The Magic Of Midstream Oil and Gas
Tuesday June 28, 2016
Whether you’re selling water, a game-changing app, or tacos, you need tankers, or an app store, or a modified trailer with a slide window and an awning to get your product to market.
The Oil and Gas industry is so big that we have broken it up into three separate industries:
- Upstream – which is focused on finding and extracting hydrocarbons from the earth
- Midstream – which is focused transporting hydrocarbons from the Upstream, storing, and delivering them to
- Downstream – which includes refineries, gas stations, city gas supplies, and Hank Hill.
Of course there is some overlap and integration between the sectors – Midstream may do some processing for Natural Gas Liquids, and may be involved in the delivery of wholesale refined product to retail outlets, for example.
Naturally, our posts here focus mainly on upstream concerns, but I thought it would be useful to examine midstream operations. I’m going to focus primarily on liquids (oil, condensate, NGLs), since gas is a little more, um, elusive.
Transportation
Let’s start with the myriad methods of transporting hydrocarbons.
- Trucks – very common for collection, although since it’s the most custom, it is the most expensive – you have to pay for a driver to transport each load. Typical tanker truck capacities range from around 5,500 to 11,600 U.S. gallons – between 131 and 276 barrels. This effectively adds a surcharge to wildcatted wells, or wells that are not near a hub. If you have a well producing 50 barrels a day, you’re going to have to send a tanker truck out every 3 to 5 days or so.
- Trains – very common, particularly to deal with very large quantities across long distances that don’t have pipeline infrastructure built out. Although like with tanker trucks you still have to deal with loading and unloading individual train car loads, the enormous distances that can be covered with a relatively small crew, make trains more economically reasonable by far than trucking. The standard DOT-111 tank car has a maximum capacity of 34,500 gallons – around 821 barrels.
