Definition of Midstream?

Midstream is a term use to define one of the three main operation phases in the oil and gas industry. Intermediate activities include the processing, storage, transportation, and marketing of oil, natural gas, and natural gas liquids.

The other two major stages are Upstream, which refers to the production of crude oil and natural gas, and Downstream, which refers to refining crude oil into gasoline, diesel, jet, and other fuels. Today, many large oil companies perform all process streams and are known integrate oil companies.

Important Tips

  • Midstream mentions points in the oil production process that are between upstream and downstream.
  • The intermediate activities include, in particular, the storage, processing, and transport of mineral oil products.
  • This can include companies that specialize in the operation of tankers, pipelines, or storage facilities.

Understand Intermediate Activities

Intermediate activities are often part of other activities in much of the global oil and gas industry. Midstream and downstream actions occur next to the first phase of production, the so-called upstream, until the final point of sale. Many oil and gas companies consider it integrated due to their ability to combine upstream, midstream, and downstream activities as part of their overall operations.

The term intermediate industry is much more common in the oil industry in the United States and Canada than in the rest of the world due to the large pipelines and private oil deposits in these countries. The Keystone Pipeline System, for example, is a pipeline system in Canada and the United States that began operations in 2010 and is now wholly owned by TransCanada Corporation. Other companies include Oasis Midstream Partners, Sanchez Midstream Partners, Hess Midstream, Magellan Midstream Partners, and EQT Midstream Partners. The designation in the US for the transportation and storage of crude oil as a separate part of the production chain permits the industry to happen.

Midstream Example

LLC. Magellan Midstream Partners positions on their website that they own and operate five coastal waterway marine storage terminals with a total storage capacity of approximately 26 million barrels and a storage capacity of approximately one million barrels jointly owned by their joint venture Texas Frontera. Marine terminals offer distribution, storage, blending, inventory management, and additive injection services to refineries, traders, merchants, and other end-users of petroleum products. These key services, offered between upstream crude production and refineries, are an important part of the Midstream Business name.

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In Europe, the transport and storage of crude is often integrated into the upstream production business. Large European oil companies like Shell or BP tend to show production and transportation costs together in their annual accounts. Furthermore, many European pipelines controll by the countries’ governments whose territories they pass through or by state-owned oil transport companies in those countries. This state ownership generally means that there is no midstream as a separately identified part of the oil production value chain.

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