The Marcellus and Utica Shale Provide Booming Opportunities in Midstream Development
There are three basic stages of development in the shale oil and gas industry. Exploration and production is called upstream, which is the first stage. Next is midstream, involving the processing, storage, transportation and marketing of natural gas. The final stage is called downstream, and this is where the finished product is taken through the sale. The Marcellus and Utica Shale plays have already produced enough natural gas to cause an upstream revolution of sorts. This overwhelming production has far surpassed the midstream capacity. The result of this disruption is an urgent push to construct processing plants, storage facilities and pipeline to get the new supply of natural gas to market.
The oversupply on the upstream end comes from new hydraulic fracturing technologies at work in both shale plays. The current technologies are not even meeting the production potential, and the race is on upstream to create new technologies to maximize that potential. Even so, an oversupply already exists that is pushing companies to develop an adequate midstream infrastructure before the system becomes overstressed. This oversupply is providing some amazing prospects for the producers of the midstream infrastructure, and they are capitalizing on this as they rush to construct the system needed to gather, transport, store, process and distribute the product to the market.
The Marcellus and Utica Shale plays are spread beneath the Pennsylvania, Ohio and West Virginia landscape, and new technologies to unlock the natural gas in the shale mean big business for these states. The country has shipped oil and natural gas from the southwest regions to the northeast for decades, but now that trend is reversing. In the rush to create the infrastructure needed, many operators are using the pipeline already in place but reversing the flow, transforming the area from a market status to a supply status.
Many companies are stepping up to take their place in the creation of this infrastructure, which will necessarily include a number of different industries. Not only does the product require pipeline for transmission, there are processing, storage and distribution solutions needed. More than one company is currently involved in the production of gathering systems in many counties in all three states, as well as developing plans for multiple processing plants to separate the natural gas and prepare it for market. The process to enact this change will not happen overnight, but it does provide an economic jackpot for the tri-state area.
That jackpot will affect more than the tri-state area. Just one midstream facility is projected to create well over 20,000 jobs and $1 billion in annual tax revenue on the local, state and federal levels, as well as reducing the national trade deficit. As the midstream stage of development works to catch up to the upstream production, it is likely to have a positive effect the economy of the entire nation.
The amount of gas in the Marcellus and Utica Shale plays has great potential once the midstream sector provides an adequate infrastructure. Both the construction and the staffing of this infrastructure is an economical gold mine for the three states above the shale plays, for the industries involved in the creation of the infrastructure, and for the entire country.