Gas Infrastructure Investment Signals Industry’s Growth
People in the oil and gas business break down the industry into different chunks. Upstream is exploration and drilling. Downstream is where finished products meet consumers. The midstream is processing and that’s where bottlenecks can crop up.
Last week a processor called Access Midstream announced plans for a major expansion of its facility in Harrison County. And experts say investments in that midstream chunk of the business are a key sign of the long-term health of a region’s gas industry.
"They sort of signal the next big step," said Jim Samuel, a consultant in the oil and gas business based in Columbus."Drilling rigs are mobile by nature. When you get into the midstream, you’re talking about capital investments that are for the most part buried underground," he said.
He’s talking about pipelines that move raw product to facilities where the oil and gas is separated into various liquids and gases. A company doesn’t make a bet like that without serious confidence that it’s going to pay off.
Processing facilities also enable growth upstream. They give drillers somewhere to send their product. With a shortage of processing capacity, drillers have to store or ship gas at high costs. That can slow drilling. With midstream processing on the rise, the industry is as bullish as ever.
Mike Chadsey is a spokesman for the Ohio Oil and Gas Association. He says it’s not just oil and gas producers that benefit from midstream investments.
"We’re going to have to lay a bunch of new pipe, which means those Ohio small businesses that move dirt, lay pipe, have welders, and have truck drivers that ship aggregates and all the other things – that’s an opportunity for those businesses to expand," he said.
An Access Midstream official says by the end of 2015, the company’s eastern Ohio investments will total $1.8 billion. With the expansion, the Harrison County facility will jump from producing about 800 million cubic feet of gas per day to over one billion.