With low oil and gas prices squeezing profits, companies are searching for smart savings opportunities. Dale St. Denis, director for midstream of Sapient Global Markets, told Hart Energy that when times are tight, turning to a consultant who can look objectively at your business and advise you how to best utilize your assets can be a worthwhile investment for midstream providers.

Sapient Global Markets offers business advisory and technology evaluation services, St. Denis said. When evaluating a company’s options, Sapient focuses on strategy—how the company plans to expand or leverage its service offerings.

“We help them with their consolidation of assets, how they ought to reposition those assets … to better serve their shippers,” he said. “We also provide technology evaluation services to help them understand what their options are for expanding their IT, or information technology, infrastructure to support their shippers with the management of these hydrocarbons through their assets.”

From an IT standpoint, companies are generally focusing on safe and reliable performance from their assets, choosing data management options that keep them updated on the specific performance of those assets.

Particularly in a downturn, however, the most important consideration for companies tends to be asset optimization, he said. To be successful in a tight commodity market, leadership needs to understand “ways in which they can better leverage those assets and combine them in more value-added services for their shippers,” St. Denis said.

Companies who have taken on the role of supporting shale producers during the last seven or eight years are often the most in need of optimization services, he said. Those companies often utilize pipelines that were built long before the shale boom and were designed to move hydrocarbons north from the Gulf Coast. With the surge of northern shale development, natural gas and crude oil must now be shipped from origination points in North Dakota and Pennsylvania to the Gulf Coast refinery zones.

“A lot of times their asset base is having difficulty dealing with all the takeaway requirements for all these shale production zones, St. Denis said. “With the change in direction, some of the major midstream companies are looking at how to better optimize their asset base to support these new flow patterns.

“The other thing that’s happening is we see more and more movement toward the export of liquefied natural gas, and more and more permitting for these facilities along the Gulf Coast and eastern seaboard. That’s going to draw more natural gas to these facilities and again, changes in some of the traditional flow patterns in those pipelines.

“The way in which you want to operate those assets is going to change, and companies are asking us to evaluate these new flow patterns and give them guidance on how they ought to operate the assets to accommodate the new flow patterns most economically,” he said.

Optimization is becoming increasingly important for natural gas shippers as LNG exports come into play, St. Denis said. LNG exports will likely be a “major” consideration during the downturn, driven by increased production—likely to continue rising through 2016, even as rig counts decline, according to the Energy Information Administration’s “Natural Gas Weekly Update” for the week ending March 11.

LNG export facilities “will be going online in 2016 for the most part, and 2017,” he said. “[Pipeline operators] need to be making changes to their infrastructure now—their asset infrastructure and of course their technology infrastructure—to support that now in order to be ready for those large movements of natural gas.”

And even during the downturn, St. Denis said, the midstream is continuing to make those necessary changes so that they can hit the ground running when prices rebound.

“The decline in hydrocarbon prices has helped these companies get a lot more selective about these projects, but in most cases the midstream industry is assuming that we’re going to see prices increase in the next year to year and a half,” he said. “They’re recognizing this as an opportunity to further consolidate and acquire new assets, particularly those that would benefit the producers in these regions that don’t have pipelines and processing facilities for managing hydrocarbon. So you’re seeing a lot of these companies now look at new ways to combine their existing infrastructure with new acquisitions.”

Contact the author, Caryn Livingston, at clivingston@hartenergy.com.