Midstream 101
The midstream industry is the link between production of natural gas, natural gas liquids (NGLs), and crude oil and the delivery of these hydrocarbon components to end-use markets. Midstream operators like WES create value at various stages along the midstream value chain by gathering production from producers at the wellhead or production facility, separating the produced hydrocarbons into various components, and delivering these components to end-use markets, and where applicable, gathering and disposing of produced water. The following diagram illustrates the primary groups of assets found along the midstream value chain:
Gathering, Stabilization, and Compression
Gathering
Smaller diameter pipelines known as gathering systems directly connect to producers’ wellheads or production facilities. These pipelines transport untreated oil or gas to a central location, where it is treated and processed, if necessary. Produced water is also gathered and often accounts for the largest byproduct stream associated with onshore oil and natural gas production.
Stabilization
The stabilization process for natural gas separates heavier hydrocarbons from the lighter components by using a distillation process, adding heat, or by reducing the pressure and allowing the more volatile components to flash from the liquid phase to the gas phase.
The stabilization process for crude oil ensures the crude oil meets downstream vapor pressure specifications. Crude oil delivery points, like terminals, storage facilities, pipelines, and refineries, often have specific requirements for vapor pressure and temperature, and for the amount of sediment and water that can be contained in any crude oil delivered to them.
Compression
Natural gas is compressed to a desired higher pressure to enable it to be gathered more efficiently and delivered into a higher pressure system, processing plant, or pipeline. Since wells produce at progressively lower field pressures as they deplete, field compression is needed to maintain throughput across the gathering system.
Processing, Treating & Dehydration
Processing
While principal components of natural gas are methane and ethane, natural gas often contains varying amounts of heavier NGLs and contaminants, such as water and carbon dioxide, sulfur compounds, nitrogen, or helium. Natural gas is processed to remove unwanted contaminants that would interfere with pipeline transportation or use of the natural gas and to separate those hydrocarbon liquids from the gas that have higher value as NGLs. The removal and separation of individual hydrocarbons through processing is possible due to differences in molecular weight, boiling point, vapor pressure, and other physical characteristics.
Treating & Dehydration
If natural gas contains water vapor or contaminants, like carbon dioxide or hydrogen sulfide, it is dehydrated to remove the saturated water and treated to separate the carbon dioxide or hydrogen sulfide from the gas stream.
Fractionation
Various levels of higher pressure and lower temperature is applied through the fractionation process to separate a stream of NGLs into ethane, propane, normal butane, isobutane, and natural gasoline for end-use sale.
Storage, Transportation & Marketing
Once the raw natural gas has been treated or processed and the raw NGL mix has been fractionated into individual NGL components, the natural gas and NGL components are stored, transported, and marketed to end-use markets. Each pipeline system typically has storage capacity located throughout the pipeline network or at major market centers to better accommodate seasonal demand and daily supply-demand shifts.
Water Disposal
As a natural byproduct of crude oil and natural gas production, producers must recycle or dispose of produced water to maintain production. Disposal systems remove hydrocarbon products and other sediments from the produced water and re-inject the produced water into the ground using disposal wells. These wells are permitted and are in compliance with applicable regulations.
Contracts
Approximately 95% of Western Midstream’s natural gas contracts and 100% of our liquids contracts are fee-based, limiting direct commodity price exposure. Under fee-based arrangements, Western Midstream receives a fee for each molecule gathered, treated, processed, and/or transported. Additionally, more than 80% of minimum-volume commitments or cost-of-service contracts support our stable cash flow.
For additional information on our contracts, please take a look at our latest SEC filings and Investor Presentation.
Educational Materials
Check out these materials for more details on the midstream business and how we keep our communities safe.
