Analysis

The rise of the midstream

Shale reinvigorates midstream growth

This report provides Deloitte’s insights on the midstream sector’s path from growth boom to maturity over the next two decades, which will ultimately lead to the rise of the midstream major.

The surge in domestic production of shale gas and tight oil — resulting from the technological advances in hydraulic fracturing and horizontal drilling — has created an unprecedented demand for infrastructure to connect these newfound resources with refineries and processing plants. As a result, the midstream sector, once expected to enter a stage of maturity by 2006, has entered a high-growth phase requiring significant amounts of capital investment to meet growing infrastructure needs

The midstream sector has come out of the shadows and into the forefront of the industry. In fact, midstream is now the third largest sector of the U.S. oil and gas industry, behind the supermajors and large independents. During this transformative period, "midstream majors" will emerge, equal in size, market power and strength to some of their counterparts in the upstream sector.

  • How will midstream companies meet the growing infrastructure needs brought on by rising domestic production?
  • How will the midstream sector fund and build the required local and national system of pipelines?
  • What role will the master limited partnership structure play and how will the midstream sector respond to interest rate fluctuations?
  • Will the midstream sector expand internationally as the United States becomes an energy-exporting nation?

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