Two months after Hurricane Harvey ravaged the hydrocarbon industry across the entire Gulf Coast, midstream operators and their equipment suppliers are starting to implement the lessons learned from the storm damage and recovery.
While refineries and chemical plants weathered the heavy rains and flooding surprisingly well, the midstream proved more difficult to secure. Some operations are being hardened but there are practical limits to how resistant the diffuse pipeline network can be made. Attention thus turns to reliability and recovery.
“We had eight units affected by high water,” said C. Brad Benge, vice president of operations for CSI Compressco (CSIC) (NASD: CCLP), one of the largest compression equipment and services suppliers. “All of them were returned to service within two or three days,” he told Hart Energy.
Almost all of the company’s equipment has remote monitoring and shutdown, and the few that do not are being purged from the fleet.
“Anyone can collect data,” Benge added. “The key is what to do with it.”
He noted that beyond the remote telemetry installed on the compression equipment that reports to the company’s fleet reliability center, the company is closing the loop by further connecting mechanical and maintenance operations.
“Automating compression services is a step change in the industry,” said Ronald J. Foster, senior vice president and chief marketing officer at CSIC. “Integrating everything is changing the way of doing business in our industry.”
That fits into another trend noted by several equipment suppliers: operators buying services rather than equipment.
The concept is not just leasing, but also full-service operational reliability, maintenance, and repair. In the midstream it seems to be growing from both extremes—the largest and complex pumps and compressors, as well as the smallest units below 100 horsepower.
Broadly speaking, oil and gas producers prefer that model, while midstream companies still prefer to purchase equipment and handle their own operations and maintenance. One obvious reason is in-house expertise, but another is accounting. In many midstream limited partnership structures, the operating entity has to own equipment to generate revenue from it.
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