Where does the midstream fit in the energy sector? It’s a valid question.

When I took on this role of covering the midstream for Hart Energy, I worked up a PowerPoint presentation that I gave to multiple groups to explain a common question I heard: Just what is the midstream?

Sometime after Col. Drake completed that well in Pennsylvania, the oil and gas business bisected itself in two: Upstream exploration and production and downstream refining and marketing. A fellow named Rockefeller over in neighboring Ohio gets credit for creating the downstream as we know it—and with some notable financial success on his part.

But what about the middle of the business: gathering, processing, transportation and storage? That includes all of the things necessary to link producer with consumer and whatever it takes to get that production ready for the consumer. It was a no man’s land. Sometimes it was an upstream function, sometimes it was downstream property.

Often, it was something of a coin flip to decide who built and owned all that in-between stuff. Midstream was viewed almost as something of a necessary evil. There were moments over the years of companies that made midstream profitable. One great example was oil pioneer Frank Phillips’ decision to lay a pipeline from his new refinery at Borger in the lightly populated Texas Panhandle to big Midwest markets such as Chicago and St. Louis.

That opened up a terrific market for his refinery’s gasoline and established a trademark still common out in front of many service stations: Phillips 66.

Things began to evolve in the last two decades with the emergence of the MLP structure and other changes. Independent entrepreneurs saw opportunities to make money in the middle of the business without drilling wells or refining products.

For its part, Hart Energy pioneered the sector’s first publication dedicated to its news and issues: Midstream Business. I’ve had the pleasure of watching its reputation grow and mature, and thanks to all of you who have offered insights, compliments and critiques.

We heard a common question: The midstream works so closely with producers, shouldn’t your publication be more closely matched with the upstream sector?

Yes, perhaps it should be.

So with this issue of Hart Energy’s Oil and Gas Investor, we’re adding regular, midstream-focused supplements to the upstream-focused OGI. We still will cover midstream issues—you’ll see more midstream-related articles in OGI—but in a way that serves our upstream audience, too.

Each midstream supplement will cover one broad topic. With this first issue, we’re focusing on what’s probably the chief subject for America’s oil and gas business today: Midstream bottlenecks. The U.S. enjoys the finest midstream infrastructure network in the world, but it’s not enough.

Production from the big unconventional plays—in particular the Permian Basin—has overwhelmed that infrastructure. The upstream and midstream sectors will need to work together closely to assure those bottlenecks get broken and production can flow freely to customers.

The nation’s role in the worldwide energy business has changed 180 degrees in little more than a decade from top importer to important exporter. Midstream, and the rest of the energy business, has to change to meet that new role, and that includes our publications.

Meanwhile, you’ll continue to see Hart Energy’s popular conference series emphasize midstream topics. Look for a special midstream-focused exports workshop at the DUG Eagle Ford Conference & Exhibition, set for Sept. 19-21 in San Antonio. In October, we will hold our first Midstream Finance Conference in Dallas and there will be special midstream-focused presentations at our annual DUG Midcontinent Conference & Exhibition, scheduled for Nov. 13-15 in Oklahoma City. Plans are underway for special events in 2019.

I hope you find this special supplement valuable. Feel free to forward your comments and suggestions after you have had time to read it.

Paul Hart can be reached at pdhart@hartenergy.com or 713-260-6427.

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