Importance of Midstream in Oil and Gas Resource Development

The midstream activities are necessary to bring oil and natural gas from producing fields to consumers but are typically low-margin businesses. Oil consumption is almost universal; midstream infrastructure may be taken for granted. But, pipeline examples are provided to demonstrate the necessity of midstream to monetize oil resources. The challenge is more acute for gas. Gas consumption is not as pervasive as oil consumption because it requires expansive networks of pipelines, storage, and customer connections. If there is no heating demand, power generation and industrial use are the only options to burn gas but they are dependent on existing electricity and industrial infrastructure and demand. Gas exports have to be via pipelines or in liquefied form, which can be expensive. As a result of these challenges, gas resources have remained stranded in many cases. Examples of gas export projects and future trends are discussed to underline the need to consider midstream investments when evaluating resource potential.