with identifying deposits of oil and gas underground. Often, this involves an underground search for shale formations, which refer to deposits of fine-grained sedimentary rock that are rich with natural gas and oil.

The second stage, well development, involves the construction of equipment and facilities to physically extract the raw materials. In addition to multiple wells, the construction often includes onshore or offshore platforms and environmental protection systems. Once the wells are in place, the third phase of production begins. This stage involves the extraction and separation of liquid hydrocarbons and natural gas from other raw materials. Lastly, abandonment takes place once the raw material deposits have been exhausted. Companies close the facilities and restore the area to its original state.