Inspectioneering

Midstream

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The Oil and Gas industry is commonly divided into the three major sectors: Upstream, which includes oil and gas exploration and production; Midstream, which includes the transportation and storage of oil and gas; and Downstream, which refers to the refining and processing of crude oil and natural gas, as well as the marketing and distribution of petroleum-based products, including gasoline, diesel, jet fuel, natural gas liquids, and many others.

The midstream sector plays a crucial role in the transportation, storage, and processing of hydrocarbon products between the upstream and downstream sectors. As an essential link in the value chain, midstream operations facilitate the movement of crude oil, natural gas, and refined petroleum products from production areas to refineries, distribution terminals, and end consumers.

Liquefied Natural Gas (LNG) is natural gas that has been converted to liquid form for ease of storage or transport. Natural gas liquifies when it is cooled to -162ºC (-260ºF) at ambient pressure. LNG takes up about 1/600th the volume of natural gas in the gaseous state, and is odorless, colorless, non-toxic, and non-corrosive.

Liquefied Petroleum Gas (LPG) is a hydrocarbon gas that liquefies in a tank, cylinder, or other closed container at normal temperature and under low pressure. LPG is similar in chemical composition to natural gas, however LPG is usually either propane or butane, or both. Similar to natural gas, LPG itself is colorless and odorless. The sour, sulfur smell comes from adding a chemical odorant, so humans can more easily detect the presence of the gas. LPG can be used to heat, cook, barbecue, light, cool or even produce electricity, all without being connected to the gas or electricity grid.

Key Functions of Midstream Operations

Transportation

One of the primary functions of midstream operations is the transportation of hydrocarbon resources. In addition to pipelines, modes of transportation may include marine vessels, rail systems, and trucking fleets to facilitate the transportation of oil and gas in areas where pipelines are not feasible or economical.

Pipelines

Pipelines are the predominant mode of transportation in the midstream sector, offering a cost-effective and efficient means of moving large volumes over long distances. They provide a reliable and continuous flow, reducing the reliance on other modes of transportation. Pipelines can span across continents and traverse various terrains, including land and underwater. They are typically made of steel and undergo rigorous inspections and maintenance to ensure their integrity and safe operation.

Dalton Highway Pipeline in Alaska

Marine Transportation

Marine transportation involves the use of tankers and barges to transport crude oil, LNG, and refined petroleum products across waterways and oceans. Tankers are specially designed ships that can carry large quantities of oil and gas over long distances. They play a crucial role in international trade, enabling the global distribution of hydrocarbon resources. Marine terminals and ports provide the necessary infrastructure for loading and unloading tankers, ensuring the efficient transfer of oil and gas between sea and land.

Oil tanker

Crude-by-Rail

Crude-by-Rail refers to the transportation of crude oil from one location to another using railroads. It serves as an alternative to pipelines or oil tankers and allows for flexible transportation routes, especially in areas where pipelines are not available or economically viable. Railways have the capacity to carry tens of thousands of barrels of crude oil per day. However, transporting flammable crude oil by rail carries certain risks, and therefore, the crude-by-rail industry is heavily regulated. Regulations govern train speeds, equipment materials, inspection intervals, and other safety measures.

Trucking

Trucking is another transportation method used in the midstream sector, particularly for short-distance or last-mile deliveries. Trucks equipped with specialized tanks transport crude oil, refined products, or natural gas in smaller quantities to various destinations, such as local refineries, distribution terminals, or end consumers. While not as efficient as pipelines or rail systems for long-distance transportation, trucks offer flexibility and accessibility in reaching remote or less connected areas.

Storage

Storage facilities are essential components of the midstream sector, ensuring a reliable supply of hydrocarbons to meet market demand. These facilities include above-ground storage tanks (ASTs), underground storage tanks (USTs), and tank farms called terminals. They provide temporary storage for crude oil, natural gas liquids (NGLs), and refined products until they are needed for further transportation, processing, or distribution. Strategically located storage facilities also serve as buffers during supply disruptions, seasonal fluctuations in demand, or emergencies.

Above-Ground Storage Tanks

Above-ground storage tanks (ASTs) are large containers designed to store crude oil, refined products, or NGLs at atmospheric pressure. They are commonly used at refineries, distribution terminals, and other midstream facilities. ASTs are constructed with various materials, including steel and fiberglass, and are equipped with safety features to prevent leaks, spills, or other incidents.

Underground Storage Tanks

Underground storage tanks (USTs) are another form of storage used in the midstream sector. USTs are typically made of materials such as fiberglass-reinforced plastic or steel and are installed underground to store petroleum products, including gasoline, diesel, and heating oil.

Terminals

Terminals (also called tank farms) are industrial facilities used to store oil, gas, and/or petrochemical products. Terminals are made up of underground storage tanks, aboveground storage tanks, or both, and pipelines, which are used to receive product, as well as transport product to the end user or further storage facilities. There are currently over 6,000 terminals in the world, with over 2,000 located in North America.

Tank farm

Processing

Midstream operations may also involve processing facilities, such as gas processing plants and fractionation plants. Raw natural gas primarily consists of methane, but also contains other gases and liquids such as water, nitrogen, carbon dioxide, hydrogen sulfide, and more. In addition, raw natural gas often contains varying amounts of heavier hydrocarbons, such as ethane, propane, butane, isobutane, and pentane, which are separated and purified into finished by-products at gas processing facilities and collectively referred to as Natural Gas Liquids (NGL). Fractionation plants, on the other hand, separate NGLs into their individual components for various industrial applications, including fuel blending, petrochemical production, and heating.

There are many uses for NGLs throughout a variety of industries. They can be used as inputs for petrochemical plants, burned for space heat and cooking, and blended into vehicle fuel. Ethane is used almost exclusively to produce ethylene, which is then turned into plastics. Much of the propane, by contrast, is burned for heating, although a substantial amount is used as petrochemical feedstock. A blend of propane and butane, sometimes referred to as "autogas," is a popular fuel in some parts of Europe and Australia. Natural gasoline (pentanes plus) can be blended into various kinds of fuel for combustion engines, and is useful in energy recovery from wells and oil sands.

Midstream Regulatory Environment

The midstream sector operates within a complex regulatory framework to ensure safety, environmental protection, and efficient energy markets. Regulatory bodies, such as the Pipeline and Hazardous Materials Safety Administration (PHMSA) in the United States, oversee the construction, operation, and maintenance of pipelines to minimize risks and ensure compliance with established standards.

Furthermore, midstream companies are often subject to environmental regulations concerning emissions, spills, and land use. They must adhere to stringent guidelines to mitigate the potential impact on ecosystems, communities, and public health.

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