What Is Midstream Oil & Gas?
January 8, 2019 Welcome
The entire oil and gas energy value chain can be classified into upstream, midstream, and downstream oil and gas operations. Let’s take a quick look at these three oil and gas industry segments.
The first phase (upstream operations) comprises all the activities and technologies involved in searching for, drilling, and producing hydrocarbons in commercial quantities. Downstream operations focus on refinement, marketing, and sale of crude oil, natural gas, and petrochemicals to the final consumers. However, our focus for this article is on the midstream oil and gas industry.
So, what does midstream mean in oil and gas?
What Is Midstream Oil and Gas?
Midstream oil and gas operations involve the processing, storage, and distribution of crude oil, natural gas, refined products, and petrochemicals. ‘Midstream,’ in simple terms, is the intermediary phase between upstream and downstream operations which involves the storing and shipping of hydrocarbons produced from oil and natural gas fields.
Midstream oil and gas companies are responsible for handling crude oil and natural gas products beyond the wellhead in a sector that is generally considered to be very low-risk.
In the United States, midstream operation is a highly-regulated sector. Many federal and state regulations govern the pricing and movement of oil and gas around the country via interstate pipelines and all state-level distribution activities by midstream oil and gas companies within the country. The body responsible for midstream regulation is the Federal Energy Regulatory Commission (FERC).
What Are Midstream Assets?
Midstream assets are all the resources utilized for refining, storage, and transportation of oil, natural gas, natural gas liquids (NGLs), and other hydrocarbons in the midstream oil and gas sector. Assets include equipment such as oil pipelines, fluid compressors, gas storage facilities, fractionating and dehydration tanks, LPG & LNG storage plants, etc. Midstream assets are significant financial investments, running into billions of dollars in the U.S. alone.
Midstream Oil & Gas Operations
Operations in the midstream industry involve field processing, storage, and transportation of oil and gas before transferring the products to the downstream players.
Oil and Gas Processing
Field processing prepares oil and gas for further refining in the downstream segment. Activities include product measurement, separation of crude products, removal of impurities, and temporary storage of products in containers for shipping to the oil/gas refineries.
A percentage of hydrocarbons produced from oil and natural gas fields go to refineries for further processing. Crude oil, for instance, must be refined to separate its various distillates, e.g., diesel, gasoline, paraffin, and heavy oils.
Oil and gas storage provide a critical balance in the supply/demand dynamics of oil and gas trade. Large storage tanks around the country hold vast amounts of oil, natural gas, NLGs, and other petrochemicals allowing the midstream petroleum industry to have significant control over crude oil price.
Transportation of Oil & Gas
Transport is a significant part of midstream oil and gas operations. The industry is huge because almost all current production is carried out long distances away from refining facilities and product markets.
Various means of transport and interim storage such as pipelines, trucks, railcars, and ships are used to move large volumes of crude and natural gas from production fields to refineries and final consumers. Let’s take a look at how these vehicles help to transport oil and gas.
Pipelines are the most prominent means of transporting hydrocarbons, especially over longer distances. An oil and gas pipeline is a hollow tube made of metal, and with a considerable length. When coupled together and supported with pipeline pumps, they can be used to create extensive networks for transport of oil and gas over great distances.
Hydrocarbon transport via pipelines is one of the safest and fastest means for moving products although they require a substantial investment and several local and national permits to set up initially. Reliable metering skids and LACT skids can be used for the custody transfer process between O&G stakeholders.
Commercial trucks are used to transport oil and natural gas from land-based production sites to the refineries for further processing. Trucking is also useful for hauling fluids and sand needed for hydraulic fracturing, e.g., in the Texan oil fields where there is a strong demand for competent rig truck drivers. Of the various means of oil and gas transport, trucks move the least volume of product, but they make up for it in flexibility.
Railcars move oil and gas via rail, a relatively cheap and safe means of transport. Midstream companies load the oil onto multiple railcars which transport the product to a refinery or a market. A single railcar can hold as much as 30,000 U.S gallons of product and can serve areas that do not have pipelines installed.
IFS provides railcar loading and unloading equipment for the transfer of hydrocarbons between trucks, railcars, and pipelines.
Ships can carry vast amounts of crude oil and natural gas held in storage containers over long distances. Large ships can significantly reduce midstream transport costs due to the sheer volume of product they carry at a time. A good example is the tank barge – capable of transporting up to 27,000 barrels of natural gas and petrochemicals thousands of miles across the sea to chemical refining plants. Crude oil is generally not transported by this means due to high risks of significant environmental hazards, if a spill were to happen.
Midstream Oil and Gas Companies
Midstream companies render services that provide a connection between the upstream and downstream segments. Some companies focus on crude and natural gas processing and storage while others provide logistics, pipeline development, railcar supply, trucking, trans-loading, and haulage services.
Powerful Modular Solutions for the Midstream Industry
For oil and gas skid manufacturers that can support the growing needs of midstream energy companies, look no further than Integrated Flow Solutions (IFS). We are a market leader in the design and manufacture of modular production systems for Upstream Oil & Gas.
We offer a wide range of skid-mounted, modular packages which are all performance-engineered and quality-assured to meet international standards.