Despite efforts toward alternative energy sources, oil and gas still fuel our country. To ensure uninterrupted service and prevent disruption, the oil and gas supply chain needs to run at its peak at all times.
Environmental impact, unpredictable supply and demand, and the otherwise complicated nature of the industry itself are just part of the issue. Midstream transportation plays a critical role in distribution and storage, but focused efforts and investment in the right places will foster transparency and a more predictable supply chain from end to end.
Defining the Three Stages of the Oil and Gas Supply Chain
There are several layers and stages in the oil and gas supply chain, but they can be grouped into one of three categories—upstream, midstream, and downstream.
In the upstream segment, you’ll find exploration, discovery, drilling, and production. Midstream processes involve storage, transportation, and processing. Downstream is the final link in the chain, where oil and gas are refined and sold as products to the end-user.
Why Is the Midstream Supply Chain Important?
The midstream oil and gas supply chain is a critical intermediate point between upstream and downstream. Midstream logistics includes companies that operate tanker ships and trucks, storage facilities, and pipelines. These services are an essential link between upstream and downstream activities and require a great deal of planning and a precisely-aligned transportation strategy.
While the transportation aspect of midstream might seem straightforward enough, there are complex safety and compliance issues to consider and a strict regulatory framework overseen by multiple layers of government.
Delays can be costly, and any missteps can result in fines and penalties with massive consequences to the market and the environment
5 Supply Chain Lessons Learned in 2021
Three Reasons to Optimize the Midstream Supply Chain
Speed, accuracy, and quality are critical at every stage, but midstream activities perhaps have the most significant potential for disruption should anything go awry. Optimization helps mitigate these risks, and nowhere is this effort quite as vital as it is in the midstream supply chain sector.
Demand for oil and gas products has plummeted by 30% since March 2020 but is expected to rebound by 2023. The trend toward renewable energy sources and a general economic slowdown continue to challenge growth in this sector.
To achieve resilience and stability, the supply chain must focus on optimization to maximize efficiency. Data visibility and centralization is the key to success.
Midstream optimization of your oil and gas supply chain will help you face the decrease in demand, allowing you to stay competitive in the wake of the growing interest in renewable energy. An optimized supply chain helps you stay agile so you can face any unforeseen changes or disruptions on the horizon.
At DTS World Cargo, we understand the challenges the oil and gas industry face today. Leveraging decades of expertise and industry-leading best practices, we partner with you to optimize your supply chain with logistics and transportation services you can rely on. Click here to improve your midstream processes.