Midstream business is a term you may not hear often. The oil and gas industry is split into three areas of operation: upstream, midstream, and downstream. What’s the difference?
- Upstream refers to drilling and well operations. This is the part of the industry that operates the wells and produces oil and natural gas.
- Midstream refers to companies that operate the pipeline and gathering or transmission facilities that move the gas from upstream (wells) to downstream (homes and businesses).
- Downstream (or distribution) moves the clean gas to your home or business.
Midstream is the ‘middle’ part of the natural gas chain, which includes the transportation, storage, and wholesale marketing of natural gas and natural gas liquids. Midstream operations sometimes take some of the elements of upstream or downstream sectors, like purifying natural gas during processing or producing natural gas liquids as finished end-products. Some elements of midstream business at UGI Energy Services (UGIES) include natural gas storage, the operation of propane air plants, and the marketing of natural gas.
Natural Gas Storage
Natural gas can be stored in several different ways. It’s most commonly held underground under pressure in three types of facilities: depleted gas reservoirs, aquifers, and salt caverns. Natural gas can also be stored in above-ground tanks.
- Depleted gas reservoirs are the most common form of underground storage. These are reservoirs that have already been tapped of all their recoverable natural gas. This leaves a formation that is geologically capable of holding natural gas.
- Aquifers are underground permeable rock formations that act as natural water reservoirs and can sometimes be reconditioned to store natural gas. These are less common and usually only used in areas where there are no depleted gas reservoirs nearby. Aquifers require the installation of wells, extraction equipment, pipelines, and dehydration facilities to effectively store natural gas.
- Salt caverns are formed out of existing salt deposits: salt domes and salt beds. Salt caverns can be very expensive and are much smaller than depleted gas reservoirs, but once created, allow little natural gas to escape from the formation unless intentionally extracted. Salt cavern walls have the structural strength of steel, which makes them very resilient against degradation.
Propane Air Plants
Propane air plants are used by natural gas utilities to meet peak demand energy supply needs. UGIES’s propane supply is used to serve our wholesale propane customers through the production of propane air. We own and operate six strategically located liquid propane gas (LPG) air plants and engage in the transportation, storage, terminalling, and marketing of LPG. UGIES strategically purchases LPG in order to offer competitive pricing for our wholesale customers. UGIES offers traditional tank storage capacity for through-putting at our rail terminal facilities and trucking-only facilities for customers who have limited propane storage.
Wholesale Marketing of Natural Gas
Wholesale marketing involves selling bulk quantities of product at low margins to customers. In a market like the natural gas industry, marketers are forced to keep their prices low to compete with other companies. By offering both fixed price and market price plans, UGIES fits the needs of all customers. Because UGIES is an energy marketer that owns and operates our own natural gas storage and delivery assets, our natural gas plans are very reliable both financially and physically.
Our focus is providing highly personalized service, which helps us structure plans tailored to your key demands. We’ll help you develop a purchasing solution for your short- or long-term needs—one with no billing issues, supply problems, or surprises.
As a premier midstream provider in the northeast U.S. and backed by decades of industry insight, UGIES Midstream Services gets affordable natural gas to the industries that need it. We connect producers, distributors, and marketers with the assets and services they need to serve their customers more efficiently and reliably.
We continue to invest in projects that help bring low-cost energy to market, partnering with businesses large and small to help them reduce expenses. If you’re interested in learning more about our services or how we can help your business, contact us today.