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Oil 101:

Introduction to Oil and Gas

What is Midstream?

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What is Midstream?

This Midstream module includes the following sections:

Introduction to Midstream

Midstream Business Characteristics

Midstream Participants

Processing – The Next Step in Adding Value

Transportation

Storage

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Midstream

As its name implies, the midstream segment encompasses

facilities and processes that sit between the upstream and

downstream segments.

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Midstream Activities

Activities can include processing, storage and

transportation of crude oil and natural gas.

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Location, Location,

Location...

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In most cases, oil and gas reserves are not located in

the same geographic location as refining assets and

major consumption regions.

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Characteristics of the Midstream Segment

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Low Risk

The midstream segment is separated from upstream and

downstream in most oil companies because it is considered

a low risk, regulated type of business.

It does not fit the risk profile or asset complexity of the other

segments of the oil and gas industry.

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Highly Regulated

The movement of gas by interstate pipelines and

subsequent state level distribution activities are

highly regulated in the US by the Federal Energy

Regulatory Commission (FERC).

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Processing

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Processing

Processing oil and gas liquids into marketable products is

the beginning of the midstream segment of the business.

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Field Processing

Field processing is the first phase of oil and gas

processing,

starting in the onshore or offshore production field.

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Field Processing

Here, surface facilities are designed and installed that:

Measure the production rate,

Separate the oil, gas, and water,

Remove impurities,

Temporarily store the crude or gas.

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Fractionation

Fractionation plants, which remove natural gas liquids

(NGL) from the produced oil and gas are also a component

of the midstream activities.

These NGLs are used as blend components in a refinery

and used as fuel or feedstock in the manufacture of

petrochemicals.

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Transportation

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Transportation

After field processing, treated oil and gas is delivered via a

complex transportation, transmission and distribution

infrastructure.

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Pipelines

Crude and refined liquids start their journey in a spider web

of small-diameter field gathering pipelines.

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Marine Transportation

Once accumulated, larger volumes are transported

internationally in tankers or vessels and moved along the

coast or through rivers in smaller barges.

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Land Transportation

Land transportation methods include

pipelines, truck and rail.

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Natural Gas Transportation

Natural gas, which flows at much higher pressure than

crude oil, is most often transported in large-diameter

pipelines called transmission lines.

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Pipelines, Trucks, and Railroad

While pipelines are the safest and most efficient way to

transport oil and gas, trucks and rail are more flexible in

terms of timing and destination.

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Crude by Rail

The recent growth in domestic US production has led to an

expansion of crude-by-rail shipments since many new

fields are not connected to existing pipeline infrastructure.

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NGL vs LNG

NGL is an acronym for Natural Gas Liquids – the liquid

hydrocarbons normally associated with natural gas.

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The most common NGLs are

methane,

ethane,

propane,

butane.

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NGLs

NGLs are much more valuable as raw material for

further processing than as fuel for simple combustion.

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LNG - Liquefied Natural Gas

LNG is an acronym for Liquefied Natural Gas –

the gaseous portion of natural gas (mostly the methane

and a little ethane) in the liquefied state.

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LNG - Liquefied Natural Gas

LNG is an efficient way to move, transport and handle

large quantities of natural gas.

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Storage

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Storage - Crude Oil

Storage facilities for crude oil and refined liquids

include:

bulk terminals,

refinery tanks,

holding tanks.

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Strategic Petroleum Reserve

The Strategic Petroleum Reserve (SPR) is an emergency

storage of oil maintained by the US Department of Energy.

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Strategic Petroleum Reserve

Current storage capacity is approximately 727 million

barrels, with about 695 million barrels (or 36 days

consumption) in inventory.

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Strategic Petroleum Reserve

The SPR was started in 1975

as a result of the oil embargo of 1973-74.

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Storage - Natural Gas

Because of its extremely high pressure,

natural gas must be stored in

underground reservoirsuntil it is ready to be transported to market.

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Storage - Natural Gas

Most commonly depleted gas reservoirs are used,

with salt caverns and aquifers being other

storage possibilities.

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Introduction to Oil and Gas

This Midstream material was taken from our

Introduction to Oil and Gas course.

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Who are we?

EKT Interactive has been a leading oil and gas

training company since 1986.

Visit us at www.ektinteractive.com to learn

more.