Mike Heim has had a busy year what with his one-year tenure as president of GPA (Gas Processors Association) as well as his promotion from to president and COO of Targa Resources Corp. in December. Heading into the 91st Annual GPA Convention in New Orleans, La., next week, Heim discussed his tenure, the future of GPA and the midstream with Frank Nieto, editor of Midstream Monitor.

What have been the focal points of your tenure as GPA President?

The majority of my time has been spent on advocacy and to a lesser degree on what has historically been the meat of the GPA activities, safety and research. I can focus on the first area because our great staff does a wonderful job of making sure that the essential every-day work gets done.

The need for GPA advocacy is a result of a regulatory environment that is continuously proposing or instituting new rules and regulations on the midstream facilities that we build in order to keep up with producer drilling and downstream demands for merchantable natural gas and natural gas liquids. All the states that the GPA is active in had legislative sessions in 2011, and the GPA worked hard to educate and lobby for the interests of the midstream industry. Thankfully, many of our states' sessions have closed for this year or will soon, and Texas won't be back in session until January of 2013. That only means we have to be preparing now for what we expect to be another intense anti-midstream year in 2013.

The GPA's Executive and Finance Committee along with the GPA staff and the full Board of Directors have been very busy. GPA has facilitated fundraisers for U.S. congressmen, co-hosted question-and-answer session lunches with the three registered Republican candidates for the Texas Railroad Commission, worked with staff to review drafts of Amicus briefs for cases before the Texas Supreme Court, and is facilitating a fundraiser for the Louisiana Republican Party associated with Governor Jindal's address to our dinner on April 17. This is in addition to the many issues that our Advocacy, Environmental and Pipeline Safety Committees have been following, writing draft legislation on, and educating legislative members about. Our restructuring with the Advocacy Steering Committee has been extremely effective.

The industry’s efforts to help meet the country’s energy needs are also being threatened on several fronts. The midstream industry's ability to use condemnation in Texas is under scrutiny after two rulings from the Texas Supreme Court. We are battling to keep compression going because of EPA rules like RICE MACT and new designations of non-attainment areas that are unfortunately based upon the EPA's conjecture and not good science. Permitting for new treaters, processing plants, compression stations and fractionators are all being unduly drawn out and delayed because of bickering between the states and the EPA, or the EPA's new role as a permit writer for greenhouse gas emissions.

What was the most fulfilling aspect of your tenure as GPA president?

I don't really look at it as my tenure because that has been relatively short. I measure it over the past four presidents' tenures. There has been a great collective effort since the early 2000s to transition the GPA into an organization that is recognized and effective in Washington, D.C., and about a dozen state capitols when legislation or new rules are proposed or enacted that affect gathering, treating, compression, processing and fractionation -- the midstream industry. GPA has not only its great staff, which has been expanded to specifically address advocacy, but we also have engaged contract lobbyists on the federal and state levels. This recent aspect of the GPA has been a success story for its member companies.

Can you talk about this transition that GPA has had from representing processors to the midstream?

I don't really see it as a transition but a case of semantics. Most onshore processors were also gatherers, had treating facilities and compression, and many had local fractionation. Many of the straddle plants along the Gulf Coast have bought gathering pipelines from the interstate and intrastate pipelines that no longer wanted to be offshore. Today, most of the large fractionators in the Midcontinent and along the Gulf Coast are owned by companies that have significant gathering and processing businesses.

Has this refocus helped to increase the awareness of the GPA?

I think that most midstream companies, no matter what phase of the business they were in, were aware of the GPA because of its long-standing support of safety and research. Over the past ten years we have seen the sale of midstream assets to both established and "start up companies." There have been so many changes that you almost need to have a program to keep up with what company owns the various assets. The real increase in awareness of “who and what the GPA is” is among our legislatures, regulators and the courts.

What regions will the midstream focus on in the next few years?

God didn't discriminate when he scattered the shale deposits throughout North America. It's amazing how once the technology was developed to drill and fracture the shales, that the producing community began to exploit resource plays from British Columbia, Alberta, the Rockies, the Permian, North and South Texas, the Midcontinent , Louisiana, Mississippi, and throughout Appalachia. New facilities will have to be built in all of these basins.

In what ways has the increased focus of producers on liquid-rich plays altered the midstream industry's plans and what new opportunities have they presented to the midstream?

The thing that has surprised everyone in the midstream industry is that all of the traditional facilities have filled up due to increasing quantities of the rich gas that is being produced. The fractionators were first, followed by the y-grade pipelines, and now many processing plants and the residue take-away pipelines are reaching their capacities. All types of midstream facilities are being expanded.

Outside the expansion of traditional facilities, many of us didn't think we would ever see expansions of ethane crackers in North America much less construction of new world-class crackers. That is happening! Technology and global economics are favoring our industry. We are benefitting from petrochemical expansion in North America to consume a growing ethane supply and global demand for propane and normal butane. With propane and butane price arbitration open to the Far East and many other global areas, two current export facilities are being expanded and others are being promoted around the international community. Appalachia is a game-changer! New pipelines, new plants, maybe new ethane crackers and export facilities, could be built in the area.

What section of the industry is showing the greatest growth in GPA membership?

From what we have seen, after our dues base change to categorize members by operational work hours, we are seeing some growth from our O3 (between 50,000 and 200,000 operational work hours) and O4 (less than 50,000 work hours) companies. In other words, we are seeing growth in the smaller players and start-up companies. If you think about it, it makes sense. Most of the bigger players in our industry are members, and have been members for a long time. The smaller companies may have just been introduced to GPA because of advocacy or technical activities. I can tell you, the money GPA saved the midstream industry just with its RICE MACT work alone will pay a company’s membership dues for a long, long time.

Contact the author, Frank Nieto, at fnieto@hartenergy.com.