4 Reasons Why the Midstream Part of Oil and Gas Is So Important
The oil industry has a number of ways to categorize and identify the different sectors of the energy market. While upstream and downstream might be the best known and most prominent areas of the industry, there are some good reasons the midstream part of oil and gas markets might just be the most important of all.
The Three Categories
Within the oil industry, you often hear reference to upstream, midstream, and downstream sectors. A few players divide everything into just two sectors—upstream and downstream—but most prefer three because of the importance of all that midstream covers. Here's what they're all about:
Upstream
This phase of oil and gas production is all about locating the oil and gas, digging exploratory wells, and then recovering raw hydrocarbons through drilling. Most of the public attention tends to focus on this stage.
Midstream
In the midstream phase, oil is transported by pipeline, barge, tanker, truck, or rail to storage facilities for sale as crude oil or for further refinement. This stage also involved marketing and sales, though some marketing also takes place in the downstream phase.
Downstream
The final phase involves refining and processing oil and gas and then distributing it around the world as various types of fuels, lubricants, waxes, and other petrochemical products.
4 Reasons the Midstream Stage Is So Important
It Requires Incredible Expertize
It would be a mistake to think that the most difficult part of working with oil and gas is getting it out of the ground. Getting oil and gas safely across long distances requires perfectly constructed and maintained pipelines and extreme compression. Pipelines have to be built to exacting specifications and across every type of terrain Earth offers. The same construction and maintenance techniques that work well in the desert may not work as well in the mountains, swamps, or tundra.
Meanwhile, compressor stations and pump stations have to be maintained constantly at regular intervals along the pipeline for safety and efficiency. For other types of transport, oil and gas have to be perfectly compressed every time to ensure safety on railroad cars, trucks, and ships. One mistake can be enormously costly, and even deadly.
It Moves Through a Lot of Red Tape
Oil always has to be transported, and often quite far, so it's normal for that transportation to involve multiple countries. There's the country where it originates, all the countries through which it must pass, and the final destination nation. This means navigating some pretty tricky political waters.
A midstream logistics company has to stay constantly up-to-date with regulations, permits, and all the necessary paperwork. They must also be familiar with the tax situation in every nation and how to negotiate it, as well as arrange for international visas, travel, and accommodations for all key personnel involved in oil and gas transport.
It Coordinates Multiple Business Sectors
in order to transport oil and gas effectively, midstream operations have to work with and coordinate pipeline developers, railroad providers and railcar suppliers, trucking companies, barge and tanker owners, logistics companies, technology professionals, transloading providers, and all the operators working at terminals.
It's the Crucial Link
Upstream and downstream energy processing are important, but without the midstream link it would be harder, if not impossible, to get petrochemical products into the world's economy at the rate the world needs and at the prices the world can afford. The midstream sector has an enormous economic impact not only on individuals and particular companies, but for entire nations and even regions of the world.
Work With the Best
The midstream sector is immensely important, so work with a midstream company that thoroughly understands their vital part in the process. Contact Blackrock Midstream today to get your oil moved by professionals with years of experience providing the safest and most reliable service.