Crude oil is an essential feedstock for the production of refined petroleum products. According to the statistics portal, Stastista we produce over four billion metric tons of oil worldwide every year — the top three producers being Saudi Arabia, the United States, and Russia.
Stastista also states that oil and gas companies are some of the largest corporations worldwide. If we look at the top ten worldwide companies based on revenue, six of them are in the oil industry.
While consumption in the developed world is going down, due to increasingly efficient technology, the global demand for oil and gas products continues to rise. From 89 million barrels in 2012, the daily global oil consumption may rise to 109 million barrels in 2035.
The increasing demand for oil means that companies in the petroleum industry have to stay up-to-date on the latest trends and continue to improve their processes, which will enable them to better cater to their consumers, and increase revenue. While over engineered heavy-steel has gotten us to where we are today, automation is the next stage in the evolution of the oil and gas industry. No sector of this industry is that more clear than in midstream.
The midstream sector of the oil and gas industry is defined by the transportation and storage of petroleum products as well as massive amounts of water. It is basically the spokes connecting the various stages of our industry and makes it possible for oil, natural gas and produced water to get from the wellhead to its final destination and every point in between.
The business of transporting product from site to facility is more serious than ever, requiring greater visibility and control over the process. On top of that, the midstream market requires companies to have clear organizational processes that allow quick response to the fluctuating demands of the market.
Companies in the midstream sector are starting to turn to automation for a centralized workflow. The use of technology makes way for improved efficiency and security in the management of midstream operations. It is also an economical option with a potential for increased profitability by reducing costs and increasing operational efficiencies.
With some segments of the oilfield readily accepting technological advances to its infrastructure, the door is already open to allow for widespread automation in the midstream sector as well. Automation will be the key to a more efficient future for midstream operations.
What Is the Midstream Sector of the Oil and Gas Industry Responsible For?
While the upstream sector of the oil and gas industry primarily refers to geological surveys, drilling, and manufacturing activities at the source of the petroleum. The midstream sector refers to storage and transportation of product through pipelines, rails, and trucks. With the downstream sector responsible for refining, processing and distribution of petroleum products through retail outlets.
Given this overview of the different sectors of the oil and gas industry, we can highlight the fact that the midstream sector is responsible for the storage and transportation of various petroleum products including the following:
- Crude oil: An unrefined liquid petroleum product largely made of hydrocarbon deposits, sulfur, oxygen, and nitrogen
- Natural gas: A colorless and odorless gas product commonly used for home heating, warming water, cooking food on gas-burning stoves, and operating gas-powered fireplaces
- Liquefied natural gas: A colorless and odorless liquid gas product commonly used as a transportation fuel for trucks and as an alternative fuel source for power vessels
- Sulfur: A pale yellow and odorless material used to create sulfuric acid and compounds, such as hydrogen sulfide and sulfur dioxide
- Produced water: A briny liquid containing water, salt, oil, organic and inorganic chemicals and naturally occurring radioactive material (NORM)
The midstream sector of the oilfield connects the far-spread oil and natural gas producing regions of the upstream sector with the various processing and storage locations of the downstream sector. To put it simply, midstream is the bridge between petroleum exploration and production (E&P) activities in the field and petroleum product distribution among refineries and other processing facilities.
How Does Product Move Though the Oil and Gas Supply Chain Infrastructure?
Midstream activities — which primarily include the storage and transportation of petroleum products — occur after the E&P phase of crude oil and natural gas operations. The transportation of crude and refined products, as well as oilfield byproducts, around the world, affects every aspect of the global economy.
Yet, the midstream sector designation is more common in the North American oil and gas industry than anywhere else in the world. This is because of the privately owned oil pipelines and storage facilities in the United States and in Canada.
Midstream oilfield companies break down the sector even further into different subgroups, including pipelines, transportation, and upgraders and refineries.
Pipelines are a major aspect of the midstream sector of the oil and gas industry. They transport crude oil, natural gas and its byproducts such as produced water from well sites and facilities in the upstream sector to the nearest (or most economical) midstream processing facility.
Pipelines are often necessary for jumpstarting the transportation and distribution process for the widespread use of petroleum products. But while pipelines are often the preferred method of transporting petroleum products, they are capital intensive and take time to be brought online, not to mention the increasingly stringent regulatory requirements before a project can even start. Midstream oil and gas pipelines may run into some obstacles, though. Things midstream companies need to consider include the following:
- Maintenance of pump and compressor stations along pipeline routes
- Geopolitical concerns, such as taxes, permits, and compliance with local regulations
- Navigation through different terrain types, from deserts to the ocean and the mountain ranges in between
- Proper pipeline maintenance for safe transportation of oil and gas
Midstream pipelines may stretch for miles and across international borders. They need high-quality components to ensure the safety and efficiency of the transition of hydrocarbons and oilfield byproducts to the designated regions and facilities.
Pipelines are one way of transporting crude oil and natural gas from upstream to midstream, but this is not the only way to transport oil, gas and water to a refinery or a processing facility. Ship transport and railway transport are options that can be just as efficient but generally regarded as less safe means of transportation.
Ship transport moves fuel across rivers and oceans via ship or barge. It is one of the least costly transportation methods for huge amounts of oil through inland and coastal waterways. Railway transport is another popular option. This method involves a low-cost setup, short rail infrastructure construction time, fairly short transit time, and a quick response to market fluctuations.
Upgraders and Refineries
Oil refineries are industrial plants that serve as the final destination of crude and refined petroleum products before they undergo the downstream process. These refineries separate oil into different marketable commodities. They generate various products, such as diesel, gasoline, and heating oil.
The chemical separation process begins with fractional distillation and chemical processing. After the petroleum undergoes these steps, it goes through treatment and de-sulfurization for cleaner and more efficient fuels. Optionally, oil refineries can blend the oils and gases to create different types of gasoline products. When the mixed products are ready, they go into storage before delivery to distribution areas.
What Can We Do to Keep the Midstream Sector Afloat?
The United Nations predicts that the world population will reach 8.5 billion by 2030 and 9.7 billion in 2050. In the next few decades, we can expect a growing need for reliable and affordable energy sources.
The midstream sector, which bridges the gap between petroleum production and product distribution, plays a role in keeping the oil and gas industry afloat and satisfying consumer demands. For this reason, midstream companies constantly look for innovative technologies that streamline their processes — and this is where automation enters the picture.
Automation uses technology to control, monitor, and increase efficiency in everyday operations. It covers several areas in the petroleum industry that have both immediate and lasting impacts on oilfield businesses. As a result, it keeps the industry running smoothly.
The upstream sector already utilizes automation for more efficient drilling operations. The midstream sector likewise already applies various automated applications. This shift to automated applications comes with several benefits. For one, automation can monitor onshore and offshore pipelines to quickly identify damages and other vulnerabilities. While the general public focuses on the environmental effects of spilling petroleum products, spilling produced water can be just as harmful to the local ecosystem and surrounding communities.
This is not the only way that automated operations lead the future of the oil and gas industry, though.
In What Ways Can Automation Improve Midstream Processes?
Automation is versatile. It improves various internal processes that involve oil and gas production and distribution, making it an ideal solution for everyday midstream operations. Oilfield companies can leverage various aspects of automation, including pipeline and transportation automation as well as oil refinery automation.
Oilfield companies are strict with their pipeline processes, whether their pipelines are in remote areas or near city centers, to make sure that the products flow safely, 24/7. For this reason, midstream companies automate pipeline and transportation processes for effective pipeline management.
Automation also provides solutions for oil refinery processes. These solutions boost safety and efficiency in oil refineries.
Saltwater disposal facilities have also achieved significant operational efficiencies by implementing automated controls and remote monitoring systems.
How Does Automation Affect Pipeline Transportation?
Every year, the midstream sector builds miles of new pipelines to accommodate the increasing need to transport oil, gas and water from the upstream sector. Automation provides various solutions for oilfield pipelines and other transportation methods.
Improved Safety and Control
Not only does oil and gas pipeline automation contribute to safer operations, it also gives midstream companies better control over the product moving through their system. In other words, it addresses maintenance and safety issues associated with midstream operations. This allows new pipeline construction and existing system upgrades stay safe and manageable.
With the recent surge the oil and gas industry has seen in the building of new, and the retrofitting of older saltwater disposal facilities, automation is going to play a key part in keeping costs down and operations running as efficiently as possible.
On a related note, automation makes way for safe and energy-efficient pumping. Automated processes improved the uptime, safety, and energy consumption of compressor and pump stations.
Automation introduces smart and connected equipment that boost pipeline productivity and profitability. Digital innovation, then, provides the following opportunities for pipeline companies:
- Real-time remote monitoring
- Complete operational control
- Optimized energy and maintenance costs
- Better control room management
- Easy access to intelligence
- Reduced downtime
Digital innovation also enables pipeline companies to excel in the area of regulatory compliance.
Pipeline companies experience optimized operations through automation. The use of technology can effectively cut down costs, ease compliance, and enhance safety for them.
In the midstream sector, companies already feel pressure to safely deliver oil, gas and petroleum byproducts from the upstream sector. They are also under pressure to deliver high returns through increased efficiency and to enhance worker and public safety. By welcoming automation, midstream companies can be more successful at delivering these improved results.
The midstream sector may utilize IoT (internet of things) devices, cloud computing, and intelligent software to meet the demands of the industry. They may use smart devices and IoT technologies for improvement in the following areas:
- Data gathering
- Energy optimization
- Root-cause analysis
- Predictive monitoring
- Pipeline maintenance
Better Terminal Operations
Smart technologies contribute to a more efficient pipeline system. They also contribute to more efficient terminal and storage tank operations by providing better control and more comprehensive information about the said operations.
In addition to all of these, smart technologies allow operators to pull up data from various devices with secure remote access. This accessibility results in improved decision-making processes and a fully digitized oilfield experience.
How Does Automation Affect Facility Processes?
The oil and gas industry generates billions of dollars every year. Operators in the midstream sector are in charge of multi-billion dollar assets. For this reason, midstream companies may turn to automation for integrated oil refinery solutions.
Improved Safety and Efficiency
Smart technologies contribute to safe and efficient operations in oil refineries. For example, the integration of process and motor controllers with the main DCS (distributed control system) results in tighter control of refinery assets. On a related note, the integration helps oil refineries meet their performance objectives including productivity, safety, and efficiency.
Oil refineries use different systems to control processes, measure petroleum products, and perform other functions. Automation lets refineries integrate these systems, resulting in better management and overall operations.
Reduced Energy and Maintenance Costs
Smart technologies streamline operations in oil refineries by integrating DCS and business systems. Automated systems effectively cut down energy consumption and maintenance tasks, noticeably bringing down energy and maintenance costs.
Additionally, automation lets oil refinery operators access and visualize data anywhere for informed business decision-making.
How Does the Midstream Sector Embrace Automation?
The midstream sector is more efficient than ever thanks to the growing use of automation tools and processes. Operators are now more open to the Internet of Things (IoT), which is a system of computing devices, mechanical and digital machines, and objects that enable data transfer through a network without the need for human-to-human or human-to-computer interaction.
The Internet of Things serves as the backbone of modern industrial operations. It makes way for secure data collection and exchange. It is particularly beneficial in the oil and gas pipeline industry because of its ability to streamline data measurement and analysis — in real time.
The pipeline sector of the oil and gas industry benefits from the IoT’s ability to increase the bandwidth for business analytics. The data produced from these advanced analytics may include parameters for optimization. Additionally, the data may include information related to the midstream process, including pressure cycles, corrosion and pipeline conditions.
Oil and gas pipeline operators benefit from IoT utilization in various ways:
- Environmental monitoring
- Infrastructure management
- Operations controllers enhancement
- Energy management
SCADA systems also play a major role in digitizing and streamlining the midstream sector.
What is the Role of SCADA Systems in the Midstream Sector?
Supervisory control and data acquisition (SCADA) systems combine software and hardware elements to streamline processes for geographically dispersed assets in industrial sectors like the oil and gas industry. SCADA is an industrial computer system that uses microprocessors and programmable logic controllers for better monitoring and management of automated processes.
These systems have the ability to control processes, monitor and process real-time data, and record events and updates into a log file. They may also use human-machine interface to interact with various midstream devices, such as sensors, valves, pumps, and motors.
In short, SCADA systems maintain efficiency, communicate system issues immediately, and process data for smart decision-making more effectively. They cater to a wide range of necessities, from simple configurations to complex installations. So, they work well in many modern industries including oil and gas, energy, power, and transportation.
The Origins of SCADA
Industrial organizations once manually controlled and managed equipment. But this system is not ideal for the oil and gas industry, nor is it optimal for other sectors that are close to size or similar in organizational processes. Such industries encounter many problems with manual control and management. These sectors need to control their equipment and systems across long distances — for oil and gas companies, these distances could run thousands of miles.
Supervisory control is crucial in oilfield pipelines, major utilities, and other industrial markets that have geographically dispersed assets. And because manual control and management is impractical and limits functionality for industrial sectors, the need for automated processes became more vital.
In the early 1950s, control engineers developed computers for industrial control purposes. The 1960s saw the rise of telemetry, which was useful for gathering intelligence about foreign missiles and space vehicles during the Cold War. In the industrial sector, SCADA was used for automated communications between remote sites and monitoring equipment. It wasn’t until the 1970s, however, when the term “SCADA” was coined. Control engineers have updated SCADA systems since then to better cater to the demands of the industrial world. What was once merely an idea of automated supervisory control is now, after decades of development, one of the most complex and in-demand data acquisition and supervisory control system.
The Architecture of a Basic SCADA System
Older SCADA system uses microcomputers called programmable logic controllers (PLCs) and remote terminal units (RTUs). These microcomputers connect to hardware, such as factory machines, sensors, and end devices. The system then delivers information from these hardware devices to computers with the help of SCADA software.
Newer fully integrated SCADA systems use Industrial PCs (IPC), which allow for continuous updates to be pushed out through a cloud-based system. This not only eliminates the need for field personnel to go to the site and shut down operations for hours or days while the PLCs are reconfigured, but it also allows for expanding operations or integrating older systems with new infrastructure.
There are still a lot of the older PLC systems in operation, but these are slowly being upgraded with the more advanced IPCs, resulting in a truly digital oilfield.
The software demonstrates the ability to process, distribute, and display data so that midfield operators and workers can properly analyze data and make well-informed decisions.
For example, the SCADA system may quickly notify a midstream operator about errors with a specific batch of petroleum products. The operator may then review the SCADA system data to determine the cause of the malfunction and address it before further damage occurs.
The Role of SCADA Systems in Midstream Operations
The midstream sector uses pipelines to transport crude oil and natural gas from drill sites to storage and processing facilities while moving an even greater amount of produced water around the oil patch. These pipelines typically span thousands of miles over different types of harsh terrains. For this reason, midstream operators may require a central SCADA system to monitor and manage all field instruments utilized across the entire oil or gas flow in the pipes.
Pumping stations regulate the pressure that runs through oilfield pipelines. They also let midstream operators monitor the entire process. Operators can detect, determine, and resolve issues like leaks and damages in these pipes by deploying an extendable Ethernet network across pump or compressor stations, metering stations, and block valve stations.
Connectivity for SCADA systems must include an integrated monitoring and surveillance service for optimal safety, reliability, and cost efficiency.
SCADA systems are effective in monitoring and controlling pipelines, they are renowned for efficiency in comprehensive data collection, data communication across the network, accurate data reporting, and streamlined system control functions. As such, they are a great contributor to the future of midstream automation.
What Are the Specific Midstream Issues that IoT, SCADA, and Other Types of Automation Tackle?
The demand for oil and gas products remains high, worldwide. And, unexpected economic slowdowns aside, we don’t see anything that can significantly cut that demand. In fact, industry experts project a rising trajectory of oil demand until 2040.
Oil and gas companies will be better equipped to meet consumer demands by fully understanding and accepting the significance of automation.
The upstream sector has long been a supporter of automation in daily drilling inspections, inspections, weather monitoring systems, and pressure and flow measurement. The midstream sector can also depend on the versatility of automation to make an immediate and lasting difference in day-to-day operations.
The use of automated tools and processes like the IoT and SCADA systems effectively tackle a wide range of everyday issues across multiple industry segments. For midstream companies, these issues can range from pipeline management to business and operations integration.
Pipelines are a major means of transportation of crude and refined petroleum products as well as the byproducts associated with drilling and completion operations. For this reason, the midstream sector requires streamlined pipeline management for a smooth operational flow.
Midstream operators have to deal with many pipeline-related concerns, such as maintenance and data analysis. Automation makes the job easier by providing a wide range of capabilities that reduce the need for human-to-human or human-to-computer interaction.
- Predictive pipeline design and modeling
- Pipeline and network optimization
- Leak and damage detection
- Operations analysis
- Capacity research
- Theft detection
Pipelines and railways play a significant role in the midstream sector. But, they are not the only concerns of midstream operators. Terminals also face many challenges in day-to-day operations.
Terminal management includes a wide range of commercial and operational activities that make sure that the entire midstream process is flowing smoothly. Automation provides configurable solutions for every aspect of terminal operations.
- Order management
- Logistics scheduling
- Billing and invoicing
- History and reporting
- Contract administration
- Gate and access management
- Movement and gantry execution
Midstream operators deal with different types of crude oil and natural gas. Petroleum products come in liquid and gaseous states of matter. For concerns with liquids management, automation provides various comprehensive solutions.
- Order-to-cash management
- Liquids pipeline optimization
- Transportation network planning
- Efficient pipeline and terminal scheduling
- Pipeline and terminal transaction management
Automated tools and processes make liquids management easier, making way for seamless transport and maximized storage. As a result, the supply chain becomes more valuable and the business attracts more customers.
Midstream operators take a different approach to liquid management and gas management. Nevertheless, they pay close attention to issues that may negatively affect worker safety, environmental impact, and efficient operations.
Automation provides many solutions that operators face when dealing with gas in the midstream sector.
- Predictive analytics
- Contracts and fulfillment
- Contract management for distributors
- Transaction and operational management
- Gas transmission management, measurement, and control
Business and Operational Integration
Automated tools and processes may improve virtually every aspect of the midstream sector. They are more than capable of addressing a long list of concerns regarding the sector, from pipeline monitoring to liquids and gas management. Midstream operators, then, should embrace automation solutions that integrate business and operational activities to streamline overall operations.
Automation, through IoT, SCADA, and similar tools and processes, integrates business and operations. It provides more room for compliance and less for confusion, effectively making way for sharper insights and better data control. As a result, midstream operators make better decisions, improve safety conditions, and boost efficiency and profitability.
The automation of daily operations in different midstream segments goes beyond simplifying tasks of operators, though. It addresses the increasingly diverse needs of the oil and gas industry as well as the possible shortage or decrease in skilled labor. In the long run, it might just be the key to sustainable growth and progress in the midstream sector.
What Does the Future Hold for the Midstream Sector?
The midstream sector of the oil and gas industry is responsible for the transportation and storage of various types of liquid and gas products. Operators deal with thousand-mile-long pipelines, ship and railway transportation, and oil upgraders and refineries. They also deal with countless concerns of each operational aspect.
Engineers are aware of the midstream sector’s business and operational concerns.; they understand that overcoming these concerns will not just give a company leverage over the competition, but will boost the entirety of the global economy. After all, streamlined operations increase safety, efficiency, and productivity without needing more hands on deck.
Given this reason, engineers are constantly developing SCADA systems, AI technologies, and other tools and processes through IoT.
Artificial intelligence and other types of automation are slowly but surely becoming cornerstones in the midstream sector. This, though, is in line with the projected growth of the SCADA oil and gas market at a compound annual growth rate of 5.77 percent between 2017 and 2022. By the last year of the project, the market size may amount to USD 4.52 billion.
With this information, midstream operators would do well to incorporate more automated tools and processes in their operations. This move will help them effectively cater to the growing demands of the market.
Everyday operations may not always flow smoothly in the midstream sector. But, operators can improve them by embracing what the future holds — automation. The sooner they integrate automated tools and processes in business and operational activities, the sooner they will adapt to the demands of the upstream sector, the downstream sector, and the consumers.
Is There Anything the Midstream Sector Should Be Wary Of?
Automation may streamline different processes in the midstream and oil gas facilities. Despite constant advances and innovation, however, manual intervention will always be necessary to perform some tasks. Operators have to be aware that human-to-human and human-to-computer interaction may be reduced by automation.
Additionally, midstream operators still have to be wary of the various challenges that the oil and gas industry generally faces.
Rising Industry Costs
The oil and gas industry is a major contributor to the global economy, so we can expect a constant, and maybe even increasing, demand for petroleum products. In line with this, operators have to be ready in case midstream sector costs rise. Readiness softens the blow on finance and accounting in the areas of cost, overruns, lagging profits, and low project returns.
Missed Estimates of Project Costs
Midstream companies prepare cost estimates to be financially secure during projects and throughout operations. Though, these estimates are not always accurate. Sometimes, actual projects miss their estimates by a noticeable percentage and result in high-cost overruns that damage overall profits. While not always under the control of the pipeline company, these overruns pose a financial risk to any pipeline project.
Fluctuating Petroleum and Water Volumes
The upstream sector deals with exploration and production (E&P) — the procurement of crude oil and natural gas. The midstream sector heavily depends on the previous sector and the availability of the petroleum products it produces, which directly affect midstream growth and profitability. With an increase in hydrocarbon production comes with it an increase in produced water, and an increase in well stimulation activities bring with it a need for water of varying quality levels.
Midstream operators must be prepared with a backup plan in case the outlook changes and upstream companies lay off rigs and decrease production. Or on the flip side, if production increases or picks up in a new region midstream companies need the ability to respond to the increase in demand for transportation, storage and processing.
Automation helps address the factors that affect midstream operators. But, automated tools and systems can only go so far without operators themselves being aware of the challenges they face.
How Can We Help You?
SitePro works with midstream oil and gas business, pipeline companies, and saltwater disposal facilities owners. These clients face many challenges in everyday operations and we help them by providing innovative automation solutions best-suited to their needs.
Our team provides oil and gas software solutions to increase operational efficiency and save time and money. We pay attention to innovation and technology not just to streamline your daily operations, but also to help you outperform the competition.
Get in touch with us via our online form, a phone call, or an email to schedule a demo.